SPEAKERS CONTENTS INSERTS
Page 1 TOP OF DOC
49–051 CC
1998
OVERSIGHT HEARING ON OUTER CONTINENTAL SHELF OIL AND GAS LEASING
OVERSIGHT HEARING
before the
SUBCOMMITTEE ON ENERGY
AND MINERAL RESOURCES
of the
COMMITTEE ON RESOURCES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
SECOND SESSION
MAY 14, 1998, WASHINGTON, DC
Serial No. 105–87
Page 2 PREV PAGE TOP OF DOC
Printed for the use of the Committee on Resources
COMMITTEE ON RESOURCES
DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana
JAMES V. HANSEN, Utah
JIM SAXTON, New Jersey
ELTON GALLEGLY, California
JOHN J. DUNCAN, Jr., Tennessee
JOEL HEFLEY, Colorado
JOHN T. DOOLITTLE, California
WAYNE T. GILCHREST, Maryland
KEN CALVERT, California
RICHARD W. POMBO, California
BARBARA CUBIN, Wyoming
HELEN CHENOWETH, Idaho
LINDA SMITH, Washington
GEORGE P. RADANOVICH, California
WALTER B. JONES, Jr., North Carolina
WILLIAM M. (MAC) THORNBERRY, Texas
JOHN SHADEGG, Arizona
JOHN E. ENSIGN, Nevada
Page 3 PREV PAGE TOP OF DOC
ROBERT F. SMITH, Oregon
CHRIS CANNON, Utah
KEVIN BRADY, Texas
JOHN PETERSON, Pennsylvania
RICK HILL, Montana
BOB SCHAFFER, Colorado
JIM GIBBONS, Nevada
MICHAEL D. CRAPO, Idaho
GEORGE MILLER, California
EDWARD J. MARKEY, Massachusetts
NICK J. RAHALL II, West Virginia
BRUCE F. VENTO, Minnesota
DALE E. KILDEE, Michigan
PETER A. DeFAZIO, Oregon
ENI F.H. FALEOMAVAEGA, American Samoa
NEIL ABERCROMBIE, Hawaii
SOLOMON P. ORTIZ, Texas
OWEN B. PICKETT, Virginia
FRANK PALLONE, Jr., New Jersey
CALVIN M. DOOLEY, California
CARLOS A. ROMERO-BARCELÓ, Puerto Rico
MAURICE D. HINCHEY, New York
ROBERT A. UNDERWOOD, Guam
SAM FARR, California
Page 4 PREV PAGE TOP OF DOC
PATRICK J. KENNEDY, Rhode Island
ADAM SMITH, Washington
WILLIAM D. DELAHUNT, Massachusetts
CHRIS JOHN, Louisiana
DONNA CHRISTIAN-GREEN, Virgin Islands
RON KIND, Wisconsin
LLOYD DOGGETT, Texas
LLOYD A. JONES, Chief of Staff
ELIZABETH MEGGINSON, Chief Counsel
CHRISTINE KENNEDY, Chief Clerk/Administrator
JOHN LAWRENCE, Democratic Staff Director
Subcommittee on Energy and Mineral Resources
BARBARA CUBIN, Wyoming, CHAIRMAN
W.J. (BILLY) TAUZIN, Louisiana
JOHN L. DUNCAN, Jr., Tennessee
KEN CALVERT, California
WILLIAM M. (MAC) THORNBERRY, Texas
CHRIS CANNON, Utah
KEVIN BRADY, Texas
JIM GIBBONS, Nevada
CARLOS ROMERO-BARCELÓ, Puerto Rico
NICK J. RAHALL II, West Virginia
Page 5 PREV PAGE TOP OF DOC
SOLOMON P. ORTIZ, Texas
CALVIN M. DOOLEY, California
CHRIS JOHN, Louisiana
DONNA CHRISTIAN-GREEN, Virgin Islands
——— ———
BILL CONDIT, Staff Director
MIKE HENRY, Professional Staff
DEBORAH LANZONE, Professsional Staff
C O N T E N T S
Hearing held May 14, 1998
Statements of Members:
Boxer, Hon. Barbara, a United States Senator from the State of California
Prepared statement of
Capps,Hon. Lois, a Representative in Congress from the State of California
Prepared statement of
Cubin, Hon. Barbara, a Representative in Congress from the State of Wyoming, prepared statement of
Cunningham, Hon. Randy ''Duke'', a Representative in Congress from the State of California
Prepared statement of
Goss, Hon. Porter J., a Representative in Congress from the State of Florida
Prepared statement of
Page 6 PREV PAGE TOP OF DOC
Jones, Hon. Walter B., a Representative in Congress from the State of North Carolina
Prepared statement of
Lampson, Hon. Nick, a Representative in Congress from the State of Texas
Prepared statement of
Miller, Hon. George, a Representative in Congress from the State of California, prepared statement of
Pallone, Hon. Frank, Jr., a Representative in Congress from the State of New Jersey
Prepared statement of
Pickett, Hon. Owen B., a Representative in Congress from the State of Virginia, prepared statement of
Regula, Hon. Ralph, a Representative in Congress from the State of Ohio
Prepared statement of
Riggs, Hon. Frank D., a Representative in Congress from the State of California, prepared statement of
Scarborough, Hon. Joe, a Representative in Congress from the State of Florida
Prepared statement of
Taylor, Hon. Gene, a Representative in Congress from the State of Mississippi
Prepared statement of
Statements of witnesses:
Holman, William, Assistant Secretary for Environmental Protection, North Carolina Department of Environment and Natural Resources
Prepared statement of
Quarterman, Cynthia L., Director, Minerals Management Service, Department of the Interior
Prepared statement of
Page 7 PREV PAGE TOP OF DOC
Whitfield, Estus, Environmental Advisor to Governor Lawton Chiles of Florida
Prepared statement of
OVERSIGHT HEARING ON OUTER CONTINENTAL SHELF OIL AND GAS LEASING
THURSDAY, MAY 14, 1998
Subcommittee on Energy and Mineral Resources, Committee on Resources, Washington, DC.
The Subcommittee met, pursuant to notice, at 2:24 p.m., in room 1334, Longworth House Office Building, Honorable Barbara Cubin (chairman of the Subcommittee) presiding.
Mrs. CUBIN. The Subcommittee on Minerals and Energy will please come to order.
The first panel would please come forward.
In the interest of time, since we don't any more votes this afternoon, and I know members all have planes to catch and other places to be, I'm going to submit my opening statement for the record, and we'll just be in recess until the Ranking Member has an opportunity to give his opening statement. So, if you'll just bear with us, it'll just be a minute. Actually, why don't we go ahead and start, Congressman Jones, and then we'll come back to his opening statement so that we can get moving.
[The prepared statement of Mrs. Cubin follows:]
STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WYOMING
The Subcommittee meets today to review Outer Continental Shelf oil and gas development issues, primarily from the perspective of Members from coastal States and congressional districts. Such Members, be they Republicans or Democrats, represent constituents who are often very passionate in their views about offshore drilling near their State's coastline—and the passion is reflected in these Members' efforts as manifested in legislation to ban a range of activities by the Secretary of the Interior from pre-leasing studies, through the auctioning of OCS tracts, to in some instances a bar on approving drilling or development permits for already leased shelf areas.
Page 8 PREV PAGE TOP OF DOC
On the other hand, occasionally Members support measures to provide incentives to companies to risk the huge sums of money necessary to explore for, drill and produce oil and gas from the OCS, such as the Deepwater Royalty Relief Act of 1995, which has been an unqualified success in stimulating bidding for central and western Gulf of Mexico tracts. For the five lease sales post-enactment of this relief, the Federal treasury has been enriched to the tune of $3.2 billion in high bids—not exactly chump change. And the leases that have been awarded will likely contain oil and gas fields upon which production royalties of far greater magnitude will be forthcoming as the thresholds in the deepwater relief Act are exceeded. And let me remind everyone, that a large portion of these receipts are dedicated to the Land & Water Conservation Fund, to which many Members look for funding of environmentally sensitive lands within their States.
The Members we are scheduled to hear from today are predominantly of the view to restrict OCS development, at least in certain geographic regions. Several of our witnesses have sponsored authorizing bills to do so which are referred to this Committee. The need to act upon these bills has largely been supplanted by moratoria in the annual appropriations bill for the Department of the Interior, via limitations of funds provisions—sometimes derisively called ''riders'' by those opposed to legislating policy matters on spending bills—at least those policies which they don't support. But I've learned in my three and one-half years here that the OCS moratoria ''riders'' have a life of their own. Our colleague from Ohio, Mr. Regula valiantly tried to avoid these riders in the first bill he reported from his subcommittee, only to be amended in the full Appropriations Committee by an overwhelming margin. So much for not legislating in the context of a spending bill.
Two years ago when a similar hearing was held, the Minerals Management Service reported to us the OCS provides 15 percent of domestic oil production and 25 percent of natural gas output. Those fractions have now increased to 18 percent for oil and 27 percent for gas, no doubt because of burgeoning activity in the central and western Gulf of Mexico. Management of the nation's offshore oil and gas resources is governed by the Outer Continental Shelf Lands Act (OCSLA), which specifies the conditions under which the Secretary of the Interior grants rights to explore for, develop, and produce those resources.
Page 9 PREV PAGE TOP OF DOC
The OCSLA requires the Secretary to prepare an oil and gas leasing program that indicates a 5-year schedule of lease sales determined to best meet domestic energy needs. Areas for which the 5-year plan does not recommend leasing activity are effectively under moratoria. And even for areas that are so recommended, the planned sales may be postponed, or diminished in area, such as has occurred with a Beaufort Sea sale scheduled for this August. Given the technical revision of the limitations of funds ''riders'' in the fiscal year 1998 Interior Appropriations Act from that of previous years, Congressional dictates and the Department's 5-year plan for 1997-2002 are now consistent with one another.
There should be little cause for alarm by Members concerned about near-term decisions by the Administration about where leasing may occur. There are concerns by some of us who believe an opportunity to increase revenues is being postponed by this plan, and the corresponding Congressional moratoria, but we are obviously of the minority view. A 1995 Clinton Administration analysis of the OCS estimated over four billion barrels of oil equivalent resources are subject to moratoria. Even using today's depressed price of $15 per barrel, this means approximately $8.5 billion of potential Federal royalties are locked out of the Treasury.
Given the passions of this debate, it seems unlikely that the entire OCS will ever be opened, nor is it likely that the very productive western and central regions in the Gulf of Mexico will be shut in, so the debate is really about the remainder. As we approach the end of the current plan in 2002 perhaps Congress and coastal States can engage in rational discourse about the next phase. Canadian development in the North Atlantic is coming on stream now. Perhaps some northeastern Members whose constituents will clearly benefit from trans-border deliveries of natural gas will become advocates of exploration in U.S. Atlantic waters when MMS proposes the 2003-2008 plan. Or perhaps not. I won't speculate as to the future of OCS development off the California coast—except to say that its likely to be a campaign issue for a long time to come.
Page 10 PREV PAGE TOP OF DOC
STATEMENT OF HON. WALTER B. JONES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA
Mr. JONES. Thank you, Madam Chairman and Committee members. I'd like to thank you and the staff for scheduling this hearing on Outer Continental Shell Oil and Gas Leasing, and for allowing me to speak on behalf of H.R. 2615.
On a daily basis, coastal citizens are presented with the threat of drilling off their coast. And as one can imagine, these citizens tend to be strongly opposed to this environmental and economic threat to their way of life. These concerns have been prevalent in North Carolina since the early 1980's when leases were first purchased. Again, they are being vocalized today with the recent announcement of Chevron's intention to drill off the State's coast.
To ensure that our fragile coast is being properly protected, I, along with Senator Faircloth, introduced the Outer Banks Protection Act last year in hopes of providing an additional layer of protection. This legislation does not ban drilling—I'd like to repeat that—this legislation does not ban drilling. It simply prohibits the Federal Government from issuing any permits relating to drilling without the consent of the State.
This legislation is important because it provides a layer of economic and environmental protection for our coast, while ensuring the rights of North Carolina. Quite frankly, drilling will have a detrimental effect on the booming tourism industry which is dependent on a healthy coast, clean water, and an abundant fishery.
Right or wrong, due to the perception that offshore drilling will contaminate the waters, it is widely believed that tourism will be directly affected. This effect would have a devastating effect on a large number of Eastern North Carolina families and businesses.
Page 11 PREV PAGE TOP OF DOC
Tourism has become the shot in the economic arm for the area. The industry continues to grow by leaps and bounds. Last year in Dare county, tourists spent more than $400 million, making the county one of the largest tourism destinations in the State. Nearly 6 million people visit the Outer Banks annually and 52 percent of all jobs in Dare County are tourism related.
There is always an environmental threat with offshore drilling. However, I tend to believe there is a greater threat to drilling off the North Carolina coast due to the depth of the water and the unpredictable weather conditions. The drilling would occur more than 40 miles off the coast in approximately 2,600 feet of water with a steep drop-off just beyond. This area is known as ''The Point'' because it is where the Gulf Stream and the Labrador Current meets and collides, creating fierce currents and unpredictable conditions.
The Point is popular fishing ground due to the abundance of fish. The Point attracts more fish than any other location along the entire Atlantic Coast. Specifically, the area has become a breeding ground for a number of different species. To lose this environmentally valuable area would have a devastating effect on the entire Atlantic Coast fisheries that are already stressed. I think drilling in this location is an environmental gamble and should not be taken.
As a proponent of States' rights, I believe that it is essential that the State has the final say on whether drilling should occur. Currently, the State is allowed to voice its support or opposition on management plans. However, the Mineral Management Service makes the final decision on if a drilling permit is issued.
H.R. 2615 reverses this trend by granting the State this authority. I believe there is precedence for legislature of this nature. For example, the Coastal Zone Management Act and the Clean Water Act transfers Federal authority to individual States. To be exact, the Federal Government has transferred authority under the Clean Water Act to 38 States. Further, it seems reasonable that the State of North Carolina gain this authority since it has been held to a different level than other States for numerous years.
Page 12 PREV PAGE TOP OF DOC
In 1989, President Bush placed a moratorium on new oil and gas development along the United States, excluding North Carolina, Florida, and Alaska. Clearly, North Carolina has been singled out by Federal regulations and energy companies. If an accident should occur, North Carolina would suffer the environmental and economic consequences—not the Federal Government. The bottom line is that drilling is the wrong industry for the Outer Banks of North Carolina.
Madam Chairman, thank you again for providing me this opportunity to speak on behalf of H.R. 2615. Also, I would like to thank the Subcommittee for allowing a very good friend of mine from North Carolina, Bill Holman, who is sitting to my left, who will be speaking today on behalf of Governor Jim Hunt, the Governor of North Carolina. Thank you.
[The prepared statement of Mr. Jones follows:]
STATEMENT OF HON. WALTER B. JONES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA
Good afternoon, Madame Chairman. I would like to thank you and the Subcommittee staff for scheduling this hearing on outer continental shelf oil and gas leasing and for allowing me to speak on behalf of H.R. 2615.
On a daily basis, coastal citizens are presented with the threat of drilling off of their coast. And as one can imagine, these citizens tend to be strongly opposed to this environmental and economic threat to their way of life. These concerns have been prevalent in North Carolina since the early 1980's when leases were first purchased. Again, they are being vocalized today with the recent announcement of Chevron's intention to drill off the State's coast.
To ensure that our fragile coast is being properly protected, I along with Senator Faircloth introduced the Outer Banks Protection Act last year in hopes of providing an additional layer of protection. The legislation does not ban drilling—it simply prohibits the Federal Government from issuing any permits relating to drilling without the consent of the state.
Page 13 PREV PAGE TOP OF DOC
This legislation is important because it provides a layer of economic and environmental protection for our coasts while ensuring the rights of North Carolina.
Quite frankly, drilling will have a detrimental effect on the booming tourism industry which is dependent on a healthy coast, clean water and an abundant fishery.
Right or wrong, due to the perception that offshore drilling will contaminate the waters, it is widely believed that tourism will be directly affected. This effect would have a devastating effect on a large number of Eastern North Carolina families and businesses.
Tourism has become the shot in the economic arm for the area. The industry continues to grow by leaps and bounds. Last year in Dare County, tourists spent more than $400 million, making the county one of the largest tourism destinations in the state. Nearly six million people visit the Outer Banks annually and 52 percent of all jobs in Dare County are tourism related.
There is always an environmental threat with offshore drilling. However, I tend to believe there is a greater threat to drilling off the North Carolina coast due to the depth of the water and the unpredictable weather conditions.
The drilling would occur more than 40 miles off the coast in approximately 2,600 feet of water with a steep drop off just beyond. This area is known as ''The Point'' because it is where the Gulf Stream and the Labrador Current meet and collides, creating fierce currents and unpredictable conditions.
''The Point'' is popular fishing ground due to the abundance of fish.
''The Point'' attracts more fish than any other location along the entire Atlantic coast. Specifically, the area has become a breeding ground for a number of different species. To lose this environmentally valuable area would have a devastating effect on the entire Atlantic coast fisheries that are already stressed.
Page 14 PREV PAGE TOP OF DOC
I think drilling in this location is an environmental gamble that should not be taken.
As a proponent of state's rights, I believe that it is essential that the state has the final say on whether drilling should occur. Currently, the state is allowed to voice its support or opposition on management plans. However, the Mineral Management Service makes the final decision on drilling if a drilling permit is issued.
H.R. 2615 reverses this trend by granting the state this authority. I believe there is precedent for legislation of this nature. For example, the Coastal Zone Management Act and the Clean Water Act transfer Federal authority to individual states. To be exact, the Federal Government has transferred authority under the Clean Water Act to 38 states.
Further, it seems reasonable that the State of North Carolina gain this authority since it has been held to a different level than other states for numerous years. In 1989, President Bush placed a moratorium on new oil and gas development along the United States, excluding North Carolina, Florida and Alaska.
Clearly, North Carolina has been singled out by Federal regulations and energy companies. If an accident should occur, North Carolina would suffer the environmental and economic consequences—not the Federal Government.
The bottom line is that drilling is the wrong industry for the Outer Banks.
Madame Chairman, thank you again for providing me this opportunity to speak on behalf of H.R. 2615. Also, I would like to thank the Subcommittee for allowing Bill Hollman who is here today speaking on behalf of Governor Jim Hunt.
Mrs. CUBIN. Thank you, Mr. Jones. And now, I will recognize William Holman, the assistant secretary for environmental protection in North Carolina Department of Environment and Natural Resources.
Page 15 PREV PAGE TOP OF DOC
STATEMENT OF WILLIAM HOLMAN, ASSISTANT SECRETARY FOR ENVIRONMENTAL PROTECTION, NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES
Mr. HOLMAN. Thank you, Madam Chairman, members of the Committee. I am Bill Holman. I'm assistant secretary for environmental protection at the North Carolina Department of Environment and Natural Resources. I'm pleased to be here today on behalf of Governor Hunt and the State of North Carolina.
I want to thank Congressman Jones for this opportunity to participate in your discussions, and to comment on Outer Continental Shelf issues.
I'm here today to deliver two basic messages: First, it is critically important that States like North Carolina have a strong and clearly defined role in the management and stewardship of our offshore resources. Second, it is essential and possible for energy and mineral resources of the Outer Continental Shelf to be managed in a coordinated and progressive manner that maximizes benefits to both our economies and our marine and coastal environment.
Mr. Jones asked the State to participate here today to convey our views on his legislation, the Outer Banks Protection Act, which require concurrence of the Governor of North Carolina as a condition for exploratory drilling off the Outer Banks of North Carolina. We greatly appreciate the recognition this bill embodies of the responsibility that States have for safeguarding the marine and coastal environment, and their coastal tourism economy. We are gratified by its title and its content, and we believe that bill makes a very strong statement that the Governor has a central role when making decisions that affect our citizens on the Outer Banks.
As members of the Subcommittee know, the current process for State review of offshore energy exploration proposals is based on the States' coastal protection planning responsibilities provided under the Coastal Zone Management Act. Through a consistency review and determination by the State, the exploration plans are examined by the State for consistency with our approval coastal management plan. If the State finds the plan inconsistent, no permit can be issued unless the Secretary of Commerce overrides the State's determination that the project is inconsistent.
Page 16 PREV PAGE TOP OF DOC
We appreciate Mr. Jones' concern that this may not provide a sufficiently strong voice for States in reviewing drilling proposals. We—that is North Carolina—are currently awaiting detailed proposals regarding proposed exploratory drilling on the Outer Continental Shelf off the Outer Banks, in an area known as The Point, that Mr. Jones talked about.
The Committee may be aware that The Point off Cape Hatteras is also under consideration for designation as a ''Habitat Area of Particular Concern'' under the Essential Fish Habitat provisions of the Magnuson-Stevens Fisheries Management Act that Congress enacted last session. This area has become recognized, as Mr. Jones said, a unique mixing zone. Larvae of some 300 fish species that are native to coastal waters, the Labrador Current and the Gulf Stream are found at The Point, all in one place.
I'm told that this concentration of fish species is far higher than might be found in typical OCS areas, and it reinforces the importance of assuring both economic and environmental values are fully evaluated in assessing any drilling proposal. This is new information that we believe must be considered by both the State and the Nation in making appropriate decisions on whether and how to proceed in the pursuit of energy resources of the coast of North Carolina. Though we view it as the part of duty and responsibility of the State to assure that if any such drilling is to occur, that it be done in a manner that is sensitive to and protective of this unique marine environment, and our coast. We do not have firm word from the Minerals Management Service that they will in fact grant us consistent review that we strongly feel is our right.
The reason for this is in 1982, when much less was know about the environmental characteristics and significance of The Point, the State made a determination that a previous different exploration proposal was consistent with our coastal management plan. That exploration proposal was never carried out. Unless the Minerals Management Service finds that the potential environmental impact of the new exploration plan is significantly greater than the prior proposal, and that new permits are required, then under the Minerals Management Services rules the State will not be granted a new consistency review.
Page 17 PREV PAGE TOP OF DOC
The legislation proposed by Mr. Jones assures that the State have a voice in a project proposal that is 16 years old, in the context of substantial new information about use of resources in the area.
The State is working cooperatively with the Minerals Management Service, and I want to say to them here today that we appreciate the collegial approach that they have taken. However, we do feel a firm commitment is needed to the concept of strong State role in this decision process. We see Mr. Jones' bill as a constructive part of this ongoing dialogue.
Let me conclude for the record by stating that the State of North Carolina has in no way reached any predetermined decision on proposed exploratory well off the Outer Banks. We are eager to have as much information as possible to reach a conclusion that will reflect and balance the many issues that are presented by the preliminary proposal we have seen in regard to such drilling. We need a full proposal. We need as much information as can be gained on the particulars of the plan, and the emerging importance of The Point as fisheries habitat. We need to carefully and vigilantly assess potential impacts on our famous Outer Banks and our coastal communities. We also need a continued recognition and commitment of the role of the State in this decision process.
We thank you for the opportunity to speak today, and will be happy to answer any questions.
[The prepared statement of Mr. Holman may be found at end of hearing.]
Mrs. CUBIN. Thank you for your testimony, Mr. Holman, and excuse my whispering up here. We have members that are trying to catch planes and we're trying to accommodate them.
I would like to compliment you, Mr. Jones, on your legislation upholding States' rights. I have never seen a law at the Federal level that I didn't think a better decision, or as good a decision, could have been made at the State level. So, thank you very much for that.
Page 18 PREV PAGE TOP OF DOC
Now, I will recognize—you're dismissed. You can go and grab the plane if you want to.
[Laugher.]
I don't have any questions. Are there any questions from the panel?
Mr. ROMERO-BARCELÓ. No questions.
Mrs. CUBIN. And now I'll recognize the Ranking Member for his opening statement.
Mr. ROMERO-BARCELÓ. Chair, in the interest of time—I know that Senator Boxer and several other Members of Congress are there to testify—I'll submit my statement for the record. Obviously, most of the people who are here today to testify are going to be backing the extension of the moratorium. I don't see how I would go any other way than with the desires of the elected members of those States.
Mrs. CUBIN. OK, the next panel that I'll call—what the Ranking Member and I have decided to do is to call the members in the order in which they arrived. So, the next panel I'm going to call for will be Duke Cunningham, Ralph Regula, Senator Boxer and Mrs. Capps. Congressman Regula, would you like to start?
STATEMENT OF HON. RALPH REGULA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO
Mr. REGULA. Thank you, Madam Chairman. I ask unanimous consent that I may submit my full statement for the record.
Mrs. CUBIN. Without objection.
Mr. REGULA. I will summarize. There is not much doubt as to where I stand on this issue. I oppose any permanent moratorium. I have included a moratorium in our Interior appropriations bill each year, and I think this is the appropriate way to do it. But to make it permanent is taking away a right that exists for the people of these United States.
Page 19 PREV PAGE TOP OF DOC
We have heard about States' rights, and States' rights extend three miles offshore, but beyond that the 260 million Americans own the right to the minerals. They also own the rights to the minerals on the Federal lands.
If you follow the logic of today's testimony to the conclusion, we would not drill on any Federal property, which is 30 percent of the United States.
Today we drill on the timberlands and on the BLM lands, and I'm sure that there are people who would prefer we not do so. But these are Federal lands in Federal ownership, and I think the people have a right to their resources. We give the States a portion of the revenues. There's a great resource out there with new exploration and drilling techniques. It doesn't really become offensive. I know a lot of the opposition is ''viewscape'': people don't want to see a drilling rig in the sunset. But it's been demonstrated clearly that there's very little risk from spills and many more risks from tankers than from drilling platforms.
We're spending $200 million a year in the Interior Appropriations bill to maintain the SPR, which is a strategic petroleum reserve to give us security in case we are cutoff from petroleum in the middle east, because over 50 percent of our petroleum resources are imported. To suddenly take a huge portion of our domestic production off the table as we would propose in a permanent moratorium makes no sense at all in terms of our national security. We use these Federal lands all over the United States for many different purposes to serve the public. For all of those reasons, I think the policy matter of making moratoria permanent would be a great mistake.
Certainly, a moratorium is appropriate at this time, and we plan to continue the moratorium in our bill again this year. The world conditions are fragile, and things could change overnight as far as access to mineral assets to petroleum. To make it a permanent moratorium, to me, doesn't make any sense in today's world.
Madame Chairman, I thank you for giving me an opportunity to be heard. I thank the other members of the panel for the courtesy.
Page 20 PREV PAGE TOP OF DOC
[The prepared statement of Mr. Regula follows:]
STATEMENT OF HON. RALPH REGULA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO
Madam Chairman and distinguished members of the Subcommittee, I appreciate the opportunity to express my strong opposition to legislative initiatives that constrain the development of our nation's energy resources. Restricting the exploration and production of oil and natural gas on the Outer Continental Shelf (OCS) takes our country in the wrong direction because it artificially and unnecessarily denies the American people access to an essential natural resource.
Since the early 1980's, Congress has used the appropriations process to impose moratoria on leasing offshore. This policy has restricted the oil and gas industry's access to over 600 million acres. These appropriations moratoria have impacted almost all of the best prospects for major new offshore discoveries outside the central and western Gulf of Mexico. Congressional moratoria and other deferrals have placed one third of the OCS's oil reserves, and 20 percent of its natural gas reserves, off limits to exploration and development.
In 1990, President Bush issued an executive order canceling all scheduled lease sales off California, southern Florida, portions of the North Atlantic, areas off Washington and Oregon, and withdrew those areas from leasing until after 2000.
Now, Madam Chairman, some of my colleagues in Congress advocate permanent bans on oil and gas drilling in vast areas of the OCS. That would have two adverse impacts. First, it would restrict future opportunities for increased Federal revenues. And second, it would put our nation's energy security at risk.
When government lands are leased for oil and gas development, they first produce bonus bids and rents on the lease until drilling occurs. If the drilling is successful, a stream of oil and gas means a stream of revenue to the Federal Government and to participating state governments. Permanent moratoria would further restrict the amount of revenue that can be generated.
Page 21 PREV PAGE TOP OF DOC
The OCS Is A National Resource
The OCS is a rich resource. The U.S. Department of the Interior (DOI) reports that the OCS holds oil reserves of 14.4 billion barrels and natural gas reserves of 72.5 trillion cubic feet. Moratoria on the appropriations bills year after year, however, have prevented the oil and gas industry from developing a significant portion of these resources. We will not know their ultimate value until the OCS is fully explored. However, in 1995, the Department of the Interior estimated that 26 billion barrels of oil equivalent (oil and gas) are under moratoria.
As a vital national resource, the oil and natural gas beneath the Federal OCS are there for the benefit of all Americans—and development of these resources is needed as demand for both fuels increases. The U.S. Department of Energy's Energy Information Administration (EIA) expects the demand for oil in the United States in the year 2015 to be 4 million barrels a day higher than in 1995, when consumption was 18 million barrels per day. The Gas Research Institute has predicted a market of 30.9 trillion cubic feet for gas in 2015, compared to a demand of 22.2 trillion cubic feet in 1996. Mr. Chairman, bans on offshore production would adversely affect our ability to meet the nation's growing need for the new sources of oil and natural gas.
Federal Revenue
The OCS moratoria prevent new revenue from coming into the Treasury at the very moment the U.S. has ended decades of damaging annual budget deficits. Cutting off future OCS production would diminish the revenue stream and make balancing the budget more difficult as existing production declines without replacement.
Page 22 PREV PAGE TOP OF DOC
Consider what the revenue from offshore operations has already produced. Since the Federal offshore leasing program began, offshore oil and gas activities have generated over $120 billion in Federal Government revenues. This total includes over $18 billion for the Land and Water Conservation Fund, over $2.5 billion for the National Historic Preservation Fund and over $2.5 billion to the coastal states. In 1997 alone, participating states received over $116 million. Bans on OCS exploration and production preclude opportunities for new revenue, and the opportunity to help keep the budget balanced in the 21st century.
Other revenue that accrues to the Federal Government from offshore operations is that collected in payroll, Social Security and Medicare taxes from those employed in the industry, and those who supply them with goods and services. Yet over the past several years, employment in the domestic offshore industry has declined. Moreover, just 10 years ago, 70 percent of the capital spent on exploration and production was invested here at home. Today, a growing percentage is being invested abroad. Other countries are, understandably, taking advantage of our shortsightedness. Earlier this month, officials from Brazil, Great Britain and Nova Scotia came to the Houston Offshore Technology Conference to invite offshore operators to explore for oil and gas in their waters.
Madam Chairman, the bans deny American workers and American companies in virtually every state an essential opportunity for better jobs and for economic growth here at home. Creating jobs offshore creates jobs onshore. The OCS Policy Committee, part of the OCS Advisory Board established by the Department of the Interior to advise the secretary, established that in addition to the jobs created offshore, ''OCS activities indirectly provide about 2.5 jobs for every person directly employed by industry.'' Whether it is fabricating steel in Ohio, or making computer chips in California, almost every state in the Union benefits because the offshore industry buys from them.
Despite the fact that a significant portion of exploration and production investment had been driven overseas, a 1996 study by the American Petroleum Institute found that companies involved in exploration and production of oil and gas in the Gulf of Mexico spent almost $6 billion with 6,600 vendors in the 49 states. While much of that $6 billion was spent in states adjacent to the Gulf, tens of millions of dollars, and sometimes hundreds of millions, were spent with vendors in New York, Pennsylvania, Illinois, Florida, and North Carolina. In Ohio, vendors invoiced over $16 million in offshore business. In New Jersey, vendors invoiced almost $7 million in offshore business. And in California, vendors received over $80.7 million from Gulf activities alone in 1996. It is ironic that many in California's congressional delegation are among the most zealous advocates of ban on oil and gas operations on the OCS, and some have sponsored bills that would even close down existing production, despite the business offshore activities in the Gulf have brought to the state.
Page 23 PREV PAGE TOP OF DOC
I have attached a table to my testimony that identifies that 10 states whose companies have the largest sales to the offshore industry. But let me emphasize that vendors and their employees in the 49 states benefit from this business. These vendors add value at every stage of the process. Their employees earn wages and benefits from their families, and they all pay taxes. In sum, offshore drilling produces jobs, paychecks and benefits for American families from the Gulf of Mexico to the Pacific Ocean. Even though American-based oil explorers employ U.S. workers abroad, our economy does not benefit nearly as much as when drilling and production occur here.
Protecting the Environment
Oil and gas provide about two-thirds of the energy consumed in the United States. Producing the energy requires a careful balancing of economic benefits and environmental safeguards. Exploration and production activities offshore are managed so as to protect the marine and coastal environment and to protect communities onshore. Federal OCS oil and gas operations are among the most tightly regulated economic activity in the world. And the offshore industry has made meeting those stringent environmental standards part of its daily business plan.
Existing Federal statutes and regulations that govern the industry offshore are numerous, complex, comprehensive and successful in producing domestic energy while protecting the environment. The laws that affect offshore operations include the Outer Continental Shelf Lands Act, the National Environmental Policy Act, the Clean Water Act, the Clean Air Act, the Oil Pollution Act, the National Marine Sanctuaries Act, the Marine Mammal Protection Act, the Coastal Zone Management Act and the Resource Conservation and Recovery Act.
The oil and gas industry offshore has a strong and vigorous record of protecting the quality of our waters and safeguarding marine life. Offshore drillers are required to obtain 17 major permits and follow 90 sets of Federal regulations. The results of those regulations, which have been gathered by the Department of the Interior's Minerals Management Service, speak for themselves: Offshore drilling and production, and the pipelines that carry those resources ashore, have been shown to be environmentally sound operations. Since 1975, when current Federal offshore safety regulations went into effect, the industry has had a environmental record that is 99.999 percent safe. Only an infinitesimal amount of oil produced offshore—less than one-thousandth of a percent—has been spilled. Even during Hurricane Andrew in 1992, the offshore industry's safety devices worked, shutting down production. Major spills were avoided, contrary to predictions of catastrophic spills from Gulf hurricanes.
Page 24 PREV PAGE TOP OF DOC
In addition to all the laws and all the rules and regulations, the exploration and production of oil and gas is a high tech industry that uses the latest advances to protect the environment. Horizontal drilling, for example, today allows for many more wells to be drilled from a single offshore platform. As new exploration and production techniques have further reduced adverse impacts on plant and animal life, production platforms serve as artificial reefs that attract marine life for spawning, feeding, and shelter.
Bans on the OCS would not significantly improve the environment. Oil and gas operations are subject to the highest standards of environmental regulation, and represent successful and compatible multiple uses of this nation's resources. These operations actually enhance the environment by increasing the desirable habitat for marine species.
Energy Security
Restricting oil and gas exploration and production in the United States had jeopardized our energy security and increased our energy dependence on foreign sources. Over half the petroleum products consumed in the United States today come from abroad. Continued restrictions on OCS operations would mean that we would increase our dependence on those suppliers, giving them added powers and added incentives to interrupt our supplies and affect prices.
Moreover, making our country more vulnerable to foreign suppliers could complicate our foreign policy since policy makers would then have to consider the effects a decision would have on our future supply from the foreign power in question. In addition, foreign supplies add to our defense burdens. Every barrel of crude oil produced here at home is one less barrel that has to be imported in exchange for U.S. dollars that flow out of the country.
Page 25 PREV PAGE TOP OF DOC
Conclusion
Madam Chairman, permanently preventing oil and gas leasing in the OCS will not significantly improve the environment, but will restrict government revenues while destroying jobs, and will endanger our energy security while denying the American people the use of a public resource. We need more offshore development, not more restrictions.
INSERT OFFSET FOLIO 1 HERE
Mrs. CUBIN. Thank you, Mr. Regula, and thank you for your work on the Interior appropriations bill.
Mr. MILLER. Could you stay and answer a few dozen questions. No, no——
[Laughter.]
Mr. REGULA. George, you want that project funded?
[Laugher.]
Mrs. CUBIN. I want George's project funded.
Mr. MILLER. I thought we could negotiate that plane flight.
[Laughter.]
Mr. REGULA. Off the record, use land and water conservation money produced from offshore drilling.
[Laughter.]
Mrs. CUBIN. Mr. Regula, Mr. Regula——
Mr. MILLER. You'd spend it all; we'd get you more.
Page 26 PREV PAGE TOP OF DOC
[Laughter.]
Mrs. CUBIN. I think you should fund George's project to whatever it was, because, as I recall, at the hearing he came right in and said he thought you should fund mine.
[Laughter.]
Mr. REGULA. OK.
STATEMENT OF HON. RANDY ''DUKE'' CUNNINGHAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. CUNNINGHAM. Before I speak, I'm going to let him leave.
Mrs. CUBIN. Pardon me?
Mr. CUNNINGHAM. Before I speak, I'm going to let him leave on that case.
[Laughter.]
Chairwoman Cubin, and members of the Committee, thank you for holding this hearing. I rise in strong support of the moratorium on oil and gas development of the OCS. I believe—my own personal opinion, and I think many agree—that these kinds of decisions should be based first on good science; second on peer review; and then the constituents of the State on how they feel about the issue.
My friend just testified that there's a 3-mile limit, but if oil spills inside that 3-mile limit and damages—even if it's beyond there and it damages the environment—then I think we have a responsibility, even though it's on Federal land, inside that to protect our environment.
Californians have made themselves very clear. And as we look at good science, the National Academy of Sciences study shows that there would be detrimental damage to the environment and to the seabed, if we drill on the OCS.
Page 27 PREV PAGE TOP OF DOC
The dumping of oil muds—I'm a diver, a scuba diver, and harvest abalone right off the coast of California. I've been up to Long Beach and I've seen the oil that's on the beaches up there; and I live right on the beach, and I sure don't want to see that in our community, or the wildlife that I harvest abalone and spearfish to be damaged as well.
Every year I've offered H.R. 133, which focuses on the entire State of California. It prohibits the sale of new offshore oil leases in southern California and central California and northern California through 2007, or until they could prove that the problems of the 1989 National Academy of Science study were addressed and resolved. My legislation would ensure that no drilling or exploration along the coast until the most knowledgeable scientist peer review, and a vote of the constituents.
I'd like to submit the rest of this for the record, but I rise in strong support of the moratorium. In many cases, I don't go along with extreme environmentalists agenda, but in this case, there's good science on it; there's peer review; and the constituents of California, I believe and support this legislation.
[The prepared statement of Mr. Cunningham follows:]
STATEMENT OF HON. RANDY ''DUKE'' CUNNINGHAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Chairwoman Cubin, members of the Committee, thank you for holding this hearing. I rise today to speak in support of the moratorium on oil and gas development on the Outer Continental Shelf (OCS). This moratorium is vital to the environment of our coastal communities, and I believe Congress has a responsibility to ensure that it is maintained.
The people of California have made it clear that they favor this moratorium. In fact, the State of California has enacted a permanent ban on all new offshore oil development in the State's coastal waters. The environmental sensitivities along the California coastline make the region an inappropriate place to drill for oil using current technology.
Page 28 PREV PAGE TOP OF DOC
Academy Study
A 1989 National Academy of Sciences (NAS) study confirmed that new exploration and drilling on existing leases and on undeveloped leases in the same area would be detrimental to the environment. In addition, offshore drilling can impact other parts of our communities. The visual impact of offshore platforms is a continuing concern among my coastal communities, especially those with a strong tourism economy.
The dumping of drilling muds and cuttings could affect our recreational fishing industries and impact our marine mammal populations. Oil spills would threaten our beaches.
All these impacts remain unresolved using current drilling technology. While I recognize that technological advances may alleviate some or all these concerns, at this time I believe that we must continue the current moratorium on offshore oil drilling and exploration.
Legislation
For that reason, I have for the past three Congresses introduced legislation to address the offshore oil drilling issue for California. My bill, H.R. 133, focuses on the entire state of California. It would prohibit the sale of new offshore leases in Southern California, Central California, and the Northern California planning areas through the year 2007. New exploration and drilling on existing active leases and on undeveloped leases in the same areas would be prohibited until the environmental concerns raised by the 1989 NAS study are addressed, resolved and approved by an independent peer review.
Page 29 PREV PAGE TOP OF DOC
My legislation will ensure that there is no drilling or exploration along the California coast unless the most knowledgeable scientists inform us that it is absolutely safe to do so.
H.R. 133 is currently pending before this Committee with eight bipartisan cosponsors. My legislation is supported by the Board of Supervisors for San Diego County and the City of San Diego. I have attached San Diego County's resolution supporting the moratorium.
Passage of this legislation would be a vast improvement over the current annual process of enacting a moratorium as part of the Interior Appropriations legislation. A more permanent ban would provide our coastal communities more stability in managing their ocean resources.
Closing
I believe Congress must operate in accordance with California's interests and respect the opinions of the people of California. I encourage this Subcommittee to maintain the current moratoria on offshore oil drilling, protect our beaches, and preserve our quality of life. Thank you.
LETTER TO MR. CUNNINGHAM
The Honorable RANDY CUNNINGHAM,
U.S. House of Representatives,
2238 Rayburn House Office Building,
Washington, DC
Dear Duke:
Thank you for sponsoring H.R. 133 to enact a temporary moratorium on leasing, exploration, and development on the Outer Continental Shelf (OCS) land off the coast of California. I am writing to reiterate the County's support for your bill as expressed in my February 1997 letter to you. Your legislation would protect San Diego County and other coastal counties from potentially significant environmental hazards and serious risks to the public's health and safety related to the OCS activities mentioned above. Because five tracts off the San Diego coastline could become eligible for drilling within the next three to five years, County officials and the San Diego community are concerned that such activity may result in air quality degradation, potential oil spills, the presence of oil industry traffic, and support facilities along San Diego's scenic coastline. All of these would threaten public health and adversely impact our local economy.
Page 30 PREV PAGE TOP OF DOC
Please ask your colleagues on the committee to expedite action on H.R. 133 as soon as possible to protect San Diego and other coastal counties from potential significant environmental hazards, public health impacts, and economic risks associated with on leasing, exploration, and development on the Outer Continental Shelf (OCS).
Sincerely yours,
| Washington Representative |
Mrs. CUBIN. Thank you, Congressman.
Senator Boxer.
STATEMENT OF HON. BARBARA BOXER, A UNITED STATES SENATOR FROM THE STATE OF CALIFORNIA
Senator BOXER. Thank you very much, Madam Chair——
Mrs. CUBIN. And welcome to our humble abode.
Senator BOXER. Thank you. Well, you need to know that I've served in this very room on the then Merchant Marine and Fisheries Committee when I got to the Congress in 1983. And at that time, I teamed up with my friend George Miller who, when I walked in the door, said, ''Hurray, reinforcements in trying to ban offshore oil drilling in new areas off the California coast.'' We already have a large number of rigs off that coast, as Congresswoman Capps could tell you. So, I'm back here and it's very nostalgic, but it's also frustrating in another way that we haven't really resolved this issue because we lean on these yearly moratoria.
I would like to just say to you that I'm glad you've given me this opportunity to testify today because I've introduced legislation, along with Congresswoman Capps and Congressman Miller, which essentially says this: When a State establishes a drilling moratorium on part or all of its coastal water, that protection should be extended to adjacent Federal waters. Then it goes to your comment, Madam Chair, that you made before in which you praised the fact that we would in fact defer to a State. I think when State does take a strong stand on the environment, such as our State has on State waters, that we ought to follow suit, because Congressman Cunningham is exactly right; the first three miles are fine, but if you're drilling five miles off there's not going to be any boundary between that demarcation and the State waters. You're going to foul State waters; you're going to go against the moratorium. I think because Congressman Regula reminded me, when I walked in, how many years we've been battling each on this, I wanted to respond to some of his points.
Page 31 PREV PAGE TOP OF DOC
Tourism is one of the biggest industries in my home State, and I'm sure many of you visited our State, and we pride ourselves on that tourist industry. The beauty of our coastline is of enormous importance, and is a huge draw to the tourist, not only from this country but from all over the world. So if you compare the economics of moving forward with offshore oil—additional offshore oil drilling—versus the possibility of destroying this incredible ocean resources, the ocean resource comes out way on top. And the people have put a value on this that can't even be counted, and I think that needs to be taken into account.
I would like to make a couple of other quick comments, and then I'll close.
President Bush issued a statement directing his Secretary of Interior to cancel several existing leases and withhold any further leasing in California waters for 10 years; and that was shortly before he left the White House. So I think this is a real bipartisan issue. I think we have colleagues on both sides of the aisle that understand (a) the aesthetic value of this, (b) the real economic value of this and the importance of moving forward.
Now, clearly, the strongest protection would be a permanent sanctuary off the coast. And someday, I hope I live long enough to see that we do that, because a value is a value and feel sure of this value. And we should make certain that our children and grandchildren can enjoy it as much as we have.
I will close in telling you this: The oil companies—the oil companies hold out the whole fact that there could be so much more revenue coming into the Federal Government as a result of drilling. While as you'll hear from a many of us in another debate, they're not even paying us the royalties they owe us. We are in court this very day essentially fighting to get more than $200 billion—$200 million in payment; $200 million. And a lot of that money goes straight into the classrooms. In our State of California that's where these royalties go.
Page 32 PREV PAGE TOP OF DOC
So it seems to me we ought to take a deep breath; we ought to look at the fact that they owe us all this money; we ought to look at what Congress did in the dead of night in stopping the Department of Interior from coming up with a fair rule to go after these royalties; and not even considering opening up this coastline—or I should say these magnificent coastlines.
I wanted to point out to you that just in the one day I've introduced my bill, we already have on the Senate side, Senators Murray, Lautenberg, Graham of Florida, Robb, and Sarbanes on as co-sponsors in the Senate. That's pretty good without even a ''dear colleague'' letter going out. So I think there's a lot of support for this.
I want to again thank Congressman Miller for his years and years of leadership. I want to thank Congresswoman Capps for being our reinforcement. And I want to thank you, Madam Chair, for giving me this opportunity.
[The prepared statement of Senator Boxer follows:]
STATEMENT OF HON. BARBARA BOXER, A SENATOR IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Chairman, I want to thank you for this opportunity to discuss an issue which is so important to all of us here today—preservation of our ocean resources.
After many years of hard work to prevent further oil drilling in the Outer Continental Shelf (OCS), I am very pleased to see the broad bi-partisan support that now exists for this issue. I began fighting for ocean protection on the Marin County Board of Supervisors, continued during my 10 years in the House of Representative, and as a United States Senator representing California.
Today, I am introducing the Coastal States Protection Act—legislation which I also introduced in the 104th Congress. This Act will provide necessary protection for the nation's Outer Continental Shelf (OCS) from the adverse effects of offshore oil and gas development by making management of the Federal OCS consistent with state-mandated protection of state waters. I am pleased that Representatives Capps and Miller are introducing the House version of this legislation.
Page 33 PREV PAGE TOP OF DOC
Simply put, our bill says that when a state establishes a drilling moratorium on part or all of its coastal water, that protection would be extended to adjacent Federal waters.
It does a state little good to protect its own waters which extend three miles from the coast only to have drilling from four miles to 200 miles in Federal waters jeopardizing the entire state's coastline—including the state's protected waters.
An oil spill in Federal waters will rapidly foul state beaches, contaminate the nutrient rich ocean floor upon which local fisheries depend, and endanger habitat on state tidelands.
My legislation simply directs the Secretary of Interior to cease leasing activities in Federal waters where the state has declared a moratorium on such activities thus coordinating Federal protection with state protection.
The bill has a very fundamental philosophy—DO NO HARM to the magnificent coastlines of America and respect state and local laws.
But I am pleased to be here today not only to discuss my legislation, but to also express my strong support for the current protection of our precious marine resources.
The major portions of fragile California coastline is currently protected from the dangers of oil and gas drilling in offshore waters by several provisions of law. The State has a permanent moratorium on oil and gas leasing, which covers state waters up to 3 miles out. U.S. waters, up to 200 miles out, have been protected by a succession of one-year leasing and drilling moratoria enacted by Congress each year since 1982.
In addition, in 1990, President George Bush issued a statement directing his Secretary of the Interior to cancel several existing leases and withhold any further leases in California waters for 10 years. With this directive, President Bush showed his commitment to prohibiting offshore drilling in areas where environmental risks outweigh the potential energy benefits to the Nation.
Page 34 PREV PAGE TOP OF DOC
The strongest protection would be a permanent ban on further offshore oil and gas leases in California waters, and I have asked the President to consider this.
California, and the rest of the nation, need a clear statement of coastal policy to provide industries, small businesses, homeowners and fishermen more certainty than can be provided by yearly moratoria. Annual battles over the moratoria make long-range business planning difficult, divert resources and attention from the real need for national energy security planning, and send confusing signals to both industry and those concerned about the impacts of offshore development.
I understand that some feel that we are losing revenue because of these moratoria. I have two thing to say about that. First, the public strongly supports the moratorium. And second, if the oil companies paid the royalties that they currently owe the Federal Government we could make up for the so-called ''lost revenue'' caused by the moratorium. Oil companies currently owe the Federal Government millions upon millions of dollars. It does not make sense to give oil companies access to more Federal oil when they are already cheating the American taxpayer out of millions of dollars.
As we celebrate the United Nations Year of the Ocean, we have a prime opportunity to strengthen our commitment to environmental protection by giving Americans a long lasting legacy of coastal protection.
We must recognize that the resources of the lands offshore California, and the rest of the country, are priceless. We must recognize that renewable uses of the ocean and OCS lands are irreplaceable elements of a healthy, growing economy. These moratoria recognize that the real costs of offshore fossil fuel development far outweigh any benefits that might accrue from those activities.
Mrs. CUBIN. Thank you very much for being here with us, and thank you for your comments.
Page 35 PREV PAGE TOP OF DOC
Congresswoman Capps, welcome. This is the first time you've been here and we're glad to have you.
STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Ms. CAPPS. Thank you very much for the welcome, Madam Chairwoman, and members of this Subcommittee. Thank you for holding this important hearing today. I appreciate the opportunity to testify on an issue of such importance to the residents of my district, and the State that I live in. I have written testimony that I have submitted for the record, and I would like to briefly summarize that for this Subcommittee today.
As you know, today with my colleagues from California, Mr. Miller, Mr. Farr, and Mrs. Harmon, I am introducing the House version of Senator Boxer's Coastal States Protection Act. This Act will place a Federal moratorium on new offshore oil and gas development where there is an existing State moratorium in place. I want to commend Senator Boxer for her unflagging leadership on this issue for so many years. That is so important for all Californians.
For me, this is an issue about local control. California residents have decided that they do not want new oil and gas development off of our beautiful coastline. We already have a State moratorium signed into law in 1994 by Governor Wilson, the California Coastal Sanctuary Act. I have oil drilling off the Coast of Santa Barbara, and this community does not want any new development.
In San Luis Obispo County, there is no offshore oil drilling, and residents want to keep it that way. You know oil doesn't know boundaries, and the Federal law would put into place in a permanent way what the State has already decided. These positions are supported by environmental organizations, the county board of supervisors, and the Chamber of Commerce in both counties that I represent.
California has a broad and varied economy. The tourism and recreation industry annually contribute more than $27 billion to the State's economy. And the California coastline is, as Sen. Boxer mentioned, a very big reason for this.
Page 36 PREV PAGE TOP OF DOC
We are also home to two of our Nation's national marine sanctuaries, one of them being the Channel Islands National Marine Sanctuary. This is in my district.
Is it worth risking all of this for new offshore oil development? Obviously, the people of California do not think so. Very recently, San Luis Obispo County and Santa Barbara County, the Mineral Management Service conducted a study. The findings of this study were reported and hearings were held in San Luis Obispo and Santa Barbara counties. Overwhelmingly, the residents came out very strongly opposed to offshore oil drilling.
Just by coincidence in the audience today is a resident of my district, Bob Sollen. He has written a book entitled, An Ocean of Oil: A Century of Political Struggle Over Petroleum Off the California Coast. I'm pleased that he could be here to hear this testimony with his wife Toni.
The protection of the environment is critical for California's economy and the quality of life we all enjoy. I hope that this Subcommittee can help us do that and support this very important legislation. Thank you very much for your time.
[The prepared statement of Ms. Capps follows:]
STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
I want to thank the Chairwoman for holding this hearing on the development of oil and gas leases in the Outer Continental Shelf (OCS). I appreciate the opportunity to testify on an issue of such importance to the residents of my district, the state, and the nation.
I am pleased to announce that today, with my colleagues from California, Mr. Miller and Mr. Farr, I will be introducing legislation to protect America's precious coastline. Our bill, the Coastal States Protection Act, amends the Outer Continental Shelf Lands Act to direct the Secretary of the Interior to cease mineral leasing activity of the OCS that is adjacent to a coastal state that has a moratorium on mineral exploration, development, or production in adjacent State waters.
Page 37 PREV PAGE TOP OF DOC
The State of California leads the nation in coastal protection. We have in place a permanent moratorium on offshore oil and gas leasing, which covers state waters up to three miles out. However, at the Federal level, the coast has no permanent protection. Rather, we rely on successive yearly moratoriums. My legislation would make that protection permanent.
Santa Barbara residents know too well the harmful effects of offshore oil. The City holds the unfortunate distinction of being the home of one of the worst oil spills in our nation's history, the 1969 oil well blowout in the Santa Barbara Channel. This event is often cited as the catalyst for the modern environmental movement. San Luis Obispo County residents also know the risks of offshore oil and have consistently opposed any efforts to open the coastline to development. This view is shared by the entire community, including environmental groups, the Chamber of Commerce, and the Board of Supervisors.
One of my constituents, Robert Sollen, who has devoted his life toward protecting the coastline in Santa Barbara, recently gave me a copy of his book, An Ocean of Oil. This book depicts the continuous struggle over petroleum policy off the California Coast. Individuals like Mr. Sollen represent the strong voice of Central Coast residents who do not want to risk the protection of California's majestic coastline with further offshore oil development.
California's coastline is a priceless treasure, enjoyed not only by our residents, but by tourists from around the world. Our economy depends on protecting this spectacular coastline because multimillion dollar industries such as recreation, fishing and tourism rely on this vital protection.
The California coastline is home to a rich ocean species habitat, a migration route of the endangered Blue Whale. It is also home to two of our National Marine Sanctuaries, including the Channel Islands National Marine Sanctuary, which is in my district.
I thank the Committee for working on such a critically important issue. I hope that you will soon conduct a hearing on this bill and that Congress will move quickly to enact a Federal moratorium on oil leases into law.
Page 38 PREV PAGE TOP OF DOC
Mrs. CUBIN. Thank you for your testimony.
Mr. MILLER. Madam Chairman, might I ask permission to insert my record into the statement at this time?
Mrs. CUBIN. Your record into the statement would be great. Without objection.
[Laughter.]
Picky, picky.
Mr. SCARBOROUGH. She's tough, George. I hope she'll be nicer to me.
George, I've always been with you brother. Royalty relief, whatever, you name. Don't act shocked. You have a short memory. Don't remember royalty relief last year?
Senator BOXER. The house has really changed since I left.
[Laughter.]
Mr. SCARBOROUGH. George and I are good buds.
Mrs. CUBIN. Will you get with it?
[Laughter.]
Mr. SCARBOROUGH. I'm waiting—Madam Chairwoman, George has taken over your Committee.
Mrs. CUBIN. Well, he's use to that.
[The prepared statement of Mr. Miller follows:]
STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Today, I join Senator Barbara Boxer and Representative Lois Capps as a sponsor of their legislation to extend the moratoria on oil and gas leasing in the Outer Continental Shelf off the coast of California. These moratoria have been in place since 1982 and should be made permanent. I congratulate Senator Boxer and Representative Capps for taking the lead in this important effort to safeguard California's coast.
Page 39 PREV PAGE TOP OF DOC
According to the Chair's letters of invitation to the Administration, the purpose of this hearing is to review existing moratoria and to investigate the revenue impacts of unrealized income to the Federal Treasury resulting from these actions.
There is a wealth of information being disseminated to suggest that the areas barred from leasing under the moratoria cost the government significant amounts of money in lost royalties and other revenues. But, before this Subcommittee moves forward with any proposal to open the California coast to oil development, consider two facts.
One, the overwhelming majority of citizens that would be directly affected by oil and gas development in these areas oppose such development.
Two, it makes no sense to consider opening up new areas for oil and gas leasing—let alone open the California coast—when we have massive amounts of evidence that the oil industry is cheating the American people out of hundreds of millions of dollars on existing leases.
It is to this second point that I will address my comments today.
Last week Senator Boxer and I introduced legislation to repeal an eleventh-hour rider attached to the Emergency Supplemental Appropriations bill. This rider was an effort to further shield the oil industry from fair market value assessments of the oil and gas extracted from public lands. It was not passed by this Committee, which has jurisdiction. In fact, it was never considered by the House. It was sneaked into an emergency spending bill at the last moment, and that action has rightly been condemned by newspapers and media across this country.
The provision stops the Interior Department from implementing plans developed over the past 2 1/2 years to assess crude oil at fair market value rather than the undervalued assessment the industry has imposed on itself for years. The Department estimates that the rule would have increased revenues by $66 million a year. Our bill, H.R. 3820 in the House, would repeal the rider and allow the Department to finalize the much needed regulation.
Page 40 PREV PAGE TOP OF DOC
The Emergency bill also includes report language relating to the issue of oil and gas extracted from deepwater reserves in the Gulf of Mexico. Congress was wrong in 1995 when we provided a royalty free-ride on the first 88 million barrels of oil and gas extracted from these so called deepwater tracts to spur development in the Gulf. As I pointed out at the time, the holiday was not needed since the boom was already on and the technology available to make the investment more cost-effective.
But, small consolation though it was, we were assured that if the holiday turned out to be too generous to the oil industry, the royalty rates could be adjusted so we could recoup some of the loss in the future. However, once it became known that the Department was considering raising those post-holiday rates, the Congress quickly stepped up to protect its special interest supporters again by adding report language to the Emergency bill to prohibit the Interior Department from raising the rates on royalties from deepwater leases. Again, instead of looking at opening up areas off New Jersey, Florida and California, this Congress should be taking steps to assure that the American taxpayer is not cheated out of its fair share.
But, so far, this Congress has chosen a different route. Critics of the current system assert that oil companies owe the American people more than $2 billion in underpaid royalties. The States of Alabama, Louisiana and Texas, along with a group of private citizens, have made such a compelling case against the major oil companies that the U.S. Department of Justice has intervened in their litigation. Some of the oil companies have already settled with the litigants, and one, ARCO, actually volunteered to correct their underpayments, offering up $524 million.
But, instead of supporting these efforts for the taxpayers, this Congress has spent its efforts looking for ways to shower additional public benefits on the oil industry. In addition to the Emergency bill's provisions, the fiscal year 1998 appropriations bill also included a rider that prevented the MMS from requiring a minimum bid on offshore leases. And, as Senator Boxer, Representative Maloney and I work to make sure taxpayers receive a fair return on Federal oil and gas leases, the oil industry is pushing a bill in this Committee that will permanently reduce royalties. Under this plan, royalties would be paid ''in-kind'' instead of cash. So far, the States of Alaska, Texas and New Mexico have all voiced strong opposition to this bill. The Minerals Management Service says it would cost a minimum of $357 million per year.
Page 41 PREV PAGE TOP OF DOC
If this Committee wishes to investigate the revenue impacts of national policy toward the oil and gas industry, I would suggest we begin with correcting problems in the existing system and not promote opening the California coast to development. In addition to repealing the royalty rider, Congress should:
• Eliminate the percentage depletion allowance for independent oil and gas companies. This will save about $2.4 billion over 5 years according to the Congressional Joint Committee on Taxation.
• Repeal the 15 percent credit for ''enhanced oil recovery'' and disallow expensing, or immediate write off, of so-called tertiary injectants until proper environmental regulations for the industry are adopted and the current waste and inefficiency in the oil and gas industry are dramatically curbed. These special tax breaks cost the treasury $500 million over 5 years according to the Congressional Joint Committee on Taxation.
• Repeal the tax provisions permitting oil and gas producers to immediately deduct ''intangible'' drilling and development costs (IDCs). Instead, require IDCs to be deducted over time. This reform would raise approximately $1 billion over 5 years according to the Congressional Joint Committee on Taxation.
• Eliminate the ''passive loss'' tax shelter for investors in oil and gas. This change would save $665 million over 5 years according to the Office of Management and Budget.
• Disallow corporate income tax deductions for future costs associated with illegally released pollution. Cleanup of existing pollution or contamination should be exempted. This reform could save taxpayers at least $1.5 billion over five years.
Instead of making it easier for oil companies to pay less than the fair market value of oil and gas extracted from public lands, and looking for new areas for oil companies to cheat the American taxpayer on, Congress should be assuring that the laws and regulations that govern these activities are effective and enforced. That job should begin in this hearing room, not on the California coast.
Page 42 PREV PAGE TOP OF DOC
STATEMENT OF HON. JOE SCARBOROUGH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA
Mr. SCARBOROUGH. Thank you, Chairwoman Cubin, and members of the Subcommittee, and George, for your invitation for me to share my thoughts on such an important subject as oil and gas leasing and development issues.
As George and the rest of you are well aware, offshore drilling in Florida is an issue of serious concern to me and has been a top priority of mine since coming to Congress a few years ago.
I represent the First Congressional District of Florida, which prides itself in its beaches, its white sands and its crystal clear water. In fact, four of our Gulf Coast beaches have been ranked among the top 10 in the country. Tourism is by far the largest industry in Florida, and our coastline economies are dependent on the condition of our coastline. As a result, we are very concerned with efforts to develop the OCS in the Eastern Gulf.
Congress in the last several administrations have understood our opposition to further leasing in the Eastern Gulf Planning Area off Florida's coast. Since the 1980's, Congress has passed, and the President has signed, a moratorium on leasing and pre-leasing activities within 100 miles of Florida's Western coast within the annual Interior Appropriations Bill. The entire Florida delegation, the Governor, the cabinet, the legislature, and virtually all other local governments in Florida support a drilling moratoria. As you can imagine, there are very few, if any, issues that elicit such broad support among such diversion segments of Florida's population. It transcends party, ideology, age, race, and economic status.
In addition to the annual moratoria, Representative Goss and I have introduced legislation to reach a more permanent solution. I fully support Representative Goss's bill, H.R. 180, which would delay any drilling or leasing activities until adequate environmental analyses have been completed and would establish a joint Federal-State task force to fulfill this objective.
Page 43 PREV PAGE TOP OF DOC
Last summer, I introduced H.R. 1989 with the full support of the entire Florida congressional delegation, to address a pending threat to our no-drilling policy. The Florida Coast Protection Act, identical to a bill introduced in the Senate by Senators Mack and Graham, calls for a permanent moratorium on leasing activity within 100 miles off the coast of Florida, basically writing the annual moratorium into permanent law.
It would have also canceled 6 leases just 17 miles off of Florida's Panhandle Coast and set forth a process to fairly compensate the lessees. We included this language in the bill to address an oil company's desire to sink an exploratory well on their block just 17 miles off the coast. Fortunately, they subsequently notified MMS that they did not intend to proceed with exploration and would instead allow the leases to revert back to the government.
While this section of the bill is no longer relevant, we remain concerned with future exploration with Chevron's development of the Destin Dome. Chevron has discovered a large gas deposit just 25 miles offshore of Pensacola and are moving forward with a development plan. We in Northwest Florida remain concerned over this site, and certainly support the State of Florida in their challenge to Chevron's proposed plan under the Coastal Zone Management Act. Chevron has appealed the challenge which will ultimately be decided by the U.S. Department of Commerce.
I share many of the concerns in this debate on the possible environmental threats of drilling just 25 miles off Pensacola. Florida is home to most unique and beautiful coastline in the country. And any threat to our coastal environment must be taken seriously. We in Florida maintain that there is inadequate scientific information available on the effects of drilling to warrant a change in our ''no drilling'' policy. In addition to the obvious concern of an oil spill, there are other pressures on the environment from both oil and gas development. As it's been stated previously, environmental studies are not complete and drilling effects on Florida's coastline are therefore not fully known. As the Florida delegation stated in a letter to Secretary Babbitt, ''Until these studies are completed and the scientific information is available and analyzed, no decisions on pre-leasing, leasing, and drilling should be made about Florida's waters.'' And we stand by that statement today.
Page 44 PREV PAGE TOP OF DOC
With the recent passage of the Royalty Relief Act, which I opposed, development in the Gulf of Mexico has exploded. Each new lease sale brings record bids, increases in the incentives to explore new areas, and puts increased pressure on the Eastern Gulf. And I may add right here that during the Royalty Relief debate last year, we were told time and time again that nobody would go into that area unless Royalty Relief was passed. And our lessons over the past year show that to be false.
In closing, I urge the Committee to consider seriously more permanent legislative protection for Western Florida's coast. According to the Department of Interior's own estimates, the Eastern Gulf contains only a very small amount of the country's natural gas. I strongly believe that it would be foolish to jeopardize Florida's pristine coast, at least until the full effects of drilling are known. Writing the current moratorium on leasing in the Eastern Gulf into law, which my legislation would do, would offer a more permanent solution to the question of future leasing. We must also consider the options for dealing with the more urgent concern of the more than 150 existing leases in the remaining Eastern Gulf of Mexico. Without any intervention, Chevron could be in production on the Destin Dome as early as the year 2000.
I stand ready to work with the Subcommittee to address these matters of great importance to the State of Florida. I thank you, Chairwoman Cubin, for the opportunity to testify here today. I appreciate your holding the hearing and look forward to working with the Subcommittee in the future. Thanks a lot.
[The prepared statement of Mr. Scarborough follows:]
STATEMENT OF HON. JOE SCARBOROUGH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA
Thank you, Chairman Cubin, and members of the Subcommittee for the invitation to share my thoughts with you on such an important subject as oil and gas leasing and development issues. As you are aware, offshore drilling in Florida is an issue of serious concern to me and has been a priority of mine since coming to Congress.
Page 45 PREV PAGE TOP OF DOC
I represent the First Congressional District of Florida, which prides itself in its pristine beaches, sugar-white sands, and crystal clear water. Four of our Gulf Coast beaches have ranked among the top ten in the country. Tourism is by far the largest industry in Florida, and our coastal economies are dependent on the condition of our coastline. Florida's beaches are its most valuable natural resource and the overwhelming majority of Florida's residents and tourists believe strongly that offshore drilling at this time is incompatible with an economy based largely on tourism, recreation, and commercial and recreational fishing. Florida's dependence on tourism and recreation cannot be overstated. As a result, we are very concerned with efforts to develop the OCS in the Eastern Gulf.
Congress and the last several Administrations have understood our opposition to further leasing in the Eastern Gulf Planning Area off Florida's coast. Since the 1980s, Congress has passed, and the President has signed, a moratorium on leasing and pre-leasing activities within 100 miles of Florida's Western coast within the annual Interior Appropriations bill. The entire Florida delegation, the Governor, the Cabinet, the legislature, and virtually all local governments in Florida support drilling moratoria. As you can imagine, there are very few, if any, issues that elicit such broad support among such diverse segments of Florida's population. It transcends party, ideology, age, race, and economic status.
In addition to the annual moratoria, Rep. Goss and I have each introduced legislation to reach a more permanent solution. I fully support Rep. Goss's bill, H.R.180, which would delay any drilling or leasing activities until adequate environmental analyses have been completed and would establish a joint Federal-state task force to fulfill this objective.
Last summer, I introduced H.R. 1989 with the full support of the entire Florida Congressional delegation, to address a pending threat to our no drilling policy. The Florida Coast Protection Act, identical to a bill introduced in the Senate by Connie Mack and Bob Graham, calls for a permanent moratorium on leasing activity within 100 miles of the coast of Florida, basically writing the annual moratorium into permanent law.
Page 46 PREV PAGE TOP OF DOC
It would have also canceled six leases just 17 miles off Florida's Panhandle coast and set forth a process to fairly compensate the lessees. We included this language in the bill to address Mobil's desire to sink an exploratory well on their block just 17 miles off the coast. Fortunately, Mobil subsequently notified the Minerals Management Service that they did not intend to proceed with the exploration and instead would allow the leases to revert back to the government.
While this section of the bill is no longer relevant, we are concerned with future exploration and with Chevron's development of the Destin Dome. Chevron has discovered a large gas deposit 29 miles offshore of Pensacola and are moving forward with a development plan. We in Northwest Florida remain concerned over this site and certainly support the State of Florida in their challenge to Chevron's proposed plan under the Coastal Zone Management Act. Chevron has appealed the challenge which will ultimately be decided by the U.S. Department of Commerce.
I share the concerns of many in this debate on the possible environmental threats drilling just 29 miles off Pensacola. Florida is home to some of the most unique and beautiful coastline in the country. Any threat to our coastal environment must be taken very seriously. We in Florida maintain that there is inadequate scientific information available on the effects of drilling to warrant a change in our ''no drilling'' policy. In addition to the obvious concern of an oil spill, which does not apply to the Chevron site, there are other pressures on the environment from both oil and gas development. As has been stated previously, environmental studies are not complete and drilling's effects on Florida's coast are therefore not fully known. As the Florida delegation stated in a letter to Secretary Babbitt, ''Until these studies are completed and the scientific information is available and analyzed, no decisions on pre-leasing, leasing, and drilling should be made about Florida's waters.'' I stand by that statement today.
With the recent passage of the Royalty Relief Act, which I opposed, development in the Gulf of Mexico has exploded. Each new lease sale brings record bids, increases the incentives to explore new areas, and puts increased pressure on the Eastern Gulf. While our moratorium passes each year with broad, bipartisan support, we need a more permanent solution. In addition, we must address efforts to develop and further explore pre-moratorium leases.
Page 47 PREV PAGE TOP OF DOC
In closing, I urge the Committee to seriously consider a more permanent legislative protection for the Western Florida coast. According to the Department of Interior's own estimates, the Eastern Gulf contains only a very small amount of the country's oil and natural gas. I strongly believe that it would be foolish to jeopardize Florida's pristine coast, at least until the full effects of drilling are known. Writing the current moratorium on leasing in the Eastern Gulf into law, as my legislation would do, would offer a more permanent solution to the question of future leasing. We must also consider the options for dealing with the more urgent concern of the more than 150 existing leases remaining in the Eastern Gulf of Mexico. Without any intervention, Chevron could be in production on the Destin Domes early as the year 2000. I stand ready to work with the Subcommittee to address these matters of great importance to the State of Florida.
Thank you, Chairman Cubin, for the opportunity to testify here today. I appreciate your holding this hearing and look forward to working with the Subcommittee in the future.
Mrs. CUBIN. Thank you, Congressman Scarborough. Now I just want—your testimony was compelling, but I want to just put your mind at ease a little bit.
You know that Chevron area is at least 20 miles out, that's gas. So if there's a leak, it'll be bubbles; it won't be a big gas spill or oil spill to come onto your shore. So, you can sleep better tonight, right?
Mr. SCARBOROUGH. You know the fact that you, from the Chair, would make a statement like that is going to make me very nervous as I fly back to the pristine coastline of Florida this evening, but have a good weekend in Wyoming, or wherever you're going to be.
[Laughter.]
Page 48 PREV PAGE TOP OF DOC
Mrs. CUBIN. Congressman Pallone.
STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. PALLONE. Thank you, Madam Chairman, and members of the Committee. I know you've been listening to us for a while here and I appreciate the fact that you're willing to bear with each of us as we make a presentation. I'm going to try and summarize my statement—you know—if I can include the whole thing as part of the record, I'd appreciate it.
I wanted to say that the first bill that I introduced when I became a Member of Congress back in 1988 was legislation to prohibit the Department of Interior from spending any funds for any activity related to mid-Atlantic OCS oil and gas lease sale. In fact, I framed the bill and I have it in my office on top of my bookshelf. I've once again joined with our Resource Committee colleagues, Mr. Jones and Mr. Hinchey, and with other members representing the mid-Atlantic States to introduce legislation establishing a mid-Atlantic moratorium on offshore oil and gas leasing. This bill, H.R. 2555, is similar to the legislation I first introduced 10 years ago.
The bill prohibits the Department of Interior from spending any funds for any activity related to mid-Atlantic offshore gas or oil lease sales. It would protect waters offshore of Connecticut, New York, New Jersey, Delaware, Maryland, Virginia, and North Carolina. And I've also joined as an original co-sponsor of Mr. Riggs' legislation, H.R. 3074, which has the similar effect for both the entire east and west coast of the United States.
I mention these because I think there are about 6 bills in the house that collectively would prohibit OCS oil and gas lease sales off all the 18 States coast lines, and these bills are supported on a strongly bi-partisan basis. It just basically show the adversity that exists to opening up our shores to drilling.
Page 49 PREV PAGE TOP OF DOC
Now, over the years a lot of us haven't been too concerned because, as you know, and I think Congressman Regula mentioned it earlier, every year there has been a moratorium in the Interior Appropriations Bill, and we all go and testify there. Even though he doesn't know he's agreed with it, we manage to get it into the bill. But I notice that he said that he is again against any permanent moratorium. I think that's unfortunate. I think that's in fact what we need and I would urge the Subcommittee to move in that direction.
I'm not going to go into too many more details because it's in my statement. But I just wanted to say that they're really three reasons why I and, I think so many others continue to oppose these kinds of sales and leases. And one is that we really don't believe that the offshore drilling is necessary for reasons of national or energy security. Second, we oppose exploiting the OCS simply as a new source of revenue when we continue to give away our other natural resources through out of date sea royalty and leasing programs. And third, I believe that drilling off of our shores poses severe threat to our marine environment.
I'm not going to get into points one or two. It's in my statement, and I know that Senator Boxer talked about that article in the Washington Post about the four oil companies that are being sued by the Federal Government. And I'm obviously concerned about that. I just wanted to say on the last point about the environmental and economic point of view.
In New Jersey, we've learned very well, I think, that a healthy coastal environment also means a healthy coastal economy. New Jersey's coastal zone—I represent about a third of it, along with Jim Saxton and Frank LoBiondo. Our coastal zone as a whole contributes tens of billions of dollars to State coffers. About half of New Jersey's gross State products comes from the coastal zone. People don't usually realize that.
I guess our concern is that all of this could be jeopardized by the environmental consequences of offshore drilling. We saw what happened back in the late 1980's when we had all the sewer, the washups of medical waste and dredge materials, and material that was coming from combined sewer overflow in New York. For years we lost billions of dollars in our State economy, and basically we feel that the risk of drilling off the mid-Atlantic coast far outweigh the benefits; that in the long run what would happen is that our State economy would suffer severely.
Page 50 PREV PAGE TOP OF DOC
I want to say in conclusion, it's not just an environmental concern. It's also an economic concern. I think the feeling—the reason why so many of us from the coastal States would like to see permanent moratorium in effect is because of the impact not only on the environment, but also our fear about the impact on our economy. Thank you.
[The prepared statement of Mr. Pallone follows:]
STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY
Thank you, Madam Chairwoman and Mr. Romero-Barceló, for holding this hearing and inviting me to testify today on the issue of Outer Continental Shelf (OCS) Oil and Gas Leasing.
The issue of offshore drilling is one that has concerned me since I first came to Congress almost 10 years ago. In fact, the very first bill I ever introduced was legislation to prohibit the Department of Interior from spending any funds for any activity related to a mid Atlantic OCS Oil and Gas Lease sale.
As you know, I have once again joined with our Resources Committee colleagues, Mr. Jones and Mr. Hinchey, and with other members representing mid-Atlantic states to introduce legislation establishing a mid-Atlantic moratorium on offshore oil and gas leasing. This bill, H.R. 2555, is the great, great grandchild of my original legislation.
The legislation that we have introduced is simple. The bill prohibits the Department of Interior from spending any funds for any activities related to a mid-Atlantic off-shore gas or oil lease sale. The bill would protect waters offshore of Connecticut, New York, New Jersey, Delaware, Maryland, Virginia, and North Carolina.
In addition, I have joined as an original cosponsor of Mr. Riggs' legislation, H.R. 3074, which would prohibit the Secretary of the Interior from issuing OCS oil and gas lease sales on both the east and west coasts of the United States, including New Jersey.
In total, I believe that there are at least 6 bills in the House that collectively would prohibit OCS oil and gas lease sales off of all 18 states along the east and west coasts of the U.S. These bills are supported on a strongly bi-partisan basis and with significant geographic distribution as well. I think that this, in and of itself, clearly shows the adversity that exists to opening up our shores to drilling.
Page 51 PREV PAGE TOP OF DOC
Over the years, the Department of Interior's Minerals Management Service has made several proposals for a mid-Atlantic OCS oil and gas lease sale. Each time, legislators from the mid-Atlantic states, regardless of party affiliation, have joined together to oppose these proposals.
I have opposed, and will continue to oppose, any proposal of a mid-Atlantic OCS oil and gas lease for three main reasons: (1) I do not believe that offshore drilling is necessary for reasons of national or energy security, (2) I am opposed to exploiting the OCS simply as a new source of revenue, when we continue to give away our other natural resources through out of date fee, royalty, and leasing programs, and (3) I believe that drilling off of our shores poses a severe threat to our marine environment and therefore to the economies of our coastal states.
With respect to our nation's energy security, I feel strongly that we need to focus more on diversifying our sources of energy, not just diversifying our sources of fossil fuel. We need to be actively developing alternative, renewable energy sources. A greater diversity in energy sources will reduce our need for off-shore drilling, decrease our dependence on fuel imports, and protect against future oil price shocks. Continued development of efficient and renewable energy sources also will free up capital for increased domestic investment that will spur economic growth, and ensure continued technological innovation and global competitiveness in these areas. In addition, technological development in these areas is necessary to make our current primary energy sources as safe as possible. Further, using renewable energy sources will reduce damage to natural resources and will result in fewer emissions of greenhouse gases and other pollutants.
From the standpoint of creating new sources of Federal revenue, I feel that the American people would be better served by eliminating the natural resource subsidies that are still on the books, rather than initiating additional public resource giveaways and, increasing the drain on taxpayer dollars, and encouraging environmentally damaging development activities. Just two weeks ago, it was reported in the Washington Post that 4 oil companies are being sued by the Federal Government, and 10 other companies are under investigation, for understating the value of crude oil produced on Federal and tribal lands. According to the project on government oversight, the oil companies have shortchanged the U.S. Government to the tune of more than $2 billion in underpaid royalties.
Page 52 PREV PAGE TOP OF DOC
MMS is in the process of trying to resolve this problem, which the agency proposes to do by basing royalty fees on an independent measure: the world market price for oil. Yet language just included in the Emergency Supplemental Appropriations bill prohibits the Minerals Management Service from making these changes to the program, thereby allowing big oil companies to continue robbing the American people of billions of dollars in revenues. Before we open up new public natural resources to development, I think we should work on eliminating existing subsidies, including subsidies for mining, grazing, and logging on public lands as well as existing irrigation subsidies.
And finally, I am opposed to offshore drilling from both an environmental and an economic standpoint. In New Jersey, we have learned very well that a healthy coastal environment also means a healthy coastal economy. New Jersey's coastal zone as a whole contributes tens of billions of dollars annually to state coffers—or about half our gross state product. Within that, coastal tourism accounted for more than $14 billion in 1997, over half of the state's travel and tourism revenues. In addition, an American sportfishing association study recently showed that in 1996, the total economic impact of angler expenditures in New Jersey exceeded $2 billion. Recreational fishing in New Jersey also supported almost 22,000 full-time jobs and generated $69.5 million in state revenues and $63.3 million in Federal tax revenues. New Jersey's commercial fishing industry is estimated to add an additional $700 million to the economy as well as to support tens of thousands of jobs.
Unfortunately, all of this could be jeopardized by the environmental consequences of offshore drilling. Put simply, Madam Chairwoman, the risks of drilling off the mid-Atlantic coast far outweigh the benefits. This is one of those unique facts that is recognized by all sides: commercial and recreational fishermen, environmentalists and business interests, Republicans and Democrats. We need to ensure all sectors of the coastal economy that are dependent on coastal environmental quality, both in my state and in other coastal states, that the government will not impose unwanted, unsound, and unneeded oil and gas development off our coasts.
Page 53 PREV PAGE TOP OF DOC
In conclusion, I again thank the Chairwoman for holding this important hearing, and strongly urge the Subcommittee to move H.R. 2555 and H.R. 3074. Thank you.
Mrs. CUBIN. Is Mr. Whitfield here? Would you like to just come forward and join the last witness? Congressman Nick Lampson, I'd like to recognize you for your testimony.
STATEMENT OF HON. NICK LAMPSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. LAMPSON. Thank you, Madam Chairwoman. I hate to sit here and follow my very good friend, Mr. Pallone, and take a little bit of a different view, but that's what I'm getting ready to do.
The gas and petroleum reserves under ultra deep water on the continental slopes of the Gulf of Mexico have demonstrated in the past several years to be of absolute enormous economic and strategic significance to the United States. The rising interest is evidenced by the recent offshore natural gas and oil lease sale in the Western Gulf of Mexico in which the Minerals Management Service received some $800 million in high bids. There are currently over 150 companies with over 3,800 producing platforms active in the Gulf of Mexico.
As industry moves into deeper water, new technology, safety, and environmental challenges will need to be met by the Mineral Service in its role of supervising the exploration, development, and production of gas, oil, and minerals on the Outer Continental Shelf.
Oil and gas operators are subject to the highest standard of environmental regulations. The Federal Government's stringent environmental regulations on the oil and gas industry are protecting the quality of our waters, coastal areas, and marine life. Offshore drillers are required to obtain 17 major permits and follow 90 sets of Federal regulations. The Department of Interior's Mineral Management Service says that since 1975, when current Federal offshore safety regulations went into effect, the industry has had an environmental record that is 99.999 percent safe.
Page 54 PREV PAGE TOP OF DOC
The implementation of further restrictions, and their minimal impact on the environment must be balanced against their potential harm to our economy and national security.
Today, over half of the petroleum products we use come from abroad. Bans on the Outer Continental Shelf operations mean that the United States increases on foreign oil. That increases our dependence on foreign suppliers, giving them added powers and added incentives to interrupt our supplies and to affect our prices. Making our country more vulnerable to foreign suppliers could add to our defense burdens and put our national security at risk.
Restrictions also stop new revenue from coming into the Treasury while we are trying to end decades of damaging budget deficits. Offshore leasing in Federal waters has been highly productive for the Federal Treasury. Since the offshore leasing program began, offshore oil and gas activities have generated over $117 billion in revenues to the Federal Government. A continuing stream of revenue is needed to keep the Federal budget balanced.
Offshore operations afford American workers and American companies in virtually every State an essential opportunity for jobs and economic growth. A 1996 study by the American Petroleum Institute found that companies involved in the exploration and production of oil and gas in the Gulf of Mexico spent almost $6 billion with 6,000 vendors in 49 States. While much of that $6 billion was spent in States adjacent to the Gulf, tens of millions of dollars, and sometimes hundreds of millions, were spent with vendors as far away as New York, Pennsylvania, Illinois, and California. Offshore drilling produces jobs, paychecks, and benefits for American families.
In summary, Madam Chairman, we must balance further restrictions on oil and gas operations and their environmental impact against economic growth. Restrictions endanger our energy security and could add new burdens to maintaining our national security. They close off opportunities for new revenue to help balance the Federal budget, and they restrict opportunities for working people in 49 States. We must take a closer look at greater regulation.
Page 55 PREV PAGE TOP OF DOC
I think as we go through all of this, there are ways that we can find to increase greater benefits to the coastal regions who are willing to be involved in these kinds of businesses. There is a sacrifice; and there is always the potential of a danger. But there's also a danger in many, many other ways in our life every day. So there's hope on my part that we will be able to go forward with a good balance and look for the ways as, even Mr. John and others are working on in the State of Louisiana and other coastal States, particularly on the Gulf of Mexico, to make this work and to make other areas of our coastal needs work, and work very efficiently.
Thank you.
[The prepared statement of Mr. Lampson follows:]
STATEMENT OF HON. NICK LAMPSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. Chairman, the gas and petroleum reserves under ultradeep water on the continental slopes of the Gulf of Mexico have demonstrated in the past several years to be of enormous economic and strategic significance to the United States. The rising interest is evidenced by the recent offshore natural gas and oil lease sale in the Western Gulf of Mexico in which the Minerals Management Service received $800 million in high bids. There are currently over 150 companies with 3,800 producing platforms active in the Gulf.
As industry moves into deeper water, new technical, safety, and environmental challenges will need to be met by MMS in its role of supervising the exploration, development and production of gas, oil and minerals on the Outer Continental Shelf.
Oil and gas operators are subject to the highest standard of environmental regulations. The Federal Government's stringent environmental regulations on the oil and gas industry are protecting the quality of our waters, coastal areas, and marine life. Offshore drillers are required to obtain 17 major permits and follow 90 sets of Federal regulations. The Department of the Interior's Mineral Management Service says that since 1975, when current Federal offshore safety regulations went into effect, the industry has had an environmental record that is 99.999 percent safe.
Page 56 PREV PAGE TOP OF DOC
The implementation of further restrictions and their minimal impact on the environment must be balanced against their potential harm to our economy and national security.
Today, over half the petroleum products we use come from abroad. Bans on OCS operations mean that the United States increases its dependence on foreign oil. That increases our dependence on foreign suppliers, giving them added powers and added incentives to interrupt our supplies and affect our prices. Making our country more vulnerable to foreign suppliers could add to our defense burdens and put our national security risk.
Restrictions also stop new revenue from coming into the Treasury while we are trying to end decades of damaging budget deficits. Offshore leasing in Federal waters has been highly productive for the Federal Treasury. Since the offshore leasing program began, offshore oil and gas activities have generated over $117 billion in revenues to the Federal Government. A continuing stream of revenue is needed to keep the Federal budget balanced.
Offshore operations afford American workers and American companies in virtually every state an essential opportunity for jobs and economic growth. A 1996 study by the American Petroleum Institute found that companies involved in exploration and production of oil and gas in the Gulf of Mexico spent almost $6 billion with 6,000 vendors in 49 states. While much of that $6 billion was spent in states adjacent to the Gulf, tens of millions of dollars, and sometimes hundreds of millions, were spent with vendors as far away as New York, Pennsylvania, Illinois, and California. Offshore drilling produces jobs, paychecks, and benefits for American families.
In summary, Mr. Chairman, we must balance further restrictions on oil and gas operations and their environmental impact against economic growth. Restrictions endanger our energy security and could add new burdens to maintaining our national security. They close off opportunities for new revenue to help balance the Federal budget. And they restrict opportunities for working people in 49 states. We must take a closer look at greater regulation.
Page 57 PREV PAGE TOP OF DOC
Mrs. CUBIN. Thank you for your testimony, spoken like a true Republican.
Mr. LAMPSON. Give me a break.
[Laughter.]
Mrs. CUBIN. I just couldn't help myself. I really do agree with your testimony. You know my State of Wyoming, while it is a different kind of beauty, certainly is a spectacular place to live and to visit, and tourism is an extremely important industry there. As Chairman Regula brought forward, we do allow drilling in the forest, and on the BLM lands, and it can and is done in a balanced manner. So I think we need to keep our minds open. Thank you.
Mr. LAMPSON. We even create greater opportunities for people to enjoy the good things that are going out there because of much of this activity that is going on. If we can find ways to use some of those resources, ultimately, to help protect the coastal wetlands, which is something that is dramatically important for all of the whole United States—even though the great predominance of those wetlands fall in the States of Louisiana and Texas, and even Florida. If we can begin to use some of those resources to address the national assets that we have along there that we are rapidly losing, then I think that we gain tremendous amount for our environment. And again, it's a matter of balance, it's not a matter of going so far one way or the other that we lose the opportunities that we might create for ourselves along the way.
Mrs. CUBIN. That's right. I don't think anyone would argue that there are areas where there should be no drilling. Absolutely, those need to be reserved and maintained, but we do need to keep an open mind about it, I think. Thank you for your testimony.
Mr. LAMPSON. You're very welcome.
Page 58 PREV PAGE TOP OF DOC
Mrs. CUBIN. I see Mr. Goss just came into the room. Now if you would prefer, Mr. Whitfield can go first while you gather your thoughts. But if you'd please just take a seat at the table. Or you can go first because you're the man.
Mr. GOSS. He's been waiting, thank you very much.
Mrs. CUBIN. Thank you. I'd like to recognize now Mr. Whitfield, the Environmental Advisor, the Office of the Governor of Florida.
STATEMENT OF ESTUS WHITFIELD, ENVIRONMENTAL ADVISOR TO GOVERNOR LAWTON CHILES OF FLORIDA
Mr. WHITFIELD. Thank you, Madam Chairman, members of the Subcommittee. I appreciate the opportunity to come and testify on behalf of Governor Lawton Chiles. With your permission, I'll submit a written statement and make some comments orally.
We wish to voice concerns about the negative effects of oil and gas development, particularly off the coast of Florida. These concerns come from across the broad spectrum, citizens interest, elected officials, and the scientific community. And, I want to lend support to H.R. 180 by Congressman Goss.
Florida has three Outer Continental Shelf areas. Two of these, South Atlantic and the Straits of Florida, that basically cover the eastern and southern part of the State. There are no leases scheduled during the 1997–2002 program, and there are no active leases in these areas. So these two areas are not under immediate threat. However, the panhandle, which is the eastern Gulf of Mexico, the potential remains high. There are 150 leases which cover 864,000 acres off Florida that have been leased. In fact, there's one that has been referred to earlier, about 25 miles off the coast of Pensacola, by Chevron, it's a major production proposal that is currently under appeal by Chevron under the Coastal Zone Management Act Consistency Program.
The environmental and economic importance of Florida's marine and coastal habitats is extraordinary. And these areas are pristine, basically, off the entirety of Florida. These are the habitats of many species of both ecological, endangered and threatened, and economic i