[Senate Hearing 106-14]
[From the U.S. Government Publishing Office]
55-970 CC
______
1999
S. Hrg. 106-14
OFFSHORE OIL AND GAS ACTIVITY IMPACT
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
on the
IMPACTS OF COASTAL AREAS AND COMMUNITIES CAUSED BY OFFSHORE OIL AND GAS
EXPLORATION AND DEVELOPMENT
__________
JANUARY 27, 1999
Printed for the use of the
Committee on Energy and Natural Resources
_______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
20402
?
COMMITTEE ON ENERGY AND NATURAL RESOURCES
FRANK H. MURKOWSKI, Alaska, Chairman
PETE V. DOMENICI, New Mexico JEFF BINGAMAN, New Mexico
DON NICKLES, Oklahoma DANIEL K. AKAKA, Hawaii
LARRY E. CRAIG, Idaho BYRON L. DORGAN, North Dakota
BEN NIGHTHORSE CAMPBELL, Colorado BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming RON WYDEN, Oregon
GORDON SMITH, Oregon TIM JOHNSON, South Dakota
JIM BUNNING, Kentucky MARY L. LANDRIEU, Louisiana
PETER G. FITZGERALD, Illinois EVAN BAYH, Indiana
SLADE GORTON, Washington BLANCHE L. LINCOLN, Arkansas
CONRAD BURNS, Montana
Andrew D. Lundquist, Staff Director
David G. Dye, Chief Counsel
James P. Beirne, Deputy Chief Counsel
Robert M. Simon, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Kelly Johnson, Counsel for Natural Resources
Shirley Neff, Staff Economist, Minority
(ii)
?
C O N T E N T S
__________
STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................ 6
Caldwell, Jack C., Secretary, Louisiana Department of Natural
Resources...................................................... 21
Fitzgerald, Hon. Peter G., U.S. Senator from Illinois............ 12
Graham, Hon. Bob, U.S. Senator from Florida...................... 10
Landrieu, Hon. Mary L., U.S. Senator from Louisiana.............. 6
Lincoln, Hon. Blanche L., U.S. Senator from Arkansas............. 20
Lott, Hon. Trent, U.S. Senator from Mississippi.................. 5
Murkowski, Hon. Frank H., U.S. Senator from Alaska............... 1
Navarre, Mike, Mayor, Kenai Peninsula Borough, AK................ 52
Oltz, Dr. Donald F., Ph.D., State Geologist, Alabama............. 30
Palmer, James I., Jr., Executive Director, Mississippi Department
of Environmental Quality....................................... 15
Sessions, Hon. Jeff, U.S. Senator from Alabama................... 13
Van Putten, Mark, President and CEO, National Wildlife Federation 34
Whitaker, Jim, State Representative from Alaska.................. 27
APPENDIX
Responses to additional questions................................ 55
(iii)
OFFSHORE OIL AND GAS ACTIVITY IMPACT
----------
WEDNESDAY, JANUARY 27, 1999
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:35 a.m., in
room SH-216, Hart Senate Office Building, Hon. Frank H.
Murkowski, chairman, presiding.
OPENING STATEMENT OF HON. FRANK H. MURKOWSKI,
U.S. SENATOR FROM ALASKA
The Chairman. Good morning. We will call the hearing to
order.
This is the Committee on Energy and Natural Resources, an
oversight hearing on the impacts of offshore activities on
coastal States and communities. And I might add, for the
benefit of those of you, this is not our normal room. The
Architect of the Capitol has designs on our space and, as a
consequence, there is substantial construction going on. So, I
suspect at some point in time we will be moving back.
But we also have a hearing tomorrow. And I believe it is in
this room. And we will hear from witnesses on the state of our
domestic oil industry from the standpoint of the impact of the
mergers, consolidations, as well as the smaller producers, as
well as the drilling contractors, and the general effect that
lower oil prices are having on the economy and the continued
increase in foreign production, particularly that which would
be potentially brought about by the lifting of the sanctions on
Iraq, from about 500,000 barrels a day to 2.5 million.
Let me welcome Senator Bingaman, as he takes over the role
of the ranking member, from long-time member, Senator Bumpers.
And we look forward to working with you, my Democratic
colleagues on your side, as well as the very professional staff
that we have on both sides. We have been graced, I think, in
this committee with a good deal of bipartisanship, and we
continue to look forward to having that kind of a relationship
as we pursue the areas of responsibility under our
jurisdiction.
So, welcome to the first Energy and Natural Resources
Committee hearing of this new Congress.
I would also like to point out that we are pretty much on
schedule with our hearings. We have not lost any significant
time as a consequence of the other items that have taken up a
good deal of our attention.
We are going to hear testimony today from those that are
most affected by the offshore oil and gas production, the
States and communities who share their coast for the national
interest of domestic energy production. There will be a number
of future hearings to examine in depth the three titles of the
bill that Senator Landrieu and I have introduced, to provide
coastal impact assistance.
Further, I want to advise those that are interested in the
States that have a moratoria that we will accommodate those
States in future hearings relative to their concerns about any
activity off their OCS areas, and also the dilemma of the
revenue-sharing issue. But that is a commitment that I made to
a number of members who have indicated a concern, and wanted to
testify at this hearing.
The purpose of this hearing is simply to basically lay down
the legislation. Currently, Federal OCS production is
authorized to occur off the coast of six States. That is Texas,
Alabama, Mississippi, Louisiana, a part of California, and
parts of Alaska. Although, in Alaska, there is no significant
production off of our coast at this time.
Our witnesses today represent three of the Gulf Coast
States, as well as my State of Alaska. They know firsthand the
mixed blessings of Federal OCS energy programs, and can add to
our knowledge of how offshore oil and gas production impacts
those closest to it.
If oil and gas are discovered on Federal lands in Wyoming,
the revenues from that discovery would be split 50/50 with the
State of Wyoming. However, as you know, those rules do not
apply to the oil and gas discovered on Federal submerged lands
on the outer continental shelf.
In fiscal year 1997, the Federal OCS leasing program
generated $4.1 billion in rents and royalties. None of these
funds were shared with the State which hosts the development
and of course underwrites and puts up with the impacts.
Well, all that money goes to the Federal Treasury. We do
not think that is fair. It is also important to note the role
of the Federal OCS production in meeting our energy demands.
America imports more than 56 percent of our total domestic
petroleum requirements. And, further, the Department of Energy
predicts that in 10 years America will be at least 64 percent
dependent on foreign oil.
I think that addressed the national energy security
interests of the country. OCS development will play, and
continues to play, an important role in offsetting even greater
dependence on foreign energy. Currently, the OCS accounts for
14 percent of our oil production and 24 percent of our gas
production.
Unlike foreign oil and foreign tankers, this energy is
homegrown and contributes directly to the national wealth of
the country, and produces good jobs in those industries, and
contributes to the balance of payments. Technological
advancements have and will continue to result in new OCS
production, having an unparalleled record of excellence on
environmental and safety issues. Hence, we need to maintain a
healthy OCS leasing program.
Today's hearing occurs against the backdrop of the bill, S.
25. That was legislation introduced by a bipartisan group of 11
Senators.
Now, I would like to recognize Senator Landrieu's efforts.
Senator Landrieu, from Louisiana, has done an extraordinary job
in working on this legislation, cooperating with staffs and the
cosponsors of Senator Landrieu, Senator Lott, Senator Sessions,
Senator Breaux, and Senator Cleland, Senator Johnson, Senator
Craig, Senator Mikulski, Senator Cochran. And I think there are
others, as well.
The bill, as it stands in its current submitted form, would
remedy the current inequity by redistributing 50 percent of the
OCS revenue for three programs. The first would be coastal
impact assistance. The second would be State and local park and
recreation programs. And third, State wildlife programs. The
other 50 percent, of course, is maintained in the Federal
Treasury.
S. 25 allots 27 percent of the OCS revenues to coastal
States and communities that shoulder the responsibility of
offshore oil and gas development off their coastlines. Funds
would be used for a variety of coastal, environmental and
infrastructure purposes under the jurisdiction of the
communities, not the Federal Government.
Our bill acknowledges that all coastal States have unique
needs, and provides coastal impact assistance to 34 coastal
States, even those States which currently prohibit by
moratorium oil and gas activity off their coasts. The bill also
takes a portion of the revenues and invests them in
conservation and wildlife programs in all 50 States.
Sixteen percent of the revenue would go to fund the Land
and Water Conservation Fund for State and local park recreation
facilities. Seven percent of the revenues would be used for
State fish and wildlife programs, including actual activities
to enhance the expansion of the wildlife resource.
These programs recognize that a portion of the revenues
earned from the depletion of a non-renewable resource should be
reinvested in renewable resources--the park, recreation and
conservation systems--which, of course, all Americans enjoy.
And, finally, importantly, the expenditures of this money
throughout the bill rests with the local communities and not
the Federal Government. Local communities are going to figure
out what renewable resources need to be conserved and enhanced
for the benefit of the residents, not the Federal Government.
One provision of concern is the protection of private
property. The bill provides money for Federal land
acquisition--approximately $350 million--based on OCS revenue
of $4.1 billion in 1997. That would be shared with all 50
States. And the average is, I think, $5 million to $10 million
per State.
Throughout the Western States, in Federal conservation
units, there are private property holders being held in limbo,
wanting to sell their land because their land use and access is
curtailed by the Federal regulations, but no Federal money has
been provided to make those owners whole. Well, that is an
opportunity for those to seek relief.
At the same time, there are inholders who do not want to
sell. And what we have tried to do is reach a balance among
those competing interests. And again, I want to compliment the
staff in negotiating this, because they have, I think, put
reasonable parameters around this. Only Federal purchases would
be those that are authorized within land management units,
authorized by an act of Congress. None of the funds could be
used to condemn property.
Two-thirds of the money would have to be spent east of the
100th meridian, which runs from Texas, north, through the Great
Plains. And it is kind of the area that is east of the
Mississippi, but not quite. Acquisitions greater than $5
million would require House and Senate authorization in
appropriating committees. And while we recognize that this is
not a perfect bill by any means, we think it is a start.
We want to move it through the committee and through the
hearing process through the appropriate method, which of course
is to get witnesses to tell us the impacts of OCS and gas
revenue in their schools, in their backyards, in their
emergency response--all types of infrastructure services which
the areas provide.
The representatives of State and local government hear
first when something of course goes wrong, whether real or
perceived. So, after having opening statements from our
members, we would look forward to hearing from our
distinguished roster of witnesses.
I will call on the ranking member, Senator Bingaman, at
this time.
[The prepared statements of Senators Murkowski and Lott
follow:]
Prepared Statement of Hon. Frank H. Murkowski, U.S. Senator From Alaska
Welcome to the first Energy and Natural Resources Committee hearing
of this new Congress. We will hear testimony today from those most
affected by offshore oil and gas production--States and communities who
share their coasts for the national interest of domestic energy
production and jobs.
There will be a number of future hearings to examine, in depth, the
three titles of the bill Senator Landrieu and I introduced to provide
coastal impact assistance.
Further, we want to promptly hold a hearing to accommodate those
States that currently have moratoria on OCS development. Federal OCS
production is authorized to occur off the coast of 6 States: Texas,
Alabama, Mississippi, Louisiana, a part of California and parts of
Alaska though there is no significant protection off of Alaska at this
time.
Our witnesses today represent three of the Gulf Coast States and
Alaska. They know, first-hand, the mixed blessings of federal OCS
energy programs and can add to our knowledge of how offshore oil and
gas production impacts those closest to it. If oil and gas are
discovered on Federal lands in Wyoming, the revenues from that
discovery are split 50-50 with Wyoming.
Those rules do not apply if the oil and gas are discovered on
Federal submerged lands on the Outer Continental Shelf. In Fiscal Year
1997, the Federal OCS leasing program generated $4.1 billion in rents
and royalties--none of these funds were shared with the States which
host this development and underwrite the impacts. All of the money goes
to the Federal treasury. This is not fair.
It also is important to note the role of Federal OCS production in
meeting our energy demands. America imports more 56 percent of our
domestic petroleum requirements. DOE predicts that, in the next 10
years, America will be at least 64 percent dependent on foreign oil.
OCS development will play an important role in offsetting even
greater dependence on foreign energy. The OCS accounts for:
14% of oil production;
24% of our gas production.
Unlike foreign oil on foreign tankers, this energy is home-grown
and contributes directly to our national wealth. Produces good jobs in
these industries and contributes to the balance of payments.
Technological advancements have and will continue to result in new
OCS production having an unparalleled record of excellence on
environmental and safety issues. Hence, we need to maintain a healthy
OCS leasing program.
Today's hearing occurs against the backdrop of S. 25 legislation
introduced by a bipartisan group of eleven Senators. Other cosponsors
include: Landrieu, Lott, Sessions, Breaux, Cleland, Lott, Johnson,
Gregg, Mikulski, and Cochran.
Our bill would remedy the current inequity by redistributing 50% of
the OCS revenues for three programs:
coastal impact assistance;
State and local park and recreation programs; and
State wildlife programs.
The other 50% remains in the Federal treasury. S. 25 allocates 27%
of the OCS revenues to coastal States and communities that shoulder the
responsibility of offshore oil and gas, development off their
coastlines. Funds will be used for a variety of coastal, environmental
and infrastructure purposes.
Our bill acknowledges that all coastal States have unique needs and
provides coastal impact assistance to 34 coastal States--even those
States which prohibit oil and gas activity off their coasts. The bill
also takes a portion of the revenues and invests them in conservation
and wildlife programs in all 50 States. 16% of the revenues would go to
fund the Land and Water Conservation Fund for State and local park and
recreation facilities; and 7% of the revenues would be used for State
fish and wildlife programs.
These programs recognize that a portion of the revenues earned from
the depletion of a non-renewable resource should be reinvested in
renewable resources--the park, recreation and conservation systems
which all Americans enjoy. Importantly, the expenditure of this money
throughout the bill rests with local communities not with the Federal
government. Local communities will figure out what renewable resources
need to be conserved and enhanced for the benefit of their residents--
not the Federal government. One provision of concern is the protection
of private property.
The bill provides money for Federal land acquisition--approximately
$350 million based on OCS revenues of $4.1 billion in 1997. Throughout
the western States in Federal conservation units, there are private
property holders being held in limbo--wanting to sell their land
because their land use and access is curtailed by Federal regulations
but no Federal money has been provided to make these owners whole. At
the same time, there are other inholders who do not want to sell.
The bill tries to reach a balance between these competing
interests:
only Federal purchases would be those within land management
units authorized by the Act of Congress;
none of the funds could be used to condemn property;
2/3 of the money would have to be spent east of the 100th
meridian which runs from Texas north through the Great Plains;
and
acquisitions greater than $5 million would require House and
Senate authorizing and appropriating committees.
No bill of this magnitude is perfect--it can, and will be, improved
as it works its way through the Committee. Our witnesses can tell us
the impacts of OCS oil and gas activity in their backyards of their
communities, on their schools, on their emergency response teams and
all types of infrastructure services. Representatives of State and
local governments hear first when something goes wrong, whether real or
perceived.
So, after hearing opening statements from our members, we will look
forward to hearing from our distinguished roster of witnesses.
______
Prepared Statement of Hon. Trent Lott, U.S. Senator From Mississippi
Mr. Chairman, since the inception of the oil and gas program on the
Outer Continental Shelf (OCS), States and coastal communities have
understandably sought a greater share of the benefits from development.
These communities provide the infrastructure, public services, manpower
and support industries necessary to sustain this development, and some
percentage of the revenues should be reinvested in the affected region.
Currently, the majority of OCS revenues are funneled into the
Federal Treasury where they are used to pay for various federal
programs and to reduce the deficit. The Conservation Reinvestment Act
diverts one-half of the OCS revenues from the Federal Treasury to
coastal States and communities for a multitude of programs. These
States will effectively use the funds for local needs. This bill
provides a framework within which these localities can make the right
decisions for their citizens and their environment.
Mr. Chairman, I know that there is no way to totally eliminate this
impact on coastal communities. I also know that, while the benefits of
a healthy OCS program are felt nationally, the infrastructure,
environmental and social costs are felt locally.
In addition to supporting up the States and coastal communities,
our bill also provides funding for the Land and Water Conservation Fund
(LWCF). More than 30 years ago, Congress set up this fund to address
the American public's desire for more parks and recreational
facilities. This bill makes the program self-sufficient, providing a
secure funding source from the OCS revenues. This is an investment in
our future--our land, our natural resources and our recreational
enjoyment.
The bill makes yet another investment with these OCS revenues--an
investment in fish and wildlife programs. With the inclusion of OCS
revenues, the amount of money available for State programs would nearly
double. This is money that can be used to increase fish and wildlife
populations and habitats. It could even be used for wildlife education
programs.
This bill was carefully crafted to strike a balance between the
needs and interests of the oil and gas industry, the States, and the
environmental and conservation groups. It's a good package that will
benefit all Americans, not just those who live and work in coastal
areas.
I commend the Chairman for holding these hearings, and appreciate
the hard work of my colleagues. I look forward to advancing this
important legislation in the 106th Congress.
STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR
FROM NEW MEXICO
Senator Bingaman. Thank you very much, Mr. Chairman.
I congratulate you for getting started on hearings,
considering the other preoccupations we have around this place.
Let me also congratulate Senator Landrieu and you for this
legislation that you have introduced. I think it will give us
the needed opportunity to analyze the pros and cons of the
issues involved. I know this hearing is not focused directly on
the legislation. I understand you are having additional
hearings that will do that. But I think it does give us a
chance to begin to understand the problem, or at least some of
the problems, that the legislation is intended to address.
So, I am glad to be here, and I look forward to hearing
from the witnesses. We do have a caucus this morning on this
impeachment issue, which I will have to duck out for. But I
hope to hear some witnesses before then.
Thank you.
The Chairman. Thank you very much, Senator Bingaman.
I might add that we too have a caucus. Ours starts at 11
o'clock.
Senator Bingaman. Ours starts at 10 o'clock.
The Chairman. All right. Well, it looks like you are going
to be leaving before me.
It gives me a great deal of pleasure to welcome a new
Senator to our committee, Senator Fitzgerald. It is a pleasure
to have another banker around here. Bankers do not do very well
in the election process, usually because they have a history of
having to say ``no'' too often. Is that right?
Senator Fitzgerald. That is true.
The Chairman. Let me call on Senator Landrieu for an
opening statement. Let me also recognize Senator Graham, who is
with us this morning. He has been on the committee for many,
many years, and he is from one of the States that is obviously
affected, the State of Florida.
Senator Landrieu, please proceed.
STATEMENT OF HON. MARY L. LANDRIEU, U.S. SENATOR
FROM LOUISIANA
Senator Landrieu. Thank you.
Mr. Chairman, in light of the time, I have prepared a
statement that I want to submit it for the record. Because I
think it is important to lay down some important facts.
The Chairman. Without objection, so ordered.
Senator Landrieu. But I will speak just from my heart this
morning about this bill. You and I have worked so closely in
the last year about it. Or, I should say, this issue, not the
bill. I want to thank you for your help and your leadership in
getting this process started. And I want to thank the members
on my side for their input, their advice and their counsel.
Because I think, frankly, there is no greater environmental
issue in our country today than trying to focus our attention
on the coastline of America. There are issues all over the
country, but our coastlines really deserve some attention.
Now, Louisiana is an oil and gas producing State. We have
been that way for more than 50 years. And our notable Secretary
is here, who can talk more about the details. We have
benefitted greatly from that industry. But there have also been
some negative environmental impacts.
We are not the only oil and gas producing State. Each State
in this Nation has chosen their own way to address that issue.
But I am here this morning at this hearing to say that I firmly
believe that the Federal Government needs to be a greater and
more reliable partner in helping provide some revenues for
States to manage better the great resources of our tremendous
and valuable coastline in this Nation.
It is the West Coast, the East Coast, the Gulf Coast and
the Great Lakes that represent a tremendous resource, in terms
of tourism, fisheries, wildlife, our general environment, oil
and gas. And that is what this hearing is about--to lay down a
record for the great needs that are out there. And there are
many. The panelists that are here this morning can talk from a
variety of different experiences about it.
Our comments, of course, and mine, will be somewhat focused
on the problems in Louisiana, but I would like to call to my
colleagues' attention that the greatest and largest wetlands in
the United States on the coast of course is in the Mississippi
Delta, if you will, of one of the greatest rivers in the world
and on our continent. And while the Everglades gets a
tremendous amount of attention, and needs the attention, and I
want to support my friend, Senator Bob Graham, I do believe
that Louisiana does not quite get the attention that we deserve
on this important topic.
We are losing, according to the latest figures that I have,
or have lost, 630,000 acres--or the projection will be
630,000--coastal marshes, swamps and barrier islands by the
year 2050 if nothing is done in terms of preserving that
coastline.
Erosion is occurring along much of Texas's 3,667 miles of
Gulf and Bay shoreline. But this represents, the coastline that
we are speaking about, primarily in Louisiana, represents 80
percent of all the coastal wetland loss in the continental
United States. So this is a serious environmental issue.
We are hoping that as this bill and this issue works its
way through Congress that these monies that come from the outer
continental shelf, which are significant--they have been $120
billion since 1955, $120 billion, of which Louisiana has
produced the lion's share off of our coast--and there is a
graph, which I would like to submit for the record, of last
year's figure. I want to show this, Mr. Chairman, because it is
important. But the lion's share of that money has been produced
offshore in Louisiana.
We are happy to contribute to the Federal Government in
this way. And I just want the members and the audience to see
this pie chart. The red is basically what Louisiana contributes
to the Federal Treasury. Last year, it was $2.5 billion. The
closest other State was Texas, which is $472 million. The next
State is California, with $64 million.
Now, I am going to wrap up in just a minute, but I have to
express that we are happy with the oil and gas industry. We
want it to be environmentally sensitive. Louisiana has produced
this money for the Nation, as a domestic oil and gas source. We
have produced this money for the Federal Treasury. But I have
to say that it is about time that we got a portion of it back
to help save the coastline that we are losing, which benefits
the whole Nation, not just with oil and gas but with fisheries
and everything else. And we are happy to share that money with
the rest of the Nation as we try to shore up our coastlines.
So, Mr. Chairman, I have this statement for the record, but
I look forward to working with you on this issue. I welcome
Secretary Jack Caldwell and the other members of this
distinguished panel that can give more specifics. But I really
do not believe there is a more important environmental issue
than this.
I want to thank the administration for their thoughts about
this. We are not exactly on point yet, but I know that this
administration is sensitive to these needs. I am hoping that
this hearing will go a long way in laying out the record of how
important it is to get money to our States and our cities and
our coastline communities for things like beach erosion,
wetlands loss, et cetera, and how important it is to do that
now, and not wait. Every year, every week, every day that we
wait, we lose additional wetlands and additional valuable
resources of this Nation.
So I thank the chairman, and I particularly thank my
colleagues and my ranking member for his advice and thoughts as
we proceed.
Thank you.
[The prepared statement of Sen. Landrieu follows:]
Prepared Statement of Hon. Mary L. Landrieu, U.S. Senator From
Louisiana
Mr. Chairman, thank you for convening this hearing today to discuss
what I believe to be one of the most important environmental topics
that this committee can examine--the impacts of offshore activity on
the coastlines and communities of oil and gas producing States and the
need for a permanent source of funds for the Land and Water
Conservation Fund. As a Senator from Louisiana, a State with one of the
more aggressive and intense production plans in place, I am
particularly pleased to be able to assist in the development of a
record on coastal impacts. In doing so, I would like to welcome the
witnesses before us this morning. In particular, I would like to
welcome Louisiana Department of Natural Resources Secretary Jack
Caldwell. Secretary Caldwell is also a member of the Outer Continental
Shelf Policy Committee, one of the four advisory committees of the
Minerals Management Service. He, along with our other distinguished
panelists, has worked long and hard to inform the public about
environmental impacts being suffered in our coastal communities in the
State, and has identified solutions to these problems.
Before I make a few remarks about the Gulf Coast area and impacts
from offshore activity, I would like to point out that there is grave
coastal degradation occurring all over the country. Shoreline
environmental problems are not unique to producing States. Coastal
erosion poses serious difficulties for non-producing States whose
economies are closely tied to maritime, fisheries and tourism
industries. One need only pick up the newspapers to learn about the
needs for beach replenishment in many States and cities across the
country, or for assistance with invasive species in frequently used
waterways. The Minerals Management Service currently engages in State
cooperative activities to pump sand in Alabama, Florida, Louisiana,
Maryland, Delaware, New Jersey, North Carolina, South Carolina and
Virginia. These are important projects, but more is needed.
In my State of Louisiana, we value the importance of our natural
resources, and the extent to which we rely on those resources. In 1947,
Kerr McGee sank the first platform into shallow waters in the Gulf of
Mexico. 1997 marked the 50th anniversary of the discovery of oil in the
Gulf. Over the years, the United States has benefited from a source of
domestic oil that has contributed greatly to our supply needs. In 1998,
approximately 20 percent of U.S. consumption of oil was supplied
domestically from the OCS, and 27 percent of our natural gas. Close to
90 percent of those domestic resources came from the Gulf of Mexico. I
would like to submit for the record a chart showing the division of
resources in the Gulf of Mexico according to State offshore production
in 1998.
While we have welcomed this activity and the positive influence on
the economy, there have also been some negative environmental
consequences. For over 50 years, the Gulf Coast States have supported
OCS activity with its influx of people and burdens on coastal
infrastructure, including service bases, helicopter hubs, construction
facilities, processing facilities including refineries and gas
processing plants, terminals for barges and tanker ports, disposal and
storage facilities for offshore operational wastes, landfills and
coastal pipelines. Supplying the offshore has meant using
infrastructure that was not designed to handle the volume of activity
involved. As this is an industry that serves the nation's energy needs,
some responsibility must be borne by the Federal government.
There is another complicating factor in Louisiana. We are dealing
with an underestimated, under-researched, yet highly threatening
phenomenon--coastal erosion. Current rates of land loss range from 25
to 35 square miles annually. This represents 80% of all the coastal
wetlands loss in the continental United States. According to the
Louisiana Department of Natural Resources, if there is no action, the
State will lose 630,000 acres of coastal marshes, swamps and barrier
islands by the year 2050. This is an area the size of Delaware. Erosion
is occurring along much of Texas' 3,667 miles of Gulf and Bay
shorelines as well. If we lose these wetlands--altogether, the effects
on people living in these areas will be devastating. Wetlands serve as
storm surge buffers, anchoring points for pipelines, habitat for
migratory waterfowl and nurseries for coastal fisheries. Water
diversion is partly to blame for losses, but they are also due to
weighted surface compression from infrastructure or from development
policies of the past. Once developed, these coastal lands subside and a
formerly land-covered area becomes open water. This constitutes a
threat to the communities that support oil and gas activity, and the
oil and gas activities themselves. One major coastal initiative
underway in Louisiana, a program called Coast 2050, aims to arrest
those losses. It will take a great deal of effort, and an adequate
funding stream to succeed.
Offshore activity, coupled with boom and bust cycles, has had a
number of physical impacts on the land, and diminished the ability of
the State to rely on a steady economy. Our institutions of higher
learning evaluate these impacts on coastal environments. Recently, they
have begun to evaluate the impacts on the residents of coastal
communities that support offshore activities. The results sound a clear
signal. A study at the University of New Orleans concluded that in
communities that rely on extraction activities, such as in the coastal
parishes of Louisiana, in the first year of an upturn in activity,
average per capita income and high school completion rates rise, while
college enrollment decreases. Incomes rise, sales tax collections
increase, and people move into the areas to benefit from higher wages
and a better living. In the second year after an upturn, the economic
impacts reverse. Too many newcomers arrive and do not have enough jobs.
Since college enrollment has decreased, people are less qualified to
engage in other gainful employment and social problems result. This in
turn burdens the local law enforcement authorities. A low oil price
scenario, such as the one we are experiencing now, only aggravates the
problem with layoffs and decreased profits. Onshore impacts from
offshore activities are multi-dimensional.
To conclude, studies indicate that OCS activities affect the
coastal States as well as the offshore marine environment, and in fact
appear to affect the coastal zone to a greater degree than offshore.
These impacts take the forms of physical change, cultural
diversification and economic alteration. Without OCS activity there
would be fewer changes onshore and without onshore activities there
would be reduced offshore activities. The relationship between the two
areas is direct and irrefutable. We will hear testimony that will go
far beyond my comments into specific examples of needs and suggested
remedies. I look forward to hearing the remarks this morning. Thank
you, Mr. Chairman.
The Chairman. Thank you very much, Senator Landrieu. And
again I want to thank you for all your diligence, hard work and
effort on this. I know how much it means to your State. I think
it is your maiden legislation, if I can use that term that I
might get in trouble for.
Senator Landrieu. That is okay.
The Chairman. But I do want to acknowledge your efforts and
that of your staff.
We have a policy in the committee to take them as they
come, as opposed to back and forth. And unless I am overruled,
Senator Graham is the next one who came in.
STATEMENT OF HON. BOB GRAHAM, U.S. SENATOR
FROM FLORIDA
Senator Graham. Thank you very much, Mr. Chairman.
In recognizing the desire to move on to the witnesses who
have travelled here today, I will submit my statement for the
record.
I would like to congratulate you and Senator Landrieu for
your leadership in presenting this important issue to us. I
would like to ask consent to submit for the record comments
that will be provided by our newly-inaugurated Governor Bush,
who has taken a special interest in this issue.
[The information referred to follows:]
Department of Environmental Protection,
Tallahassee, FL, January 26, 1999.
Hon. Bob Graham,
U.S. Senate, Hart Senate Office Building, Washington, DC.
Dear Senator Graham: On behalf of Governor Jeb Bush, please accept
the enclosed testimony into the record for the Senate Committee on
Energy and Natural Resources' January 27 hearing regarding the effects
of coastal oil and gas drilling.
The Governor remains concerned about the potential for
environmental damages to our coastal and marine resources from outer
continental shelf oil and gas activities. Because of these concerns,
this testimony reiterates Governor Bush's strong opposition to oil and
gas leasing, exploration and development offshore Florida. While we
recognize the potential significance of S. 25 to effected States, this
testimony pertains only to the Committee's interest toward
understanding the impacts of oil and gas activities on coastal States.
I appreciate the opportunity to submit this testimony. We look
forward to working with you and the committee on issues important to
Florida.
Sincerely,
David B. Struhs,
Secretary.
On behalf of Governor Jeb Bush and the citizens of Florida, I
appreciate the opportunity to submit this testimony regarding the
Committee's interest in environmental damage caused by offshore oil and
gas activity. We have not completed an analysis of S. 25 and therefore
will not take a position on nor directly address the bill, even though
we recognize its potential and significance to our State. The purpose
of this testimony is to express Governor Bush's strong opposition to
oil and gas leasing, exploration and development offshore Florida. Our
Governor recognizes the potential for environmental damages to our
coastal and marine resources--as has been felt by our neighboring Gulf
States.
Our concerns about negative impacts of offshore oil and gas
development cannot be overstated. These concerns are expressed by a
wide range of people--from our elected officials to scientists to
citizens and tourists enjoying the white sands and clean waters of
Florida's beaches and coastal regions. The potential for damage to our
coastal and marine resources from these activities in the Eastern Gulf
of Mexico off the northwest Florida Panhandle is high.
Over the last several years, with the support of former Governors
and the Florida Cabinet, our Congressional Delegation has been
successful in securing limited protection of our coastal and marine
resources by implementing moratoria on new leasing off the west Florida
coast. However, approximately 125 active leases remain in the eastern
Gulf of Mexico. More alarming is the fact that production is being
proposed by Chevron just 25 miles off Pensacola--some of the nation's
most beautiful and popular beaches and coastal areas.
The Eastern Gulf of Mexico off Florida is ecologically and
geologically quite different from the other Gulf States where natural
oil seeps, high turbidity loads and the effects of continuous oil and
gas activities occur. Accidental spills remain the most visible
concern, however, physical disturbances caused by anchoring, pipeline
placement and rig construction; the resuspension of bottom sediments;
and the chronic pollution from discharges can be very destructive.
Scientists believe that the marine and coastal communities off west
Florida are not well adapted to withstand adverse impacts associated
with oil and gas activities. The development of oil and gas resources
off Florida's coast will cause long-term negative impacts to air, water
and biota where none currently exist.
Florida's panhandle provides an array of marine and coastal
habitats, including productive offshore fishing grounds, bountiful
estuaries, sandy white beaches and barrier islands. The area's
environmental and economic importance is reflected in the number of
State and federal preservation, conservation, and recreation areas
including the Gulf Islands National Seashore and more than 50 other
sites along the panhandle coast. The seagrasses, marshes and other
coastal areas provide habitats for a variety of wildlife, including
many threatened and endangered species. Offshore marine habitats are
critical to most life stages of marine species and would be directly
impacted by these activities.
The economy of Florida's northwest coast, like the remainder of the
State, is directly tied to our warm climate, clean waters and unspoiled
natural resources. Environmentally clean industries, including
recreation, tourism, retirement, commercial and recreational fishing
are major economic activities of the panhandle that bring in billions
of dollars annually to State and local economies. Florida ranks second
only to California in tourism expenditures, generating over 90 million
dollars a day. Visitors rank our parks, preserves and natural areas as
the second major attraction bringing them to Florida. Recently, the
five western counties of the Florida panhandle brought in more than
eight million dollars from tourist development tax. Three cities in
this area recorded more than 1.5 billion dollars in tourism and
recreation taxable sales during the same period. The unique quality and
character of the panhandle's beaches are reflected in their inclusion
in the ``Annual Ranking of America's Best Beaches'' by the nation's
foremost beach expert, Dr. Stephen Leatherman.
Our marine and coastal waters also support commercial fishing
industries, worth nearly 6 billion dollars to Florida. Commercial
fishery landings for Florida's west coast are valued at over 130
million dollars, with revenues from processed fishery products
exceeding 350 million dollars.
Furthermore, the National Marine Fisheries Service reports that
Florida led all coastal states in saltwater recreational fishing
activity in 1997. During that year, there were over two million out-of-
state anglers participating in more than 24 million trips to the state.
Recent studies also show that the panhandle hosted over 200,000
saltwater fishermen who spent over 92 million dollars.
Florida's coastal and marine resources are the foundation of our
economy and quality of life. In a healthy condition, these self-
sustaining resources will continue to provide benefits to people who
live in and visit Florida. Otherwise, the ecology and economy of the
state will fail.
For these reasons, any proposal that deals with outer continental
shelf oil and gas activities has our undivided attention. We look
forward to working with the Committee on this and other legislation
important to Florida. Thank you.
Senator Graham. I thank you, Mr. Chairman, for your
interest in holding, as part of this series of hearings, a
hearing for States like Florida, which currently have a
moratorium on oil and gas leasing, and would look forward to an
opportunity to discuss our experience under those moratoriums.
Thank you, Mr. Chairman.
[The prepared statement of Senator Graham follows:]
Prepared Statement of Hon. Bob Graham, U.S. Senator From Florida
Mr. Chairman, members of the Committee, I thank you for this
opportunity to speak on an issue that is so important to the State of
Florida.
As you are aware, Congress has been diligent in protecting
Florida's fragile coastline from the impacts of offshore drilling. You
have for many years supported Senator Mack and me in our efforts to
adopt moratoria on leasing and preleasing activity off the coast of
Florida. We appreciate and thank you for your continued support.
Today, we will hear from several distinguished representatives from
the States of Alabama, Mississippi, Louisiana, and Alaska on the
impacts that offshore drilling has had on their coastlines. In the next
several days, I will be submitting written comments on behalf of
Governor Bush, and I am looking forward to the hearing on S. 25 which
will address issues pertaining to coastal states with moratoria on
leasing and drilling. Today, I would like to take a few minutes to tell
you how your protective actions have benefited Florida's coastlines and
communities.
This coastline is home to some of the richest estuarine areas in
the world. These habitats provide an irreplaceable link in the life
cycle of both marine and terrestrial species. Florida's commercial
fishing industry relies heavily on these estuaries as they support the
nurseries for most commercially harvested fish. In addition, nearly 90%
of the reef fish resources in the Gulf of Mexico are caught on the West
Florida Shelf.
Our local communities also benefit from healthy coastlines. In
1997, over 47 million tourists visited Florida, spending $41 billion.
The five western counties of the Florida Panhandle brought in over $8
million from tourist development tax in 1996. Three cities in this
area--Panama City, Pensacola, and Fort Walton Beach--recorded over $1.5
billion in tourism and recreation taxable sales during the same period.
Florida's coastline and beaches are not only our greatest economic
asset, but they are a part of our identity. Newcomers to the State are
drawn to our shores. Many Floridians remember childhood weekends along
the endless white beaches of the Panhandle. All of us are struck by the
tranquility of Tampa Bay or the beauty of Sanibel Island. Florida's
coastlines are as integral to the state's identity as the Grand Canyon
is to Arizona or the redwoods are to California. Their health directly
affects our State's future.
I suspect that our witnesses today will tell us that their States
share this relationship between land, water, and man. I look forward to
hearing from them. Thank you.
The Chairman. Thank you very much, Senator Graham.
I want to assure you, in the fourth paragraph of my opening
statement was a reference--and I will read it for you:
Further, we want to promptly hold hearings to accommodate
those States that currently have moratoriums on OCS
development.
And thank you very much.
Senator Fitzgerald, good morning. We look forward to your
statement and your presence on the committee.
STATEMENT OF HON. PETER G. FITZGERALD, U.S. SENATOR
FROM ILLINOIS
Senator Fitzgerald. Well, thank you, Chairman Murkowski. I
am delighted to be on this committee. And I think, in addition
to bringing the perspective of a banker, it will be good for
balance on this committee to have somebody from Illinois, east
of the Mississippi and a little bit north of Senator Landrieu
and Senator Graham.
Illinois is very interested in the issues that this
committee will work on, such as storage of nuclear waste,
electric deregulation and even the outer continental shelf
activity work here, because we are a Great Lake State. And we
are worried about the degradation to our Great Lakes, as well.
So I look forward to the work on this committee. And I
would ask for unanimous consent to submit my opening statement
for the record.
The Chairman. Without objection.
Senator Fitzgerald. Thank you.
[The prepared statement of Senator Fitzgerald follows:]
Prepared Statement of Hon. Peter G. Fitzgerald, U.S. Senator From
Illinois
I would like to thank Chairman Murkowski for holding this hearing
on the Impact of Outer Continental Shelf Activity on Coastal States and
Communities. As a freshman Senator, I am very pleased to serve as a
member of this important Committee. I look forward to working with the
other members of the Energy and Natural Resources Committee on this and
many other issues of national importance. The Committee faces many
challenges on a full range of issues including the deregulation of the
electric industry, the storage of nuclear waste, raining law reform,
proposals on global emissions, and a host of other issues.
Today, our focus is on assessing the impact of outer continental
shelf (``OCS'') activity on States and communities, This issue is of
enormous importance to coastal States, including Great Lakes States
like my home State of Illinois, and their residents which are directly
and indirectly affected by offshore activities.
As a Senator from Illinois, I am familiar with the environmental
problems faced by coastal States. The Lake Michigan shoreline is also
subject to environmental degradation and erosion. This is of real
concern to me and the residents of my State who do not want to see
their shoreline degraded regardless of the cause. It is my hope that
legislation produced as a result of these hearings will serve to
address problems which confront all coastal States.
There is some concern from private property groups that legislation
addressing these issues may lead to an increase in the purchase of land
by the federal and State governments. The Committee should address this
concern in today's or future hearings on this topic.
It is my belief that the hearings we hold will assist us in sorting
through these issues, help us to ascertain the nature and extent of OCS
impact, and ultimately permit us to achieve the goal of assisting the
States and local communities impacted by OCS activity. I look forward
to these hearings and welcome the opportunity to consider these issues.
Again, my thanks to the members of the Committee and to Chairman
Murkowski.
The Chairman. We have been joined by Senator Sessions.
Good morning.
STATEMENT OF HON. JEFF SESSIONS, U.S. SENATOR
FROM ALABAMA
Senator Sessions. Mr. Chairman, thank you very much for two
reasons and that you have allowed me to be with you. One is I
am so much impressed with this legislation. I believe it could
be one of the biggest steps we have made toward environmental
improvement and good management of resources. Alabama does have
a lot of involvement in offshore activities. It is a matter
that is important to us in a lot of different ways.
I am also pleased to be invited to be here, because Mr. Don
Oltz, from Alabama, is our State Geologist and will be
testifying. He is Vice Chairman of the Mineral Management
Services Outer Continental Shelf Policy Committee. He is a
Supervisor of the State Oil and Gas Board, and a part-time
magician, as I understand it.
[Laughter.]
The Chairman. Well, we need him to help us in our
discussions and deliberations on impeachment, then, if he is
available.
[Laughter.]
Senator Sessions. And oil and gas exploration, too. I
understand that is a factor.
As Director of the Geological Survey, he is responsible for
providing information on geology, biology and environmental
impacts on oil and gas production. He is a tremendous resource
to me, as we have researched this legislation in the State of
Alabama. I am honored to have him and honored to be here. I
also feel like this legislation has an opportunity to be a
historic step toward environmental improvement and wise use of
our resources.
And further, I would like to express my admiration for your
leadership in being continually concerned about domestic
production of oil and gas. Instead of having our wealth be
transported around the world, we have tremendous resources
offshore and onshore that we need to be producing wherever
possible.
Thank you.
[The prepared statement of Senator Sessions follows:]
Prepared Statement of Hon. Jeff Sessions, U.S. Senator From Alabama
I would like to thank Senators Murkowski and Landrieu for allowing
me the opportunity to attend the hearing today on the Conservation and
Reinvestment Act. I commend you both for your tremendous leadership on
this bipartisan bill and look forward to working with you as the bill
develops.
The Conservation and Reinvestment Act offers a unique opportunity
for the entire nation to enjoy the tangible benefits of Outer
Continental Shelf oil and gas production. It redirects a portion of
royalties from Outer Continental Shelf production directly back to
States and local communities for environmental and conservation
programs.
The effect of this bill will be to provide States and local
communities funding to expand and maintain parks and to enhance
hunting, fishing and other outdoor recreational activities.
In addition, this bill would redirect a portion of Outer
Continental Shelf Royalties back to the States which have endured the
risks of production through the bill's Coastal Impact Assistance
program. This program will provide dedicated funding to coastal States
for air quality, water quality and to mitigate the environmental
effects of Outer Continental Shelf infrastructure developments.
Alabama might use these funds to help ensure water quality in
Mobile Bay, part of the National Estuary Program, and for the
preservation and restoration of oyster beds and other sensitive
environments areas along our coast. States may choose to establish a
protected ``trust fund,'' as Alabama has with existing State royalties,
in order to use the revenues in perpetuity for environmental and
conservation purposes.
Alabama is one of only six States with active Outer Continental
Shelf natural gas production off its shore and onshore infrastructure
to refine and transport those resources. Alabama ranks ninth in the
country for natural gas production and produced over 430 billion cubic
feet of natural gas in 1994. There are four onshore refineries and
numerous natural gas pipelines to process Outer Continental Shelf
natural gas. The State has made a significant investment in providing
the land and infrastructure to handle this production, yet has not been
able to enjoy any direct royalty benefits from Outer Continental Shelf
production.
This bill takes a step towards ensuring Alabama and the entire
nation receive at least a part of the direct benefits of OCS
production.
Mr. Chairman, thank you for permitting me this opportunity to
appear before your Committee today. I look forward to working with you
and Senator Landrieu to help craft a conservation bill which can
continue to enjoy bi-partisan support.
The Chairman. Thank you very much, Senator Sessions.
I am going to call the witnesses up now: Mr. James I.
Palmer, Jr., Executive Director of the Mississippi Department
of Environmental Quality, from Jackson, Mississippi, please
come to the witness table.
The Hon. Jim Whitaker, House of Representatives, State of
Alaska, Juneau, Alaska. Jim, it is nice to welcome you. You do
not have to shovel any snow down here today, do you. Well, you
have a little snow around here. You just do not see it. It is a
different kind.
Donald Oltz. Donald is the State Geologist and Supervisor,
Geology Survey of Alabama, Tuscaloosa, Alabama. And you have
already received, I think, an introduction.
Mr. Mark Van Putten, President of the National Wildlife
Federation. Good morning.
And the Hon. Jack C. Caldwell, Secretary, Louisiana
Department Natural Resources, of Baton Rouge, Louisiana.
Good morning, gentlemen.
I want to recognize Senator Burns. Senator Burns, you are
recognized.
Senator Burns. Yes, sir. Thank you very much. I was afraid
of that.
The Chairman. That is fine.
[Laughter.]
The Chairman. We are talking about Montana's coastline here
very briefly.
Senator Burns. Keep fooling around. We have every
Californian in the world up there. We might as well have a
coast.
[Laughter.]
Senator Burns. That name, by the way--I was called all
kinds of names last night. And the one on that plaque ain't one
of them.
[Laughter.]
Senator Burns. Thank you and good morning.
The Chairman. Good morning.
With that, I would remind you that the Democratic members
are going to have a caucus starting very soon. And I am going
to end this probably before 11 o'clock. So we want to get your
statements. I would encourage you to take 5 to 7 minutes. I get
a little edgy beyond that. You can submit the balance for the
record. Of course, we want to ask some questions as well. So,
please proceed in the order I called you. I will accommodate
anyone if they have to leave early. Does anyone?
[No response.]
The Chairman. All right, Mr. Palmer, it looks like you are
on. James Palmer, Executive Director, Mississippi Department of
Environmental Quality.
STATEMENT OF JAMES I. PALMER, JR., EXECUTIVE DIRECTOR,
MISSISSIPPI DEPARTMENT OF ENVIRONMENTAL QUALITY
Mr. Palmer. Thank you, Mr. Chairman, and members of the
committee, for the opportunity to participate in your first of
what I know will be a series of hearings on the concepts that
are framed in S. 25. We strongly support the legislation and
how it is built.
What I will touch on in a few moments, Mr. Chairman,
without reading my statement--I have submitted it for the
record and would appreciate it being included there--I will
touch on the significance of this legislation to Mississippi.
My assignment is more so for a few moments to be the somewhat
resident historian. Because we all know that those who do not
learn from history are destined to repeat it.
There is a history here. And I have lived it and litigated
it now for 19 years. And I would simply remind you, in our
first moments of this discussion, about some key things.
First, let us start with what I would submit, Mr. Chairman,
you are not here to do and you will not be doing throughout
your series of hearings. You are not here to debate the
fairness, the equity, the prudence of helping coastal States
deal with, cope with impacts caused by offshore operations. You
have been there and you have done that.
You made that national decision in 1976 when you amended
the Coastal Zone Management Act to create a coastal energy
impact program. The thesis of that program is exactly what we
are again here today to talk about. Your idea was sound.
Unfortunately, it was doomed from the beginning. It was doomed
for two reasons.
One, it was framed around an annual appropriations concept.
Bad move. Second, it was built around a process that was so
cumbersome and complicated it collapsed, ultimately, of its own
weight.
I litigated that situation, Senator Landrieu, between
Mississippi and Louisiana, and wound up having to craft the
agreement that the Governors signed to resolve those
differences. Do not repeat that history. When you pass this
legislation, do not sentence the recipient States to have to go
then, make it work through court battles. Bad move.
Ultimately, the Congress realized that the program was not
going to work. And so you killed it in 1990. But after, you
then passed another stage of recognizing the correctness of the
concept. In 1986, 10 years later, I came to this Congress with
representatives of the other coastal States, and we went nose
to nose with the Department of the Interior over what you now
know as the Section 8(g) settlement. The States made a big gain
in that settlement, because of the recognition that the program
was right; and, second, it was keyed not to appropriations but
to direct diversion of those revenues to the States. Good idea.
Limited, though. Because you will remember that the key
issue that you grappled with was possible drainage of resources
from adjacent State waters. So you limited the revenue stream
to a 3-mile zone. Again, good idea. We made headway. But it was
limited.
Now, after that happened, we have come back to this
Congress time and time again, saying, you got a good start. You
have stumbled several times. Let us regain our footing and put
in place now--and you have a mechanism to do it--a concept that
will distribute those revenues fairly, through a system that
works, and life will go on.
In 1993, after a failed attempt--one of many--to persuade
you to move to something like S. 25, the Outer Continental
Shelf Policy Committee--and I have been a member since 1987--
sent to you our key report, called ``Moving Beyond Conflict to
Consensus.'' And we said to you again: Get it done.
Well, frankly, the Congress piddled around with it a year
or so later, and nothing happened.
In 1994 and 1995, as I had the opportunity to be vice
chair, and then chair, the policy committee, we have come back
to you again to say: We are not going away. The issue is not
going away. The impacts are getting worse. As you will hear
from my colleagues in more graphic detail, it is time for us to
get the job done.
We support this concept. Remember the history. You have the
chance now to fix it.
In Mississippi, just a little bit of perspective. In the
Majority Leader's hometown of Pascagoula, we have industries
that build and work over rigs. We have Chevron's largest
refinery east of the Mississippi River processing crude from
the Shelf. We have a new Amoco gas processing plant to process
the gas from Federal production. People, we are contributing
our part to help the economy of the country and to meet the
national energy needs of this country. We want you to help us
back.
Remember, though, as you flesh out S. 25, it is not limited
to the coastline. There are industries in all coastal States
that you will find inland that make their contributions.
In Vicksburg, Mississippi, LeTourneau is building today the
world's largest offshore jack-up rigs. Yes, the first one was
sent to the North Sea. But the orders that have come to
LeTourneau we know will lead to rigs being in U.S. waters.
Again, the concept of S. 25 would reach the impacts in the
Vicksburg area, caused by these new industrial operations. And
you will now hear the other folks talk about what those impacts
are--from traffic, water, waste water, air emissions, and all
those things that we are coping with.
Mr. Chairman, we thank you for the opportunity to be here.
Pass the legislation. And do not wait forever in doing it.
Thank you.
[The prepared statement of Mr. Palmer follows:]
Prepared Statement of James I. Palmer, Jr., Executive Director,
Mississippi Department of Environmental Quality
Mr. Chairman, my name is James I. Palmer, Jr. I submit this
statement to you and the members of the Committee in support of S. 25,
the Conservation and Reinvestment Act of 1999, and I appreciate the
opportunity to address you personally about this much needed, and long
awaited, legislation.
Since 1980, I have been very much involved in the efforts of
Mississippi and all other similarly situated States to obtain our fair
share of revenues from offshore oil and gas operations in federal
waters to help mitigate the onshore impacts of these activities. As a
Special Assistant Attorney General, Staff Counsel to the Governor,
Executive Director of the Mississippi Department of Environmental
Quality (which has jurisdiction over leasing State-owned lands, both
onshore and offshore, for oil and gas exploration and development),
Mississippi's representative on the Outer Continental Shelf (OCS)
Policy Committee since 1987, and both Vice-Chairman and then Chairman
of this Committee over the last four years, I have long been a strong
critic of the federal government for its failure to be fair with
Mississippi and other coastal States that have to cope with onshore
impacts from offshore operations, and a strong supporter of all
legislative efforts to right this wrong.
The first, and one of the most important, points I want to make to
you is that you are not plowing new ground here. Congressional
recognition of the reality of--and the need to fully compensate
effected coastal States for--onshore impacts attributable to offshore
operations occurred some twenty-three years ago, when Congress amended
the Coastal Zone Management Act (CZMA) by creating the Coastal Energy
Impact Program (CEIP) which was grounded in, and had the same goals of,
S. 25. The idea was sound, but the program, administered by the
Department of Commerce, was doomed from the outset because of two fatal
flaws. First, and foremost, the CEIP was not a true revenue-sharing
program, because funds flowed to State and local governments only when
Congress was in the mood to approve annual appropriations under the
program. In short, the CEIP provided only periodic handouts, ignoring
the fact that onshore impacts in coastal States can't be turned on and
off according to the whim and caprice of the Congress regarding
funding. These impacts are experienced in the real, everyday world of
life in our coastal States, not the surreal world of politics in
Washington.
The second fatal flaw in the CEIP was a labyrinthine formula for
distributing the appropriated funds which was so convoluted in concept
and complex in administration that it collapsed of its own weight.
Administration of the program sparked litigation among coastal States
in which I was personally involved, having authored the document which
was used by the governors of Mississippi and Louisiana in settlement of
the terribly expensive and time consuming CEIP controversy between our
two States.
As to the first flaw in the CEIP, S. 25 provides for direct
distribution of funds to coastal States and local governments by the
Secretary of the Interior, not an annual appropriation by the Congress.
The States deserve a guaranteed, permanent distribution of these
revenues based on facts--not political temperament. As to the second
flaw in the CEIP, the S. 25 revenue distribution formula is both fair
and workable. As this legislation moves forward to passage, the
Congress should make every effort to avoid creating another situation
like the CEIP in which recipient States have to go to court just to
make the program work timely and fairly.
Ultimately, after haphazard treatment of the CEIP by both the
Congress and the Executive Branch, the program failed and was repealed
in the 1990 CZMA amendments.
Reinforcing its policy decision recognizing the reality of, and the
need to compensate coastal States for, onshore impacts associated with
offshore oil and gas exploration and development operations, Congress
amended Section 8(g) of the Outer Continental Shelf Lands Act (OCSLA)
in 1986 to distribute offshore revenues to coastal states to help
offset impacts from federal OCS activities. While the main purpose of
these amendments was to compensate States for possible drainage of oil
and gas reserves from State lands, the funds may be used to mitigate
other costs, as well. The concept is sound, but the relief to the
States is limited because the Section 8(g) ``zone'' extends seaward
only three miles from State waters. As Mississippi's representative in
the multi-State effort to resolve the Section 8(g) dilemma through
Congressional action, I can personally attest to the success of that
initiative. As with S. 25 today, the Section 8(g) battle was fought
over a single issue--equity. Congress did the right thing, but it was
only a step in the right direction. S. 25 will complete the task of
putting in place a revenue sharing concept that has been denied the
States for as long as there has been oil and gas activity in federal
waters on the OCS, and that is simply intolerable.
After the CEIP died, President Bush directed the Department of the
Interior to develop a legislative proposal to, once again, establish a
coastal impact assistance program. It was inserted into, and then
removed from, the National Energy Policy Act of 1992. Utterly
frustrated by yet another refusal by the Congress to be fair with
coastal States, the OCS Policy Committee then stepped into the breach
by formally endorsing a revenue sharing concept somewhat like S. 25
proposes today. Mr. Chairman, each member of this Committee should
carefully review the OCS Policy Committee's 1993 recommendations, which
were set forth in their report entitled, ``Moving Beyond Conflict to
Consensus.''
The Energy and Natural Resources Committee took notice of the OCS
Policy Committee's work, and considered a bill (S. 575) during the
104th Congress to create a coastal impact assistance program.
Unfortunately, the Committee did nothing but ``consider''--it did not
act--because of wrangling over how to make an impact assistance program
work in light of the constraints in the Congressional Budget
Enforcement Act.
The OCS Policy Committee's most recent actions regarding coastal
impact assistance began about four years ago. As Vice Chairman, I
recommended to Chairman Paul Kelly that we make another effort to keep
this issue before the Congress. Paul readily agreed, and he and I again
worked this issue through the Committee, culminating in our report in
October 1997, which became the launching pad for what is now S. 25. As
Chairman of the OCS Policy Committee when our report was finalized and
transmitted to both the Secretary of the Interior and Congressional
leaders, I can state unequivocally that the overall concept of S. 25,
taking into account the goals of each of the three titles, is
unprecedented. A very large and diverse coalition of interests,
including State and local governments and various private sector
organizations, has come together to push this bill to passage. And yes,
while there is no way to avoid the inevitable nit-picking and paranoia
with which any major piece of legislation like this will meet, the
foundation of S. 25 is rock solid.
All coastal States and our territories will share revenues from
offshore operations in federal waters. For producing areas, these funds
are sorely needed to mitigate very real impacts today. In areas now
under moratoria, these funds may be utilized to conduct comprehensive
environmental and economic studies, which will provide decision makers
an informed basis for future decisions regarding possible offshore
activities, consistent with the nation's energy needs. Most
importantly, as I have already stated, the key feature of S. 25, beyond
its geographic coverage and the revenue distribution formula, is that
the funding mechanism will be conformed, generally, to that of the
Section 8(g) program. Simply put, Congress will authorize the
guaranteed, permanent revenue stream and then get out of the way.
Mr. Chairman, while my principal assignment here is to remind this
Committee of the Congress' spotty history of dealing with coastal
impact assistance, I must not miss this opportunity to comment on our
situation in Mississippi in this regard. In recent years, major
discoveries, principally deep gas, have resulted in on-line production
from federal OCS waters adjacent Mississippi. Moreover, shipyards in
Pascagoula, Mississippi, Senator Lott's hometown, are making a major
contribution to these activities by providing rig construction and
workovers, as well as crew boat construction. On the downstream side,
Chevron's largest refinery east of the Mississippi River is also
located in Pascagoula, and this facility processes large volumes of
crude landed in Venice, Louisiana and transmitted to the refinery via a
pipeline that crosses the OCS and State waters. Finally, Amoco has just
completed a new gas processing plant in Pascagoula, further expanding
Mississippi's contribution to our offshore industry. As you can
imagine, while these activities have brought a much appreciated boost
to our coastal economy, they have also brought growing concerns about
water and wastewater infrastructure and air emissions, along with a
growing need for oil spill contingency planning and preparedness.
As is the case with most producing States along our nation's
coastline, the impact of offshore operations reaches inland more than
meets the eye. Mississippi's best example of this is the LeTourneau
facility on the Mississippi River at Vicksburg. Now a division of
Rowan, LeTourneau is constructing the world's largest jack-up drilling
rigs. The first of these mammoth, state-of-the-art units was launched
last year, and work on additional rigs is in progress today. While the
first rig was deployed to the North Sea, Rowan/LeTourneau will no doubt
continue to be a major force in providing offshore drilling
capabilities in the United States, as well. Again, this new industrial
activity is a major economic asset of the Vicksburg area, but the
growth issues, such as water supply and wastewater disposal, air
emissions, transportation arteries, and the like have been serious, and
the revenues Mississippi will receive when the program contemplated by
S. 25 is in place will be a tremendous help to State and local
officials, as well as planners and regulators, as offshore support
industries like LeTourneau continue to grow in our State.
Because my invitation to appear before this Committee today gave me
only a very short time to prepare, I was not able to obtain from
appropriate Mississippi officials estimates on the economic impacts
associated with the onshore activities in our State that I just
described. We will continue to work with your staff to develop this
information as consideration of S. 25 continues in this Committee and
elsewhere in the Congress.
Mr. Chairman and members of the Committee, it has been my pleasure
to appear before you today and to submit this statement in support of
S. 25. This bill is good law. It rests on a history of clear--but as
yet not fully implemented--policy of compensating coastal States for
impacts attributable to oil and gas operations in federal waters, and
it creates a rational, workable program to distribute OCS revenues to
State and local governments for use in a variety of ways, all under a
system of accountability to the Secretary of the Interior and the
Congress. Finally, S. 25 couples with this long-needed coastal impact
assistance program welcomed amendments to make the administration of
the Land and Water Conservation Fund also more flexible and permanent.
Mississippi strongly supports all three titles in S. 25, and we urge
this Committee to move the bill to final passage as quickly as
possible.
The Chairman. Thank you very much.
Senator Landrieu. Mr. Chairman, could I say a word? Because
I may have to leave. If you do not mind.
The Chairman. I am going to accommodate your witness next.
Senator Landrieu. Okay. I do want to thank Jimmy, if I
could, for his great advice and counsel he has been to us in
the development of this concept, and how invaluable your long-
time work has been. And I just wanted to thank you.
Mr. Palmer. Thank you, Senator.
Senator Landrieu. I think we are going to move, Mr.
Chairman, to Jack. Can I introduce him?
The Chairman. Before you do, I want to make a couple of
comments.
First of all, I want to recognize a new member of the
committee that has just joined us. And in keeping with the long
association of the State of Arkansas on this committee, it is a
pleasure to welcome Blanche Lincoln, from Arkansas.
STATEMENT OF HON. BLANCHE L. LINCOLN, U.S. SENATOR
FROM ARKANSAS
Senator Lincoln. Thank you.
The Chairman. Senator Lincoln joins us for the first time,
and at our first meeting, I might add. And we look forward to
your contribution.
Do you have any brief statement?
Senator Lincoln. Thank you, Mr. Chairman. I will submit my
statement for the record for the sake of time.
I do want to thank you very much for your leadership. I am
very excited to be on this committee. We do, as you have said,
have a long record of Arkansas presence on this committee. But
I also, in my own right, come from the Energy and Commerce
Committee on the House side. So I have some good background and
a good record there, as well.
I am looking forward to working with you. And I would also
like to thank my colleague, Senator Landrieu, for her
leadership on this issue, which I think is very important. I am
looking forward to working with both of you on this.
The Chairman. Thank you very much.
Senator Lincoln. Thank you for having me on the committee.
[The prepared statement of Senator Lincoln follows:]
Prepared Statement of Hon. Blanche L. Lincoln, U.S. Senator
From Arkansas
Thank you, Mr. Chairman. And thank you to our distinguished ranking
member, Senator Bingaman. As a freshman member of the Senate and the
junior Senator from the State of Arkansas, it is a pleasure to have
been appointed to the Energy and Natural Resources Committee. I am
looking forward to serving with you and my other colleagues here on the
committee.
As an Arkansan, and seventh generation farmer, I am pleased to
represent the private and public entities in my State, for whom energy
is so important. While serving in the House of Representatives and on
the Commerce Committee, I was active in supporting the needs of rural
Americans to have access to affordable electricity, protecting our
natural resources, promoting U.S. oil exploration, finding a resolution
to the problems of nuclear waste, and solving many other issues
important to my State.
My predecessor, Senator Bumpers, has been an active voice on this
committee for many years. His long and effective service on this
committee is reflected in statute and public policy. He has been an
advocate for protection of the natural resources of Arkansas and the
United States, for caution when implementing legislative mandates, and
for civility in guiding the interests of Arkansas and the country.
Clearly, his is a tough act to follow, but I am committed to
aggressively pursuing the interests of the State of Arkansas and
fighting for the needs of rural America . . . to make sure that an
acceptable resolution is found to the problems of nuclear waste
disposal, that the needs of rural Arkansans are represented during the
electricity restructuring debate, that our Nation's resources and
national parks are protected for future generations, that we continue
to pursue renewable energy options, and that the needs of industry are
balanced with the requirements of the environment.
This hearing, to provide Senate oversight on the impact of outer
continental shelf oil production on coastal States, has an indirect
effect on the State of Arkansas. My State benefits from the oil
produced in the outer continental shelf and does not have to bear any
of the environmental impact it causes. As a committee, we cannot ignore
this important issue or its effect on the communities along our
coastline. We should give proper deference to the impact that they bear
for the oil resources that we all enjoy. The panel before us today will
help us take the first step along the path of exploring this issue. I
look forward to the testimony to be presented here today and to the
insight offered by the witnesses.
The Chairman. I am very happy that you are here.
Senator Graham. Mr. Chairman.
The Chairman. Yes, Senator Graham.
Senator Graham. Can I ask this? I am afraid I am going to
have to leave for that caucus. I wonder if we would be
permitted to submit questions in writing to the witnesses for
subsequent-to-the-hearing response.
The Chairman. Sure, we will provide that opportunity.
Senator Graham. Thank you very much.
Before I recognize Senator Landrieu, let me indicate how
broad the interest in the issue and in the players are because
LeTourneau is a very interesting subsidiary of the Rowan
Company. And the Rowan Company has got activities in our State
in the area of aviation and others. So we have a stretch across
a broad breadth of America in the interests of those that are
in the oil and gas exploration, development and so forth.
Senator Landrieu, I believe you wanted to introduce your
witness, Mr. Caldwell. Please proceed.
Senator Landrieu. Jack Caldwell is our Secretary of Natural
Resources, and has done just an outstanding job as he has spent
days, weeks, months, years on this issue, travelling to almost
every State in the Union, talking with any people who will
gather to hear him. And I want to thank him for his leadership.
He is on one of the advisory committees of the Mineral
Management Service, and has just done an outstanding job, Mr.
Chairman, helping us get to this point.
Jack, before you start, I also want to thank Mark for his
leadership. Mark Van Putten and the National Wildlife
Federation have been one of the great environmental groups that
can speak specifically to this issue. So, thank you very much.
I am going to have to leave in a few minutes. I am going to
try to stay as long as I can. But, Jack, thanks for coming.
The Chairman. Please proceed, Jack.
STATEMENT OF JACK C. CALDWELL, SECRETARY, LOUISIANA DEPARTMENT
OF NATURAL RESOURCES
Mr. Caldwell. Thank you, Senator Landrieu.
Mr. Chairman and honorable members of the committee, as
Senator Landrieu has just emphasized to you, Louisiana's
coastal ecosystem is a unique national treasure and it is in a
virtual state of collapse. In the last 50 years, we have lost
1,000 square miles of coastline. And in the next 50 years, we
are going to lose another 1,000 square miles of coastline if we
do not do anything about it. This is an area the size of the
State of Delaware that is disappearing into the Gulf of Mexico.
I have here my digitized satellite map, which shows the
losses, in red in the past, and the yellow is in the future, in
just one part of the Louisiana coast. And you can see the
catastrophic devastation that this coast is undergoing.
The economic, social and environmental costs are
staggering. The current estimate is that in infrastructure
alone, we are going to lose $150 billion in value over the next
50 years. Whole towns and communities, oil fields, coastal
industries, public facilities are going into the Gulf of Mexico
if we do not do something about it.
Now, the causes of this loss are very complex and numerous.
But, without a doubt, as always, the hand of man is a
significant influence. And in this, offshore oil and gas
operations have had a significant impact.
Let us take one example, the Houma Navigation Canal. This
canal was dug in 1964, and it runs from the town of Houma,
Louisiana, population about 100,000, 25 miles down to the Gulf.
And it is one of Louisiana's major offshore oil and gas
operations bases. In the 35 years that this canal has been
there, as you can see from my satellite map, we have lost 10
square miles along that one canal in a 25-mile area.
This is due to boat wash in these fragile marshes,
saltwater intrusion that comes up the canal and destroys the
freshwater marsh, and the tidal energy that washes the soil in
and out. Ten square miles in 35 years.
In addition, the Louisiana coast is criss-crossed by 14,000
miles of oil and gas pipelines, many of them from offshore
coming onshore. The Mineral Management Service is presently
doing a study to determine the impacts just of those pipelines.
And we will have that and we will file that in the record when
the MMS completes it.
In addition, we have Port Fourchon, which is presently
being studied by the MMS. It is the major offshore oil base,
located down on the coast. Port Fourchon is serviced by one
two-lane road, running up Bayou LaFourche, that carries 1,000
trucks a day. And that poor road is crumbling into the Gulf as
we speak. If we do not get some help, Port Fourchon will have
to shut down.
Now, Louisiana supports strongly offshore oil and gas
operations. We have always believed in it, as Senator Landrieu
has told you. But Louisiana should not bear a disproportionate
burden of the adverse environmental impacts of these
operations. We have furnished 90 percent of the revenues that
come from offshore Louisiana. And we have been returned about 1
percent of the royalties under the 8(g) funds.
But there is hope on the Louisiana coast. Under the Breaux
Act, sponsored by Senator Breaux in 1990, Louisiana has been
receiving about $40 million in Federal funds. And this,
together with State match, has gone into coastal restoration
projects that my department is charged with implementing. And I
want you to know that I am very pleased and very proud to
report that we are currently meeting with modest success in
coastal restoration.
But this is not enough. At the present rate, it is
estimated we will only save about 22 percent of the losses that
will otherwise occur. We believe that S. 25 can provide the
resources to restore the coast.
A joint coalition of Federal and State agencies have just
finished a comprehensive strategic plan for the Louisiana
coast, known as Coast 2050. And we have furnished the committee
with copies of this plan.
The Coast 2050 estimates that if we take the appropriate
action, we can save 90 percent of the loss that will otherwise
occur, and at a modest cost of $14 billion over the 50-year
period. And S. 25 we believe can provide those funds.
So, we submit that the Louisiana coast is a perfect model
for reaching the lofty and worthy goals of S. 25, which is to
reinvest a portion of these nonrenewable oil and gas revenues
into renewable and sustaining resources. We believe that title
I, as well as title II and title III embody the great American
tradition of conserving and preserving our dwindling natural
resources.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Caldwell follows:]
Prepared Statement of Jack C. Caldwell, Secretary, Louisiana Department
of Natural Resources
Louisiana's story is compelling. It's about an irreplaceable part
of America's coast that is disappearing at a catastrophic rate. If the
loss is not stopped and reversed, the very industry we discuss today
will be at risk, along with the economy, infrastructure, wildlife
habitat, fisheries, communities and unique culture of south Louisiana.
Louisiana's coastal wetlands represent 40% of all the salt marshes
in the contiguous United States. During the past 50 years more than one
thousand square miles have disappeared. During this decade, our coastal
wetlands are being lost at the rate of 25 to 35 square miles a year, or
the equivalent of a football field every 15 minutes. Even with current
restoration efforts, we expect to lose almost one thousand more square
miles by the year 2050. This dramatic loss represents 80% of all
coastal wetland loss in the entire continental U.S.
The effects of natural processes like subsidence and storms
combined with human actions, including impacts from offshore oil and
gas exploration and development, have led to an ecosystem on the verge
of collapse.
America is losing much more than acreage. Louisiana's coastal
wetlands contribute 28% to the total volume of U.S. fisheries, provide
winter habitat for one-half to two-thirds of the Mississippi Flyway
waterfowl population and for many threatened and endangered species,
the nursery ground for fish and shellfish for much of the nation's
seafood consumption, and 40% of the nation's fur harvest. They provide
for 400 million tons each year of waterborne commerce, and support and
protect the multi-billion dollar a year oil and gas industry. Our
coastal wetlands are home to more than two million people and serve as
their buffer from hurricanes and storms.
louisiana offshore oil and gas activity
Eighteen percent of U.S. oil production originates in, is
transported through, or is processed in Louisiana coastal wetlands with
a value of $6.3 billion a year. Almost 24% of U.S. natural gas
production originates in or is processed in Louisiana's coastal
wetlands with a value of $10.3 billion a year.
Louisiana's OCS (outer continental shelf) territory is the most
extensively developed and matured OCS territory in the United States.
It has produced 88.8% of the crude oil and condensate and 83.2% of the
natural gas extracted from all federal OCS territories from the
beginning of oil and gas exploration and development in the U.S.
through the end of 1996.
As of December 1998, Louisiana offshore leases totaled 5,363, with
more than 27 million acres under lease, 130 active drilling rigs, 4,489
producing oil wells and 3,813 producing gas wells.
Our latest annual production data for 1997 shows that 353,846,995
barrels of oil and 3,881,352,353 MCF (thousand cubic feet) of natural
gas was produced. Between January and July 1998, oil production was at
227,282,332 barrels, with gas at 2,281,832,468 MCF.
As of October 1998, there were 3,439 platforms in the Gulf off
Louisiana's coast.
In 1997, oil and gas production was valued at a combined total of
$18.6 billion, with federal royalties totaling $2.9 billion.
Louisiana projection estimates for offshore oil and gas production
and federal royalties:
----------------------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
----------------------------------------------------------------------------------------------------------------
OIL:
Production (in millions of barrels)...................... 413.0 493.9 524.8 541.2 556.7 572.2
Oil Royalties (in millions of $$)........................ 1,177.5 1,392.0 1,471.4 1,523.9 1,537.2 1,450.4
GAS:
Production (in million MCF).............................. 3,700.8 3,527.3 3,308.5 3,318.3 3,373.4 3,428.4
Gas Royalties (in millions of $$)........................ 1,360.9 1,292.2 1,175.5 1,082.2 993.5 911.6
----------------------------------------------------------------------------------------------------------------
Recently, the oil and gas industry has rebounded from a downturn in
the 1980s. The main reasons are the discovery of oil and gas in
deepwater fields of the central Gulf of Mexico, deepwater royalty tax
relief, and new and improved technology used to extract oil from the
deepwater Gulf.
Industry leaders are expressing a new optimism and the frantic pace
of drilling is breaking old records. The deepwater Gulf of Mexico has
emerged as the country's most significant oil and gas province and some
estimates say within the next four to five years, as much as 30% of the
country's total domestic output will originate from the Gulf of Mexico.
Market analysts predict this intense level of exploration could
last 10 years. The success of Louisiana's oil and gas industry
contributes billions to the State and national economies every year.
Offshore companies paid about $2.4 billion to vendors and contractors
in 165 Louisiana communities in 1992 alone. Nearly 4,000 vendors serve
offshore operations and employ 55,000 people and more than 30,000 are
employed offshore.
Port Fourchon is the geographic and economic center of offshore
drilling efforts along the Louisiana Gulf Coast. More than $700 million
in public and private investments have been made in the complex and the
port will provide support to 75% of the deep water drilling prospects
in the Gulf. It's tonnage has increased 275% in the last five years and
it is anticipated to double again within two years. It handled more
than 30 million tons of cargo in 1996.
More than 6,000 people currently depend on the port as an avenue to
and from offshore facilities and more than 13,000 people depend on it
for jobs, supplies, facilities and as a hurricane evacuation hub to
safer locations north of the coast. Most of the major and independent
oil and gas companies operating in the Gulf have a presence at Port
Fourchon. On any given day, more than 1,000 trucks are unloaded and
loaded there and pipe yards, shipyards, platform construction
facilities, service bases and barge terminals within the immediate
service area of the port are working at or near capacity.
Less than 20 miles southeast of Port Fourchon is the Louisiana
Offshore Oil Port (LOOP), built by a group of major oil and pipeline
companies. It serves as the central unloading and distribution port for
all incoming supertankers to the Gulf region. The supertankers offload
crude oil into LOOP's offshore pipeline continuously. The oil is then
piped north to Lafourche Parish where it is stored and piped to markets
all over the country.
the oil and gas industry--impacts come full circle
The United States depends on the oil and gas shipped through and
produced in Louisiana's coastal zone. Wetlands and barrier islands
protect the billions of dollars worth of infrastructure that supports
the industry from wave and storm damage and are an integral part of the
nation's energy system. The industrial uses associated with offshore
exploration and production, pipelines, and canal developments have
directly and indirectly contributed to marsh destruction, putting the
industry, itself, at risk.
Navigation channels and canals dredged for oil and gas extraction
have dramatically altered the hydrology of the coastal area. North-
south channels and canals have brought salt water into fresh marshes,
killing vegetation and habitat. East-west canals have impeded
sheetflow, ponding the water on the marsh and leading to stress and
eventual loss. Canals have also increased tidal processes that impact
the marsh by increasing erosion. Channel deepening has caused saltwater
intrusion, endangering the potable water supply of much of the coastal
region.
As of 1997, there were more than 20,000 miles of pipelines in
federal offshore lands and thousands more inland. They all make
landfall on Louisiana's barrier islands and wetland shorelines. The
barriers are the first line of defense against combined wind and water
forces of a hurricane and they serve as anchor points for pipelines
originating offshore. These islands protect the wetland habitants from
an offshore oil spill and are critical in protecting the state's
wetland-oriented oil and gas facilities and thousands of jobs directly
and indirectly tied to the industry.
If the barrier islands erode entirely, as expected in the next 50
years, platforms, pipelines and wells will be damaged in increasing
numbers. More than 58% of the region's wells are located in coastal
parishes. Most of them are more than 50 years old and were not designed
to withstand the conditions of open water they could face in the next
50 years. More than 30,000 wells are at risk within the 20-parish
coastal area. Wells that were on land only a few years ago are now
surrounded by water, a situation hazardous to boat traffic and an
environmental liability to habitat and fisheries.
Workers, equipment, supplies, and transportation facilities that
accompany the rapid growth of the offshore oil and gas industry depend
on land based facilities. Roads, housing, water, acreage for new
business locations and expansions of existing businesses, waste
disposal facilities and other infrastructure facilities will be needed
in localized areas along the Louisiana coast. Existing land based
infrastructure is already heavily overburdened and needs expansion and
improvement, requiring extensive financial infusions from State and
local governments. For example, Louisiana's only highway leading to
Port Fourchon is on the verge of crumbling under the strain of the
thousands of trucks that travel it each week. It will cost about $266
million to make the highway safe and fully usable.
LOOP also depends on onshore infrastructure protected by wetlands.
Without this protection, America will lose an essential trade and
navigation center that would affect commerce throughout the world.
other impacts from coastal wetland loss
Louisiana ranks first in the nation in total shipping tonnage,
handling more than 450 million tons of cargo a year through its deep-
draft ports of New Orleans, Baton Rouge, Lake Charles, South Louisiana,
Plaquemines Parish and St. Bernard. The ports between Baton Rouge and
New Orleans are the largest by tonnage carried in the world and serve
the entire eastern part of the country.
The state's wetlands and barrier islands protect this
internationally important port system, as well as navigation channels,
waterways and anchorages from winds and waves. At present land loss
rates, more than 155 miles of waterways will be exposed to open water
in 50 years, leaving this key port system at risk and businesses
throughout the nation losing preferred links to European and Pacific
Rim markets.
Because of our coastal marshes and barrier islands, Louisiana's
commercial and recreational fisheries are among the most abundant in
America, providing 25% to 35% of the nation's total catch. Louisiana is
first in the annual harvest of oysters and crabs and menhaden, and is a
top producer of shrimp. Some of the best recreational salt water
fishing in North America exists off Louisiana's coast. The reason for
this abundance is that our coastal marshes provide the nursery for
young fish and shellfish.
The long-term impacts of wetland loss relates to many species of
fish and shellfish that depend on these habitats, translating into
economic losses that affect the entire region and the nation. Nearly
all Louisiana commercial species use the marsh at some stage of their
life cycle, and fisheries loss will be proportional to marsh loss. By
the year 2050, the annual loss of commercial fisheries will be nearly
$550 million. For recreational fisheries, the total loss will be close
to $200 million a year.
Louisiana's coastal wetlands provide a diverse habitat for many
wildlife communities. The wetlands provide life cycle needs for
resident species and wintering habitat for migratory waterfowl and
other birds. Land loss and habitat change by the year 2050 will affect
the nation's wildlife population. Sea birds, wading birds and shore
birds are expected to decrease, along with raptors and woodland birds.
Alligators and furbearers will decrease in certain areas of the coast,
as will the abundance of ducks and geese.
Louisiana's cities and coastal communities are at great risk as the
wetlands and barrier islands disappear, leaving people with no buffer
from storm surges and the force of high winds. Miles of hurricane
protection levees will be exposed to open water conditions, forcing
widespread relocation and abandonment of coastal communities.
Wetlands create friction and reduce high winds when hurricanes hit.
They also absorb hurricane storm surges. Scientists estimate that every
2.7 miles of wetlands absorbs one foot of storm surge. The 3.5 million
acres of wetlands that line Louisiana's coast today have storm
protection values of $728 million to $3.1 billion.
The recent strike of Hurricane Georges, just a few miles east,
brought home just how devastating a direct hit to New Orleans would be.
The potential loss of life and property is incomprehensible and the
threat of disaster was not lost on the city's residents. Bumper-to-
bumper traffic snaked out of the city north and west for hours as more
than one million people evacuated the crescent city. Hotel space was
scarce as far north as Memphis.
With the loss of barrier islands and wetlands over the next 50
years, New Orleans win be a Gulf coast city and will lose its wetland
buffer that now protects it from many effects of flooding. Hurricanes
will pose the greatest threat, since New Orleans sits on a sloping
continental shelf, which makes it extremely vulnerable to storm surges.
More than two million people in inland south Louisiana will be
subject to more severe and frequent flooding than ever before. Coastal
communities will become shorefront towns and the economic and cultural
costs of relocation is estimated in the billions of dollars.
We expect an increase in homeowner and commercial insurance rates
by 20% in some cases. Insurance coverage for wind damage may be
discontinued, deductibles will increase by 20% by next year, and large
insurance companies will stop issuing new policies in the coastal zone.
South Louisiana's unique culture is a national treasure and the
very fabric of its distinct way of fife is being eroded with the coast
at great intangible cost to the nation and the world.
coast 2050: a vision of the future
Louisiana began work in earnest to restore its coast in 1989 with
the passage of Act 6 and in 1990 with passage of the Breaux Act or
CWPPRA (The Coastal Wetlands Planning Protection and Restoration Act).
Since then, more than 80 restoration projects are presently underway or
already completed. We have gained the technical know-how and, by
working with our federal partners, we are cementing long-term
partnerships as we build projects together.
During the past 18 months, the Coast 2050 Plan was developed in
partnership with the public. It is a technically sound strategic plan
to sustain Louisiana's coastal resources and to provide an integrated
multiple-use approach to ecosystem management.
Coast 2050 has received unanimous approval from all 20 Louisiana
coastal parishes, the federal Breaux Act Task Force, the State Wetlands
Authority, and various environmental organizations, including the
Coalition to Save Coastal Louisiana. This approval is unprecedented.
The main strategies of the plan are watershed structural repair,
such as restoration of ridges and barrier islands, and watershed
management, such as river diversions and improved drainage. In making
recommendations, the process did not view the number of coastal
wetlands acres saved as the only priority, but considered other
resources as well, such as roads, levees, fish and wildlife resources,
and public safety and navigation, in making recommendations.
The Breaux Act (CWPPRA) Task Force, the State Wetlands Authority
and the Department of Natural Resources Coastal Zone Management
Authority will establish it as a unifying strategic plan of action. It
will become the CWPPRA restoration plan and Louisiana's overall
strategic coastal plan. Proposed projects will be measured against the
strategies in the Coast 2050 Plan before being approved.
In one way or another, everyone in the nation will feel the
enormous loss of land along Louisiana's coast and current restoration
efforts will only prevent 22% of the land loss projected to occur
within the next 50 years. However, we know that a comprehensive
restoration program using the Coast 2050 Plan as a guide, could restore
and maintain more than 90% of the coastal land existing today.
The price tag is $14 billion to construct more than 500 projects
that would be needed, but the price of infrastructure alone that would
be lost is more than $150 billion.
For more than 50 years, Louisiana has shouldered the environmental
and infrastructure impacts of supporting the OCS oil and gas industry.
In 1997, royalties paid to the federal government from OCS revenues off
the coast of Louisiana totaled $2.9 billion. Louisiana realized only a
fraction in direct financial benefit, while losing another 35 square
miles of its coast. If Louisiana receives its fair share of OCS
revenues, we will be well on the way to restoring our coastline,
justifying the $14 billion investment.
Senate Bill 25 makes good sense. Investing income from a non-
renewable capital asset into renewable resources that will provide
economic stability and health to an entire region and the nation for
decades to come, is good business.
Louisiana and America cannot afford to wait.
NOTE: Some of the information in this testimony was taken from: the
preliminary final draft of Coast 2050: Toward A Sustainable Coastal
Louisiana, the final draft of No Time to Lose, a report by the
Coalition to Restore Coastal Louisiana, and reports written by Dr.
Donald W. Davis, administrator, Louisiana Applied Oil Spill Research
and Development Program.
The Chairman. Thank you very much, Mr. Caldwell. I
appreciate your statement. And your entire statement will be
entered into the record.
Senator Craig has joined us. Good morning.
Senator Craig. Good morning, Mr. Chairman.
Go right ahead.
The Chairman. The next witness will be the Hon. Jim
Whitaker of the House of Representatives, State of Alaska.
STATEMENT OF JIM WHITAKER, STATE REPRESENTATIVE
FROM ALASKA
Mr. Whitaker. Thank you, Mr. Chairman.
If I may jump right to it. I respectfully submit my
statement for the record.
The Chairman. Without objection.
Mr. Whitaker. Thank you.
And I will paraphrase parts of it. But before I do that,
let me state simply--and if you remember nothing of what I say
for the remainder of that which I speak, please remember this--
this bill is a good idea, and we need good ideas. The people of
Alaska support it. And, again, it is a good idea.
I am testifying here today on behalf of State Senate
President Drue Pearce and the Alaska State Senate and on behalf
of State House Speaker Brian Porter and the Alaska State House,
and, most importantly, on behalf of the people of Alaska.
I serve as Chairman of the Oil and Gas Committee in the
Alaska State House. I am here today to talk about the impacts
of offshore oil and gas development activities on Alaska and
its coastal communities. I want to begin, however, by
expressing my appreciation to you, Chairman Murkowski, Senator
Landrieu, and other cosponsors of S. 25, the Conservation and
Reinvestment Act of 1999.
This legislation is a much-needed and appropriate step
towards addressing the impacts, needs and inequities which have
been discussed today and will continue to be discussed, I am
sure.
For the last three decades, Alaska has been one of the
primary sources of this country's domestic energy supply. And
it is no secret that the oil and gas industry has brought many
benefits to those of us in Alaska. At the same time, however,
it has also created responsibilities and burdens which have
economic costs throughout the State.
I can tell you that my own hometown of Fairbanks
experiences many real economic, environmental and community
impacts as a result of the oil and gas activities which takes
place further north and also from the Trans-Alaska Pipeline.
Fortunately, we have also been able to benefit from them, as
well, and rely upon those benefits, to some extent, to deal
with such impacts and responsibilities.
Alaska is one of several States which has active Federal
outer continental shelf oil and gas development taking place
off its shores. More importantly, the level of production from
Federal OCS oil and gas leases in Alaska is likely to increase
significantly as new development is brought online. Hundreds of
millions of dollars in revenues will be produced from Federal
OCS development in Alaska. And I hope that billions becomes the
byword, rather than millions, as the years go by.
Yet, unlike Federal onshore activities, Alaska and the
individual communities which are most proximate to Federal OCS
development will receive no direct benefits from it, even while
we shoulder the burdens and responsibilities that arise from
development.
Senator, in light of time constraints, I will stop my
testimony at this point. Thank you very much, again, for giving
me the opportunity.
[The prepared statement of Mr. Whitaker follows:]
Prepared Statement of Jim Whitaker, State Representative From Alaska
Good Morning, Mr. Chairman and members of the Committee. My name is
Jim Whitaker and am here testifying today on behalf of State Senate
President Drue Pearce and the Alaska State Senate and Alaska State
House Speaker Brian Porter and the Alaska State House. I am a member of
the Alaska State House from Fairbanks, Alaska and serve as Chairman of
the Oil and Gas Committee.
I am here today to talk about the impacts of offshore oil and gas
development activities on Alaska and its coastal communities. I want to
begin, however, by expressing my appreciation to Chairman Murkowski,
Senator Landrieu and the other co-sponsors of S. 25, the Conservation
and Reinvestment Act of 1999. This legislation is a much-needed and
appropriate step towards addressing the impacts, needs and inequities
we are discussing today.
For the last three decades, Alaska has been one of the primary
sources of this country's domestic energy supply. It is no secret that
the oil and gas industry has brought many benefits to Alaska. At the
same time, however, it has also created responsibilities and burdens
which have economic costs throughout the State. I can tell you that my
own hometown of Fairbanks experiences many very real economic,
environmental and community impacts as a result of the oil and gas
activities which take place further north and from the Trans Alaska
Pipeline System. Fortunately, we have also been able to benefit from
them as well and to rely upon those benefits, to some extent, to deal
with such impacts and responsibilities.
Alaska is also one of the several states which has active federal
outer continental shelf (OCS) oil and gas development taking place off
its shores. More importantly, the level of production from federal OCS
oil and gas leases in Alaska is likely to increase significantly as new
development is brought on line. Hundreds of millions of dollars in
revenues will be produced from federal OCS development in Alaska. Yet,
unlike federal onshore activities, Alaska and the individual
communities which are most proximate to federal OCS development will
receive no direct benefits from it even while we shoulder the burdens
and responsibilities that arises from development.
As in the case of onshore development, federal OCS activities are
major industrial undertakings which inevitably impact the State and
particularly the communities nearest to them. Federal OCS oil and gas
activities place increased demands on infrastructure, such as roads,
ports, airports and not just those in the immediate area. Anchorage,
our largest city, which is itself a coastal community, feels such
affects from activities all over the State. In Alaska, much OCS-related
equipment and facilities must come through the Port of Anchorage
whether it is destined for the nearby waters of Cook Inlet or those
much further north. The Anchorage and Fairbanks airports both
experience significantly higher traffic, both cargo and passenger, as a
direct result of onshore development and offshore activities will bring
further increases. Federal OCS activities also place increased demands
on local public services, such as fire protection, search and rescue,
and law enforcement, as well as the utility systems of nearby
communities, such as Barrow, Kaktovik, Kodiak and around Cook Inlet.
Equally important are the increased environmental monitoring and
regulatory functions that must be performed by the State and local
governments. All of these impacts have economic costs for the State and
for our local communities. Under the current federal system, however,
we derive no direct economic benefits from federal OCS oil and gas
development to assist us in dealing with the impacts which these same
activities create.
Not only is this unfair, it is also at odds with the historical
practice and policy in the United States of allowing affected states
and communities to share in the benefits of the development of
federally-owned resources. The Alaska Statehood Act and, in other
states, the Mineral Leasing Act, provide that we are entitled to
receive a significant portion of the revenues derived from federal oil
and gas leases on lands within our boundaries. This policy exists both
as a matter of fairness and in recognition of the very real impacts
which such activities create. Similarly, the federal payments in lieu
of taxes or PILT program seeks to account for the economic impacts of
federal lands on the local tax base. But the rules suddenly and
inexplicably change when those very same federal activities occur right
off our shores. That, I believe you'll agree, is simply not right and
makes no sense.
Nevertheless, this is not simply a matter of sharing the wealth,
but also about addressing very real needs. Many of the smaller coastal
communities in Alaska are struggling under what can best be described
as third world conditions. Most are still trying to address basic
community needs like education and water and sewer service. Many of the
residents in these villages exist below the poverty line and are forced
to rely on subsistence activities for survival. I have included as an
exhibit to my written testimony a chart with income and poverty
information for some of our coastal communities. The social and
cultural problems that accompany poverty are often rampant. Money will
not solve all of these problems. But providing some form of OCS
community impact assistance will help improve the quality of life for
such communities and their residents.
Allowing Alaska and other coastal States to share in the economic
benefits of federal OCS development will also assist us in addressing
other important needs and functions. As a coastal State, Alaska has an
extensive Coastal Zone Management Plan and Program Which is concerned
not just with OCS oil and gas activities but all activities which
impact the coastal environment. Federal OCS revenues would better
enable Alaska and its communities to implement adequate monitoring and
planning programs. The monitoring and collection of data regarding
marine species and habitat could be significantly expanded. Local
communities would be able to participate more fully and address their
concerns in the extensive federal and State environmental planning
process which precedes OCS development.
In closing, let me emphasize that the Legislature and the citizens
of Alaska overwhelmingly support responsible OCS development. Alaska
has been blessed with a wealth of natural resources and their
development is a crucial element of our economy. At the same time,
however, it is important that the United States recognize the necessity
and equity of allowing Alaska and other coastal States to share
directly in the benefits of the development OCS resources so as to
better enable them to deal with the very real impacts and
responsibilities which they create.
Thank you again, Mr. Chairman, for the opportunity to appear here
and express the Legislature's concerns on this very important matter.
------------------------------------------------------------------------
Median Percent
Community Population household below
income poverty
------------------------------------------------------------------------
Kipnuk............................. 567 $ 4,999 76.6%
Kokhanok........................... 168 14,286 53.4%
Tyonek............................. 151 11,591 37.1%
Wales.............................. 162 15,000 35.2%
Savoonga........................... 622 11,339 50.9%
Quinhagak.......................... 567 17,500 37.2%
Chevak............................. 721 17,222 27.0%
Edna Bay........................... 70 12,250 63.7%
Gambell............................ 653 15,938 46.4%
Hooper Bay......................... 1,012 18,125 43.5%
Perryville......................... 107 25,000 25.4%
------------------------------------------------------------------------
SOURCE: 1990 U.S. Census
The Chairman. Thank you very much, Mr. Whitaker. I
appreciate your statement. And the balance will be entered into
the record.
Our next witness is Mr. Donald Oltz, State Geologist and
Supervisor for the Geological Survey, State of Alabama.
Please proceed.
STATEMENT OF DR. DONALD F. OLTZ, PH.D.,
STATE GEOLOGIST, ALABAMA
Dr. Oltz. Thank you, Mr. Chairman. I appreciate the
invitation to be here.
I am the State Geologist of Alabama, and apparently I am
lobbying for State magician also.
[Laughter.]
Dr. Oltz. I want to thank Senator Sessions for his
introduction.
The Chairman. In case some of our members missed it, this
gentleman is also a magician. And I thought maybe we could use
him in either the Democratic or the Republican caucus.
Senator Craig. More than he ever would realize.
[Laughter.]
The Chairman. So, if you are looking for something to do
after you finish, we have got a place for you.
Dr. Oltz. Okay.
Senator Burns. I want to take the opposite position to
that. I think we have got more than we need now.
[Laughter.]
The Chairman. Well, there is never an unspoken thought
around here.
Please proceed.
[Laughter.]
Dr. Oltz. Today, I would like to briefly touch on how
Alabama currently handles OCS income and activities, and then
discuss how offshore exploration and production activities for
natural gas and oil impact the coastal part of Alabama.
I thought it would be informative just to briefly mention
the Alabama model for revenues the State currently receives
from oil and gas production. A 2 percent production tax and a 6
percent privilege tax are assessed on oil production. The
counties from which the production is severed receive 25 to 30
percent of the privilege tax. The majority of severance tax
goes into the general fund, which supports all non-educational
programs in Alabama.
Two trust funds have been established that receive offshore
revenues, the Alabama and the Heritage Trust Funds will be
merged together in 2001. They currently have a combined corpus
of $1.61 billion. These funds include royalties and other
revenues derived from State waters and all 8(g) revenues.
Investment income last year approached $122 million, which was
deposited in the State's general fund.
Now, I would like to focus on Alabama, and discuss how
offshore exploration and production activities for natural gas
impact the coastal area. Natural gas was discovered in Alabama
in 1979. Additional discoveries of natural gas in Alabama State
waters led to natural gas discoveries in the OCS off Alabama,
Mississippi and Florida. Offshore production platforms,
pipelines, and onshore processing facilities were established
to allow for production of these very large natural gas
reserves.
Currently, gas production offshore of Alabama occurs within
the 3-mile State coastal waters, in the State shared with
Federal 8(g) area, and beyond the 6-mile 8(g) boundary. Over a
billion and a half--and let me repeat that, because I am going
to come back to some of these numbers--a billion and a half
cubic feet a day are brought onshore in southern Mobile County,
Alabama. This gas originates from Alabama, Mississippi and
soon, possibly, Florida.
Alabama has over 100 industries that participate in the
construction and operation of drilling rigs. New production
drilling and production technology will expand exploration and
production operations into very deep water.
Some specific Alabama infrastructure needs are roads. For
instance, we have four gas processing plants in three locations
in Mobile County, Alabama. These plants, as an example, send
out 25 to 30 molten sulfur-laden semis, tanker trucks, every
day, each day accumulating 400 to 500 long tons of molten
sulfur. Sulfur is removed from the gas because a lot of the gas
produced in offshore Alabama is sour.
Docks and port facilities are obvious. New pipelines--we
are projecting increased exploration in the Gulf of Mexico. It
is one of the hottest spots for exploration for the oil
industry in the world right now. So we can look for expanded
for pipelines in Alabama. Sometimes these have to cross coastal
wetlands and other environmentally sensitive areas.
Accommodations to Federal production--in the interest of
efficiency offshore, a lot of material will be combined with
State production at an offshore platform and then piped into
onshore facilities. We are going to be accommodating Federal
production, and commingling it with the State production, which
means a whole administrative nightmare, metering problems, and
also accommodation for the increased volume.
We have viewshed issues. Residents of the coastal
communities have complained about the viewshed issues offshore
Alabama. We have boat and air traffic problems, competition for
offshore space. You are probably aware that Alabama has a
tremendous shrimping industry and a fishing industry, and the
shrimp boats compete with crew boats and other traffic going
back and forth in support of the offshore platforms.
Air quality is a problem in the south coastal air basin.
Oil spills could potentially be a problem in offshore Alabama.
Right now, we only have to handle gas. And there is no threat
to the shoreline. As production increases and as new
discoveries are made further offshore, we expect that oil will
have to be something that infrastructure will be needed to
handle, in terms of potential beach problems.
Of course labor is a problem.
My written comments address also title I provisions, but we
go on record here in support of the title II and title III.
Alabama has produced over 1 trillion cubic feet of gas. And
I go back to this idea about numbers, because the industry
talks about a million cubic feet a day, or 5,000 barrels of oil
per day. A trillion cubic feet of gas is about 20 percent of
the total reserves that are available offshore Alabama. One
trillion cubic feet will take the area of a football field
2,800 miles high. That is how much gas and how much
infrastructure impact there is in Alabama.
As I have described, Alabama is currently being impacted by
offshore development in a variety of ways. And we are carrying
more than our share of the burden. It would be appropriate for
the State of Alabama and local governments to receive
additional revenues that could be used to mitigate adverse
environmental and public service impacts incurred due to OCS
development.
I appreciate the opportunity to make these comments. Thank
you.
[The prepared statement of Dr. Oltz follows:]
Prepared Statement of Dr. Donald F. Oltz, Ph.D., State Geologist,
Alabama
Mr. Chairman, thank you for the invitation to appear here today. I
am Don Oltz, State Geologist of Alabama. In my position as Supervisor
of the State Oil and Gas Board of Alabama, I have regulatory authority
for oil and gas operations in Alabama. As Director of the Geological
Survey of Alabama, I head an agency which provides current, competent,
and complete information and research on Alabama energy, minerals,
water, and biology. Also, I am the current vice chairman of Minerals
Management Service (MMS) Outer Continental Shelf (OCS) Policy Committee
and was one of the votes to move the assistance concept to the
Department of the Interior. I also have many years' experience in the
oil and gas industry. Today, I would like to provide a short summary of
the OCS Policy Committee's report on coastal impact assistance, briefly
touch on how Alabama handles current income from OCS activities, and
then discuss how offshore exploration and production activities for
natural gas and oil impact the coastal area of Alabama.
The OCS Policy Committee was established to provide advice to the
Secretary of the Interior through the MMS on policy issues related to
oil and natural gas activities on the OCS. Members represent the
coastal States and constituencies impacted by federal OCS programs. At
the Spring 1997 meeting, the OCS Policy Committee reiterated its
support for impact assistance and revenue sharing to coastal States and
communities directly affected by oil and gas development. The MMS asked
the OCS Policy Committee to develop a proposal to implement an impact
assistance program. The resulting report entitled, ``Coastal Impact
Assistance'' was approved by the OCS Policy Committee and transmitted
to the Secretary of the Interior.
The OCS Policy Committee report identified two fundamental
justifications for a revenue sharing or impact assistance program: (1)
mitigate the various impacts of OCS activities and (2) support
sustainable development of nonrenewable resources. The committee report
states that `` `OCS development can . . . affect community
infrastructure, social services and the environment in ways that cause
concerns among residents of coastal States and communities.' These
effects cannot be entirely eliminated and they underscore the fact
that, while the benefits of the OCS program are national, a
disproportionate share of the infrastructure, environmental and social
costs are local.''
Impacts listed in the OCS Policy Committee report are:
the need for infrastructure, such as ports, roads, water and
sewer facilities, to support expanded economic activity
accompanying OCS development;
the need for public services, such as schools, recreation
facilities, and other social services, to support the
population growth accompanying OCS development;
the need to mitigate the effects of occasional accidents
(e.g., oil spills) or cumulative air, water, and solid waste
discharges on coastal and marine resources and on the economic
activities (e.g., tourism and fisheries) that depend on those
resources;
the need to mitigate the physical impact of OCS activities
(e.g., pipelines, wake wash, road traffic, canal digging, and
dredging) on sensitive coastal environments;
the visual impact on residents and tourists from production
platforms and facilities, waste disposal sites, pipeline rights
of way, canals, etc.; and
the costs to State and local governments of effective
participation in OCS planning and decision-making processes and
permitting, licensing, and monitoring onshore activities that
support offshore development.
Mr. Chairman, I thought it might be informative to briefly mention
revenues the State currently receives from oil and gas production
including the offshore. In Alabama, severance taxes are charged on
natural gas production. A two percent production tax and a six percent
privilege tax are assessed on all production. The counties from which
the production is severed receive 25 to 30 percent of the privilege
tax. The majority of severance tax revenues are deposited in the State
General Fund which supports all non- educational State programs. Two
trust funds have been established that receive offshore revenues. The
Alabama and Heritage Trust Funds will be merged in 2001 and currently
have a combined corpus of 1.61 billion dollars. These funds include
royalties and other revenues derived from State waters and all 8(g)
revenues. Investment income last year approached 122 million dollars
which was transferred to the State's General Fund.
Now I would like to focus on Alabama and discuss how offshore
exploration and production activities for natural gas and oil impact
our coastal area. Our coastal area comprises two counties: Mobile and
Baldwin. Mobile County is more populated and has a strong industrial
base which includes: paper products, ship building, aviation,
chemicals, lumber products, textiles, seafood processing, and oil and
gas production. Baldwin County is less populated but has the fastest
growing population in the State. Retail trade and real estate are the
industries which support a strong and growing tourist industry.
Natural gas was discovered in Alabama State waters in 1979.
Additional discoveries of natural gas in Alabama State waters led to
natural gas discoveries in the OCS off Alabama, Mississippi, and
Florida. Offshore production platforms, pipelines and onshore
processing facilities were established to allow for production of these
very large natural gas reserves. Production from Alabama State waters
and the OCS off Mississippi and Alabama constitutes a significant
contribution to U.S. energy production. We fully expect the
infrastructure necessary to produce these energy resources will
continue to expand offshore and onshore Alabama.
Currently, gas production offshore Alabama occurs within the 3-mile
State coastal waters, in the Federal-State shared ``8(g)'' area and
beyond the 6-mile ``8(g)'' boundary. Over a billion and a half (1.5
bcf) cubic feet of gas are brought onshore every day in south Mobile
County, Alabama. This gas originates from offshore Alabama,
Mississippi, and soon, possibly Florida. Alabama has over 100
industries that participate in the construction and operation of
offshore drilling rigs. New drilling and production technology will
expand exploration and production operations into very deep water.
Geologic creativity continues to expand the number of ``plays'' so that
more and more prospects are being drilled. New plays currently being
developed in OCS waters include the oil-prone deep water flex play and
the Cretaceous carbonate trend offshore Mississippi and Alabama.
Alabama infrastructure needs for maintaining current and future
Gulf of Mexico drilling and production include:
1. Roads. Alabama has to widen a two-lane road south of I-10 toward
the gulf to add lanes to handle increased industrial traffic. One
source of some of that traffic is tankers carrying molten sulfur. We
have four gas-processing plants in three locations in Alabama; these
plants send out 25 to 30 trucks laden with 400 to 500 long tons of
molten sulfur each day. (Sulfur is removed from the ``sour'' gas prior
to entering sales lines.) Many of the 100+ industries supporting
offshore oil and gas activities also deliver their products to
facilities on the coast over Alabama roads.
2. Docks and Port Facilities. The Mobile area port facilities
service much of the OCS exploration and production operations offshore
Alabama, Mississippi, and Florida.
3. New Pipelines. As projected production increases occur, new
pipelines will need to be brought onshore Alabama. In some areas they
may cross coastal wetlands or other environmentally sensitive areas.
The current plans to add natural gas liquids plants will also increase
current daily throughput and the need for new pipelines.
4. Accumulations to Federal Production. In the interest of
efficiency, some federal production may be commingled with State
production prior to pipelining. Metering and allowables will become an
additional administrative issue for the Alabama State Oil and Gas
Board.
5. Viewshed Issues. Residents of coastal communities have
complained about the visual impacts of offshore exploration and
production facilities.
6. Boat and Air Traffic. Helicopters, crews and supply boats
operate out of onshore of nearshore bases. Alabama has a tremendous
offshore fishing and shrimping industry that compete in the flow of
traffic.
7. Air Quality. The south-coastal air basin has air quality
problems. Some contributions that impact air quality may be related to
onshore processing, truck traffic, etc.
8. Oil Spills. All of Alabama's State and ``8(g)'' production is
gas. Deep water production will introduce oil production into the
infrastructure of coastal Alabama. Alabama needs support for State
coastal-based response teams because of increased exposure of risk not
contemplated by current planning.
9. Labor and Associated Infrastructure. Increased jobs brings
increased needs for schools, hospitals, water treatment plants, sewers,
etc. Some socioeconomic studies are in progress to address these and
other related issues.
In closing, Senate Bill 25 is designed to provide Coastal Impact
Assistance to State and local governments in order to mitigate adverse
environmental and public service impacts incurred due to OCS
development. Alabama has produced over 1 tcf of gas. I think industry
people throw numbers around that are sometimes hard to envision: 1 mmcf
or 1.5 bcf/day or 5,000 bopd; 1 tcf of gas will cover the area of a
football field vertically for 2,800 miles. As I have described, Alabama
is currently being impacted by offshore development activities in a
variety of ways and we are carrying more than our share of the burden.
It would be appropriate for the State of Alabama and local governments
to receive additional revenues that could be used to mitigate adverse
environmental and public service impacts incurred due to OCS
development. I appreciate the opportunity to provide these comments.
Thank you.
The Chairman. Thank you very much, Mr. Oltz. The balance of
your statement will be entered into the record.
I want to welcome Mr. Van Putten. Mark Van Putten,
President of the National Wildlife Federation. We look forward
to your statement and welcome you this morning.
STATEMENT OF MARK VAN PUTTEN, PRESIDENT AND CEO,
NATIONAL WILDLIFE FEDERATION
Mr. Van Putten. Thank you, Mr. Chairman. Good morning to
you and to the members of the committee.
My name is Mark Van Putten. And I am here today to testify
on behalf of the National Wildlife Federation, America's
largest conservation advocacy and educational organization. I
have submitted written testimony, which I would ask be included
in the record of this hearing.
My testimony today outlines some of the threats that our
invaluable coastal resources face as a result of offshore oil
and gas drilling. Unfortunately, most of these adverse impacts
are borne primarily by America's coastal zones, which are among
the most biologically rich natural resource systems on this
continent. They are also among our Nation's most important
systems because of the crucial role they play in minimizing
coastal flooding and erosion, providing important spawning
habitat, and harboring rare and endangered wildlife.
Any analysis of this issue quickly reveals three
fundamental facts. First, petroleum and petroleum byproducts
are an integral part of our economy. Second, these products are
toxic to nearly every type of living organism. And, third,
these products are nearly impossible to contain once they have
been released from the protective shelter of the Earth's crust.
While it is critical that we as a Nation wrestle with the
impacts of drilling in the outer continental shelf, the battle
over needed changes in our Nation's offshore oil and gas
drilling practices will likely drag on long into the future. In
the meantime, there are real opportunities for this Congress to
begin to mitigate, protect and restore some of the coastal
resources that have been degraded.
S. 25, recently introduced by Senators Murkowski, Landrieu
and others, provides an important opportunity to redirect
revenue from our offshore oil and gas drilling activities to
address some of these impacts.
My written testimony provides a detailed accounting of
these impacts, so I will only highlight a few of them here.
Laying pipelines, anchoring rigs to the ocean bottom and other
related construction activities generally result in significant
mechanical damage to the sea floor, and can have devastating
impacts on ecologically sensitive habitats.
The accompanying noise associated with construction and
operation of these sites has been found to disturb critical
marine species. Oil and gas development on the OCS also bears
substantial responsibility for coastal subsidence, which was
spoken to so eloquently by Mr. Caldwell.
Scientists have persuasively documented that the laying of
pipelines and opening of navigation channels through Louisiana
coastal wetlands have accelerated erosion and subsidence.
In addition, routine platform operations create several
chronic pollution sources, the most deadly of these are the
toxic chemicals routinely used to lubricate drill bits. These
fluids and lubricants mix with the rock and mud to form a toxic
sludge that is often found hundreds of meters away from the
rigs. This sludge is left directly on the ocean floor, where it
both suffocates and poisons species.
Toxic brine, or produced water as it is known, is generated
in massive quantities by offshore oil wells, and contains a
variety of pollutants.
Additionally, naturally occurring radioactive materials
found deep in the Earth's crust leach into produced water and
are then brought to the surface as a consequence of drilling.
The cumulative impacts of these various toxics have had
serious consequences for important species like lobsters,
oysters and fin fish that inhabit the areas under these rigs.
In addition to this ongoing chronic pollution associated with
OCS oil and gas drilling, accidental leaks, spills, blowouts,
tanker barge collisions, and explosions all result in the
release of oil and petroleum byproducts into the ocean and
coastal systems.
Although relatively rare, when they happen, the impacts of
these spills are often catastrophic and long lasting. More
common are the smaller, chronic spills that occur as leaks. The
incidence of these leaks in the future will likely grow as the
pipelines laid in the 1960's and 1970's age and corrode.
As substantial and diverse as these impacts of OCS drilling
are, one of the most significant long-term impacts of OCS
production for the coastal zone is human-induced climate change
and sea level rise. EPA has estimated that an increase in sea
level of 50 centimeters would inundate more than 5,000 square
miles of current uplands and 4,000 square miles of wetlands, an
area six times larger than the State or Rhode Island.
Chronic pollution, catastrophic oil spills and other
detrimental impacts of OCS oil and gas drilling are having a
substantial impact on our invaluable coastal resources,
including estuarine and coastal wetlands which provide vital
protection from flooding and erosion; sea grass beds, which
serve as nurseries for commercially important food fish and
shellfish; barrier islands, which protect waterfront
communities from the ravages of storms; coral reefs, whose
biological richness is equal to that of tropical rain forests;
and little known deep-sea ecosystems whose treasures are yet to
be discovered.
If properly crafted, S. 25 would help to mitigate the
damage to the environment that is created by offshore oil and
gas drilling. The National Wildlife Federation wholeheartedly
endorses the idea of reinvesting revenues from the sale of
nonrenewable resources in the conservation of renewable
resources such as land, wildlife, habitat, air, and water.
At the same time, it is critical that any legislation
intended to meet these needs does not, at the same time,
negatively affect the environment by encouraging more oil and
gas development. To prevent this perverse effect, the impact
assistance funds for coastal governments should be dedicated to
environmentally sound projects designed explicitly to mitigate
the environmental damage, and shaped by public input.
Further, the allocation of these funds should be structured
so that local communities are not encouraged to support
inappropriate oil and gas development along their coasts.
NWF also commends the application of OCS dollars to other
conservation areas that have historically been underfunded--the
Land and Water Conservation Fund and State and wildlife
programs. Attached to my testimony is a letter, signed by NWF
and other leading conservation organizations that provide
suggestions for ensuring that these funds are used for their
intended conservation purposes and directed to the areas of
greatest need.
I would also note the positive development of the
President's Lands Legacy initiative as another important factor
that could lead us to addressing this need.
In conclusion, our coastal zones contain invaluable natural
resources that face substantial threats from OCS oil and gas
drilling and other sources. The National Wildlife Federation
encourages this committee to give serious consideration as you
move forward to amending S. 25 to fulfill its potential as a
tool for addressing some of America's most pressing
conservation needs.
Thank you, Mr. Chairman. And we look forward to working
with you and the members of this committee as S. 25 moves
ahead.
[The prepared statement of Mr. Van Putten follows:]
Prepared Statement of Mark Van Putten, President and CEO, National
Wildlife Federation
Mr. Chairman, Senators, thank you for this opportunity to testify
before you. My name is Mark Van Putten. I am here today on behalf of
the National Wildlife Federation, the Nation's largest conservation
advocacy and education organization.
My testimony outlines some of the threats that our invaluable
coastal resources face as a result of offshore oil and gas drilling--in
particular, drilling on the Outer Continental Shelf (OCS). It is hard
to overstate the devastating environmental impacts of OCS drilling--
impacts that result from the initial exploration and development of the
platforms; from the production, transportation, and refining of oil and
gas; and ultimately, from our own consumption of OCS petroleum.
Unfortunately, the lion's share of these impacts are borne by America's
coastal zones, which rank among the most biologically rich and
economically significant natural systems on the continent. These
coastal zones are home to over half the Nation's population, play a
critical role in absorbing flooding and blunting storms, provide
important spawning habitat for commercially valuable fisheries, and
harbor a disproportionate fraction of rare and endangered wildlife.
Thoughtful analysis of this issue quickly reveals three underlying
facts: (1) petroleum and petroleum by-products are an integral part of
our economy; (2) these products are toxic to nearly every type of
living organism; and (3) once freed from the earth's crust, these
substances are virtually impossible to completely contain--in small and
large quantities, they leak, spill, and evaporate, with environmental
effects that are felt far from the rigs that bring them to the surface.
The impacts of OCS drilling are substantial and widespread. Some of
these impacts are so severe that there is no hope for mitigation or
restoration, however, many others can and should be addressed. Indeed,
there are real opportunities to mitigate and restore some of the
coastal resources that have been degraded and protect existing
resources from future degradation. S. 25, the ``Conservation and
Reinvestment Act of 1999,'' that was recently introduced by Senators
Murkowski, Landrieu, and others, proposes to redirect revenue generated
from offshore oil and gas drilling for conservation and other purposes.
Amendments to S. 25 are necessary to ensure that it fulfills its
potential for addressing the conservation impacts described in this
testimony and that the bill in no way creates incentives for increasing
OCS drilling.
overview of ocs drilling
Currently, there are approximately 3,800 oil and gas drilling
platforms along the U.S. federal Outer Continental Shelf (National
Research Council, 1996). Although drilling platforms are found on the
coasts of 6 States (California, Alaska, Texas, Louisiana, Alabama, and
Mississippi), they are most heavily concentrated in the waters off of
Louisiana and Texas. Cumulatively, this drilling accounts for
approximately 18% of domestic oil and 27% of domestic natural gas
production (Quarterman, 1998).
Florida, California, Oregon and Washington have banned new leasing
in State waters (and there are existing leases in Florida and
California that have not yet been developed). With the exception of
some areas off of Florida, Alabama, and Alaska, nearly all remaining
coastal areas have been withdrawn by President Clinton from new oil and
gas leasing through the year 2012. This moratoria also applies
indefinitely to all areas designated as marine sanctuaries. To date, 12
sites have been designated marine sanctuaries, including one--the
Flower Garden Banks--in the Gulf of Mexico.
The OCS moratoria does not affect existing leases and drilling on
existing leases shows no signs of abating. In fact, the Minerals
Management Service (MMS) notes that development of the OCS is expected
to increase substantially over the next few years, in part due to
growing interest and activity in the area of deepwater drilling (MMS,
``Deepwater,'' 1999; Year of the Oceans Report, 1998). Furthermore,
over half the Nation's undiscovered oil and gas reserves are believed
to occur on the OCS, and the pressure to drill in existing lease areas
is likely to increase as oil resources become depleted (Year of the
Oceans Report, 1998),
The OCS program generates bonuses, rent, and royalty payments to
the Federal Treasury of nearly $4-5 billion annually (with a cumulative
historic total of $120 billion, as of 1998) (Quarterman, 1998). A
portion of these funds is distributed to coastal States that have OCS
drilling sites off of their coasts (under section 8(g) of the OCS Lands
Act--in 1998, $65 million went to six coastal States). Some of these
OCS receipts are also used to fund the Land and Water Conservation Fund
(over $19 billion to date) and the National Historic Preservation Fund
(nearly $3 billion to date) (Quarterman, 1998).
The following discussion of the destructive impacts of OCS oil and
gas drilling argues strongly for mitigation and conservation practices
that offset, where possible, the impacts of current OCS drilling.
threats posed by ocs drilling
If asked to reduce Outer Continental Shelf (OCS) drilling to a
single visual image, most people would picture an oil rig, silhouetted
against the sky, in the middle of open ocean. In fact, while oil rigs
do have significant environmental impacts by themselves, the rigs are
just one step in a long process of production, refining, distribution,
and consumption. Impacts of OCS drilling on the coastal zone arise at
all stages of this process, from pre-production exploration and rig
construction, to refining, to transportation of oil and gas by pipeline
and tanker, and ultimately to consumption patterns shaped by the
availability of OCS petroleum.
Oil exploration and rig construction
From the outset, offshore exploration has significant environmental
consequences. Seismic surveys used in oil and gas exploration generate
sound waves that are known to disturb various marine mammals, as well
as other marine species. For example, seismic waves are believed to
interfere with gray whales' ability to communicate with one another and
they demonstrate behavioral changes in response to seismic pulses.
Development of the rigs and related structures also has substantial
environmental repercussions. Laying down pipelines, anchoring rigs to
the ocean bottom, and other related construction activities generally
result in mechanical damage to the underlying sea floor and can have
devastating impacts on ecologically sensitive habitats such as coral
reefs and sea grass beds (MMS, 1999; DOI, ``Notice to Lessees and
Operators 98-12,'' 1998). Newly discovered deep-sea benthic communities
of unique chemosynthetic organisms (which include assemblages of
tubeworms, clams, mussels, and other species) face significant threats
from the rapid increase in deepwater ocean drilling (DOI, ``Notice to
Lessees and Operators 98-11,'' 1998).
The accompanying noise, increased boat and air traffic, and debris
generated during the construction of these sites have also been found
to disturb the surrounding marine ecosystem and marine species that
inhabit the area. Sea otters, for example, have been observed avoiding
areas where construction is ongoing and have reacted negatively to
recorded playbacks of platform construction sounds (MMS, 1999).
Interestingly, scientists are beginning to discover that the
deconstruction of these structures also presents serious environmental
challenges. Approximately one-quarter of the existing offshore
platforms are over 25 years old and many of them will have to be
decommissioned over the next 10-15 years (National Research Council,
1996; MMS, 1999). To date, the vast majority of decommissioned rigs
were broken into pieces--through the use of underwater explosives--so
that the smaller pieces could be carried away. Unfortunately, these
underwater explosives have significant detrimental impacts on
endangered sea turtles and marine mammals. These explosions have also
been found to cause substantial fish kills (National Research Council,
1996). As the large number of platforms built in the 1960's and 70's
become ready for decommissioning, this issue will become a more serious
problem.
Subsidence and coastal marsh destruction
Louisiana boasts 40 percent of the coastal and estuarine wetlands
in the Lower 48 States, but accounts for 80 percent of estuarine
wetlands loss (Boesch, et al, 1994; Louisiana Coastal Wetlands
Conservation and Restoration Task Force, 1993). The State's marshes are
sinking into the Gulf at a rate of 25-35 square miles per year
(Louisiana Coastal Wetlands Conservation Task Force, 1998). In part,
Louisiana's coasts are subsiding as a direct result of our efforts to
control the Mississippi River. Levees built and maintained by the U.S.
Army Corps have imprisoned the great river in its banks and defeated
its natural delta-building efforts, forcing the Big Muddy instead to
drop its sediments into the abyss off the continental shelf.
Oil and gas development on the OCS, however, also bears substantial
responsibility for coastal subsidence. Studies by government and
academic scientists have persuasively documented that laying of
pipelines and opening of navigation channels through Louisiana's
coastal wetlands has accelerated erosion and subsidence. As a 1987
biological report by the U.S. Fish and Wildlife Service noted,
``[w]here canal density is high, land loss is high; where canal density
is low, land loss is low; where canal density is nearly zero, land loss
is nearly zero. . . . [C]oastal erosion rates are directly related to
canal and spoil levee density.'' (USFWS, 1987, 28-29).
Many, if not most, of these channels were built to facilitate oil
and gas exploration, placement of pipelines, or transport of rig
components out into the Gulf. As the Louisiana Coastal Wetlands
Conservation and Restoration Task Force explained in 1993:
The dredging of smaller channels for drilling rig access and
pipeline installation proliferated in the coastal wetlands of
Louisiana during the oil and gas exploration and development
boom of the 1950's, 1960's, and 1970's. When onshore fields
were developed, the marsh was broken up by dense canal
networks. Offshore fields also caused destruction as pipeline
canals were dredged through the marshes and barrier islands to
connect with onshore processing facilities. By 1978, more than
six percent of Louisiana's coastal wetlands had been directly
converted to open water or spoil through canal dredging
(Louisiana Coastal Wetlands Conservation and Restoration Task
Force, 1993).
As the Coalition to Restore Coastal Louisiana notes, ``coastal
Louisiana is laced with about ten thousand miles of canals excavated to
service the oil and gas industry.'' (Coalition to Restore Coastal
Louisiana, 1989)
Ongoing pollution from drilling
In addition to the destruction caused in developing the
infrastructure on and offshore for OCS drilling, routine platform
operations create multiple chronic pollution sources, including:
drilling muds and cuttings, produced waters/toxic oil brine, deck
drainage fluids, air emissions of hydrocarbons (from the rig machinery,
helicopters, and support vessels), naturally occurring radioactive
materials (NORMs), and a large amount of trash produced during general
rig operations.
Toxic chemicals are routinely used to lubricate drill bits as they
grind through the outer continental shelf. These fluids and lubricants
mix with rock and mud to form a toxic sludge (or drilling waste) that
is often found hundreds of meters from the rigs. This sludge is left
directly on the ocean floor, where it both suffocates and poisons
benthic species found in the area. It is estimated that up to 8,000
square feet per well may be covered by up to a meter thick of drilling
wastes. The National Academy of Sciences estimates that drilling
produces an average of 1,500-2,000 tons of drilling waste per well
(National Research Council, 1983). The waste contains toxic pollutants
such as lead, arsenic, copper, mercury, petroleum hydrocarbons,
selenium, and other heavy metals.
Toxic brine or ``produced water'' is contaminated water brought up
along with oil from the well. This ``produced water'' is generated in
massive quantities by offshore oil wells and contains a variety of
pollutants, including cadmium, benzene, napthalene, lead, and other
carcinogenic pollutants. Additionally, naturally occurring radioactive
materials (NORMs) found deep in the earth's crust leach into produced
water and are then brought to the surface as a result of the drilling.
``Workover fluids'' containing oil and grease also include
napthalene, ethylbenzene, toluene and zinc. While there are
restrictions about dumping these work materials into the ocean, the
limitations are only applied to the oil and grease directly. Other
toxic materials are dumped into the ocean. Deck drainage of oil,
grease, drilling fluids, ethylene, lubricants, fuels, biocides,
surfactants, detergents, solvents, dispersants, coagulants and other
substances are also believed to cause harmful environmental impacts
when they leak or are disposed of in the ocean.
Once in the ocean, toxics can remain suspended as solids in the
water column where they lead to fish kills and interfere in the
development of fish eggs and larvae. In fact, this waste can remain in
the ecosystem for decades causing negative impacts to marine water
quality and marine species (often by disrupting the ecosystem's balance
through changes in species abundance and richness). For instance, a
recent study found that increased levels of sediment contamination
resulted in reduced genetic diversity of small copepod species found
near the offshore platforms (Street and Montagna, 1996). MMS has noted
that gray whales and other imperiled marine species may be vulnerable
to adverse impacts from these drilling wastes--in particular, it is
believed that it can cause eye irritation to gray whales migrating
through the area. Filter feeders and bottom-feeders like corals, clams,
oysters, and lobsters have been found to be particularly vulnerable to
the effect of these toxics. This waste material strips surrounding
water of its oxygen leading to reduced dissolved oxygen concentrations
that interfere with fish egg development and cause other problems in
the ecosystem (Holing, 1990). Toxics prove immediately lethal to some
marine organisms, however they also are threatening when they
accumulate in concentrated levels in the tissues of species at the top
of the food chain--including species consumed by humans.
Trash and debris, generated as a result of daily ongoing human
activities has proven to be a significant problem on the sea floor and
washed up as detritus on beaches in the Gulf. Remnants of construction-
related debris (e.g. pipes, tubing, hard hats, lumber) and non-
biodegradable environmentally persistent materials (e.g. plastic and
glass) accumulate on the sea floor around rigs. The U.S. Department of
the Interior recently issued a notice to lessees and operators of
offshore rigs noting that ``marine trash and debris pose a threat to
fish and wildlife . . . oil and gas operations in the Gulf of Mexico
contribute to this chronic problem'' (DOI, ``Notice to Lessees and
Operators 98-27,'' 1998). This trash can be fatal for species if it is
ingested or results in entanglement, whether in open waters or along
coastal beaches and wetlands.
The production of these rigs also, at times, leads to the emission
of toxic air pollutants such as hydrogen sulfide, nitrogen oxides,
carbon dioxide, and sulphur dioxide. These air toxics are known to be
harmful to humans and are probably harmful to wildlife species (DOI,
``Notice to Lessees and Operators 98-16,'' 1998).
Accidents and disasters
Accidents and human error lead to leaks, spills, blowouts, tanker/
barge collisions, burst pipelines, and explosions. Large spills caused
by catastrophes such as tanker collisions, or platform blowouts are
relatively rare; MMS statistics show that approximately 61,500 barrels
have been spilled since 1980 (Year of the Ocean Report, 1998). When
these larger spills do happen, however, their impacts are often
catastrophic and long-lasting. Despite some improvements in cleanup
technologies, often only a limited amount of the spilled material can
be captured before it enters the ecosystem. For example, in a recent
spill in Texas involving 2,950 barrels of oil, over 1,150 barrels were
never recovered (Tunnell 1995). In drilling, pockets of oil are often
punched through before the actual well is tapped, leading to leakage.
Blowouts occur when a drill head pierces a pressurized pocket of
natural gas, and the pressure forces the drill back out of the opening,
in turn blowing the contents up to the surface and sometimes destroying
the rig.
More common are the smaller, chronic spills that occur as leaks.
Approximately 16,000 miles of pipelines serve as the primary mechanism
for conveying oil and gas from OCS platforms to the shore (Alvarado,
Anderson, and Schneider, 1992). In the early 1990's it was estimated
that spills from pipelines accounted for the release of approximately
4,170 barrels of oil annually, usually as the result of pipeline
corrosion or pipeline disruption by ship anchors (Alvarado, Anderson,
and Schneider, 1992). These types of spills can go unnoticed for days
(e.g. in January 1990, 14,423 barrels of oil leaked from a pipeline for
13 days before the slick was noticed) (Alvarado, Anderson, and
Schneider, 1992). It is expected that these types of pipeline leaks
will increase as the pipelines in the Gulf of Mexico and elsewhere age
and become more vulnerable to corrosion.
A fair amount of spillage also occurs regularly during the process
of ``lightering'' where crude oil is transferred from huge tankers to
smaller ships. Off the coast of Texas, lightering operations have
increased by 200% since 1986, raising the possibility of a big spill
and ensuring chronic leakage.
Cumulatively, the common and uncommon accidental spills affect
water quality, coastal and benthic habitats, and wildlife. MMS has
noted that oil spills pose a number of risks to cetaceans, and studies
have shown that contact, inhalation, and ingestion of oil-related
compounds produces behavioral changes and physiological damage (MMS,
1999). In particular, it is believed that the toxic, highly volatile
components of fresh crude is damaging to the soft tissues and mucous
membranes in the eyes and airways of cetaceans, resulting possibly even
in death (MMS, 1999). A study of the effects of oil on baleen, the
plates that certain whales use to filter their food, found that it
contaminated their plates and hindered feeding (MMS, 1999). Studies and
analyses have indicated that when endangered sea turtles are exposed to
oil they suffer from carcinogenesis, increased parasitism, decreased
lung capacity, digestive problems, and disruptions to their sensory
organs (MMS, 1986).
Sea otters, sea birds and other marine species are particularly
vulnerable to the devastating impacts that oil contamination has on
their fur and feathers. Otters must maintain a layer of warm dry air in
their dense underfur to insulate them from the cold water; even partial
oiling of their fur leaves them essentially exposed to the elements. In
the Exxon Valdez oil spill, well over 1,000 otters were killed as a
result of pulmonary emphysema caused by inhalation of toxic fumes,
hypothermia from decreased insulation (as a result of fur
contamination), hypoglycernia caused by poor gastrointestinal function
(from ingestion of oil), and lesions on other organs (from ingestion of
oil and/or stress). Oil spills often also kill animals by driving away
or killing crucial organisms lower on the food chain (e.g. krill,
kelp.) that constitute their prey base.
Some of these chemicals have longer-term, more insidious effects.
Polycylic Aromatic Hydrocarbons (or PAHs) are a group of chemicals that
are released into the marine environment as a result of oil spills,
discharges from ships, and other methods. PAHs have received a great
deal of attention recently because they have been found to have
carcinogenic and mutagenic potential in finfish, shellfish, and marine
mammals. They are also considered a priority pollutant by the World
Health Organization, the U.S. Environmental Protection Agency and
others because of their potential impacts on human health (Hellou,
1996). PAHs and other toxic pollutants can remain in an ecosystem for
decades after their initial release.
Although some of the oil released in spills eventually settles into
the bottom sediments, much of it is carried up to the coastal margin
where it can cause numerous problems. Field studies have found that
successive oilings of salt marshes, resulted in considerable changes to
species distribution and balance, leading to slow recovery, even years
later (Baker, 1973). A more recent study estimated that full recovery
of a marsh habitat in San Patricio County Texas would take 8-10 years
(Tunnell, 1995) despite fairly dramatic cleanup methods. Other studies
found that after 3 years, marsh grass was still unable to re-establish
itself and sediments continued to show high levels of hydrocarbons
(Hampson, 1978).
The biggest externality: climate change and rising sea levels
As substantial and diverse a set of direct impacts as OCS drilling
has, surely the most significant long-term effect of OCS production for
the coastal zone is its contribution to anthropogenic climate change
and sea-level rise. At present, though climate scientists remain unsure
how quickly to expect temperatures to increase, a strong consensus has
emerged within the scientific community that human-induced climate
change is real, is in progress, and will almost certainly lead to
accelerated sea-level rise. The Intergovernmental Panel of Climate
Change suggests that sea-level may increase by between 20 and 86 cm
over the next century. EPA has calculated a range of estimates,
suggesting that there a 50% probability that sea-levels will rise, it
least 23 cm (one foot) by 2050 and 55 cm. (two feet) by 2100 (Titus,
1998).
Since the 1950s, humans have contributed to an 8% increase in the
concentration of carbon dioxide in the Earth's atmosphere. Today, the
U.S. is the world's leading emitter of carbon dioxide, contributing
about 23% of ``global energy-related carbon emissions''--98.5% of which
is attributed to the combustion of fossil fuels (U.S. Department of
Transportation, 1998). To be sure, OCS production accounts for only a
fraction of the fossil fuel consumed by Americans. Nonetheless, the
marginal contribution of OCS oil and gas to climate change and sea-
level rise comprises an economic externality that effects the coastal
zone disproportionately, and for which impact-reduction funds have
never been made available. In particular, EPA has estimated that an
increase in sea level of 50 cm could inundate more than 5,000 square
miles of current ``uplands'' and 4,000 square miles of wetlands
(Gardiner, D., 1996). For a point of comparison, that is six times
larger than the State of Rhode Island--an area six times the acreage
that Louisiana has already lost to accelerated coastal subsidence since
the 1950s (approximately 1,500 square miles) (Boesch, 1994).
the coastal resources at stake
Unquestionably, our Nation's important coastal resources face a
variety of threats from sources other than offshore oil and gas
drilling, however, the pollution and environmental degradation just
described contribute significantly to the problem. OCS drilling
degrades open water habitats--seagrass beds, coral reefs, and deep sea
communities--through pollution and physical destruction that occurs
during platform/pipeline construction and gas production. Additionally,
OCS drilling and related activities harm coastal and estuarine
wetlands, as well as barrier islands, through excavation for navigation
and pipelines. These resources are also impacted directly by oil spills
and trash that washes up along the shore.
The section below describes five categories of distinct and
valuable coastal resources, each of which is substantially impacted by
OCS drilling. The purpose of describing these resources in some detail
is to highlight their unique characters and values and to articulate
the oft-overlooked ecological services that they provide.
Estuarine and coastal wetlands
Coastal wetlands absorb and temper the impact of storm surges and
protect economically significant coastlines. For example, according to
one estimate, the elimination of one mile of wetlands along Louisiana's
250 mile coastline would cause approximately $63,676 in increased
hurricane damage annually (1980 dollars) (Farber, 1987). The low
gradient of many shorelines and the capacity of wetlands vegetation to
absorb and dissipate wave energy combine to counteract storm surges and
prevent shoreline erosion.
When Hurricane Andrew buffeted the shores of Florida and Louisiana
in 1992, the Nation was reminded of the tremendous buffer coastal
wetlands can provide. The storm hit both States with approximately the
same strength, yet Florida, which has lost 9.3 million acres of its
original wetlands (the largest acreage loss of any State), sustained
between $15 to $30 billion in damage compared to the $1 billion
sustained by Louisiana, with its large coastal wetlands buffer. The
flood insurance claims that were paid in the wake of the hurricane came
to $115 million in Florida, as compared to $30 million in Louisiana
(Kusler and Larson, 1993). While other factors also played a role, the
value of coastal and estuarine wetlands as buffers is evident.
Estuarine and coastal wetlands provide important water quality
benefits as well. Wetlands act as ``nature's kidneys,'' (Kusler, 1994),
filtering polluted waters, removing and retaining nutrients, processing
organic wastes, and reducing sediment loads to receiving waters. Water
entering estuarine wetlands is slowed by aquatic vegetation growing in
and around the wetland. Wetland plants and micro-organisms then go to
work on wastes in the water, absorbing them into plant tissue or simply
converting them into harmless forms. Compounds containing nitrogen are
broken down into products useable by plants, and bacteria convert much
of the nitrogen gas that escapes into the atmosphere.
Finally, coastal and estuarine wetlands provide vital habitat for
wildlife. The ``coastal fringe'' in fact provides habitat to a
surprisingly large number of threatened and endangered species--as of
1991, 20 federally listed species lived under the 10 foot contour (that
is, no higher than 10 feet above sea level) and nowhere else, with
another 33 species on the waiting list for listing as candidate
species. As many as 122 listed threatened and endangered species relied
on coastal and estuarine habitats (Reid and Trexler, 1991).
Coastal and estuarine wetlands sustain the abundant creatures as
well as the rare. Wetlands are the cradle of the Nation's seafood
industry. Fish and shellfish depend on estuaries for spawning and
nursery grounds, food production, and migration. Depending on the
region of the country, the percentage of wetland-dependent fish species
varies. For example, 98% of all species in the commercial seafood
harvest in the Gulf of Mexico spend part of their lives in wetlands and
marshes. In the southeastern U.S. this percentage is slightly lower--
94%. The connection between wetlands and seafood is most simply
illustrated by a bumper sticker frequently seen in coastal North
Carolina, which succinctly states the importance of wetlands to the
fishing industry--``No Wetlands, No Seafood.''
The annual economic value of estuarine habitats is presently well
over $14 billion. In the late 1980's, commercial landings of estuarine-
dependent species contributed some $5 billion to the economy. In
California alone, the value of commercial fish landings exceeds $126
million per year, and the industry contributes $111 million per year in
value-added products. The Great South Bay, a shallow tidal estuary in
New York, has extensive naturally productive habitat that has
contributed approximately 92% of New York's commercial hard clam
landings with a reported dockside value in excess of $16.7 million
(Fox, 1981). The marshes of Louisiana produce an annual commercial
catch worth over $680 million (Boesch, 1994). Despite the tremendous
contribution wetlands make to our economy, over half of the wetlands
that historically supported America's fisheries have been destroyed.
The economic and natural values of Louisiana's coastal wetlands--
which number among the American marshes hardest hit by OCS drilling--
are particularly striking. Louisiana marshes sustain nearly one-third
of the nation's commercial fish catch, ``second only to Alaska in terms
of total biomass of fisheries landings, and third in terms of economic
value.'' The State's wetland-dependent furbearers (nutria and muskrat)
account for 40% of the annual national fur harvest. Recreational
hunting, fishing, and outdoor activities in the marshes contribute $338
million to the State's economy annuals; about 4 million ducks, or 20%
of the North American population, spend their winters in Louisiana's
marshes (Boesch, 1994).
Seagrass beds
Seagrass beds are underwater ``meadows'' that occur in isolated
pockets offshore, where they provide vital foraging and spawning
habitat for commercially important finfish and shellfish, and also
sustain wintering and migrating waterfowl. Historically, seagrass beds
flourished, as salinity and wave energies permitted, in sites along the
full arch of the Gulf Coast, from the southern tip of Florida (Florida
Bay) through the U.S.-Mexican border. Nonetheless, most estuaries in
the Gulf have suffered a loss of between 20 and 100 percent of their
seagrass beds, primarily as a consequence of declining water quality
(Handley, 1995, 273).
For over two decades, we have known that seagrass beds play a role
in coastal ecosystems that their low profile on the landscape makes it
easy to overlook:
Documentation now exits which shows that seagrass meadows are
not only important locally, but also on a much larger scale.
For example, they are used as nursery grounds for commercial
shrimp in Florida; as a food source for migratory waterfowl,
particularly the black brant, along the Pacific flyway; and
[for] green sea turtles in the Caribbean; as a habitat for the
larval development and commercial bay scallops along the
Atlantic coast of the United States and fishes along all coasts
where the grass is present, and as a buffer from hurricanes
along the Florida coast (Thayer and Phillips, 1977).
Seagrass beds are similarly important for softshell and razor
clams, lobsters, and mud crabs along the Atlantic coast and for
virtually the entire commercial fishery of Puget Sound (Thayer and
Phillips, 1977). Off Florida, seagrass beds are key feeding grounds for
the federally-listed endangered manatee, as well as the endangered
Kemp's ridley sea turtle and the threatened green sea turtle (Weber, et
al, 1992).
Though seagrass beds have been in decline along much of America's
coastline, Louisiana has experienced particularly extensive losses of
its historic seagrass beds. Today, seagrass beds survive off the
Louisiana coast at only one cluster of sites, Chandeleur Sound. Perdido
Bay in the panhandle of Florida has also suffered substantial loss of
seagrass beds, attributed to dredging, polluted runoff from
agriculture, and residential, commercial, and industrial development
(Handley, 1995, 274).
Barrier islands
Coastal barrier islands are complexes of beaches, dunes, and
wetlands that lie offshore of the main coastline. Their chief
characteristic is change: currents deposit and carry away sand and so
the islands are constantly shifting shape or even migrating along the
coast. Some barrier islands are quite large, with complex and unique
biological communities--the maritime forests of North Carolina's
barrier islands are one example, other barrier islands are quite small
sandbars submerged at the highest tides. All barrier islands help to
protect waterfront communities; the larger islands also provide
essential habitat for a variety of wildlife, including sea turtles,
birds, and small mammals. Coastal barriers act as natural buffers
against storms, erosion, wind and waves.
Coastal development presents a severe threat to barrier islands
(Pilkey and Dixon, 1996). On large islands, development includes
residential, commercial, and public works construction, often heavily
supported by federal subsidies. Indeed, much of this development would
not be economically viable if left to the market alone. Both large and
small islands, however, have been severely destabilized by human
efforts to ``freeze'' the barrier islands with breakwaters, beach
renourishment, and navigational dredging. While these techniques have
managed to halt or disrupt natural processes along much of America's
coasts, they have generally failed to conserve the barrier islands
themselves: approximately 80% of America's barrier islands are eroding,
at rates varying from 1 meter (3 feet) to 20 meters (65 feet) per year
(Williams and Johnston, 1995).
Coral reefs
Among the most diverse ecosystems on Earth, coral reefs community
are often likened to tropical rainforests. In U.S. waters, coral reefs
are concentrated around the Florida Keys in warm waters (averaging 70
degrees Fahrenheit) that are also clear and shallow (under 200 feet
deep), allowing sunlight to reach the living polyps that build the reef
(Weber, et al, 1992). Reefs are rare in the areas of the Gulf open to
OCS drilling, with an important exception: the Flower Garden Banks, the
northern-most living coral reef on the North American continent.
Sitting atop a salt dome in the middle of the Gulf, the Flower Garden
Banks are isolated from smothering sediments coming of the mainland
(Deslarzes, 1992). The Flower Garden Banks is home to at least 330
species, some of which have never been found anywhere else.
Chemosynthetic ecosystems
Within just the last few years, oceanographers and marine
biologists have discovered an entirely new and unexpected set of
natural communities under the sea. The so-called ``chemosynthetic
ecosystems'' are, like land-based ecosystems, complex and elegant
energy and food webs of micro- and macro-organisms. But, bizarrely, the
bacteria at the base of these ecosystems, in the dark, piercingly cold
depths of the ocean, apparently survive by consuming methane and
hydrogen sulfide from frozen sea-floor deposits (MacDonald and Joye,
1997). Specially-evolved ``ice worms'' and mussels live there too, fed
upon by eels and more familiar sea creatures. Scientists have barely
begun to research these rare ecosystems, spread out in isolated but
richly diverse patches on the continental shelf, and no estimate has
yet been offered to suggest how human activities are affecting these
systems. Most of the chemosynthetic ecosystems discovered to date,
however, are in the sections of the Gulf in which OCS operations are
being conducted, and are vulnerable to physical destruction during
platform and pipeline construction and smothering by drill wastes.
the need for conservation
Coastal conservation efforts have been underway for decades,
however, they have failed to address the significance of the threats in
a systematic or comprehensive way. If properly crafted, S. 25, the
``Conservation and Reinvestment Act of 1999,'' could help mitigate the
damage to the environment that is created by offshore oil and gas
development. It is entirely appropriate to reinvest revenues from the
sale of non-renewable resources in the conservation of renewable
resources such as land, wildlife, habitat, air and water. At the same
time, it is critical that any legislation that is intended to meet
these needs does not simultaneously create negative environmental
impacts by encouraging more oil and gas development. ``Impact
assistance funds'' for coastal governments should be explicitly
dedicated to environmentally sound projects and programs that include
public input. Further, allocation of these funds should be structured
so that local communities are not encouraged to support inappropriate
oil and gas development along their coasts.
NWF recommends that coastal impact assistance funds distributed
under Title I of S. 25 be designated for use by State and local
governments to mitigate the environmental damage created by offshore
development. The types of projects that we consider appropriate would
include:
amelioration of any adverse environmental impacts resulting
from the siting, construction, expansion, or operation of OCS
facilities;
projects and activities, including habitat acquisition, that
protect or enhance air quality, water quality, fish and
wildlife, or wetlands in the coastal zone;
administrative costs the State or local government incurs in
approving or disapproving or permitting OCS development/
production activities under any applicable law including the
Coastal Zone Management Act and the OCS Lands Act; and/or
the repurchase of OCS leases.
Because revenues for all three titles of the bill would come from
existing and new leases, and the allocation formula in Title I ties 50%
of a State or local government's allocation directly to proximity to
OCS production, States and local governments are likely to support new
leasing as well as development on existing leases to increase the
amount of money available to them. The legislation should be amended to
exclude new leasing revenues or revenues received from production in
areas that are currently subject to leasing moratoria. In addition, if
the allocation formula to States and local governments is based on
proximity to OCS activity then it should include a flat, static
percentage allocation based on past leasing and/or production. This
would acknowledge States that have suffered OCS impacts to date without
providing an incentive for new leasing exploration or production.
Oversight and accountability are critical to the success of an
impact assistance program. Control and distribution of impact aid funds
should reside with NOAA and/or EPA--not the Interior Department. NOAA
and/or EPA should have the authority to review and approve in advance
the annual plans proposed by each State and local government to ensure
that the money will be used for the previously mentioned purposes, will
not be inconsistent with the CZMA, CWA or other environmental statutes,
will benefit the coastal environment of the State and are well-
justified in terms of demonstrated need, design and proposed manner,
and cost of implementation. NOAA and/or EPA should also be required to
monitor implementation of the plans.
In addition, NWF commends the application of OCS dollars to two
other conservation areas that have historically been underfunded--the
Land and Water Conservation Fund and State fish and wildlife programs.
Just as NWF recommends that the coastal impact title of the bill be
tightened to ensure that the dollars are directed to the greatest
conservation need, we also recommend tightening the language regarding
wildlife funding to ensure that it emphasizes non-game wildlife
protection. Attached is a letter signed by NWF and other leading
conservation organizations that outlines some of these suggestions and
concerns in greater detail.
Conclusion
Our coastal and marine resources are critically important and
severely threatened. As outlined by this testimony, NWF believes that
offshore oil and gas drilling has, and will continue to be, a major
source of environmental degradation to these resources. Legislation
that takes dollars generated from these activities and pours it into
something positive would result in much-needed conservation actions for
coastal and other natural resources.
If amended to address the concerns that we have outlined, S. 25
would constitute a lasting, historic contribution to the conservation
cause.
References
Alvarado, A., Anderson, C. and P. Schneider, ``A Minerals Management
Service Perspective on Detection of Leaks in Offshore
Pipelines,'' August 5, 1992.
Boesch, D., M. Josselyn, A. Mehta, J. Morris, W. Nuttle, C. Simenstd,
and D. Swift, Scientific Assessment of Coastal Wetland Loss,
Journal of Coastal Research, Special Issue Number 20, 1994.
Deslarzes, K.J.P., Long-Term Monitoring of Reef Corals at the Flower
Garden Banks (Northwest Gulf of Mexico): Reef Coral Population
Changes and Historical Incorporation of Barium in Montastrea
Annularis, 1992.
Farber, S., ``The Value of Coastal Wetlands for Protection of Property
Against Hurricane Wind Damage,'' Journal of Environmental
Economics and Management, 14(2), 1987, 43-151.
Fox, R.E., ``An Estimate of the Recreational Harvest of Hard Clams from
Great South Bay, New York''. New York Fish and Game Journal, v.
28 (1), 1981, 81-87.
Gardiner, D., ``Global Climate Change Negotiations,'' Testimony Before
the House Commerce Committee, Subcommittee on Energy and Power,
June 19, 1996.
Handley, L., ``Seagrass Distribution in the Gulf of Mexico,'' in
National Biological Service, Our Living Resources, 1995, 273-
275.
Hellou, J. ``Polycylic Aromatic Hydrocarbons in Marine Mammals,
Finfish, and Molluscs,'' in Environmental Contaminants in
Wildlife, Ed. W. Nelson Beyer, G. Heinz, and A. Redmon-Norward,
CRC Press, Florida, 1996, pp. 229-250.
Holing, Dwight, ``Coastal Alert: Ecosystems, Energy, and Offshore Oil
Drilling,'' Island Press, Washington, D.C., 1990.
Kusler, J., and J. Larson, ``Beyond the Ark: A New Approach to U. S.
Floodplains Management. Environment, v. 35, June, 1993.
Kusler, J. ``Wetlands--These havens of biodiversity are often
endangered because they can be hard to identify. Understanding
their variable characteristics can lead to more successful
conservation efforts,'' Scientific American, January 1994.
Louisiana Coastal Wetlands Conservation Task Force, Coast 2050: Towards
a Sustainable Coastal Louisiana, December 1998.
Louisiana Coastal Wetlands Conservation and Restoration Task Force,
Louisiana Coastal Wetlands Restoration Plan: Main Report and
Environmental Impact Statement, November 1993.
MacDonald, I, and S. Joye, ``Lair of the `Ice Worm','' Quarterdeck, v.
5(3), December 1997.
Minerals Management Service, ``Deepwater Information, MMS, Gulf of
Mexico OCS Region,'' 1999.
Minerals Management Service, ``Study of the Effects of Oil on Marine
Turtles,'' September 15, 1986.
National Research Council, ``Drilling Discharges in the Marine
Environment,'' National Academy Press, Washington, D.C., 1983.
National Research Council, ``An Assessment of Techniques for Removing
Offshore Structures,'' National Academy Press, Washington, D.C.
1996.
Onuf, C., ``Seagrass meadows of the Laguna Madre of Texas,'' in
National Biological Service, Our Living Resources, 1995, 275-
277.
Pilkey, O., and K. Dixon, The Corps and the Shore, 1996.
Quarterman, C.L., Director, Minerals Management Service, Department of
the Interior, Testimony before the House Committee on
Resources, May 14, 1998.
Reid, W., and M. Trexler, Drowning the National Heritage: Climate
Change and U.S. Coastal Biodiversity, 1991.
Street, G.T., and P.A. Montagna, ``Loss of Genetic Diversity in
Harpacticoida Near Offshore Platforms,'' in Marine Biology, v.
6(2), October 1996.
Thayer, G., and R. Phillips, ``Importance of Eelgrass Beds in Puget
Sound,'' Marine Fisheries Review Paper 1271, 1977.
Titus, J., ``Rising Seas, Coastal Erosion, and the Takings Clause: How
to Save Wetlands and Beaches Without Hurting Property Owners,''
Maryland Law Review, v.57(4), 1279-1398, 1998.
U.S. Department of Interior, Minerals Management Service, Gulf of
Mexico OCS Region, Notice to Lessees and Operators 98-16,
``Hydrogen Sulfide Requirements,'' August 10, 1998.
U.S. Department of Interior, Minerals Management Service, Gulf of
Mexico OCS Region, Notice to Lessees and Operators 98-12,
``Implementation of Consistent Biological Stipulation Measures
in the Central and Western Gulf of Mexico,'' August 10, 1998.
U.S. Department of Interior, Minerals Management Service, Gulf of
Mexico OCS Region, Notice to Lessees and Operators 98-11,
``Implementation of Measures to Detect and Protect Deepwater
Chemosynthetic Communities,'' August 10, 1998.
U.S. Department of Interior, Minerals Management Service, Gulf of
Mexico OCS Region, Notice to Lessees and Operators 98-27,
``Guidelines for Eliminating Trash and Debris Resulting from
Gulf of Mexico OCS Operations,'' December 1, 1998.
U.S. Department of Transportation, Transportation and Global Climate
Change: A Review and Analysis of the Literature, June 1998.
Weber, M., R.T. Townsend, and R. Bierce, Environmental Quality in the
Gulf of Mexico: A Citizen's Guide, 1992.
Williams, J., and J. Johnston, ``Coastal Barrier Erosion: Loss of
Valuable Coastal Ecosystems,'' in National Biological Service,
Our Living Resources, 1995, 277-279.
``Year of the Ocean--Ocean Energy and Minerals: Resources for the
Future,'' 1998.
The Chairman. Thank you very much, Mr. Van Putten.
I am going to be very brief on questions. First of all, are
you satisfied that this percentage, the 7 percent, which we are
using in the terminology of the bill, to be used for State fish
and wildlife programs is adequate and, in effect, is that an
offset for the momentum that was behind the teaming with
wildlife proposal?
And the difficulty with that is where we found the revenue.
Because there are those who objected to a tax on backpacks
because the kids take them to school, or a four-wheel-drive
vehicle because it was a necessity for the family. And so we
never could come to grips with a revenue source. Of course,
what we have attempted to do in this legislation is find that
revenue source. While we have changed the terminology from
``teaming with wildlife,'' clearly it fits in for State fish
and wildlife programs.
I want to make sure everybody understands the intention of
the chairman. It is not to have these funds directed for
extensive administration, but more out in the field to do real
things relative to the renewability of this type of resource.
Any comments?
Mr. Van Putten. Mr. Chairman, the National Wildlife
Federation was a founding member of the Teaming with Wildlife
Coalition. And we have been a member of the steering committee
since its inception.
We support the approach that you have identified here for
funding those underfunded wildlife needs. We would urge you to
look at moving that to 10 percent, which is the amount that was
in the House bill that was introduced last year by
Representatives Young and Dingell. And we would also encourage
you, as this process moves ahead, to emphasize the needs of the
historically unfunded needs of State fish and wildlife
agencies, especially for non-game wildlife.
The Chairman. The other point I want to make very clear is
you cannot bite the hand that feeds you. Some of the
environmental groups are very sensitive because, on the one
hand, they are opposed to OCS development, but they are happy
to get some revenue. Unless we have a healthy OCS program,
there are not going to be any revenues for what we want to
accomplish here. And that is, of course, not only the issue of
funding for wildlife, but for State land and water conservation
funds.
You cannot have it both ways. We have got to use the
technology and the American can-do spirit to overcome and
reduce the environmental risks. But, make no mistake about it,
if this program is going to work, it is going to work because
we have a healthy OCS program off our coastal States.
Now, that does not mean that the States that do not want
this activity should not have a right to prevail. The issue of
equity comes in. And it will come in in future hearings. Then,
as a consequence, have we directed the right kind of a formula
for those States that clearly have the impact and are entitled
to a greater share, and the others just get a free ride because
they happen to have a coastline?
Well, I am going to leave those questions up to future
hearings and future input. But I do want to make the point very
clear to the environmental community that this provides us with
a funding mechanism that otherwise we would have to stand in
line for, through an appropriations process. And that gets
very, very foggy. It attempts to try and directly address the
funds down to the local level, where the people have the
capability, as well as the desire, to identify their priorities
as opposed to a dictate from Washington, D.C., that suggests
one size fits all.
Mr. Van Putten. Mr. Chairman, may I respond to that?
The Chairman. As long as you do it quickly.
Mr. Van Putten. I will do my best.
I think you are very astute to observe that the dispute
over offshore oil and gas drilling has been long. It has been
complicated. And it could sink this bill.
As I alluded to in my testimony, I think you have an
opportunity to navigate those treacherous waters here, as you
have done in your recital of intent in this particular bill--
and we commend you for that--to tighten the language with
respect to where the money comes from and what it is used for
in the coastal impact assistance to remove any argument that
this is in fact an inducement to additional offshore oil and
gas drilling. And we have suggested specific ways, in my
written testimony, that you might do that.
The Chairman. Thank you.
Mr. Palmer, you talk about a now-abandoned program under
the Coastal Zone Management Act that provided for coastal
impact assistance. What did you learn from that experience, for
our benefit?
Mr. Palmer. I learned how difficult it obviously is, Mr.
Chairman, for a body like this to write a formula out of the
air that then works on the ground. Again, you are going toward
the correct goal to help States like Mississippi and Alaska.
You fell way short of the mark because of the mechanism that
you crafted to get to that goal. And I will not go back through
the difficulties that the States had in making it work.
The other big problem, which you have just alluded to
moments ago, about the fogginess of the appropriations process,
that is really what killed CEIP. The implementation troubles
could have been worked through. They were tortured and
torturous. But it is not going to work if you hang your hat on
that appropriations process.
Where you are going--and see, you cured that somewhat in
the 8(g) resolution. Continue pursuing that track of
distributing those revenues directly.
The Chairman. Thank you very much, Mr. Palmer.
Mr. Van Putten commented on the environmental damage caused
by offshore activities. Are there offsets to that that add to
the contribution? I am told that the fishing is better around a
sunken rig or where there are some platforms or whatever. And I
recognize that we can go down a lot of rabbit trails with this
line of questioning. But, in fairness, I am wondering if either
Mr. Palmer or Mr. Oltz--Mr. Oltz, can you identify any
contribution that the offshore activity has relative to the
environment, in the marine estuarine environment?
Dr. Oltz. First of all, some of the commentary indicated
that there were chronic problems with discharges from these
platforms that are out there, and drilling rigs. In Alabama, we
have a zero discharge rule, so there is no impact on the bottom
or from any discharge on those rigs.
The Chairman. So, simply have a zero discharge?
Mr. Palmer. Yes, sir. We would not allow discharges from
these operations.
The Chairman. Louisiana?
Mr. Caldwell. We have what is called a rigs-to-reefs
program, in which old platforms are cut down and laid on the
bottom for the very purpose of providing fish habitat. And they
work fine.
The Chairman. Do you have any discharge?
Mr. Caldwell. But in the overall picture, this is such a
small plus compared with the enormous losses, that while we see
it as a benefit, it certainly cannot be characterized as an
offset.
The Chairman. Do you allow discharge on your rigs?
Mr. Caldwell. No. No, sir.
The Chairman. Mr. Whitaker, discharge off the rigs?
Mr. Whitaker. No.
The Chairman. So that can be addressed, then, through
technology. Are there other areas, Mr. Oltz, that you would
identify that need to be examined from the standpoint of either
the environment or, more particularly, contributions that have
been made to the environment because of the offshore activity?
Dr. Oltz. You mentioned, Mr. Chairman, offshore fishing. We
have a large charter boat business, obviously, offshore
Alabama. And one of the most popular places to go is near the
platforms. Because the fish school in very large numbers around
the rigs.
The Chairman. I think it is awfully easy to criticize OCS
activity. And I think it is important that we try and balance
it with whatever contribution is made, and recognizing that
there is a bit of a give and take in the process.
Mr. Whitaker, you are Chairman of the Oil and Gas Committee
in the legislature. You are familiar with the impacts of the
activities on our coastlines and our residents. Do you have any
idea what the legislature would recommend that the State of
Alaska do with funds from the coastline impact assistance
monies, assuming this bill passes? Where are your priorities?
Mr. Whitaker. Mr. Chairman, our first priority would be
impact to the community. Certainly, the bill requires mandated
set-asides for environmental concerns. But our biggest concern
is our people, and their needs to be put first.
The Chairman. Speaking of people, I understand British
Petroleum announced the other day 600 layoffs in Alaska because
of falling oil prices. And I anticipate that there might be,
recognizing that the forecast for increased oil prices are
pretty remote at this time. Could coastline impact assistance
funds alleviate any of these budget strains?
Mr. Whitaker. Unquestionably, yes.
The Chairman. Mr. Oltz, your two coastline counties receive
a portion of tax that is imposed on natural gas production. In
your experience, what do the counties spend the money on? What
is their current priority? Is it to offset the impact of
offshore activities, or is it to fund infrastructure, or both?
Dr. Oltz. Mr. Chairman, I would have to check on that. I do
not follow how they distribute their money. But I can get that
information to you.
The Chairman. What about the viewshed associated with
offshore oil and gas production? Viewshed means different
things to different people. We had occasions in our State where
the terminology was integral vistas, which was the creation, I
think, of the Department of the Interior at some point in time,
to suggest that you might be able to see a plume of steam if
you were on the top of Mount McKinley at 20-some-odd-thousand
feet on a clear day, which few people get to. But, in any
event, I am curious to know what your viewshed issue is. Is
this the issue of the offshore platforms?
Dr. Oltz. We have two different sizes of platforms off of
Alabama. We have a smaller platform and a very large platform,
depending on where they are producing the gas from.
There is a group of coastal people, usually represented by
chambers of commerce and realty associations, who feel that the
platforms that are offshore detract from the viewshed and the
beauty of the area, and therefore have an impact on tourism,
which they are worried about. They have gone to the State to
request a 15-mile buffer from the coastline out, and not have
any development in there.
The Chairman. Mr. Caldwell, I am curious to know, as the
erosion occurs, does it add to your State anywhere? I mean is
the Delta area filling up? Pardon my lack of knowledgeable
geography, although I have travelled your State a little bit
and have been looking for some ducks and so forth.
Mr. Caldwell. That is an excellent question.
The Chairman. But your shores are going away somewhere and
coming ashore somewhere. Is it a net plus to your State or is
it indeed a substantial decrease in your State's land mass?
Mr. Caldwell. Yes, sir. It just so happens I can give you a
quick, short, accurate answer by showing you on the map.
The Chairman. That is fair enough. All right.
Mr. Caldwell. The answer to your question is yes and no at
the same time.
The Chairman. We have those answers around here, too.
Mr. Caldwell. The yes is in the Atchafalaya Delta, which
takes 30 percent of the Mississippi waters coming down. There
is a buildup, and we just finished a large project that we
think is going to add about 5 square miles fairly quickly. So
the answer is yes.
Unfortunately, over at the mouth of the Mississippi, which
used to provide sediment to the whole area, the Delta has
extended to the point where the sediment is now going off the
outer continental shelf. And I am presently working on a
planned project to divert some of that, so it will flow along
the coast and help rebuild.
The Chairman. Why has it changed? Has the Corps of
Engineers done anything to change the flow, that would result
in less buildup of the Delta?
Mr. Caldwell. That is what we are working on a plan for
now. It is very, very expensive. The problem is money. S. 25
will give us the money to do these large-scale projects that we
cannot do with $40 million.
The Chairman. Why did it use to build up and not build up
anymore?
Mr. Caldwell. Well, primarily from the levees. That is the
principal cause of the coastal loss. There are many causes--
navigation canals, offshore operations, sea level rise, natural
compaction. But the principal cause is the fact that we built
levees along the Mississippi and deprived the marshes of fresh
water nutrients and sediment.
The Chairman. Senator Sessions has been observing here, and
I would be pleased to extend him a question or two if he would
care to. Because I am about through. I have got a couple more
questions, but I will submit them to you in writing. I want to
end this at 11 o'clock, because we go into a caucus.
Senator Sessions, please proceed as you see fit.
Senator Sessions. I think it is accurate, is it not, Mr.
Van Putten, that gas that we are discovering offshore does burn
cleaner than gasoline and diesel fuel and that sort of thing?
And, in fact, some of our powerplants are converting now to
natural gas because it has much less polluting impact. So, I
guess from an environmental point of view, if we could bring
online more natural gas, that would be a positive thing, would
it not?
Mr. Van Putten. Well, Senator, we certainly are supportive
of, for example, dealing with dirty coal-fired powerplants in
the Midwest that are contributing to so much pollution. And
conversion to natural gas is one of the alternative sources of
energy.
Senator Sessions. Well, we need to do that. And there
appear to be substantial reservoirs offshore. And our
technology has gotten so good that we are seeing very few, I
believe, spills of any kind.
Also, Dr. Oltz, Alabama has a trust fund that it has set
aside for the income of oil and gas production offshore. And
the theory was, some 20 or so years ago I guess--I know
Congressman Sonny Callahan, and Governor James, who was in his
first term, made that happen. And it avoids the boom and bust
oil and gas thing.
Would you share with us how that works and if you would
recommend that other States consider that?
Dr. Oltz. Senator, we did talk briefly about that in the
presentation, but let me recount the model, which is probably
something other people might like to use. All the revenue that
comes off the 8(g), which is the combined State/Federal sharing
area, and all of the revenues that are acquired from lease
sales and rents and bonuses and royalties, all of that is
deposited in an inviolate trust fund that was set up by then
Attorney General Sessions, as I recall.
Did you have something to do with that?
Senator Sessions. I did not, but I have admired it over the
years.
Dr. Oltz. We make attempts to make sure that that remains
inviolate in the State. It is now at $1.61 billion. And the
interest and investment income off of that fund is deposited
into the general fund for the operation of the State.
Senator Sessions. Mr. Palmer, from Louisiana, do you wish
that at least some portion of your monies had gone into a fund
like that?
Mr. Palmer. Well, I am sure Jack and the folks in Louisiana
do so. In Mississippi, now, we do have a trust fund that, in
the 1980's, was embedded in the Constitution, moved from
statute. It is dedicated to funding education programs. That is
one of the issues that we will have to deal with here as you
move along with S. 25, and that is the character of these
monies as they would come to Mississippi.
Because there are so many other worthy things to deal with,
as Mr. Van Putten has talked about, and others, that are beyond
education. We certainly are not going to violate the principle
of supporting public education. But there are these other
needs--environmental and infrastructure and otherwise--that we
believe these monies should be dedicated to.
Senator Sessions. I understand that an amendment or a
suggestion I made to the bill--and I believe it does this--it
says if a State desires it can set aside a trust fund for these
monies that come to it as a result of this legislation. And it
has to be dedicated, the interest on it, to the same goals that
this legislation provides, and not some other goal.
So, to me, it would preserve the environmental character of
the Act, but also it would guarantee a perpetual fund for
environmental needs that would be perhaps better than just
going up and down with the market and the production of oil and
gas.
Mr. Chairman, thank you.
The Chairman. I would like to just interrupt, because I am
going to have to leave.
Senator Sessions. That is all I have.
The Chairman. All right. Do any of you gentlemen want to
make any concluding 30-second statements?
Mr. Van Putten. Mr. Chairman, I cannot resist the
opportunity to again say that obviously there is a lot of
dispute about the environmental impacts of OCS drilling and
expanding it. We would like to work with you on S. 25 to
navigate those waters, so that it does not provide perverse
incentives for additional drilling, so this bill does not get
laden down and caught up in that larger and unnecessary
development. And we look forward to working with you on that.
The Chairman. Well, I concur with that. And we do welcome
your input. I have had members come up to me and say, well, I
am from a State that has got a moratorium, and we want to
maintain that moratorium, but we want your money.
Now, I do not think we have to resolve that here because
this bill is clearly designed to provide a sharing mechanism on
a disproportionate basis, depending on whether there is an
impact or not. This seems to be at least a fair way to get
started with the process.
So I assure you on that. But I do not think we ought to
have any misunderstanding--this is oil money, this is gas
money. And it is doing something positive for the environment
and for the environmental movement.
Now, if they say it is tainted and want to use that as
rhetoric, so be it. But I think we have to be basic and
understand the reality that we need energy, we consume energy.
We are either going to import it or we are going to have a
reasonable domestic segment in the United States. And with it,
we can use the proceeds to offset concerns that we have and
would have to pursue in the appropriations process, which is a
lot tougher.
Now, make no mistake about it, this is about a $4 billion
pot. And this has been going to the Federal Treasury. And we
are proposing to take half of it and distribute it under a
formula. And there are a bunch of tiers that are not going to
be very happy with that, because where do we come up with the
other $2 billion?
Well, that is not necessarily an obligation of this
committee at this time.
[Laughter.]
The Chairman. But I pass that out for your consideration.
I want to thank the panelists for, I think, a meaningful
contribution to a significant effort that could dramatically
change the way in which the impacted communities have an
offset, if you will, to meet their own priorities, and also to
fund a very worthwhile effort. I am very, very disappointed
that, in spite of the base of support from the Council of
Mayors and all the others, the Land and Water Conservation Fund
has not seen fit to be funded by this administration. This
would take care of that. And it would certainly take care of
the concerns over the wildlife, fish and wildlife, within the
States.
So it is an effort to try and do something that I think has
more pluses than minuses, but we will have to add those up as
we go along.
I want to thank you, gentlemen. And I want to thank the
audience. I want to assure the States that are affected by a
moratorium that it is not in our interest to set up a funding
decoy out there for you. This is just the first shot at a
formula. And we will have plenty of opportunity to kick it
around and discuss the equity of it from here on out.
So, with that profound observation, I wish you a good day.
And thank you for coming.
[Whereupon, at 11 a.m., the hearing was adjourned.]
[Subsequent to the hearing, the following statement was
received for the record:]
Statement of Mike Navarre, Mayor, Kenai Peninsula Borough, AK
My name is Mike Navarre and I am the mayor of the Kenai Peninsula
Borough in Alaska. I am also the current President of Alaska Conference
of Mayors. I want to thank Chairman Murkowski and the Committee for the
opportunity to present this testimony on an issue of great import to my
community and to the entire State of Alaska. I also want to express my
support for S. 25, the Conservation and Reinvestment Act of 1999. I
agree with Chairman Murkowski that while this bill, in its current
form, is not perfect it is a worthy first step in the effort to finally
resolve the inequity of the current federal leasing program. I also
applaud its provisions to direct a portion of OCS revenues to State and
local government land conservation programs.
The Kenai Peninsula encompasses approximately 10,000,000 acres in
south- central Alaska. It is surrounded by the waters of the Cook Inlet
and the Gulf of Alaska on the east. It includes the communities of
Homer, Soldotna, Kenai and Seward, among others. It is home to the
1,970,000 acre Kenai National Wildlife Refuge and the 567,000 acre
Kenai Fjords National Park as well as portions of Katmai National
Monument, and Lake Clark National Park. The Kenai River, one of the
premiere sportfishing rivers in Alaska and the world flows through the
Peninsula.
The Kenai Peninsula Borough, of which I am Mayor, is the primary
municipal government for the area and has a permanent population of
approximately 49,000 people. However, during the summer tourist season,
we see as many as one million visitors to our area. Many of our
residents depend upon the attractions of the Kenai River and its
resources for their livelihood as fishing guides, outfitters and
campground operators. Still others support themselves through
commercial fishing and salmon hatcheries. Seward is the disembarkation
point for many of the thousands of cruise ship passengers who visit
Alaska each year.
As you know, Alaska is one of six States with active oil and gas
exploration and development of the outer continental shelf (OCS). While
there is currently only a relatively small amount of offshore
production activity in Alaska much of what there is occurs in the
waters of Cook Inlet just west of the Kenai Peninsula. In fact, one of
the largest private employers in the Borough is the Phillips/Marathon
LNG facility which exports Cook Inlet natural gas to Japan. The
Borough, in short, is not just a coastal community, it is many coastal
communities, all of whom are affected by the development activities
which occur in nearby waters. Moreover, current exploration and
development activities are expected to result in more OCS oil and gas
production in Alaska in the near future.
The vast majority of the residents of Alaska and of the Borough are
in favor of OCS oil and gas development. We recognize the many benefits
that onshore development has brought to our State and, particularly
now, want to continue to develop our natural resources in a responsible
manner. However, as in the case of onshore development, OCS activities
also have other impacts on the State and nearby coastal communities
such as ours. Such impacts have economic costs and the burden and
responsibility for dealing them falls disproportionately on the nearby
communities. For one thing, OCS oil and gas development activities
place increased demands on our roads and coastal infrastructure.
Federal OCS activities also increase the demands on our local public
services, including schools, police, fire protection, search and
rescue, and utilities. It also increases the nature and extent of
environmental monitoring and regulatory functions that must be
performed by the State and local governments. Under the current federal
system, however, we derive no direct economic benefits from federal OCS
oil and gas development to assist in dealing with the very real impacts
which such activities create. That unfairly places the burdens, and the
risks, of such development on our communities while denying us a share
in its benefits and rewards.
Allowing coastal States and communities to share directly in the
economic benefits of federal OCS development will also assist in
addressing a variety of important needs and functions regarding our
coastal resources. The State of Alaska and the Borough have an
extensive Coastal Zone Management Plan designed to protect our
resources by, among other things, allowing only responsible use and
development. We regulate any and all activities which impact the
coastal environment. Unfortunately, the costs of such regulatory
activities make it more difficult to engage in an adequate and
comprehensive monitoring and planning program. If we were to receive a
portion of the Federal OCS revenues which are produced from nearby we
would be better able to do so. In addition, local communities like mine
would be better able to participate fully and protect their interests
in the extensive federal and State environmental planning process which
precedes OCS development.
In conclusion, let me reiterate my support for responsible
development of our rich OCS oil and gas resources. Doing so is vital to
the long-term economic health of our communities, our State and our
Nation. At the same time we should not be made to bear so much of the
responsibilities of such development while receiving none of the
rewards.
APPENDIX
Responses to Additional Questions
----------
National Wildlife Federation,
Vienna, VA, April 1, 1999.
Hon. Frank Murkowski,
Chairman, Energy and Natural Resources Committee, U.S. Senate,
Washington, DC.
Dear Chairman Murkowski: I deeply appreciated the opportunity to
testify before the Senate Energy and Natural Resources Committee on
January 27, 1999. Attached is my response to the questions posed by
various members of the Committee. Please let me know if I can provide
any additional information to you or other Committee members.
Sincerely,
Mark Van Putten,
President and CEO.
Responses to Questions From Senator Landrieu
Question 1. First, I want to thank you for testifying before the
Committee today. We have met before to talk about this subject, and I
appreciate your input and the input of others in the environmental
community. In your testimony, you make a very thorough accounting of
the effects offshore operations have on coastal areas: on wildlife,
fisheries, habitat and communities, particularly in Louisiana where
activity is greatest. Would you agree that the Louisiana Delta area is
of national importance and deserves national attention to its
conservation needs?
Answer. The National Wildlife Federation recognizes that the
Louisiana Delta (Delta) is an area of tremendous ecological importance
with conservation needs that warrant national attention. The Delta is
part of a complex network of saltwater marshes, coastal wetlands,
estuaries, and barrier islands. These ecosystems serve as nurseries for
fish and shellfish species that are ecologically and economically vital
to the Gulf of Mexico and the rest of the nation. Gulf fisheries
constitute nearly 40 percent of the country's commercial fishing
industry. This area also provides essential habitat for millions of
migratory waterfowl, including many endangered species.
Unfortunately, this biologically rich region is being destroyed at
an alarming rate. Louisiana contains 40 percent of the coastal and
estuarine wetlands found in the Lower 48 states, but accounts for 80
percent of the nation's estuarine wetlands loss. In some cases,
wetlands are being drained or filled in order to promote coastal
development. Elsewhere, levees, navigation channels, and pipeline
construction lead to accelerated erosion and subsidence that literally
causes the region's wetlands to sink into the Gulf. With over 20,000
wells off its shores, Louisiana has also been hit hard by the negative
environmental impacts of offshore oil and gas drilling. The direct
effects of offshore drilling, as well as the impacts associated with
the transport and refinement of petroleum products have been
devastating to the Delta's natural resources. Sea level rise caused by
climate change and a variety of other threats promises to cause
additional losses to these resources unless conservation measures are
used to intervene.
The coastal impact assistance portion of S. 25 (Title I) directs a
substantial amount of federal funding to Louisiana and specifically, to
the Delta. The current bill language does not ensure that these
precious conservation dollars will be spent on improving and protecting
Louisiana's vital natural resources. Instead, the bill allows these
dollars to be directed for other purposes, including infrastructure
development that might actually promote environmental degradation. The
National Wildlife Federation strongly recommends that the bill be
amended so that coastal impact assistance funds are directed toward
projects that ameliorate the environmental impacts of offshore oil and
gas drilling and related development activities. Rather than
subsidizing unwise development, the bill should require a demonstration
that each impact assistance project will benefit the natural
environment and is consistent with federal environmental laws like the
Clean Water Act and Coastal Zone Management Act. The bill should
require that priority be given to efforts that directly offset the
impacts of offshore drilling, protect and enhance fish and wildlife
habitat, and support the repurchase of Outer Continental Shelf leases.
These changes to the bill would ensure that the Louisiana Delta would
receive funding for the environmental protection and restoration that
it desperately needs.
Question 2. We have spoken today about the Gulf Coast area and
impacts from activity there. There are also coastal environmental needs
that deserve federal assistance in other parts of the country. In the
Northwest there are habitat and fisheries, along the eastern seaboard
shorelines are disintegrating. Do you believe that these areas of the
country should benefit from impact assistance?
Answer. The National Wildlife Federation supports the use of
coastal impact assistance funds to address the significant coastal and
marine conservation needs that exist around the country. In general,
coastal states that have oil and gas drilling off their shores suffer
from the most chronic and direct impacts of this industry. The recent
oil spill from a grounded tanker in Coos Bay, Oregon, however, clearly
illustrates the hazards that oil and gas related activities pose to all
of the nation's important marine and coastal resources. Fragile coastal
ecosystems around the country face threats from development and other
types of human disturbances. Our coasts are now home to half the
populace, which places incredible pressures on these ecosystems. As our
population continues to expand, it will become more difficult to
maintain intact, functioning coastal ecosystems. If we do not protect
these coastal resources, we will lose economically valuable fisheries,
irreplaceable outdoor recreational opportunities, and unique
assemblages of species. Our nation's marine resources face similar
pressures. Increased pollution, climate change, over harvesting of
fisheries, and other factors are threatening the survival of many
marine species--including endangered marine mammals like the gray whale
and Hawaiian monk seal, and commercially valuable fish species like red
snapper and bluefin tuna. These are resources we cannot afford to lose.
As a result, the use of coastal impact assistance dollars to support
coastal and marine conservation work in areas with, and without,
offshore drilling is both appropriate and necessary.
Responses to Questions From Senator Wyden
Question 1. S. 25 provides that Outer Continental Shelf (OCS)
impact assistance money can be spent by States and political
subdivisions on a broad variety of programs, as long as those programs
are consistent with State coastal zone management plans. On the West
Coast, and perhaps in other areas of the country as well, one of our
biggest problems is the lack of basic scientific research on marine
fish species. Obviously, OCS development could have an impact on those
species and on the coastal communities and industries that rely on
those species. Does the phrase ``fish and wildlife'' in section
704(a)(1) of S. 25 include marine fish research? If not, how would you
suggest modifying the provision so it clearly covers marine fish
research?
Answer. The National Wildlife Federation supports the use of
offshore oil and gas revenues to address the conservation needs,
including research, of marine fisheries in the Northwest and elsewhere.
Like our coasts, marine fisheries around the country face substantial
threats from a variety of sources and many have declined dramatically.
Inadequate data regarding the status of marine fisheries has hindered
our ability to protect these species. The collapse of the Georges Bank
fisheries, which was once one of the richest fishing grounds in the
world, is a sobering indicator of how quickly these resources can
disappear and how serious the economic losses are when an entire
fishing fleet is forced to shut down.
The negative effects of offshore oil and gas drilling have, in some
cases, contributed to these declines. The Exxon Valdez oil spill, for
instance, caused a complete shutdown of the region's salmon fisheries.
Fish are also negatively affected by chronic exposure to toxic
pollutants that are released as a result of the drilling process.
Furthermore, drilling platforms and their cable anchors occupy a great
deal of space that can prevent commercial fishing in areas up to 20
square miles. The harmful impacts that offshore drilling have on fish,
the need for increased understanding of the threats to marine
fisheries, and the importance of the resource at stake are strong
justifications for using S. 25's coastal impact assistance funding for
marine fisheries conservation work.
Title I of S. 25 is currently broad enough to allow states to use
these funds for marine fisheries conservation. States, however, have a
limited role in the protection of marine resources. If these funds were
to be used for things like marine mammal conservation, or deep sea
fisheries conservation, then a federal program would either need to be
created or an existing federal marine conservation program identified
as the recipient of these funds.
Whether or not a federal marine provision is added to the bill, the
National Wildlife Federation recommends against the addition of bill
language that specifically directs funds towards marine fisheries. If
marine fisheries were mentioned without highlighting other distinct
categories of fish and wildlife species that face comparable
conservation challenges, it would place an undo emphasis on marine
fishery needs that is not biologically justified. Coastal impact
assistance funds should be directed to those coastal and marine species
and/or ecosystems where there is the greatest conservation need; and
these needs will vary greatly from region to region.
Question 2. As you know, during the consideration of the Endangered
Species Act reauthorization in the Committee on Environment and Public
Works last year, I worked with the unlikely alliance of the Farm Bureau
and the Environmental Defense Fund to find a source of permanent
funding for the landowner incentive provisions of the Kempthorne-Baucus
legislation.
I continue to believe that our lack of serious, dedicated funding
for the purpose of working with private landowners on the conservation
of endangered species habitat remains a major flaw in our approach to
the conservation and recovery of endangered species.
Legislation introduced by Senator Landrieu--S. 25--proposes to
earmark a substantial portion of the nation's outer continental shelf
oil drilling receipts and dedicate those to funding of state fish and
wildlife programs. What are the Federation's views about this as a
priority for federal spending on wildlife? Should Congress consider
making a portion of these funds available for the direct conservation
of endangered species habitat? And if so, how much?
Answer. The National Wildlife Federation considers the funding
needs of state fish and wildlife agencies for nongame wildlife
protection to be of the highest priority, and wholeheartedly endorses
the use of Outer Continental Shelf revenues for these purposes. State
fish and wildlife agencies are responsible for the management and
protection of the majority of fish and wildlife species that inhabit
their borders. Yet, the amount of funding available to these agencies
typically does not reflect their broad mandate; and, all too often,
important programs are limited due to inadequate funding. Substantial
new funding would provide a shot in the arm to state fish and wildlife
agencies for improvements in on-the-ground management of wildlife
species. Title III of S. 25 provides desperately needed funding for
state fish and wildlife conservation efforts; however, it should be
amended to ensure that the funds go to those species that have the
greatest conservation needs.
Roughly 90 percent of wildlife species are ``nongame,'' which means
that they are neither hunted or fished, nor federally listed as
threatened or endangered. Early intervention when a nongame species
begins to decline is the best way to keep the species from plummeting
to the point that it must be listed as threatened or endangered.
Proactive protection is more cost effective than waiting for the
species to reach a crisis situation when recovery measures become more
extreme and more expensive. Nevertheless, protection for these nongame
species has historically received minimal amounts of funding. Instead,
the vast majority of state wildlife dollars are spent on the protection
of game species. Annual funding for all state nongame programs amounts
to less than $100 million compared to more than $1 billion spent for
state game programs. This is not surprising given that hunters and
anglers pour millions of dollars annually into the state agencies
through excise taxes that they pay on hunting and fishing equipment and
sporting licenses. The time has come to remedy this funding imbalance.
To accomplish this, the National Wildlife Federation recommends
strongly that Title III of S. 25 be changed to clearly indicate that
priority should be given to the historically underfunded nongame
species protection programs.
The National Wildlife Federation has consistently identified
nongame species as the area of greatest wildlife conservation need and
would oppose any effort to reduce current funding provided for these
purposes under Title III of S. 25. The National Wildlife Federation
recommends that the Committee amend S. 25 to increase the percentage of
Outer Continental Shelf revenues for state fish and wildlife programs
under Title III--from 7% to 10%--to match the levels provided under
H.R. 701, the companion bill in the House. Beyond this increase,
additional Outer Continental Shelf revenues set aside under S. 25
should be directed towards the protection of threatened and endangered
species. A long history of inadequate funding for the federal
Endangered Species Act has made it extremely difficult to recover
threatened and endangered species.
For years, the National Wildlife Federation has called for a
dedicated funding source that could provide reliable dollars for
endangered species habitat protection. The use of Outer Continental
Shelf revenues for private landowner incentives programs--programs that
get landowners more engaged in endangered species protection efforts--
would be a particularly sensible and beneficial application of these
dollars. Many threatened and endangered species depend heavily on
private lands for their habitat, yet the Endangered Species Act has
been relatively ineffective at improving conditions for species on
these lands. Moreover, current implementation of the Act has left many
private landowners antagonistic toward endangered species. Positive
outreach efforts could help minimize their hostility toward the Act.
If it can be done without jeopardizing funding for the existing
Title III state wildlife programs, the Committee should amend S. 25 to
include an endangered species provision similar to that found in S.
446, a bill introduced by Senator Barbara Boxer. This provision
allocates $100 million annually to fund landowner management actions
that promote the recovery of endangered species. The funds would be
used only for management actions that go above and beyond the existing
requirements of the federal Endangered Species Act. This ensures that
the federal government is not paying landowners to comply with the law.
This type of program would make an important contribution to our
national effort to protect threatened and endangered species.
Question 3. Should Congress decide to move forward on legislation
to utilize a share of Outer Continental Shelf (OCS) revenues to fund
Land Water Conservation Fund, coastal impact assistance and wildlife
conservation. What safeguards do you believe are necessary to protect
the current moratoria on OCS leasing and to prevent incentives for
states to advocate for increased oil and gas development?
Answer. Some essential safeguards should be added to S. 25 to
ensure that it does not create financial or political incentives for
coastal states to accept inappropriate offshore oil and gas
development. Under S. 25, the allocation of Outer Continental Shelf
leasing revenues to coastal states and their local governments is based
on a formula that rewards increased production and closer proximity to
production. To ensure that this bill will not create incentives for
drilling, the allocation of funds under all three titles of the bill
should be de-linked from new leasing, exploration, production, or
geographic proximity to such activities. Representatives Don Young and
John Dingell have taken some significant steps towards addressing this
issue in H.R. 701, the House companion bill to S. 25. Specifically,
H.R. 701 excludes from its coastal impact assistance funding stream any
new revenues generated from areas currently covered by drilling
moratoria. S. 25 should be amended to exclude funds from all areas (not
just those covered by moratoria) where drilling is not currently
occurring. In addition, the exclusion of these funds from the bill's
revenue stream should apply to all three titles of the bill.
Funds generated from future exploratory efforts and/or drilling
that occurs in areas excluded from the funding revenue stream (i.e.,
areas where these activities are not occurring at the time the bill is
enacted) should be set aside in a ``catastrophic response account'' to
be used for emergency costs associated with oil and gas accidents.
Additionally, the share of coastal impact assistance provided to
each state and locality should be set at the time the bill is passed
(i.e., fixed at the rate of current production levels) or based on an
average production level over the last 20 years.
Question 4. With the increasing number of listed species in the
Northwest and around the nation, it would seem to be smart to use
revenues provided by S. 25 for accomplishing preventive wildlife
conservation. States and local governments could employ increased
resources in an effort to get out ahead of future endangered species
listings. How would you view the use of these resources to enhance
conservation of those species which are candidates for Endangered
Species Act listing as either threatened or endangered?
Answer. Funding provided under Title III of S. 25 can and should be
used to address the conservation needs of species (including
``candidate'' species) that have declined, but have not yet been
federally listed as threatened or endangered. Candidate species, in
particular, deserve conservation attention because they are generally
in dire condition. These are species that have already declined to the
point that they should be listed, but have been precluded from listing
for a variety of reasons, including insufficient funding and a lack of
political will to add them to the list. As candidates, these species
receive no protection under the Endangered Species Act, and several
candidate species have gone extinct while waiting to be listed.
A number of states have begun to develop plans that address the
conservation needs of candidate species. Some of these state plans will
prove beneficial to the species; however, many are based on voluntary
conservation measures and unproven conservation strategies that are
unlikely to achieve recovery of the species in question. State plans
that provide meaningful conservation measures--including clear
biological goals, monitoring programs, funding for implementation, and
enforcement provisions--are the types of efforts that will benefit
candidate species and should be funded under Title III of S. 25. In
some instances, states have generated these plans with the express
intent of avoiding a listing. State plans that will not contribute
significantly to the recovery of a candidate species or that are merely
an excuse to avoid a listing that is warranted and necessary, should
not be eligible for funding under S. 25.
Question 5. Currently, money collected from offshore development
under the Mineral Leasing Act is supposed to be used for land and water
conservation. However, only a portion of the funding collected actually
gets appropriated to the Land and Water Conservation Fund. Is this
legislation going to ensure that all of the funds collected from
development of lands currently covered by the Mineral Leasing Act that
are supposed to be used for conservation are actually used for
conservation? If not, should Congress, as a ``truth in budgeting''
issue, also address the existing funding problem with the Land and
Water Conservation program?
Answer. S. 25 is designed to ensure that a portion of offshore oil
and gas revenues are permanently and automatically appropriated for
coastal impact assistance, the Land and Water Conservation Fund (LWCF),
and state fish and wildlife programs. Titles I and III of S. 25 need to
be amended to ensure that all of these funds go for conservation
purposes. The most significant portion of these Outer Continental Shelf
revenues are directed to the coastal impact assistance program in Title
I. As currently written, the bill would allow these funds to be used
for infrastructure projects that may promote environmental degradation.
Title I should be amended to ensure that coastal impact assistance
dollars are used to fund projects that ameliorate environmental impacts
of Outer Continental Shelf oil and gas development and related onshore
activities. Rather than subsidizing unwise development, the bill should
require a demonstration that each impact assistance project will
benefit the natural environment and is consistent with federal
environmental laws like the Clean Water Act and Coastal Zone Management
Act. The National Oceanic and Atmospheric Administration and/or the
Environmental Protection Agency should be given the authority to review
and approve state plans for spending these coastal impact assistance
funds to ensure that the proposed actions are consistent with these
laws. The bill should require that priority be given to efforts that
directly offset the impacts of offshore drilling or associated
development activities, protect and enhance fish and wildlife habitat,
improve air or water quality, protect and restore coastal wetlands, and
support the repurchase of Outer Continental Shelf leases.
Title II of S. 25, which addresses funding for the Land and Water
Conservation Fund (LWCF), also poses some substantial problems that may
preclude all of the funds from being used for conservation purposes. S.
25 includes a provision that requires any federal LWCF land acquisition
exceeding $5 million to be authorized by Congress. This requirement
will force many LWCF projects to get Congressional approval; and, in
turn, subject them to the political process that has always hindered
the LWCF program. Currently, LWCF is authorized to receive $900 million
annually, but the average appropriation that Congress has provided over
the last thirty-four years is only one-third of that amount. Although
S. 25 provides LWCF permanent and automatic funding, the requirement
that projects receive Congressional approval creates a substantial
hurdle that will hinder land acquisitions and may prevent those funds
from actually being spent.
Additionally, Title III of S. 25 requires that 2/3 of the LWCF
funds be spent on lands east of the 100th meridian. The requirement
that 2/3 of the funds be spent in the East is an arbitrary restriction
that will limit the ability to prioritize land acquisition based on
conservation needs. The National Wildlife Federation strongly
recommends that these restrictions be eliminated from the bill to
ensure that LWCF dollars are spent for land acquisitions that respond
to the most serious impending conservation threats.
Responses to Questions From Senator Graham
Question 1. Can you provide an example of the coastal impacts that
offshore drilling can cause on a day-to-day basis?
Are the effects the same for oil and natural gas? If not, what are
the differences?
Answer. On a day-to-day basis, offshore drilling results in the
regular release of toxic compounds used in the drilling process, air
emissions that violate Clean Air Act standards, and the chronic seepage
of petroleum from pipelines into the surrounding coastal marshes and
sea bottom. These impacts are not always immediately visible and may
seem less significant than the dramatic impacts of a catastrophic oil
spill, yet the cumulative effect over time is a buildup of pollutants
that have corrosive effects on the region's ecosystem, resident
species, and species that migrate through the region.
Offshore drilling for natural gas produces many of the same effects
that result from oil drilling on the Outer Continental Shelf. Platform
placement, which disturbs the seabed; drilling discharges, which
release toxic materials into the area around the drill site; noise
disturbances created by platform construction and ongoing activities;
and trash produced during daily activities on the platform are negative
impacts common to both oil and gas drilling. The effects of a natural
gas spill, however, are less detrimental than that of an oil spill
because natural gas is less toxic to the environment and dissipates
more rapidly from the ecosystem.
Question 2. Can you provide an example of the coastal impacts that
an unanticipated event (for example, an unanticipated discharge of
fluids, a tanker collision) could have on fragile coastlines such as
those in the state of Florida?
Answer. Unanticipated, catastrophic events like the recent tanker
spill in Coos Bay, Oregon can have immediate and devastating impacts on
marine and coastal ecosystems. Despite some improvements in cleanup
technologies, often only a limited amount of the spilled material can
be captured before it enters the ecosystem. Frequently, these spills
cause the closure of important commercial fisheries. Shellfish and
other sedentary organism are particularly vulnerable to the impacts of
an oil spill and can be killed outright or rendered unfit for human
consumption. A spill off the coast of Florida, for instance, would
wreak havoc with the area's coral reefs; which, in turn, would threaten
all of the resident fish and marine species that rely upon those reefs.
Oil slicks have proven deadly for sea otters, seabirds, and other
marine species. Migratory species like whales often avoid areas where
major spills have occurred, sometimes for years after the event. After
a major spill, oil, tar and other petroleum byproducts can wash up on
beaches for years leaving them inhospitable to people and wildlife.
Furthermore, the oil and its associated compounds will persist in the
ecosystem for years. Ten years after the Exxon Valdez oil spill, the
region's coastlines and marine species are still suffering from the
impacts of oil residue that remains in the ecosystem.
______
State of Louisiana,
Department of Natural Resources,
Baton Rouge, LA, February 17, 1999.
Kelly Johnson,
U.S. Senate, Committee on Energy and Natural Resources, Washington, DC.
Dear Ms. Johnson: I have enclosed my responses to written questions
from Senators Landrieu and Wyden. If I can be of further assistance to
the committee in any way, please do not hesitate to call me at 225-342-
4503.
Again, thank you for the opportunity to be heard on such pressing
issues.
Very truly yours,
Jack C. Caldwell,
Secretary.
Responses to Questions From Senator Landrieu
Question 1. We have heard a great deal this morning about the
importance of Louisiana's wetlands to the state and to the nation. In
your dealings with other states, have you encountered similar
expressions of concern regarding coastlines and coastal economies?
Answer. Yes. I speak to groups on coastal issues in different parts
of the country. Most recently, I addressed coastal conferences in
Williamsburg, Virginia, Washington, D.C., Galveston, Texas and
Monterey, California. In these and other places, the concerns raised
most often are about preserving marshes, sustaining fisheries and
stopping beach erosion.
Question 2. Louisiana depends heavily on the oil and gas industry
as an integral part of its job base--fully 50% of the economy is based
on petroleum. In light of this dependence and historical boom and bust
cycles, has the state contemplated taking any steps to diversify the
economy? What are the factors, in your view, that have affected efforts
to diversify the economy?
Answer. Governor Mike Foster's Louisiana Economic Development
Council is putting together ``Vision 2020'', a strategic economic
development plan that sets aside six clusters to be targeted in the
state's efforts to diversify its economic. The clusters include:
Medical and Biomedical; Micro-manufacturing; Software, Auto-regulation,
Internet, and Telecommunications; Environmental Technologies; Food
Technologies; and Materials (catalysts, composites, electronic
materials and bio-compatible materials). Public input from the
scientific community, higher education, business and industry have all
played roles in the plan and the development of these targeted
clusters.
In the past, in my opinion, economic diversification efforts have
been hampered by the lack of an educated workforce. Education is a main
component of Vision 2020, and the issue is addressed throughout the
plan.
Question 3. As mentioned in the testimony of several witnesses
today, the OCS Policy Committee, which is one of four advisory
committees of the Minerals Management Service, made recommendations to
the Department of the Interior in 1993 and again in 1997, asking for
consideration by the agency of a coastal impact assistance package. To
date, have you had any response to your request?
Answer. No. However, the MMS has been working with President
Clinton on his Lands Legacy legislation. Together with the Department
of the Interior, they have worked to incorporate portions of certain
aspects of the legislation.
Response to Question From Senator Wyden
Question 1. S. 25 provides that Outer Continental Shelf (OCS)
impact assistance money can be spent by states and political
subdivisions on a broad variety of programs, as long as those programs
are consistent with State coastal zone management plans. On the West
Coast, and perhaps in other areas of the country as well, one of our
biggest problems is the lack of basic scientific research areas of the
country as well, one of our biggest problems is the lack of basic
scientific research on marine fish species. Obviously, OCS development
could have an impact on those species and on the coastal communities
and industries that rely on those species. Does the phrase ``fish and
wildlife'' in section 704(a)(1) of S. 25 include marine fish research?
If not, how would you suggest modifying the provision so it clearly
covers marine fish research?
Answer. In my view, the phrase does include marine fish research
and would certainly be permissible if a state's governor includes it as
part of the plan to be funded.
______
Mississippi Department of Environmental Quality,
Jackson, MS, April 6, 1999.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources, Washington, DC.
Dear Senator Murkowski: With humble apologies for being so late in
responding to your February 1, 1999 letter which poses additional
questions from the Committee regarding my testimony on Wednesday,
January 27, 1999, I am pleased to submit for the record the answers set
forth below.
While I hope that my responses to these questions can be made part
of the official record of our January 27, 1999 Committee oversight
hearing, I certainly understand if my tardiness prevents that.
Nevertheless, we are vitally interested in passage of S. 25, and stand
ready to assist you and your staff in any way possible to that end.
Sincerely,
James I. Palmer, Jr.,
Executive Director.
Response to Question From Senator Graham
Question. In your testimony, you discuss the fact that the growth
of industrial activity in the Vicksburg area due to the construction of
new, state-of-the-art drilling rigs has led to growth issues with
infrastructure development for water supply and wastewater disposal,
control of air emissions, and transportation arteries. In distributing
funds under S. 25, do you plan to identify the growth needs that were
generated by OCS development and those that were generated by other
sources of growth in your state?
Answer. Because the principal purpose of the Coastal Impact
Assistance title in S. 25 is to compensate coastal states for costs
associated with infrastructure and other burdens attributable to
operations in federal waters within the specified proximity of their
states, I believe there must be some rational effort to identify and
quantify these pressures, separate and apart from other, and very
similar, pressures in the economy, in general. In some states,
including Mississippi, where we have realized substantial economic
growth in recent years, this will be a complicated exercise in which
great precision is likely not possible. However, to deny assistance
because the nexus between offshore operations and coastal impacts is
real but not subject of minute precision would be a gross insult to the
entire concept. By way of example, that would be tantamount to saying
that both ``direct'' and ``circumstantial'' evidence may be utilized in
the courts of our nation, but the latter will be disallowed in the
administration of federal revenue sharing programs.
Response to Question From Senator Wyden
Question. S. 25 provides that the Outer Continental Shelf (OCS)
impactassistance money can be spent by States and political
subdivisions on a broad variety of programs, as long as those programs
are consistent with State coastal zone management plans. On the West
Coast, and perhaps in other areas of the country as well, one of our
biggest problems is the lack of basic scientific research on marine
fish species. Obviously, OCS development could have an impact on those
species and on the coastal communities and industries that rely on
those species. Does the phrase ``fish and wildlife'' in Section
704(a)(1) S. 25 include marine fish research? If not, how would you
suggest modifying the provision so it clearly covers marine fish
research?
Answer. The Coastal Impact Assistance title in S. 25 was generated
by the OCS Policy Committee, which has been advising the Secretary of
the Interior on OCS matters for many years. The national fisheries
industry has been prominently represented on the OCS Policy Committee
for a very long time, and, because the Coastal Impact Assistance
recommendations to the Secretary of the Interior were generated by the
OCS Policy Committee during my term as chairman, I can say without
hesitation or reservation that the phrase ``fish and wildlife'' in
Section 704(a)(1) of S. 25 is intended to cover marine fish research.
The most important modifier in the phrase ``air quality, water quality,
fish and wildlife, wetlands, outdoor recreation programs, or other
coastal resources. . . . is the word ``coastal''. Necessarily, that
includes both freshwater and marine fish species. As you properly note,
extensive marine fisheries research associated with offshore operations
along the West Coast has been ongoing in recent years, and hopefully
will continue. Similar programs for the Gulf of Mexico and adjacent
state coastal waters should receive similar attention. We have
outstanding scientists at the Gulf Coast Research Laboratory and other
facilities in our Institutions of Higher Learning in Mississippi who
eagerly await opportunities to participate in this much--needed marine
fisheries research.
______
State Oil and Gas Board of Alabama,
Tuscaloosa, AL, February 12, 1999.
Ms. Kelly Johnson,
Counsel, Senate Committee on Energy and Natural Resources, Washington,
DC.
Dear Ms. Johnson: The following are answers to the questions
submitted by Senators Bob Graham and Ron Wyden as follow up to the
Wednesday, January 27, 1999 Committee hearing on Coastal Impacts of
Offshore Drilling.
I would be pleased to provide any other information the committee
may require.
Very truly yours,
Donald F. Oltz,
State Geologist.
Responses to Questions From Senator Graham
Question 1. In your verbal testimony, you indicated that the state
of Alabama has a zero discharge policy for all drilling rigs in your
coastal waters. Have you ever issued a violation for that zero
discharge policy? If so, how many violations have you issued in the
last year? Which companies received those violations? Did you complete
an analysis of the environmental impact of the discharges involved in
those violations?
Answer. Alabama's zero discharge policy was violated twice, early
in our program. Mobil Oil Exploration and Producing Southeast, Inc. was
sued by the Alabama Attorney General in 1982, fined ca. $2 million plus
clean up costs. In 1983, Superior Oil Company was fined ca. $80,000
plus clean up costs which were estimated to exceed $2 million. There
were no violations last year. The lead state agency for environmental
impact assessment is the Alabama Department of Environmental Management
(ADEM).
Question 2. In your written testimony, you indicate that currently
natural gas produced in the Gulf of Mexico that is brought to Alabama
originates from offshore Alabama, Mississippi, and, to quote, ``soon,
possibly Florida.'' Have you received any indication from the federal
government that there has been a decision on the Chevron appeal to the
Department of Commerce?
Answer. I have not received nor asked about Chevron's appeal to the
Department of Commerce. The Destin Dome discovery is rated at or near 1
trillion cubic feet of gas. Because it is close to an existing pipeline
infrastructure, it is highly probable that the gas will come onshore
Alabama ``if possibly'' it is produced. My comment was to point out
that federal gas, Mississippi gas, Alabama gas, all come ashore in
Alabama and that Florida gas, if produced, could add to the Alabama
mix.
Question 3. You go on to state that, to quote, ``Alabama
infrastructure needs for maintaining current and future Gulf of Mexico
drilling and production include: New Pipelines. As projected production
increases occur, new pipelines will need to be brought onshore Alabama.
In some areas, they may cross coastal wetlands or other environmentally
sensitive areas. The current plans to add natural gas liquids plants
will also increase current daily throughput and the need for new
pipelines.'' What is the source of your projections for production
increases?
Answer. Exploration in the central and eastern Gulf continues to
expand. Lease sales conducted over the past couple of years by MMS have
been impressive in terms of industry interest and bids on leases. There
will be discoveries and thereby increased production. The fact that
each of the two new NGL plants being constructed in Alabama will
process 300mcfd initially but are being built at a 600mcfd capacity
also adds to the argument. Overall, in the U.S., NGL production will
increase at 1.9%/year. The demand for ethylene is increasing at about
3.8%/year. (cf the Oil and Gas Journal, (OGJ) June 8, 1998, p.50 ff)
Question 4. Given these projected increases in production, what is
your estimate of the increased motor vehicle traffic that will result?
What route do these vehicles normally take away from the Alabama
coastline? What is your estimate of the change in ozone and particulate
matter that will result from this increased traffic? Has Alabama
performed a plume analysis to identify the path that these pollutants
will take? If so, what are the results?
Answer. ADEM is the agency that conducts analyses of the air
quality in Alabama. Mobile County could be in non-attainment as early
as this summer. According to ADEM, the addition of the NGL plants is
not a significant element in modifying the air quality in the area. We
have not studied potential increase in traffic.
Question 5. Has the state of Alabama begun planning and budgeting
in anticipation of development of natural gas leases off the coast of
Florida? If so, what types of activities have you already undertaken?
Were these projects conducted independently or have you partnered with
private firms or other organizations?
Answer. No.
Question 6. How many additional natural gas liquids plants
(referenced in your written testimony) are you anticipating will be
constructed in Alabama? Who do you anticipate will be constructing
these plants? How much of an increase in daily throughput would you
anticipate? What is the source of that estimate?
Answer. We only know of the two under construction in Alabama, and
one in Mississippi. In addition to the statistics in my answer to
question 3, LPG consumption has expanded at nearly twice the rate of
world petroleum demand (OGJ op cit, p. 50). It comes down to supply and
demand. If the U.S. population requires more MTBE for gasoline, for
example, plants will need to meet the demand.
Question 7. Would you anticipate that potential funds from S. 25
would be used for pipeline construction costs or for restoration of
coastal wetlands that are destroyed in the process?
Answer. Restoration.