[Senate Hearing 107-729]
[From the U.S. Government Printing Office]



                                                        S. Hrg. 107-729
 
                   OIL AND GAS WELLS AND MMS PAYMENTS
=======================================================================


                                HEARINGS

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

TO IDENTIFY ISSUES RELATED TO THE INSPECTION AND ENFORCEMENT OF BUREAU 
    OF LAND MANAGEMENT OIL AND GAS WELLS IN THE FARMINGTON AREA AND 
  ATTEMPTS TO REMEDY COMPUTER PROBLEMS AFFECTING MINERALS MANAGEMENT 
                     SERVICE PAYMENTS IN NEW MEXICO

                               __________

                              MAY 31, 2002

                             BLOOMFIELD, NM


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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii              FRANK H. MURKOWSKI, Alaska
BYRON L. DORGAN, North Dakota        PETE V. DOMENICI, New Mexico
BOB GRAHAM, Florida                  DON NICKLES, Oklahoma
RON WYDEN, Oregon                    LARRY E. CRAIG, Idaho
TIM JOHNSON, South Dakota            BEN NIGHTHORSE CAMPBELL, Colorado
MARY L. LANDRIEU, Louisiana          CRAIG THOMAS, Wyoming
EVAN BAYH, Indiana                   RICHARD C. SHELBY, Alabama
DIANNE FEINSTEIN, California         CONRAD BURNS, Montana
CHARLES E. SCHUMER, New York         JON KYL, Arizona
MARIA CANTWELL, Washington           CHUCK HAGEL, Nebraska
THOMAS R. CARPER, Delaware           GORDON SMITH, Oregon

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               Brian P. Malnak, Republican Staff Director
               James P. Beirne, Republican Chief Counsel
                          John Watts, Counsel
                Frank Gladics, Professional Staff Member















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearings:
    May 31, 2002.................................................     1
    May 31, 2002.................................................    23

                               STATEMENTS
                              May 31, 2002

Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     1
Blancett, Linn, San Juan Basin, NM...............................    19
Blancett, Treciafaye W., Blancett Trust, Blancett Ranches, San 
  Juan Basin, NM.................................................     7
Gallagher, Bob, President, New Mexico Oil & Gas Association, 
  Santa Fe, NM...................................................     8
Hottell, Jacob, Chairman, Clean Water Coalition..................    19
Rolston, Alan, San Juan Systems..................................    16
Taylor, B. Brooks, M.D., MPH, La Plata County, CO................    17
Ulibarri, Lucille, Blanco, NM....................................    18
Whitley, Richard, Acting State Director, New Mexico Office, 
  Bureau of Land Management, Department of the Interior..........     3

                              May 31, 2002

Begay, Edward T., Speaker, Navajo Nation Council.................    25
Benally, Chester.................................................    49
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................    23
Blackie, Louise..................................................    48
Chavez, Ervin, President, Shii Shi Keyah Association, Bloomfield, 
  NM.............................................................    42
Garcia, Calvert, President, Nageezi Chapter, District 19, Number 
  92, Nageezi, NM................................................    29
Humphrey, Mary...................................................    51
Lizer, Matilda, Window Rock, AZ..................................    50
Lords, Douglas, Director of Office of Trust Funds Management, 
  Department of the Interior, Office of the Special Trustee for 
  American Indians...............................................    24
McCauley, Pauline................................................    46
Ray, Wilson......................................................    45
Trujillo, Arvin, Chief of Staff for the Navajo Nation Office of 
  the President and Vice President...............................    27
Werito, Eileen...................................................    44

                                APPENDIX

Additional material submitted for the record.....................    57















                       OIL AND GAS WELLS IN THE 
                            FARMINGTON AREA

                              ----------                              


                          FRIDAY, MAY 31, 2002

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                     Bloomfield, NM
    The committee met, pursuant to notice, at 8:30 a.m. in The 
Bloomfield Cultural Complex, 333 South First Street, 
Bloomfield, New Mexico, Hon. Jeff Bingaman, chairman, 
presiding.

           OPENING STATEMENT OF HON. JEFF BINGAMAN, 
                  U.S. SENATOR FROM NEW MEXICO

    The Chairman. Let me welcome everybody this morning. This 
is a field hearing of the Senate Energy and Natural Resources 
Committee.
    We are going to have two topics we are going to try to 
address. I know we don't have adequate time to fully address 
probably either one, but we want to do our best in the limited 
time we have.
    First, from 8:30 to 9:30 we are going to discuss the issue 
of inspection of Bureau of Land Management oil and gas wells 
here in the Farmington area, your testimony on that.
    Second--after that, we will have a short break and then 
maybe about a quarter to ten we will start up on some testimony 
and discussion about the Department of the Interior's computer 
shutdown and its effect on royalty payments that are owed to 
individual Navajo allottees.
    For each part of the hearing, we want to have an 
opportunity for public comment after we hear the testimony. So 
if you would like to speak, we would ask that you sign up in 
the back of the room, and we will hear public comments in the 
order of those who have signed their names on the list.
    Let me be sure I have the right instructions to people 
here.
    Let me say a few things about the first hearing, the one we 
are starting here at 8:30. We heard several reports, sort of 
repeated reports, in recent months about the problems here with 
the Farmington Field Office of the BLM lacking staff for 
inspection and enforcement.
    The national average for the BLM is about 300 wells per 
inspector, that's what I'm informed. There are at least 1,500 
wells per inspector here in Farmington, this area, according to 
the BLM's 2000 Technical and Procedural Review for the 
Farmington Field Office.
    I understand the BLM has set a goal of reducing the 
caseload of each Farmington inspector to no more than 500 
wells. That's still more than the national average, but it is 
the minimum that the BLM finds to be acceptable.
    I had a recent meeting in my office with Kathleen Clarke, 
head of the BLM, and she informed me that they have determined 
or made a decision to hire five new inspectors in Farmington. 
These new hires are commendable; however, that still leaves 
them with less than half the personnel needed to achieve this 
500 wells per inspector, so I hope we can urge the BLM to add 
additional staff and achieve this goal as soon as possible.
    We've received a lot of information about reporting and 
production--reported production sales and royalty amounts were 
not adequately verified during some of the inspections that 
were taking place, that the inspection personnel were not 
provided with adequate support; and the Farmington Field Office 
needs to hire an inspection and enforcement coordinator, a 
position that the Office is now making an effort to fill.
    I'm also concerned that there are large numbers of old and 
poorly maintained sites in this area that are in need of 
restoration. In many of these places, there is insufficient 
protection against sediment runoff from the site and associated 
roads. In other cases, sites and roads have not been cleaned or 
and fully vegetated.
    I understand that last year the Farmington Field Office 
instituted a facilitated collaborative process between ranchers 
who have grazing rights and the oil and gas lessees to help 
restore many of the old sites and resolve these problems. I 
look forward to hearing about that collaborative process. It's 
a good first step. I want to know how that's working and what 
more needs to be done. This field hearing, I think, will be a 
good start in addressing these problems.
    I understand that at the national level, Kathleen Clarke 
told me during our meeting in my office that Assistant 
Secretary Watson will be announcing some new policies related 
to surface owner rights. I'm anxious to learn anything we can 
about those new policies, and we look forward to hearing that.
    Today, we are going to hear from the BLM about the agency's 
efforts to remedy these problems. I know they have been working 
on them. And we will also hear from Tweeti Blancett, who is a 
land owner and a grazing permit holder in the area; and from 
Bob Gallagher, who is the head of the New Mexico Oil and Gas 
Association.
    Before we start the testimony with our first witness, let 
me just indicate that we would like each witness, if they 
could, we will include any written testimony that has been 
prepared in the record as if given. We would like each witness 
to take 5 minutes or so to summarize the main points and tell 
us what they think the Committee should be aware of.
    Then following that, we will have this opportunity for 
members of the public to give input as well, and I'll be able 
to ask some questions.
    Our witnesses on this first part will be Mr. Richard 
Whitley, who is the Acting Director of the New Mexico State 
Office for the Bureau of Land Management of the Department of 
the Interior; as I indicated, Robert Gallagher, with New Mexico 
Oil and Gas Association; and Tweeti Blancett, a long-time local 
land owner and rancher from Aztec.
    So Mr. Whitley, why don't you go ahead and give us your 
views. And this is going to be a little awkward, I'll just 
advise everyone, because we have the one microphone, and we 
want everyone to hear all the witnesses. So we are going to run 
the microphone back and forth. So there may be a little bit of 
a delayed reaction here. So why don't we go ahead.
    Thank you.

STATEMENT OF RICHARD WHITLEY, ACTING STATE DIRECTOR, NEW MEXICO 
 OFFICE, BUREAU OF LAND MANAGEMENT, DEPARTMENT OF THE INTERIOR

    Mr. Whitley. Mr. Chairman, thank you for the opportunity to 
appear here today. I am Richard Whitley, Acting State Director 
for BLM New Mexico State Office. I have a couple of staff here 
that will be available to answer some questions a little later 
as well.
    In the interest of time, I will begin my oral statement 
with BLM's inspection and enforcement program, the I&E program, 
and its responsibilities. The BLM is responsible for the 
oversight of oil and gas operations on Federal and Indian lands 
with the exception of Osage Tribal lands. The objectives of the 
Oil and Gas I&E program are to protect the environment, public 
health, and public safety; to ensure the public's oil and gas 
resources are properly developed in a manner that maximizes 
recovery while minimizing waste; and to ensure the proper 
verification of production reported from Federal and Indian 
lands.
    This responsibility includes inspection of oil and gas 
operations to determine compliance with applicable statutes, 
regulations, onshore operating orders, notices to lessees, 
lease terms and permit conditions of approval. These terms and 
conditions include those related to drilling, production, well 
plugging and abandonment, and other requirements related to 
lease administration.
    Under current law, the Secretary of the Interior is 
required to inspect leases annually, based on production or 
operator noncompliance. Leases are also inspected at least 
annually if there is a potential for environmental degradation 
or hazard to public health and safety. When inspectors identify 
noncompliance, they initiate enforcement action. The BLM is 
authorized to use a number of enforcement tools to ensure 
compliance, such as issuing notices of violations, imposing 
assessments or civil penalties, ordering a shutdown of 
operations, and possible lease cancellation.
    In July 2000, a Farmington Field Office I&E review was 
conducted to address concerns in the Farmington Field Office. 
The main finding identified an inadequate number of personnel 
available to monitor oil and gas activities in the Farmington 
area. The New Mexico State Office has worked to fill critical 
I&E positions as a result of the fiscal year 2000 review.
    A total of $840,000 base funding was provided in fiscal 
year 2002 for BLM New Mexico petroleum engineering technicians, 
PETs, in the I&E program. The Farmington Field Office has 
filled five of those PET positions, the Carlsbad Field Office 
has filled three PET positions, and the Oklahoma Field Office 
will be filling four more PET positions in 2003.
    The New Mexico State Office has advertised for two regional 
I&E Coordinator positions, and a State I&E Coordinator, who 
will provide for a more consistent I&E program statewide.
    There will be a total of 14 new I&E positions in BLM New 
Mexico before the end of fiscal year 2002. For fiscal year 
2003, the BLM is proposing to further increase funding for New 
Mexico's I&E program, and to add an additional 13 I&E positions 
for the State.
    The 2002 review also found that Surface Protection 
Specialists were focusing their efforts on processing 
Applications for Permits to Drill, APDs. A recommendation of 
the review was to increase the number of Surface Protection 
Specialists to ensure high-priority environmental inspections 
were performed.
    To address this recommendation for fiscal year 2003, the 
BLM is proposing to add five new Environmental Specialist/
Surface Protection Specialist positions to conduct 
environmental inspections and facilitate the APD approval 
process. Currently, an individual from the I&E staff is 
focusing on high-priority environmental inspections.
    Of course, providing and maintaining a strong oil and gas 
I&E program does not resolve all the potential conflicts 
related to oil and gas development. The BLM is also attempting 
to initiate and implement other means to address the inevitable 
conflicts inherent with our multiple use mission.
    An example of this in the Farmington area involves the 
conflicts arising from the fact that the BLM issues livestock 
grazing permits and oil and gas drilling leases for the same 
BLM lands.
    BLM grazing permit holders have claimed that oil and gas 
production and pipeline companies negatively impact the 
ranching operations of BLM grazing permit holders. Their 
complaints primarily center on accelerated erosion from oil and 
gas access roads and reclamation efforts on pipelines and well 
pads.
    In addition, ranchers believe they should have the 
opportunity to have more input into siting and accessing oil 
and gas wells within their grazing permit areas so that wells 
cause the least disruption to grazing operations and minimize 
surface disturbance.
    In order to address these concerns, the Farmington Field 
Office continues to stress collaboration and communication in 
working toward resolving these conflicts. In July 2001, the 
Farmington Field Office formed the BLM Grazing/Oil and Gas 
Committee, consisting of BLM grazing permit holders and 
representatives of the oil and gas industry, the New Mexico Oil 
and Gas Conservation Division, the U.S. Forest Service, and the 
New Mexico Land Office.
    Some accomplishments of the committee's collaboration and 
cooperation include agreeing on standards for fencing of waste 
pits and tanks on oil and gas well sites; initiating a 
voluntary $1,000-per-acre offsite mitigation fee to restore 
vegetation; establishing better seed mix for rehabilitation of 
disturbed areas; increasing communications between BLM, 
industry, and grazing communities so that ranchers are aware of 
pending surface disturbance in grazing areas; and initiating a 
program of rancher and land owner involvement in predevelopment 
field consultation and participation in working groups.
    Last week, BLM officials also met with the New Mexico 
Cattle Growers Association in the Farmington area to further 
discuss these issues and to develop collaborative methods of 
mitigating the impacts of oil and gas development activities.
    Mr. Chairman, the BLM plays an important role in 
implementing the President's National Energy Policy and in 
providing for environmentally sound energy development. As you 
know, it is imperative that a strong oil and gas I&E program 
follow any increases in energy development and production. The 
BLM is committed to addressing the issues raised in the 2000 
review of the Farmington I&E program and looks forward to 
working with you and your committee further on this issue.
    Thank you again for the opportunity to testify. I would be 
pleased to answer any questions that you have.
    [The prepared statement of Mr. Whitley follows:]
   Prepared Statement of Richard Whitley, Acting State Director, New 
   Mexico State Office, Bureau of Land Management, Department of the 
                                Interior
    Mr. Chairman and members of the Committee, thank you for the 
opportunity to appear here today to discuss the Bureau of Land 
Management's (BLM's) oil and gas inspection and enforcement (I&E) 
activities in the Farmington area. I am accompanied by Steve Henke, our 
Farmington Field Office Manager, who is responsible for the inspection 
and enforcement program in the Farmington area.
                               background
    In New Mexico, the BLM manages 13.4 million acres of surface land 
(an area larger than Vermont and New Hampshire combined); 36 million 
acres of subsurface mineral estate underlying Federal surface land; 8.4 
million acres of Tribal and allotted lands where the BLM manages 
mineral operations as part of its trust responsibility; and 9.5 million 
acres of subsurface mineral estate underlying privately owned land. 
Federal lands in New Mexico are some of the highest in oil and gas 
production in the Nation. The Farmington Field Office administers 1.5 
million acres of surface land in northwest New Mexico and 3 million 
acres of subsurface mineral estate.
    In following the Federal Land Policy and Management Act, the BLM 
manages the public lands based on the principles of multiple use and 
sustained yield, and balances recreation, commercial, scientific, and 
cultural interests as it strives for long-term protection of renewable 
and nonrenewable resources. These include range, timber, minerals, oil 
and gas, recreation, watershed, fish and wildlife, wilderness, and 
natural, scenic, scientific, and cultural values.
         blm oil & gas inspection & enforcement responsibility
    The BLM is responsible for the oversight of oil and gas operations 
on Federal and Indian lands with the exception of Osage Tribal lands. 
This I&E authority derives from the Mineral Leasing Act of 1920, the 
Federal Oil and Gas Royalty Management Act of 1982, and the Indian 
Mineral Leasing Act of 1938.
    The objectives of the oil and gas I&E program are to protect the 
environment, public health, and public safety; to ensure that the 
public's oil and gas resources are properly developed in a manner that 
maximizes recovery while minimizing waste; and to ensure the proper 
verification of production reported from Federal and Indian lands. This 
responsibility includes inspection of oil and gas operations to 
determine compliance with applicable statutes, regulations, onshore 
operating orders, notices to lessees, and lease terms and permit 
conditions of approval. These terms and conditions include those 
related to drilling, production, well plugging and abandonment, and 
other requirements related to lease administration.
    Under current law, the Secretary of the Interior is required to 
inspect leases annually, based on production or operator noncompliance. 
Leases are also inspected at least annually if there is a potential for 
environmental degradation, or hazards to public health and safety. When 
inspectors identify noncompliance they initiate enforcement actions. 
The BLM is authorized to use a number of enforcement tools to ensure 
compliance, such as issuing notices of violations, imposing assessments 
or civil penalties, ordering a shutdown of operations, and possible 
lease cancellation.
   farmington field office oil & gas inspection & enforcement review 
                findings, recommendations & resolutions
    In July 2000, a Farmington Field Office I&E review was conducted to 
address concerns regarding I&E issues in the Farmington Field Office. 
The main finding identified an inadequate number of personnel available 
to monitor oil and gas activities in the Farmington area. The New 
Mexico State Office has worked to fill critical I&E positions as a 
result of the Fiscal Year 2000 review. A total of $840,000 in base 
funding was provided in Fiscal Year 2002 for BLM New Mexico petroleum 
engineering technicians (PET) in the I&E program. The Farmington Field 
Office has filled five PET positions; the Carlsbad Field Office has 
filled three PETs; and the Oklahoma Field Office will be filling four 
more PET positions in July 2002. The New Mexico State Office also has 
advertised for two regional I&E Coordinator positions, and the State 
I&E Coordinator, who will provide for a more consistent I&E program 
statewide. There will be a total of fourteen new I&E positions in BLM 
New Mexico before the end of Fiscal Year 2002. For Fiscal Year 2003, 
the BLM is proposing to further increase funding for New Mexico's I&E 
program, and to add thirteen I&E positions for the State.
    The 2000 review also found that Surface Protection Specialists were 
focusing their efforts on processing Applications for Permit to Drill 
(APD). A recommendation of the review was to increase the number of 
Surface Protection Specialists to ensure that high-priority 
environmental inspections are performed. To address this 
recommendation, for Fiscal Year 2003, the BLM is proposing to add five 
new Environmental Specialist/Surface Protection Specialist positions to 
conduct environmental inspections and facilitate the APD approval 
process. Currently, an individual from the I&E staff is now focusing on 
high-priority environmental inspections.
  other efforts to resolve oil & gas conflicts in the farmington area
    Of course, providing and maintaining a strong oil and gas 
inspection and enforcement program does not resolve all of the 
potential conflicts related to oil and gas development. The BLM also is 
attempting to initiate and implement other means to address the 
inevitable conflicts inherent with our multiple use mission. An example 
of this in the Farmington area involves the conflicts arising from the 
fact that the BLM issues livestock grazing permits and oil and gas 
drilling leases for the same BLM lands. BLM grazing permit holders have 
claimed that oil and gas production and pipeline companies negatively 
impact the ranching operations of BLM grazing permit holders. Their 
complaints primarily center on accelerated erosion from oil and gas 
access roads and reclamation efforts on pipelines and well pads. In 
addition, ranchers believe they should have the opportunity to have 
more input into siting and accessing oil and gas wells within their 
grazing permit areas so that wells cause the least disruption to 
grazing operations and minimizing surface disturbance.
    In order to address these concerns, the Farmington Field Office 
continues to stress collaboration and communication in working towards 
resolving these conflicts. In July 2001, the Farmington Field Office 
formed the BLM Grazing/Oil and Gas Committee, consisting of BLM grazing 
permit holders and representatives of the oil and gas industry, the New 
Mexico Oil Conservation Division, the U.S. Forest Service, and the New 
Mexico Land Office. Some accomplishments of the Committee's 
collaboration and cooperation include agreeing on standards for fencing 
of waste pits and tanks on oil and gas well sites; initiating a 
voluntary $1,000-per-acre off-site mitigation fee to restore 
vegetation; establishing better seed mix for rehabilitation of 
disturbed areas; increasing communication between BLM, industry and 
grazing communities so that ranchers are aware of pending surface 
disturbance in grazing areas; and initiating a program of rancher and 
landowner involvement in pre-development field consultation and 
participation in working groups. Last week, BLM officials also met with 
the New Mexico Cattle Growers Association in the Farmington area to 
further discuss these issues and to develop collaborative methods of 
mitigating the impacts of oil and gas development activities.
                               conclusion
    Mr. Chairman, the BLM plays an important role in implementing the 
President's National Energy Policy and in providing for 
environmentally-sound energy development to respond to our Nation's 
growing energy needs. As you know, it is imperative that a strong oil 
and gas inspection and enforcement program follow any increases in 
energy development and production. This applies to the Farmington area, 
as well as all other energy development areas. The BLM is committed to 
addressing the issues raised in the 2000 review of the Farmington 
inspection and enforcement program, and looks forward to working with 
you and your Committee further on this issue.
    Again, thank you again for the opportunity to testify. I would be 
pleased to answer any questions that you may have.

    The Chairman. Well, thank you. Before we go to any 
questions, why don't we hear from Tweeti Blancett and then from 
Bob Gallagher, and then I'll have some questions for each of 
the panel members, and then we will have some public 
discussion. Why don't we let them testify.
    Ms. Blancett. Good morning, Senator Bingaman.
    The Chairman. Good morning.

 STATEMENT OF TRECIAFAYE W. BLANCETT, BLANCETT TRUST, BLANCETT 
                  RANCHES, SAN JUAN BASIN, NM

    Ms. Blancett. Welcome to northwestern New Mexico. I'm a 
member of an eighth-generation ranching family. We've lived on 
and farmed a ranch along the Animas River for parts of three 
centuries. We were here in the 1800's, all through the 1900's, 
and hopefully we'll last throughout the 2000's.
    I don't really have to tell you the problems, because our 
Senator has already told you. He outlined what our problems 
are, and they're no different than they were a year ago when I 
went into his office and told him what our concerns are.
    I don't have to tell you the problems, because they're 
documented in the evaluation summary that the Farmington Field 
Office did. These problems were identified in July 2000, but 
they were also identified in 1994 and 1998. So these are not 
new problems that we're talking about, these are old problems. 
And the problems that we have as grazing permittees, the people 
that are sitting out in the audience, I see a lot of faces that 
have exactly the same problems. They don't have a grazing 
permit, but they have a small land holding. And they have the 
noise, they have the air, they have the water pollution, they 
have the erosion. They have the contaminant spills. And we have 
serious contaminant spills throughout San Juan County.
    And a year ago when I went into your office, Senator, I 
wasn't aware of all the contamination that San Juan County has. 
But in that year's time, with the media making known our 
position, there's people that have come to me time and time 
again and said there's some real serious problems in this area. 
We have serious contamination problems that are not being 
addressed and have not been addressed that we need to look at 
as a community, as an industry, and as a BLM enforcement 
agency. The mood of the stakeholder, whether you're from the 
environmental community, whether you're from the grazing 
community, or whether you're from the oil and gas community, is 
becoming more confrontational. It is not as convenient to work 
with inner friction in the situation as it was a year ago.
    People are wanting more results, and they're wanting to see 
something done besides lip service.
    I would end my short statements and allow my time to be 
used for people out in the audience to identify specific 
problems. But I want to leave you with this thought: Last year 
alone, San Juan County spent $2.49 billion--$2.49 billion from 
our county from the extracting industry. Now, that's very 
conservative, because I don't have Tribal figures, I don't have 
private royalty owners, and I don't have the State of New 
Mexico in that. Those are very conservative.
    And my question to you as the public and to you, Senator, 
from Congress, and to the industry and BLM is if we spent that 
in one year, why are we having the discussion on where the 
funds are? We have sent the money in to take care of the 
problems, the surface problems that we have in San Juan County, 
and we think that money needs to be reallocated back to San 
Juan County to fix--and Rio Arriba County, northwestern New 
Mexico--to fix--and parts of McKinley, too, I understand--to 
fix the surface damage issues.
    Now, I think when you start reallocating the money, you 
need to lay the blame in the proportion of the people who 
received it--the Tribes, the private royalty owners, the State 
receive an eighth. Industry receives seven-eighths. So when we 
start our reclamation project, maybe we need to allocate the 
resources in that manner.
    Senator, thank you again for coming. Thank you for the 
audience that's here that's willing to share their concerns 
with you, and thank you for hearing us and coming and having 
the opportunity for us to speak. We appreciate that.
    The Chairman. Thank you very much. Mr. Gallagher, we are 
glad to have you representing the Oil and Gas Association.

  STATEMENT OF BOB GALLAGHER, PRESIDENT, NEW MEXICO OIL & GAS 
                   ASSOCIATION, SANTA FE, NM

    Mr. Gallagher. Thank you, Mr. Chairman, it's always a 
pleasure to be here with you. I don't know if I made you mad, 
but now you've made me speak after Tweeti, and in all the times 
that Tweeti and I appear together, I always sound less than 
stellar when you follow Tweeti. It's a little hard to sound 
good when you have to follow her. But I appreciate the 
opportunity, Mr. Chairman.
    I am the president of the New Mexico Oil and Gas 
Association, which is comprised of 275 companies who conduct 
business in New Mexico. Mr. Chairman, the New Mexico Oil and 
Gas Association represents the producers that produce 99 
percent of all the oil and gas that's produced in New Mexico. 
We were founded in 1929, and not surprisingly at that time the 
Association was called the New Mexico Oilman's Protective 
Association.
    Although the name has changed, the challenges facing our 
industry concerning land access have not. Since our inception a 
few weeks after the infamous stock market crash in 1929, our 
industry in New Mexico has pumped more than 4.5 billion barrels 
of crude oil and 45 trillion cubic feet of natural gas to help 
America meet its growing needs while New Mexico has become a 
national leader in the production of oil and gas.
    In the San Juan Basin, the oil and gas industry takes 
concerns, complaints, and conflicts over surface effects of 
their operations very seriously. The oil and gas industry has 
had an ongoing program to address the concerns, the complaints, 
and the conflicts of surface owners, including those holding 
grazing permits, since the first well was drilled in this basin 
80 years ago.
    The ongoing and very active program includes road 
maintenance, reclamation, well and facility site security to 
protect people and livestock, remediation of surface effects, 
studies of areas of special environmental concern, noise 
abatement, and general operating practices.
    There have been more than 32,000 wells drilled in the basin 
that now provides on a daily basis approximately 7 percent of 
the Nation's consumption of natural gas. These wells have all 
been drilled, completed, and are being operated under the 
applicable BLM Resource Management Plan and the rules and 
regulations of the New Mexico Oil Conservation Division.
    In addition, producers and operators comply with the rules 
of numerous other agencies, including the U.S. Forest Service, 
the Bureau of Reclamation, Tribal governments, the Bureau of 
Indian Affairs, the State Game and Fish Department, and the 
State Environment Department. In each and every instance, these 
32,000 wells must comply with all environmental rules, 
regulations, and policies of these agencies. If operators fail 
to meet their obligations under these requirements, they are 
subject--and should be--to fines, and they must correct their 
failures.
    The oil and gas industry goal is zero incidents of surface 
impact. We have made, and continue to make, great progress, 
such as smaller well sites and improved drilling and production 
technology. This also includes a commitment to working with the 
citizens of the areas in which we operate to do the right 
things. We are committed to our environmental obligations and 
take surface owner and user complaints and conflicts very 
seriously.
    This is evidenced by our work every day, as well as by our 
commitment to and our efforts in the groups that you mentioned 
in your opening statements, Mr. Chairman, and that is the BLM 
industry working group as well as the rancher and industry 
working group.
    We are very proud that together these two groups meet in 
excess of twelve times a year, with the common purpose of 
identifying and solving impediments to the multi-use principles 
that must guide the BLM in their regulatory role.
    These groups are very active in access issues, road 
maintenance, reclamation, reseeding, noise abatement, as well 
as other areas of mutual concern.
    These committees do not rely on op-ed pieces in the 
newspaper, selected tours of sites, or sound bites, but rather 
on sound science and common sense to ensure that we can 
continue to provide the energy needs of our State and our 
country in an environmental responsible way.
    In addition, we are proud that State lawmakers and 
regulatory agencies in the State have passed industry 
initiative and supported legislation and regulations that have 
minimized surface damage and have been specific to the San Juan 
Basin.
    As the old saying goes, ``This is not your father's 
Oldsmobile,'' nor is this your father's oil and gas industry. 
Much has changed over the past 80 years, including technology 
as well as regulatory requirements. Holding the industry 
hostage to today's standards for deeds that were done years ago 
in compliance with the laws at that time is not acceptable, nor 
is it based on sound science or common sense.
    Our industry is burdened with complicated regulatory 
requirements which we are meeting on a daily basis while 
providing the needed energy for our country, as well as a 
return on the investments of our owners and stockholders. 
Expecting to right the wrongs of the past 50 years in a 12-
month period is impossible at best and ludicrous at worst. 
Working with the above-mentioned committees, the industry 
believes that the establishment of 5-year plans by individual 
companies for remediation and reclamation of old sites is a 
practical and measured response to the problem.
    Let me quickly move to the Bureau of Land Management and 
their inspection and enforcement activities in the San Juan 
Basin. We have a very good professional working relationship 
with the Farmington Field Office of the BLM, and it generally 
has increased tenfold under the leadership of Steve Henke, who 
is the Field Office Manager in Farmington. But the entire State 
of New Mexico's BLM efforts are hampered by a lack of financial 
commitment on the part of the national BLM Office. Let me give 
you some figures to illustrate that.
    During the time period from fiscal year 1996 to fiscal year 
2001, the Bureau--countrywide, there was a 25 percent increase 
in funding, while New Mexico's increase during that same time 
period for oil and gas activities was limited to 11 percent. 
That's a little over 2 percent a year, not even keeping pace 
with inflation. At the same time, the budget of the Washington, 
D.C. National Office of the BLM has increased 175 percent.
    Mr. Chairman, I stop at this point to point out my 
testimony, my written testimony, shows the National Office 
increased 45 percent. Knowing your demand for accuracy, we 
double-checked again yesterday to make sure, because that 
figure sounded high. And, in fact, that figure was low. In that 
time period, the national office has increased 175 percent.
    Those figures: in 1997, the Washington Office of the BLM 
had a budget of $43.8 million. A short 5 years later, the 
budget of the Washington Office is $120.4 million. This 
represents an increase of 175 percent from fiscal year 1997 to 
fiscal year 2002. Employees have grown from 300 to 500 in the 
national headquarters of the BLM.
    And while Tweeti and the ranchers and the grazing permit 
holders can't get enough I&E inspectors, the oil and gas 
industry can't get enough people processing applications and 
permits to drill and right-of-way permits in order to 
effectively work.
    I have to question how the money can be spent in 
Washington, D.C., rather than in the field offices throughout 
New Mexico and the United States. It's hard for me to 
understand this disparity in funding and its logic.
    The industry, Mr. Chairman, does not oppose an increase on 
I&E as long as it's accompanied by equal increases in the Field 
Office's ability to process applications to drill and permits. 
In New Mexico today, there's an average of 90 days wait for the 
processing of APDs, and our industry cannot maximize the 
production of natural resources, which is essential to our 
industry's health, meeting the growing demand for energy, as 
well as the financial health of cities, counties, and the State 
of New Mexico.
    I would point out, Mr. Chairman, that in On-surface Rule 1 
of the BLM, they say that 85 percent of all applications and 
permits to drill should be processed in 30 days. Our average in 
New Mexico is 90. I will tell you in the Farmington Field 
Office it's a little bit lower than 90. Since Mr. Henke 
arrived, it's been reduced from over 100 to approximately 60. 
Down in the Carlsbad area, it is still exceeding 100 days.
    Moving forward, we will, as an industry, continue to work 
in coordination with the BLM and the Federal and State 
government, surface owners, and users to ensure all concerns, 
complaints, and conflicts are addressed in a timely and 
responsible manner.
    The time has come to put to bed the myth that resource 
development and the environment are not compatible or 
diametrically opposed. Our industry has shown that we can and 
in practice do develop valuable natural resources while 
protecting the important wildlife and environmental values that 
exist today. And we're committed to continuing that effort. The 
taxpayers of our State deserve that commitment as much as they 
deserve the $1.3 billion the oil and gas industry directly 
provided to the State of New Mexico this past year.
    Mr. Chairman, thank you for the opportunity to provide 
testimony to you and your committee this morning. I also want 
to thank you on behalf of our 275 member companies for your 
leadership and dedication to the passage of a comprehensive 
national energy policy. Our country now, more than ever, is in 
dire need of a strategy that will provide the energy our 
citizens need and will reduce our reliance for that energy from 
hostile parts of the world.
    Thank you very much, Mr. Chairman.
    The Chairman. Thank you very much. Thank you all very much. 
Before I start asking a few questions here, let me just say 
what I should have said right at the beginning of this hearing, 
and that is to thank the city of Bloomfield, Keith Johnson, who 
is the mayor--I believe Keith is here, is that right? Thank you 
very much for letting us use your facilities today. I 
appreciate the hospitality and all the good work.
    And let me also thank Terri Lee, who is the director of the 
Community Services. Terri is in the back of the room. And Mary 
Tso, who is the special projects coordinator, who is helping 
us; is this right?
    Ms. Tso. Yes.
    The Chairman.T1 Okay. Thank you all very much for your 
help.
    Mr. Whitley, let me ask you a few questions about the BLM 
effort here. The figures that I cited in my first comments 
about the number of inspectors per well here in this Farmington 
area, are those accurate as you understand it? I mean, do we 
have that few number of inspectors per well in this area?
    Mr. Whitley. Yes, Mr. Chairman. It's, 350 is the average 
nationwide, and it's 1,500 here in the San Juan Basin.
    The Chairman.T1 Does the plan--if it's 350 nationwide, 350 
wells per inspector, and it's 1,500 wells per inspector here, 
how quickly can the BLM under your present budgeting plans 
remedy that and get our situation here in line with the rest of 
the country?
    Mr. Whitley. The numbers we brought on this year will be a 
huge help. In addition, with the surface protection specialists 
we'll bring on next year, that will be additional resources for 
the field office here.
    And there are some other issues related to some technology 
that we're trying to bring on board in the way of pilot 
technology to do remote sensing at the well sites that will 
also help. And that pilot should start here in Farmington in 
the next couple months, if we get the funding for it.
    The Chairman. Well, I guess my concern, though, is if we 
add the five people you're talking about adding this year here 
in this office--and how many would you anticipate adding next 
year in this office for inspection enforcement?
    Mr. Whitley. Five.
    The Chairman. Five additional. So that will be ten more 
people. Does that correct the imbalance? Does that get us up to 
one inspector per 350 wells in this area?
    Mr. Whitley. No. I believe it gets us to 500.
    The Chairman. But that does get us to 500, one inspector 
for 500?
    Mr. Whitley. For 500 wells, that's correct.
    The Chairman. So by the end of next fiscal year--so that 
would be a year from this--from the first of October, 
essentially----
    Mr. Whitley. Right.
    The Chairman [continuing]. You're saying that we would be 
to where we'd have one inspector for 500 wells.
    You say in your testimony here that the inspectors identify 
noncompliance--when they identify noncompliance, they initiate 
enforcement actions. Can you tell me how many enforcement 
actions have been initiated by inspectors here in the San Juan 
County and this area in the last year, for example?
    Mr. Whitley. Mr. Chairman, I'd like Steve Henke, the field 
office manager from Farmington, to answer that question for 
you. He'd have that.
    The Chairman. That would be fine. Steve, come right ahead. 
Come on and join us.
    Mr. Henke. Thank you. I believe we issued close to 700 
incidents of noncompliance last year, and that does not include 
situations where we found areas of concern where we handled it 
with a telephone call or a verbal warning. But those were the 
actual written notices of noncompliance that were issued.
    The Chairman. And going on with Mr. Whitley's testimony, it 
says the BLM has authorized a number of enforcement tools to 
ensure compliance. You can issue a notice of violation, you can 
impose assessments or civil penalties, you can order a shutdown 
of operations, and possible lease cancellation. Could you give 
me some indication of what--which of those various tools 
actually are being used, or have been used in the last year? Is 
it just the issuance of something, or do you actually impose 
penalties, fines, civil penalties?
    Mr. Henke. It follows the whole range that you identified, 
Mr. Chairman. We start with the lowest level, and that would be 
a verbal contact and request for action. And that would 
escalate to written notification, fining, and ultimately if 
there's noncompliance, to cancellation of the lease or 
suspension of operations. I believe last year we only went to 
the highest level of suspension on one lease.
    The Chairman. I indicated earlier when I made my comments 
that I had this meeting with Kathleen Clarke, the head of the 
BLM. I guess she is your boss, is she not, Mr. Whitley?
    Mr. Whitley. Yes.
    The Chairman. She indicated that Assistant Secretary Watson 
intends to announce some additional policies with regard to 
surface owner rights. Can you give us any information as to 
what is contemplated there or what we could expect there, the 
timing or any of it?
    Mr. Whitley. No, Mr. Chairman, other than knowing that 
they're working on some new guidelines in that regard, I don't 
have any detailed information.
    The Chairman. Have you had a chance to provide input to the 
national office as to the development of these?
    Mr. Whitley. No.
    The Chairman. And Mr. Henke, have you?
    Mr. Henke. I have not. The national office is aware of what 
we're doing in Farmington and in our working groups in our 
committee. We have agreed to move towards consultation on on-
site development, where we bring in not only the surface owner, 
where we have private surface and Federal mineral estate, but 
also the grazing permittees on the BLM land to assist us in 
siting of wells and roads in a manner that's least impacting to 
the grazing operation. And that's something we have implemented 
in the last 3 or 4 months.
    The Chairman. So you have a committee that assists with 
this, is that right? Does this relate to the individual land 
owner, surface owner that is involved here, the lessee? I'm not 
clear if you have a general committee that is setting up these 
procedures or if the person who owns the surface is called in 
to participate. How is that done?
    Mr. Henke. Mr. Chairman, we had a recommendation from the 
rancher/oil and gas/BLM working group to improve the 
communication on the ground for the siting of well locations 
and access roads. And we've begun implementation of that, when 
we have an application for a permit to drill, whether it's on 
private surface or BLM surface to invite that grazing 
permittee, that land owner, to that site visit to have input 
into the siting of that well. And I hope that answers your 
question.
    The Chairman. Yes, I think that does help. You also have a 
Roads Management Committee, which I understand consists of a 
committee of agency staff and oil and gas lessees. That 
committee raises funds from certain lessees and certain areas 
to maintain collector roads. Can you tell us how that 
functions? There is an area, Hart Canyon Unit, that we have 
heard particular complaints on. What are the percentage of 
roads needing restoration that the committee is working on? Any 
information you can give us on that I would appreciate.
    Mr. Henke. The Roads Management Committee has taken a look 
basin-wide at the roads issue. We've developed a cooperative 
agreement among all the oil and gas operators in the basin and 
the Bureau of Land Management. We've divided the basin up into 
13 road management units, of which the Hart Canyon is one of 
the 13. Assessments for road maintenance are based upon a 
percentage of ownership of wells in those 13 units, and the BLM 
contributes to that road maintenance agreement.
    We anticipate spending approximately--collectively 
approximately $600,000 annually to bring our roads up to 
standards. We've invited representatives from the land owner/
ranching community to work with those individual 13 road 
superintendents to provide input into the priorities for the 
road maintenance in those 13 units.
    Obviously, we've got to have the buses running, people have 
to access their private lands. There may be issues beyond oil 
and gas access that we need to consider as we maintain roads. 
So again, we've tried to make that connection with the folks 
living and working and owning property out on the ground with 
the oil and gas operations in the BLM, to agree upon priorities 
for road maintenance.
    The Chairman. Let me ask you to return just a minute to 
this issue of the number of staff we are going to have per 
well. Mr. Henke, do you agree that we are expected to have 
enough people in play here on inspection and enforcement by the 
end of next fiscal year to get to this 500 wells per inspector?
    Mr. Henke. Mr. Chairman, I went into natural resources 
because I couldn't do the math to go into engineering. I think 
the ratio is pretty close. Certainly the trend is up. I don't 
have the exact figures, but, you know, our intent is to meet 
the national strategy on our oil and gas inspection program.
    The Chairman. So we are going to get to a point here fairly 
soon where we are not that greatly disadvantaged relative to 
the rest of the country as far as the staffing that we have?
    Mr. Henke. The trend is absolutely in a positive direction 
with regard to that ratio.
    The Chairman. Okay. And Mr. Gallagher was also concerned 
about the need for people to assist with the issuance of 
permits. Is that part of what the increased staffing is going 
to address or not?
    Mr. Henke. That's part of our package for additional 
funding as we go into fiscal year 2003, that part of that 
additional capability would go towards the permitting and 
surface compliance part of actual APD processing and 
completion.
    The Chairman. Let me ask about another part of this report, 
this technical performance review that the BLM did itself. It 
indicated that there was--I think the word they used was 
``huge,'' a huge problem with no user validation of data 
entries into the inspection recordkeeping system known as 
AFMSS. This technical performance review found, and I quote, 
``The AFMSS data is so corrupted and inadequate that it is 
recommended that all inspections except those critical be 
suspended to allow for I&E personnel to perform data cleanup, 
file verification, and data entry.'' Is this something that has 
been done and been corrected?
    I guess this report was done in the year 2000, we are now 
half-way through 2002. Has this problem been fixed? Mr. 
Whitley, do you have a view on that?
    Mr. Whitley. Yes. We've hired two additional positions that 
are working on the data entry and data cleanup and the movement 
of the data from the old system to this new Atlas system.
    The Chairman. Okay. Let me ask a couple of the other 
witnesses here a few of these questions.
    Tweeti, thank you for being here. There's a lot obviously 
that you believe needs to be addressed in order to get this 
problem under control. If you had to identify a couple of first 
steps that you think need to be taken that haven't yet been 
taken--you've heard some of the things that are ongoing that 
Mr. Henke has tried to implement since he has arrived here, but 
if there were a couple of things that you think are first steps 
that need to be given highest priority by the BLM, what would 
those be?
    Ms. Blancett. Mr. Chairman, I along with the other panel 
members want to congratulate Steve Henke on the job that he's 
attempting to do. It's very difficult to walk into a situation 
that, as Bob Gallagher said, is 50 years in the making, and 
correct it overnight.
    But the industry that we have in San Juan County has not 
had to comply for a long time. And as a result, there's many 
issues that we're at odds on. And I think probably the one 
that's the most evident is the reseeding and the lack of 
reseeding and establishment of forage. If we do not have forage 
for livestock grazing, we do not have it for wildlife, we don't 
have it for our environment. It contributes--the lack of forage 
also contributes to our watershed problems, to our 
contamination migration from well sites and roads and pipelines 
to other parts of the environment. The reseeding has been not 
ignored, but it has certainly taken second place to anything 
else.
    The second thing is--you asked me for two. The second thing 
that I would suggest is to bring the roads into compliance. 
Because the network of roads throughout the entire Farmington 
District--and I need to tell you that our ranch is 75 sections, 
which is larger than all of D.C. But San Juan County is about 
the same size as Connecticut. So you're talking about a pretty 
large land mass that has been pretty badly abused.
    So the roads and the reseeding are the two things that 
would work towards restoring the overall environment, and these 
are the two things that I think have been neglected the worst.
    The Chairman. Okay. Thank you very much. Let me ask Bob 
Gallagher: I understand there are some 5-year plans that some 
of the larger oil and gas companies are developing to try to 
restore some of the oil sites that exist here in the San Juan 
Basin. Could you give us any information about those 5-year 
plans?
    Mr. Gallagher. Mr. Chairman, we've had several of our 
companies, not only large but small independent companies as 
well, begin to want to aggressively address the concerns that 
Tweeti and some of the ranching and user groups have raised. 
And knowing that we can't do it overnight, knowing that it's 
not possible to do, some of our companies have produced 5-year 
plans.
    And the 5-year plans are very specific to the problems of 
the past. And not 5-year plans for how they're going to 
continue to develop the basin, because they are at work on 
those. But this 5-year plan is how would we address the 
problems that have been raised by the citizens that have 
occurred maybe when you built a road to a location 30 years 
ago. Obviously over the last 20 years there probably has been 
erosion, there's no doubt about that. And that road would not 
be up to today's standards, even though 30 years ago when they 
built it, it was up to those standards.
    So our companies are beginning to say listen, we need to 
address this, we need to address it in a very structured and 
timely way. But in order to ensure that they're able to do 
their job in the next several years developing natural 
resources and at the same time go back and address these 
problems, that's what we're beginning to see.
    And Mr. Chairman, I can assure you we are encouraging 
companies to continue to do that. Because I think--Tweeti and I 
disagree on a lot of things, but we also agree on a lot of 
things. And I think one of those is it can't be done in 12 
months. But it can't be ignored tomorrow. And I think that 
that's the common ground that we have found and that we're 
pursuing, the industry, is to continue to address on a day-to-
day basis and hopefully in that 5-year plan to have gone back 
and address that.
    The two biggest issues on those plans are exactly what 
Tweeti mentioned, is the reseeding and on the roads. And I 
think they're being worked on as we speak today, Mr. Chairman. 
I'm not going to tell you that the Hart Canyon area, for 
instance, we're going to wait for 4 years. As they come up, we 
continue to work on them.
    The Chairman. Let me ask, is there an effort in any of this 
planned development to get some of the grazing lessees, some of 
the ranchers involved in that so they have some say as to where 
you set the priorities and how you proceed?
    Mr. Gallagher. Mr. Chairman, the answer is yes. The 
rancher/industry/BLM group that meets several times a quarter, 
we have gotten that input from that group. In addition, the BLM 
and industry group has met. At the last meeting the president 
of the Ranchers Association group was there and said that he 
believes that progress is being made in those areas. But we 
very definitely are developing the 5-year plans because of 
input by the grazing permittees and those users. We are not 
developing those sitting in an office and not listening to 
those concerns.
    The Chairman. Well, thank you very much. Why don't we go 
ahead and allow some public input here. We have got another 10 
minutes to go on this. I think we have a place we can have the 
public use this microphone. Can we move this out there where 
people could get it?
    Let me just ask folks to come up here and take about 2 
minutes each. As I understand it, Terri has a sign-up sheet 
that she is bringing up to the podium to sort of try to 
indicate the order in which people will speak. Oh, here it is, 
I see. Okay. Alan Rolston, is that right?
    Mr. Rolston. Yes.
    The Chairman. Alan, why don't you come ahead and why don't 
you take this mike.

          STATEMENT OF ALAN ROLSTON, SAN JUAN SYSTEMS

    Mr. Rolston. Thank you, Mr. Chairman, for the opportunity 
to speak and thank you for the personal attention you devoted 
to this area. I appreciate that. My name is Alan Rolston, I 
work for San Juan Systems Lands out of Durango, and I work in 
the whole basin on oil and gas issues. And I just want to 
address one particular issue I think we've already touched.
    The Chairman. If you might just hold that microphone so 
that everybody in the back can hear you? I think that they are 
having trouble hearing you.
    Mr. Rolston. I'm very happy to see that you're familiar 
with the inspection report about the lack of compliance 
personnel in the Farmington Field Office. I think that's a 
major problem. And I think that Steve is working towards that, 
and also Rich. And I appreciate that. When I first came down 
here a year ago, I looked at many well sites, and I strongly 
disagree with Mr. Gallagher about the environmental stewardship 
of the companies. We have different--an opposing viewpoint on 
that.
    I've seen at least two wells that there's been discharges 
of flourishing wells that are violations of the Clean Water 
Act, I've seen----
    Reporter. Wait, wait. I'm sorry, could you please slow down 
and speak clearly?
    Mr. Rolston. Okay.
    The Chairman. She's trying to take all this down, it's part 
of our----
    Reporter. I'm sorry.
    Mr. Rolston. I'm trying to get all this in in 2 minutes. So 
anyway, I've seen all these violations, and I--you know, I 
think Mr. Gallagher has gone through a few, and he can show us 
some of these places. But I do appreciate that we're trying to 
move forward.
    I urge you to make sure that the Senate and the House 
properly fund the BLM for this. I talked to Kathleen Clarke. 
The BLM gets about $3 per acre of land that they manage, 
compared to the Forest Service around $7.50 an acre. And so I 
think to do this job right and to get enough compliance people 
out in the field to make sure the companies are going to 
practice environmental stewardship and follow the rules and 
regulations that are in place, we have to have the budget and 
the amount of money to do that. Thank you.
    The Chairman. Thank you very much. Next would be Brooks 
Taylor.

           STATEMENT OF B. BROOKS TAYLOR, M.D., MPH, 
                      LA PLATA COUNTY, CO

    Dr. Taylor. Senator, panelists and guests: My name is 
Brooks Taylor, I'm a resident of La Plata County, Colorado. I'm 
a surface owner, but more importantly I'm a surface dweller, 
and it's on behalf of the surface dwellers that I'm going to 
speak. That would include not only most of the people in this 
room, but the guys drinking coffee over on the highway and the 
kids who just got out of school yesterday over at the 
elementary.
    There's a persistent notion that methane gas is a source of 
clean energy. And this may be true relative to other energy 
sources at the point of use, at the time of use. However, if we 
look at methane exploitation, exploration, transportation and 
use, in its totality it's not clean, it is not environmentally 
neutral. This is certainly the case with its effects on air 
quality, and subsequently on the personal health of the 
residents and the surface dwellers in this part of the country.
    Recently publicized data on air quality and the 
deterioration of air quality in the Four Corners highlights 
several very disturbing trends. Among these are increasing 
levels of ambient ozone in San Juan County--ozone is a 
pulmonary toxin; the so-called hot spots of oxides of nitrogen 
in La Plata County, Colorado; diminished visibility at Mesa 
Verde National Park; and the ranking of Rio Arriba County to 
our east as among the Nation's worst in air quality. These 
indicators, which are occurring in what is customarily 
considered to be a rural part of the Nation, run counter to 
national trends of improving air quality.
    Over the past few months, a subcommittee of the San Juan 
Citizens Alliance has tried to look carefully at these issues 
and their relationship to the expanding oil and gas 
industrialization. We have found that perhaps as much as a 
third of the air pollutant burden is contributed by this so-
called clean industry.
    We have found that regulation of the industry's pollution, 
because it targets only sources of certain sizes and as single 
entities in the permitting systems, artificially minimizes the 
apparent contribution to air pollution. We have found that 
regulation is moreover rudimentary, haphazard, and 
uncoordinated, and there's no single entity where all aspects 
of regional air quality are systematically reviewed.
    I have three recommendations. We strongly recommend that 
all relevant air monitoring data be analyzed at a central 
point, and Federal, State, and Tribal agencies be charged to 
coordinate their efforts and to mutually share their findings 
regarding air quality.
    Secondly, it's urged that any expansion of oil and gas 
exploration be preceded by systematic study and forecasting of 
impact on regional air quality.
    And thirdly, it's recommended that the USEPA be charged to 
establish at least two comprehensive air monitoring stations 
integrated into their national network to further follow--to 
follow the further degradation, or hopefully improvement, of 
regional air quality.
    We appreciate your attention and interest.
    The Chairman. Thank you very much. We are just going to 
have time for a couple more statements here, and then after 
that we will have people just go ahead and provide their 
statements for the record.
    But let me ask the next person to come forward. Lucille 
Ulibarri? Is Lucille here?
    Ms. Ulibarri. Yes, I am.
    The Chairman. Please come up.

           STATEMENT OF LUCILLE ULIBARRI, BLANCO, NM

    Ms. Ulibarri. I'm old, Senator Bingaman. I am Lucille 
Ulibarri. I live in the Blanco area. My complaint is my--I'll 
start from the beginning. My dad 80 years ago homesteaded in 
the Pump Canyon area. I own two sections of land. It's between 
two hills and is in a valley. The roads--my biggest issue is 
the roads that go through this--through my land is--I mean, 
it's a freeway. I mean 30--20, 30 vehicles a day. That includes 
rigs or service trucks or whatever. I have tried to get 
together with Burlington, and they tell me there is nothing 
they can do to help me out. I have suggested that I work with 
them, and they have ignored me. And I am very much upset about 
this. I'm 80 years old and I'd like to see something done for 
inspection. Thank you.
    The Chairman. Thank you very much. We have--Linn Blancett 
is here? Please come right ahead.

         STATEMENT OF LINN BLANCETT, SAN JUAN BASIN, NM

    Mr. Blancett. Senator, thank you for your time. I am 
pleased with your grasp of the problem that we have here. 
Again, I appreciate what Steve Henke's trying to do. I'm a 
member of the working committee. I would remind everyone that 
the surface is not a rancher permittee problem only, although 
many ranchers have had serious AUM unit cuts, and you can 
directly relate it back to the loss of forage.
    Now, our committee is working, and we are striving to 
change things. But a problem that we have is industry's 
attitude towards the grazing permittee and the process that 
we're going through. At the present time, I know of one animal 
for certain that was hit by a water truck, possibly another one 
of mine, but I'm here today, I haven't been able to go look and 
see. It's an attitude that we are causing enforcement of the 
rules and regulations that are existing and have not been met.
    With that, I would remind you, as it was mentioned earlier, 
of the amount of money that is generated here in this county. 
And it needs to come back in some form from the BLM to help 
protect the surface where the money was generated. Thank you.
    The Chairman. Thank you very much. Let's try to get two 
additional folks given a chance here. Jacob Hartlell?
    Mr. Hottell. Hottell.
    The Chairman. Excuse me?
    Mr. Hottell. Hottell.
    The Chairman. Hottell, excuse me. Please go right ahead.

             STATEMENT OF JACOB HOTTELL, CHAIRMAN, 
                     CLEAN WATER COALITION

    Mr. Hottell. Thank you, Senator. Good morning, Senator 
Bingaman, panels and guests. My name is Jacob Hottell, chairman 
of the Clean Water Coalition.
    I appreciate Mr. Henke, Frank Chavez, Laurie Rodenbury, 
OCD. I appreciate the people that are trying to keep this thing 
under control. I think we're starting to get a little grasp of 
what the magnitude of this is.
    The numbers and figures and dialogue here this morning are 
pretty overwhelming. It is absolutely overwhelming. Can we 
comprehend the magnitude of the wealth that this industry is 
taking in? The question to be addressed is how much of our 
quality of life are we willing to sacrifice for your children, 
my children, our grandchildren, and the future of our society?
    Mr. Bingaman, we appreciate what you're doing to help 
America and the people salvage some sanity in these times of 
confusion. I love America, I'm fortunate to be born into 
America, America the Beautiful. I've been blessed from the time 
of the beginning of my life. I was born and raised on the 
Animas River, and I don't know how a person could be more 
blessed. And I realize there are those who are much less 
fortunate than I.
    Senator Bingaman, I see us as a society of junkies. We're 
so addicted to hydrocarbon energy, we'll do just about 
anything. We'll sacrifice our rivers, our lakes, our springs. 
And worst of all, we're reinjecting the waste right into our 
aquifers and our water tables.
    In 1988, we found there was a shallow injection well at 
Bondad, Colorado. They were injecting at 800 feet. Sir, that is 
unbelievable. We questioned the ability of Colorado OTC and the 
New Mexico OCD to actually regulate and control all this 
madness that's going on around us. If Colorado OTC would permit 
an injection well at 800 feet, I just can't comprehend this 
type of engineering.
    I don't know if you recall, but we had some correspondence 
a few weeks ago pertaining to the Florida River, the direct 
discharge into the Florida River. Well, if it hadn't been for 
concerned citizens and organizations like San Juan Citizens 
Alliance and Alan and us and the Southern Ute Tribe, I suppose 
it would have been permitted.
    But with the threat of lawsuits and so forth, Colorado OTC, 
they rescinded this permit into the Florida River. I'm very 
thankful for that.
    I'll cut this short because of lack of time. We need 
emergency action by Congress and the Senate for alternative 
energy resource and development. There is no doubt about it. If 
you look at our world's condition, the magnitude of wealth 
that's going into oil and gas, there should be no problem with 
that, they shouldn't object whatsoever.
    We have fuel cell energy, solar cell, and all these 
energies that absolutely have got to have some attention, and 
the State of New Mexico should be the leader in this 
development.
    Coal bed methane development has been an absolute travesty. 
I have personally witnessed in my farm the migration of methane 
gas around the Cedar Hill area and all the Animas River Valley, 
we've seen methane gas migrate into water wells. Methane gas 
carries other dangerous pollutants.
    I think that coal bed methane development has been a real 
serious impact on the future of this community. It's wrecking 
the water tables. The disposal to produce water is a nightmare. 
By some observations here in the county, you can see that we 
have to inject it, they have to evaporate in evaporative ponds. 
And the cleaning up of dirty methane gas is costly. We don't 
think that coal bed methane development would be practical 
without government subsidies.
    Thank you, sir, for coming down here.
    The Chairman. Thank you. I think in light of the time, we 
are going to have to cut it off at this point. We have got 
several others who have signed our sheet indicating a desire to 
give us input on this issue, and I would just urge each of 
these, and anyone else in the audience that wants to have a 
statement included for us to consider in the record, to contact 
John, my staff, during this break we are going to have here for 
the next 10 or 15 minutes, or mail it to us at the Senate 
Energy and Natural Resources Committee.
    But any of you who have a desire to have your statement, if 
you want the equivalent of a couple of minutes of testimony 
included, we are glad to include that.
    Again, let me thank the witnesses that we have had this 
morning. I think this has been useful in getting some of the 
issued out on the table for folks to think about. Obviously, 
there is some progress being made. It does not sound to me as 
though it's adequate progress to satisfy all the concerns that 
have been raised, and there is undoubtedly more we can try to 
do in Washington to get the resources to the local office here 
so that they can do all that is required under law to implement 
these inspections and enforcement actions as necessary.
    We also--frankly, I am also very hopeful that this 
initiative that is apparently going on in the Washington 
headquarters for the BLM will prove beneficial and will give us 
some new direction and some new priority on solving some of 
these conflicts between the subsurface and surface owners.
    Thank you all very much. Let's conclude this hearing right 
now. And then we will start up with the hearing that we are 
going to do on the royalty owners in about 15 minutes. Thank 
you.
    [Whereupon, at 10:30 a.m. the hearing was adjourned.]

 
         COMPUTER PROBLEMS AFFECTING MMS PAYMENTS IN NEW MEXICO

                              ----------                              


                          FRIDAY, MAY 31, 2002

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Bloomfield, NM.
    The committee met, pursuant to notice, at 10:45 a.m. in The 
Bloomfield Cultural Complex, 333 South First Street, 
Bloomfield, New Mexico, Hon. Jeff Bingaman, chairman, 
presiding.

           OPENING STATEMENT OF HON. JEFF BINGAMAN, 
                  U.S. SENATOR FROM NEW MEXICO

    The Chairman. Okay. Why don't we start up again. This 
hearing is another hearing of the Energy and Natural Resources 
Committee. And here we are examining the attempts to remedy the 
computer problems caused by the Department of the Interior's 
computer system shutdown on December 6, 2001.
    This is affecting the Mineral Management Services payments 
to individual Indian allottees in New Mexico. This disorder 
caused by the shutdown and the lack of information about what's 
happening here has become a major problem for a lot of the 
allottees in this part of our State, especially.
    I invited the Department of the Interior to testify at the 
hearing today to explain what's happening with the royalty 
payments that are owed to thousands of Navajos for oil and gas 
leases on their allotments.
    There are many rumors and there is a lot of confusion out 
there about the shutdown, about estimated payments, about how 
these accounts are being reconciled now that the Mineral 
Management Service computer system is functional again.
    In addition, I am sure that many people here would like to 
know exactly what the royalty payments--when these royalty 
payments will be issued in accordance with the normal payment 
schedule that people have expected.
    I would like to hear from the Departments first and have 
them give their views, and then hear from Navajo Nation 
officials and individual allottees about their view of the 
situation, and then I will have some questions.
    And then what we will do is to once again have an 
opportunity for members of the public who are not on the 
witness panel to make their statements. And we would ask that 
they do that in a couple of minutes each.
    Let me acknowledge Pete Valencia, who is here representing 
Congressman Tom Udall. Pete, where are you? There he is.
    Mr. Valencia. Thanks, Senator.
    The Chairman. Give Pete a hand. We appreciate him attending 
today and the interest he is showing in this issue. Let me go 
ahead with our witnesses here. Let me get the--be sure I have 
the full list here. First is Mr. Douglas Lords, who is the 
Director of the Office of Trust Funds Management with the 
Department of the Interior, Office of Special Trustee.
    Following him is Mr. Edward Begay, who is speaker of the 
Navajo Nation Council. Next is Mr. Arvin Trujillo, chief of 
staff for the Navajo Nation, and then Mr. Calvert Garcia, who 
is the president of the Nageezi Chapter of the Navajo Nation of 
Nageezi. We very much appreciate all of them being here.
    Mr. Lords, why don't you start. Let's give them a hand 
here. They deserve a hand. Okay, let us start with Mr. Lords, 
and we will just try to get this microphone over to you and 
have you each testify. And then after all of you have completed 
your testimony, I will ask some questions.

 STATEMENT OF DOUGLAS LORDS, DIRECTOR OF OFFICE OF TRUST FUNDS 
 MANAGEMENT, DEPARTMENT OF THE INTERIOR, OFFICE OF THE SPECIAL 
                     TRUSTEE FOR AMERICAN 
                            INDIANS

    Mr. Lords. Good morning, Mr. Chairman, and thank you. Prior 
to giving my oral testimony, I'd like to introduce two 
representatives, one from the Bureau of Indian Affairs, and one 
with Minerals Management Service. They will be here to also 
help and assist in addressing questions. From Minerals 
Management Service we have Katherine Martinez, and from the 
Bureau of Indian Affairs, we have Steve Graham.
    Mr. Chairman, thank you for inviting the Department to 
testify today. My name is Doug Lords, I'm the Director of the 
Office of Trust Funds Management, OTFM, and the Office of 
Special Trustee for American Indians. I've held the position of 
Director since October 2001.
    As Director of the Office of Trust Funds Management, I 
report to the Principal Deputy Special Trustee, Office of 
Special Trustee for American Indians.
    The divisions of Trust Fund Services, Trust Fund 
Accounting, Quality Assurance, Trust Fund Systems, Reports and 
Reconciliation, and Field Operations assist me in the execution 
of OTFM programs. The Office of Trust Funds Management is head-
quartered in Albuquerque, New Mexico.
    As director, I'm responsible for supervising and managing 
the day-to-day trust operations of approximately $3.2 billion 
held in trust for approximately 250,000 individuals and over 
300 Tribes.
    An example of one of the trust resources is oil and gas 
royalty collection on Indian land. Based on my experience as 
Director, it's my understanding that the processing of oil and 
gas royalties generally involves five governmental entities 
that transmit information to and from one another. The five 
governmental entities are Treasury, Minerals Management 
Service, Bureau of Indian Affairs, National Business Center in 
Denver, and the Office of Trust Funds Management.
    It also primarily involves three nongovernmental entities: 
The oil and gas producers, system contractors, and the account 
holders. There are variances in the processes.
    The processing of oil and gas royalties for Indian tribes 
and individuals is initiated when the Minerals Management 
Service deposits producers' funds with Treasury. The following 
day, Minerals Management Service notifies the Office of Trust 
Funds Management of the deposit. The Office of Trust Funds 
Management then records the Minerals Management Service deposit 
in a holding account and invests the funds.
    The Minerals Management Service sends a distribution file 
through the National Business Center mainframe to the Bureau of 
Indian Affairs. The Bureau of Indian Affairs processes the 
files and sends the output to the Office of Trust Funds 
Management.
    In the normal course of business, this results in an oil 
and gas credit being recorded in the beneficiary's account. A 
check or direct deposit payment may be generated, depending on 
the account restrictions and/or disbursement instructions for 
the accounts.
    The office of Trust Funds Management relies on Minerals 
Management Service to verify that the correct amount was sent 
and collected and on the Bureau of Indian Affairs to verify 
that the distribution file generated by the Bureau of Indian 
Affairs accurately reflects the correct beneficiary credit. 
Some Tribes receive payments from producers directly via lock 
box arrangements with banks. In these cases, Minerals 
Management Service collects and processes the royalty reports.
    This concludes my prepared statement. I'm happy to answer 
any questions the committee may have.
    Mr. Bingaman. Why don't you go right ahead, Ed, with your 
testimony.

            STATEMENT OF EDWARD T. BEGAY, SPEAKER, 
                     NAVAJO NATION COUNCIL

    Mr. Begay. Thank you, Senator and Chairman, and also the 
staff that is accompanying you to get information from the 
field, and especially the State of New Mexico.
    I'd like to thank you for allowing the Navajo Nation this 
time to provide comments regarding the ongoing effort to resume 
payments of Individual Indian Monies to account holders.
    The Department of the Interior relies on the Internet to 
exchange information to create payments and has caused 
considerable hardship for many. Late last year, the Navajo 
Nation was informed that IIM payments could not be processed 
because U.S. District Judge Royce Lamberth ordered the trust 
system taken off the Internet until DOI installed the necessary 
safeguards. We were told that Interior Secretary Gale Norton 
took the entire DOI off line, effectively freezing payments to 
individual Indian trust beneficiaries.
    On January 20, I attended a day-long meeting in Nageezi, 
New Mexico, with allottees whose IIM payments were affected by 
the DOI's Internet shutdown. I heard from elders who had not 
received any income for 3 months. Many of them relied solely 
upon IIM payments to pay for their homes and automobiles and 
were being threatened with evictions and repossessions.
    While these hardships were imposed by DOI's stoppage of IIM 
account checks, the Navajo Nation could not, as a sovereign 
Indian Nation, simply ignore the suffering of the Navajo 
allottees.
    I assured the allottees that I would make every effort to 
use my authority and responsibilities vested in me by the 
Council to move forward legislation that would provide some 
financial assistance to Navajo elders affected by the freeze.
    Subsequently, on January 28, during the Navajo Nation 
Council's Winter Session, I sponsored a resolution that 
appropriated $534,276 from the Navajo Nation's undesignated 
unreserved funds to provide financial assistance to IIM account 
holders. The Council acted compassionately and passed the 
Resolution, which is attached to my written statement,* to help 
those account holders who were in dire straits.
---------------------------------------------------------------------------
    * Retained in committee files.
---------------------------------------------------------------------------
    It is not a common practice for the Navajo Nation to assume 
the Federal Government's fiduciary responsibilities. The Navajo 
Nation must not be placed in a similar situation by its 
trustee, the Department of the Interior, in the future. The 
Council's action was intended to be a one-time emergency 
appropriation for those that were suffering financially as a 
result of the payment stoppage.
    As many of you on the Senate Committee on Energy and 
Natural Resources already know, the Navajo Nation has limited 
resources. There are many needs, such as scholarships and 
veterans' services, that go unmet every year. I believe the 
Federal Government has a responsibility to reimburse the Navajo 
Nation Government for the emergency allocation it made to IIM 
account holders.
    The Navajo Nation does support trust fund management 
reform, as well as the larger issue of trust asset management 
reform. The experience of Navajo allottees and the interruption 
of their IIM payments highlights the need for such a reform. 
The Navajo Nation supports the continued and improved provision 
of trust fund management to IIM account holders. The narrow 
reliance by the Department of the Interior on the Internet as 
the sole mechanism for the transmission of information 
necessary to the calculation and processing of the income of 
IIM account holders without back-up contingency is but another 
example of the gross failure of the DOI to meet its trust fund 
management responsibilities.
    It is my hope that by bringing these issues forward to this 
committee that the DOI will be moved to respond quickly and 
resolve the problems surrounding the provision of IIM payments 
to account holders. Because a lot of account holders are--have 
been informed, and they are here in the audience. If they 
have--if they only had the time, I'm sure they'd have a story 
to tell you. But due to the limited time, this is what I'd like 
to pass on on their behalf, as I understood from them, from the 
previous meeting.
    Thank you.
    The Chairman. Thank you very much. Go ahead, Mr. Trujillo.

  STATEMENT OF ARVIN TRUJILLO, CHIEF OF STAFF FOR THE NAVAJO 
       NATION OFFICE OF THE PRESIDENT AND VICE PRESIDENT

    Mr. Trujillo. Thank you, Senator, again, the public, your 
staff. Real quickly let me introduce myself to the folks out 
there.
    [Mr. Trujillo speaks in Navajo.]
    Again, this morning, Senator, the Navajo Nation thanks the 
Senate Energy Committee for holding this hearing near the 
Navajo Nation concerning the suspension of royalty payments to 
Navajo allottees. And also we thank the committee for allowing 
the Navajo Nation to present its concerns this morning.
    My name is Arvin Trujillo, and I serve as chief of staff 
for the Navajo Nation Office of the President and Vice 
President. I extend to you greetings on behalf of President 
Kelsey Begay and the great Navajo Nation. President Begay had 
some other engagements to attend to with the Hopi Tribe this 
morning. Therefore, he asked me to come and represent him this 
morning.
    Again, we thank you for bringing this issue to the 
forefront, but most importantly, to bring it to the attention 
of the Federal officials, as well as your colleagues on the 
Hill. And again, the President wanted me to express his thanks 
to you.
    Over the past few months, the Navajo Nation has been 
working with the BIA, the Minerals Management Service, the 
Office of Trust Funds Management, and other responsible 
agencies to try to find a workable solution to the present 
suspension of royalty payment checks to the Navajo allottees. 
The Navajo Nation knows that these Navajo allottees are the 
most affected due to the stipulations placed on the Federal 
Government by Judge Lamberth in the Cobell versus Norton court 
case.
    The Nation understands the reasoning behind this suspension 
but finds that the allottees are bearing the burden for the 
Department of the Interior's failure to live up to its trust 
responsibility. Moreover, these Navajo families are being 
punished for the Federal Government's inability to govern 
Indian statutory mandates and manage fundamental government 
functions. To have our Navajo people undergo such hardships is 
not acceptable.
    As time continues to move forward, many allottees are 
caught in circumstances where they do not have the income to 
address their basic financial needs. These individuals are 
being threatened with foreclosures and liens and basic 
household needs not being met, because the royalty funds are 
part of their families' basic income stream.
    The agencies' responsibilities must be to resolve the 
payment suspension in order to resume the rightful gas and oil 
trust payments to these allottees. Part of the trust 
responsibility is to create a more convenient process to 
improve the payment delivery, but these improvements must not 
jeopardize the timely delivery of these royalty payments. The 
impact of these delays could ruin credit ratings and future 
financial opportunities for these individuals.
    The Navajo Nation itself took some drastic steps to make up 
for the financial irresponsibility of the Federal Government by 
providing small discrepancy grants to the most economically 
affected allottees. This was done to help ease the immediate 
financial concerns.
    In January, as the Speaker noted, the Navajo Nation 
appropriated from its general funds account $534,000 to provide 
one-time grants to eligible allottees.
    Unfortunately, the families--unfortunately, the families 
haven't really taken advantage of these grants. They falsely 
believe if they accept this grant--if they accept this grant, 
this income would affect their eligibility status, which would 
result in their not qualifying for other social services 
programs.
    This has resulted in confusion and resulted in unnecessary 
hardships by a direct result of the suspension of the payments 
to the allottees. Until the issue is resolved, the Government 
has noted that this grant will remain in place. An audit will 
be conducted once the payments are resumed, and the Navajo 
Nation will be requesting a fund of the expended amount. And in 
the interim, your support in this effort will be most 
appreciated.
    As the Speaker knows, in January there was a meeting. The 
Division of Social Services, under the direction of Miss 
Belone, put forth a tremendous effort to identify assistance 
for these allottees. And again, that process continues.
    In summary, the Navajo Nation has availed itself to provide 
assistance. But, unfortunately, the Navajo allottees haven't 
taken advantage of the grants and services provided at this 
point in time because the royalty checks were believed to be in 
process and would be delivered. But we are finding that that is 
not the case right now.
    From our point of view, these families find themselves back 
at square one with the suspension of their payments and the 
inability to gain access to these funds.
    The Navajo Nation recommends the following to answer the 
needs of these allottees.
    One, provide average annual royalty payments to be used for 
estimated payments until such time a fully functional computer 
system is operational. This would resolve the immediate 
problem.
    Two, provide for effective and efficient communication and 
cooperation between Minerals Revenue Management, the BIA, and 
the Office of Trust Funds Management to solve the accounting 
and deposit information problems.
    Three, resolve the royalty distribution and identification 
problems under the Mescal Settlement for individual owners.
    Four, resolve the computer system ``rejections'' apparently 
caused by errors on the forms submitted for processing. These 
systematic technical errors have slowed the oil and gas royalty 
payment processing with the Minerals Revenue Management System.
    Five, place the rejections issue at a high priority.
    Six, review the time it takes to process the royalty check 
payments and reduce the time between actual payments and 
distribution of checks.
    Most importantly, number seven, provide for a more 
effective--a more effective method of communication between the 
agencies and those individuals affected. Allow for assistance 
and timely answers to urgent questions. We have also found that 
several allottees have noted that the explanation of payments, 
determining what is being paid out and how, is either very 
confusing or not even given at this point. And also the 
uncertainty of these payments must be resolved so that reliable 
timetables can be communicated to these individuals. The idea 
that the check is in the mail is just not sufficient any more.
    The Navajo Nation continues to assist affected Navajo 
allottees as best we can. The most persistent call for service 
at this point in time is to devise a process to pay the 
allottees their royalty payments as soon as possible. Once this 
is achieved, then a more efficient, dependable, and reliable 
system of royalty check payment processing should be put in 
place, a system that will provide timely payments but would 
also anticipate circumstances that are happening now, so 
similar type payment suspensions do not happen again.
    Once again, thank you for your attention in this matter.
    The Chairman. Thank you very much. Mr. Garcia, please go 
ahead.

   STATEMENT OF CALVERT GARCIA, PRESIDENT, NAGEEZI CHAPTER, 
              DISTRICT 19, NUMBER 92, NAGEEZI, NM

    Mr. Garcia. Thank you, Senator. On behalf of Navajo 
allottees and as a chapter president of the Nageezi, I would 
also like to thank Mr. Wilson Ray, our chapter president, who 
has been very instrumental in getting these concerns and issues 
addressed to you, Senator. And on behalf of your staff and the 
people out here and the Navajo Nation, I'd like to thank you. I 
will just go ahead and read a statement that we have prepared.
    The Navajo allottees and the Nageezi Committee are deeply 
concerned and disappointed that individual Indian monies have 
not been adjudicated since the computer shutdown on December 6, 
2001. The Department of the Interior, through the Bureau of 
Indian Affairs, has mismanaged billions of dollars through 
royalty payments of the Navajos, also known as Individual 
Indian Monies.
    What will make the Bureau of Indian Affairs to account for 
all missing funds and return it to the rightful owners?
    It was over a century ago that the United States obligated 
to have the trust responsibility to ensure the Native Americans 
protection and management of their affairs.
    Most of our elderly rely on this income to meet their basic 
living needs and to care for their livestock. This income is 
deeply needed by our community to supplement what income they 
have, if any, in that the majority of our people are way below 
poverty income guidelines.
    A great percentage of our Indian allottees have not 
received or resumed any royalty payment proceeds since the 
shutdown, which created critical financial hardship. Some 
resorted to selling their personal possessions, livestock, or 
other items of value.
    On May 3, 2002, the Navajo allottees conducted a meeting 
with Minerals Management Service from Denver, Colorado, Office 
of Trust Indian Fund Management in Albuquerque, Bureau of 
Indian Affairs of Gallup, and Farmington at Indian Minerals 
Office of--Indian Minerals Office of Farmington. It was evident 
at that time that some oil companies were not making payments 
to MMS on Indian land for production and leases. Minerals 
Management Service personnel confirmed the discrepancies, which 
resulted in nonpayment to Navajo allottees. And this is still 
current, ongoing, has not resumed any of their production and 
lease payments.
    Speaking on behalf of Navajo allottees, there are numerous 
problems with the current program operation on Indian Trust 
Management operations. Secretary Norton's plan to reorganize 
and consolidate Indian Trust Asset Management functions into a 
separate new organization unit will not work unless Tribes 
develop a realistic and workable plan with individual input. 
Creating another department with current Department of the 
Interior personnel will only create further bureaucracy, 
thereby hindering improvement and customer service.
    Our recommendation to you, Senator, is to support the 
following:
    One, allow our Navajo allottees to utilize the Indian Self-
Determination Act by creating a local Individual Indian Monies 
payment distribution, preferably in Farmington, New Mexico. 
Current process for payment are distributed as follows: Oil 
companies pay directly to Minerals Management Service in 
Denver. Then it goes to the Bureau of Indian Affairs in Gallup, 
New Mexico, and then to the Office of Trust Funds Management in 
Albuquerque. Then, finally, to the Indian allottees. There are 
ways to cut down the process that currently is not working, and 
our people are at most times disadvantaged.
    Two, coordinate proposed plan and set up with Farmington 
Indian Minerals Office. Plans are as follows: Oil companies 
make direct payment to Navajo allottees. The Farmington Indian 
Minerals Office will monitor and ensure that oil companies make 
proper and timely payments.
    Three, the other recommendation that we make to you is to 
develop a Feasibility Economic Plan, which will enable the 
Navajo citizens to have a direct impact utilizing mineral 
extraction for employment and other positive means. Suggestion: 
Since our community averages a payout over almost a million 
dollars a month, would it be feasible to have our own Navajo 
refinery?
    We urge you to support and seek ways to improve the system 
that has failed our people for many years. There are ways to 
prevent wasteful and unnecessary government bureaucracy in 
hindering direct service to our community members. Please give 
this matter your highest priority. May we hear from you very 
soon?
    Thank you. Calvert Garcia, chapter president.
    The Chairman. Thank you all very much for the testimony. 
Let me start with some questions here, Mr. Lords, about the 
status of things.
    Can you give us--the way I think about this issue, there 
are, and I think everyone acknowledges this, a series of 
problems in the Department of the Interior administration of 
these payments to allottees. And that's one set of issues.
    But a second sort of more immediate set of issues is the 
set of issues that have arisen out of the decision, or the 
order, really, which was directed to the Department of the 
Interior to shut down their computer system this last December.
    As regards that second series of problems, have we gotten 
the computer system back up and running so that we are now back 
to where we were before the judge stepped in and ordered a 
shutdown, or is that still in the works?
    Mr. Lords. Let me respond for OTFM, and I'll have Kathy 
respond for MMS and Steve respond for BIA.
    In the court order, Senator, it's stated that any 
individual Indian systems that were connected to the Internet 
were to be shut down. The Office of Trust Funds Management 
converted all tribal and individual Indian money accounts to a 
commercial Trust Funds Accounting System (TFAS). Conversion was 
completed in March 2000. TFAS was not connected to the 
Internet. The Office of Trust Funds Management System was not 
shut down, due to the court order. If we had money in an IIM 
account and we had distribution information, we were cutting 
checks. But if I don't have the ownership information, I 
couldn't cut checks.
    The Chairman. And who has the ownership information?
    Mr. Lords. BIA maintains the ownership information for oil 
and gas royalties.
    The Chairman. And that information was--the availability of 
that information to you was interrupted by the court order; is 
that right?
    Mr. Lords. That's my understanding, yes.
    The Chairman. So I guess the next question is is whether 
BIA has now gotten in a position where they're making that 
ownership information available so checks can be cut?
    Mr. Lords. We've been issuing checks on oil and gas 
royalties since the end of March 2002 on a weekly basis.
    The Chairman. This seems to be in dispute. Let me ask the 
audience to please let us try to conduct this is an orderly 
way. Mr. Garcia, the president for the Nageezi Chapter, says in 
his statement, ``A great percentage of our Indian allottees 
have not received or resumed any royalty proceeds since the 
shutdown.'' Is that consistent with what you understand, or do 
you disagree with it?
    Mr. Lords. Let me clarify, Senator. We estimated payments, 
two estimated payments on February 21 and March 21.
    Once systems started back up in March with MMS sending BIA 
information, BIA sending OTFM information, then the estimated 
payments were offset against the actual payments that came 
forth on a weekly basis. Once we've recouped the estimated 
payments, then the individuals started receiving checks. If we 
haven't recouped the estimated payments, allottees are right, 
they have not received checks.
    The Chairman. So they did receive a check that was issued 
February 21 and again a check that was issued March 21, but 
those were estimated payments?
    Mr. Lords. Yes, Senator.
    The Chairman. And you're saying that if no checks have been 
received since those two checks, it is because the estimated 
payments were too large, were larger than they were really--
than they otherwise would have received. You estimated they 
would be receiving more than they, in fact, had received up 
until that time?
    Mr. Lords. That is one scenario, Senator. I think the other 
scenario may be that maybe there was a change in ownership or 
the well production has changed.
    The Chairman. If I were an owner--I am not an owner, but if 
I were, if I were an allottee entitled to receive a check, how 
would I know whether or not I'm getting my fair share of the 
payments from production on one of these wells? Is there any 
kind of an accounting that you provide to owners saying this is 
what the total production was from the well, this is the amount 
of your payment?
    Mr. Lords. The BIA generates for OTFM an EOP, Explanation 
of Payment, and that was enclosed with oil and gas royalty 
payments prior to the shutdown. And that explained the 
production, the amount of money, what oil well the money was 
generated from. But since the recouping of the estimated 
payments, the explanations of payments have not been enclosed 
with the checks for the individuals that do receive checks.
    The Chairman. And why have they not been enclosed?
    Mr. Lords. Because with the recoupment process, the check 
may not equate to EOP because we may have offset the actual 
payment against the estimated payments. For example, let's say 
that their total estimated payments were a hundred dollars. And 
they get an EOP that the actual production was $150. Well, the 
check is going to be for $50, the residual, and the EOP will 
reflect that there was $150 generated off that well.
    The Chairman. What I guess I'm wondering is, is this--are 
you providing information to allottees that will let them 
understand what you just said, so that they would know that in 
January the well produced so much and I was entitled to so much 
royalty payment from the well; in February it produced so much? 
And then indicate what the checks were and how much is left 
over to be paid? I mean, is this all--do people have to come to 
a meeting like this in order to understand this information, or 
are you providing it to them?
    Mr. Lords. The EOP will show what the actual production 
was.
    The Chairman. Tell me, the EOP--what does that stand for?
    Mr. Lords. Explanation of Payment, Senator.
    The Chairman. Explanation of Payment. And that's a document 
that is sent to them along with the payment?
    Mr. Lords. In normal processing, yes.
    The Chairman. But we are not in normal processing.
    Mr. Lords. No, we're still offsetting the estimated 
payments, Senator.
    The Chairman. And you don't give them any explanation in a 
period when you are offsetting their payments? They get no 
explanation?
    Mr. Lords. Within the quarterly statements that OTFM is 
mandated to send out per the Reform Act, it shows their 
estimated payments and what we've offset against them.
    And today I have staff here for any of the allottees who 
want to know the status of their estimated payments. I've got a 
listing in alphabetical order by allottees of what their 
estimated payments were, what we've recouped, and what they may 
owe, if any. And once they show identification, we'd be happy 
to tell them where they stand.
    The Chairman. Well, in order that we be sure that people 
can take advantage of that, who are your staff? Are they here?
    Mr. Lords. Yes, right here.
    The Chairman. Okay. And you have that information now?
    Ms. Wabnum. Yes.
    The Chairman. Should we have them either go to a separate 
room and provide that to people----
    Mr. Lords. I think that would be most effective, yes.
    The Chairman. Is that possible? Do we have a place where 
they could sit at a table and go through this?
    Ms. Lee. We'll put you around the corner in the lobby, away 
from this room.
    The Chairman. Okay. Well, why don't we do this: Have them 
go ahead and proceed there and be available to answer questions 
of individual allottees as we are having this hearing. We will 
continue to have the hearing and give people a chance to speak, 
but if there are individual allottees who are here and want 
this information now, they could get it right now from these 
people.
    Mr. Lords. Yes, Senator.
    The Chairman. Okay. And let me ask also, though, if we 
conclude the hearing about noon, which we are expecting to do, 
or by noon, no later than noon, will they be able to stay 
beyond that and provide the information?
    Mr. Lords. We will definitely have someone stay until we 
answer the questions, yes.
    The Chairman. Okay. So they will be here until everyone's 
questions are answered about their individual payments.
    So any of you that want to talk to those representatives 
now, you can, or you can wait until after the hearing. That's 
your choice. Yes, Mr. Begay, please.
    Mr. Begay. Senator, could I assist here by translating into 
Navajo?
    The Chairman. Please. Please do.
    Mr. Begay.
    [Navajo spoken.]
    The Chairman. Very good. Why don't you hand the microphone 
back to Mr. Lords, and let me ask a few additional questions of 
him.
    For allottees--Navajo allottees who are entitled to receive 
royalties who are not able to be here today, who should they 
contact in case we want to put a notice out? Who could they 
contact to get the information that is on that sheet that your 
assistants have in the next room if they're not able to be here 
today?
    Mr. Lords. They can contact the Office of Trust Funds 
Management at (505) 816-1001.
    They can dial 1-800-OST OTFM, and when it asks for the 
three digits of their account number, that will take them right 
to the agency where their account is managed. Agency staff can 
get the information off the system, also.
    The Chairman. So they dial 1-800-OST OTFM?
    Mr. Lords. Yes.
    The Chairman. And then they insert three digits of their 
account number. So that each allottee knows what their account 
number is?
    Mr. Lords. They may or may not. And Kevin Gambrell at the 
Farmington Indian Mineral Office can also help them, also.
    The Chairman. Okay. Now, we are putting that information up 
here so that anybody who is not able to be here today to ask 
the questions about their individual payments, we want to be 
sure you can get access to it.
    Let me ask about the quarterly payments you referred to. 
The quarters that you talked about, is the first quarter being 
January, February, March?
    Mr. Lords. They're not quarterly payments, Senator. They're 
quarterly statements.
    The Chairman. Quarterly statements?
    Mr. Lords. Yes. And no, they do not coincide with the 
calendar quarter. They're staggered, because we've got 250,000 
individual IIM accounts that we're required to issue these on. 
So we stagger them, but they're staggered on a 3-month basis.
    The Chairman. So we cannot say to all allottees that as of 
the end of June, they will be receiving a statement. Some will, 
some won't?
    Mr. Lords. For the Navajo allottees, I can get with my 
staff. I don't know off the top of my head, but I can say for 
them yes, they should have received a quarterly statement at 
these dates for all of them.
    We issue by regions and made sure they were consistent. We 
didn't separate a region and say some of the individuals got it 
these 3 months, and another of the individuals in another 3 
months staggered.
    The Chairman. Okay. Why don't--we need someone to translate 
this also, and Mr. Garcia, are you able to do that? Or who can 
translate what we just discussed and indicate what these 
numbers are? Do we have somebody here who is a translator? I 
hate to just keep relying on Ed Begay to do this, but 
whatever----
    Mr. Garcia. Thank you, Senator. I believe what some of our 
people are experiencing getting--having direct contact with 
them every day and conversing with them. I believe most of the 
allottees who receive individual Indian monies were accustomed 
to receiving an average amount prior to shutdown.
    I believe--now, Kevin is here. Some oil company, maybe two, 
has taken advantage of this computer shutdown. And I believe 
there's two or maybe even possibly three that have not made any 
payment, or very small payment, to Mineral Management Service 
of Denver. That might have resulted in nonpayment to some of 
the Indian allottees. I believe maybe Kevin can maybe attest to 
that.
    The Chairman. Why don't we hand that back to Mr. Lords, and 
let me ask him. Do you have any information, or do you have 
anybody who can tell us whether there's been any problem with 
the companies making the payments into the government accounts? 
Please go ahead, identify who you are, and tell us----
    Ms. Martinez. Good morning, Senator Bingaman. My name is 
Kathy Martinez, I work with Minerals Management Service. I'm 
the Chief of the Accounting Services Branch there. As you know, 
this issue started with the system shutdown. And in today's 
world, we use computers for almost everything we do. So when 
the Department was ordered by the Court to shut down and 
disconnect from the Internet, that basically affected them.
    There is a situation where a couple of companies also were 
having computer issues. One of the companies happened to be a 
company that does business in Indian country. And they, for 
whatever reason, I don't know, because I'm not a computer 
techno-person and I don't talk technobabble, because I don't 
understand it, basically, but one of the companies was having 
severe difficulties in bringing their computer system on line 
and giving us a file. Basically, they were having difficulty 
getting their computer to report correctly.
    And this issue was resolved about a couple of weeks ago and 
they were current as of a couple weeks ago. But that means that 
they, too, had a number of months of data to give us.
    Now, during the shutdown, all of the companies still had to 
pay. Just because they couldn't report on the Internet was not 
a reason that they could not pay. They were still required to 
pay.
    We collected all of the money that was reported to us, 
either by wire transfer to a bank or by check, and we continued 
to make deposits to the treasury account for OTFM to invest.
    As I said earlier, to my knowledge, all of the companies 
that did have computer reporting issues that did business in 
Indian countries, those were resolved as of a couple weeks ago.
    Now, that still means that the computer has to process the 
data and that the accountant and the computer have to match the 
report and the payment. And the data must be reported correctly 
so that we can transmit that data to BIA so they can identify 
the owners so that we can get checks out the door to the Indian 
owners.
    The Chairman. Well, if I am an Indian owner, are you 
telling me that you are not able to send me my check because of 
your internal computer problems and it's my problem and not 
yours?
    Ms. Martinez. No, sir, that is not at all what I intended 
to imply.
    The Chairman. What are you saying?
    Ms. Martinez. Lets work with a particular example. If I 
have a lease that is being operated, let's say right here in 
New Mexico, and it's being operated by--it's Lease 1 being 
operated by Company X, that company reports to Mineral 
Management Service either electronically or by paper or 
whatever method they so choose. They also have to send in a 
payment for that royalty.
    The computer adds up that data that's entered onto the 
report to ensure basic math, basic dates, and to ensure that 
the right lease number is on there. Then we do basic edits, we 
do some basic verification.
    We take that royalty report for that lease, say it's $100 
and the company must also pay $100. Our computer and our 
accountant basically work to match that payment--to identify 
that payment to that report, and then it's processed through 
the computer, sent in a file to BIA, just data at this point. 
The money has already been deposited, so at this point it's 
just data.
    The file is sent to BIA, BIA looks at their computer 
system, and it allocates that $100 to whoever the appropriate 
owners are on that lease. And then OTFM distributes checks.
    The Chairman. Well, I guess what I'm wondering is how 
quickly are we going to see these computer problems resolved so 
that people--Mr. Garcia here says that people were accustomed 
to receiving a monthly check or a check every two weeks. Is it 
a monthly check if I'm a royalty owner, or is it every two 
weeks?
    Ms. Martinez. Prior to the shutdown, BIA, MMS, and OTFM 
used to go to the oil and gas revenue distribution twice a 
month.
    The Chairman. Okay.
    Ms. Martinez. Since the shutdown, we have been doing the 
oil and gas distribution on a weekly basis.
    The Chairman. So that means you send a check out to one 
owner every week? If I'm an owner, I should expect to get a 
check every week?
    Mr. Lords. Senator, based on the information that I receive 
from BIA, if you were an owner and I did receive distribution 
information, you would receive a credit to your account. Then, 
depending on if you had estimated payments to offset, you may 
or may not get a check. And then depending on the type of 
account--there's certain restrictions, obviously, minors, non-
comps don't get checks distributed to them.
    The Chairman. Well, I'm just trying to figure out--there 
was a certain set of procedures being followed before the 
Federal judge ordered the shutdown because of security reasons 
or concern about people's privacy, I think was what prompted 
that. How quickly are we going to be back to that same 
procedure so that anybody who was getting checks before, under 
normal circumstances could expect to start receiving their 
checks again on a regular basis? How quickly?
    Mr. Lords. I don't have a good answer for you, Senator. 
That's dependent upon the information that I receive from BIA. 
BIA is dependent upon the information they get from MMS. MMS is 
dependent upon the producer information they get.
    As Kathy stated, we're processing on a weekly basis now. 
BIA has sent me weekly distribution files since the end of 
March. We are going to continue to do that until we get caught 
up.
    Ms. Martinez. From when the system shutdown to about the 
end of last week, Minerals Management Service has collected 
roughly $9 million of Indian revenue. And since we brought the 
system back the last week in March to the end of the last week 
in May, we have also distributed to BIA $9 million.
    Yes, there were some exceptions to that. There was the 
company that wasn't reporting for 4 months. We're working with 
that company, we work with them every day. We work on their 
report, so we expect to get back to regular business very soon, 
very quickly.
    Again, if I can repeat myself, during the system shutdown 
to about last week, we received $9 million of Indian revenue 
and we have distributed $9 million to BIA for their action with 
OTFM. So we have our resources working on Indian issues.
    As I said earlier, I'm the Chief of the Accounting Services 
Branch, and I make sure that they understand that our Indian 
workload is our priority.
    The Chairman. Let me try to understand this issue, though, 
with the company that was not able to give you the right 
information, computer information. They have been making their 
payments, but you are not able to tell Mr. Lords's agency to go 
ahead and send a check out because the information that they 
have given you has been inadequate for you to verify as to how 
much goes to which allottee; is that right?
    Ms. Martinez. The particulars? Yes, sir, you are correct. 
The particular company that I'm aware of that had the reporting 
problem, they could not give me the data to identify what lease 
they were paying on.
    The Chairman. Which company is this?
    Ms. Martinez. It's Burlington.
    The Chairman. Burlington, okay. Have they corrected this?
    Ms. Martinez. They have corrected their system issues, and 
they are current in reporting to us. Now, it's our job to 
review their reports, make sure they're adequate, that they 
pass the basic edits that I described earlier. The math has to 
be correct, it's got to be a valid lease number.
    The Chairman. So the bottleneck in getting those payments 
distributed by Mr. Lords is you have to check the information. 
Now, Burlington has provided it, you are now in the process of 
trying to audit it or confirm----
    Ms. Martinez. Do some basic verification.
    The Chairman. Right. And then Mr. Lords can send those 
checks out?
    Ms. Martinez. I have to make sure I process that data, 
identify for OTFM the payment of that data, and then send the 
data--the lease data with the payment data to BIA so they can 
identify the right owner. And then when BIA sends the ownership 
information with my lease and payment data, then OTFM can send 
that out with interest.
    The Chairman. But, now, you're the bottleneck right now?
    Ms. Martinez. It sits in my court, I've got to work with 
Burlington.
    The Chairman. So how much longer are you going to be the 
bottleneck?
    Ms. Martinez. A lot of it depends on how good Burlington's 
computer system is now. And off the top of my head, even though 
we got the report, I don't know how accurate they are. A lot of 
it depends on their accuracy, their response to our request for 
information. But we are working on it and our staff does know 
that our Indian workload is our priority.
    The Chairman. And once you conclude your workload, how long 
does it take for the BIA to get the information to Mr. Lords so 
he can cut the check?
    Ms. Martinez. I'll turn the mike over to BIA.
    Mr. Graham. My name is Steve Graham, and I'm the regional 
royalty officer for the Navajo Region.
    Currently, one of the problems that we're having with it is 
that we don't have all of our staff able to have access to our 
system because of the security problems. Getting our current 
office staff that were available to utilize the system prior to 
the shutdown aren't able to utilize that.
    The Chairman. So you say the Judge's order is still in 
place and you can't access your computer?
    Mr. Graham. Once the Judge's order is in place, the BIA 
goes through the security process of all the staff that had 
access to the system. They're reverifying everyone's access to 
the system to make sure they have proper clearance.
    The Chairman. So this is another bottleneck within your 
agency?
    Mr. Graham. Within BIA, yes.
    The Chairman. Within BIA. BIA cannot figure out who--which 
of their own employees should have access to the system?
    Mr. Graham. They've been given--the information is there, 
but the security office who--I don't know what their staffing 
level is to verify every person that was knocked off the 
system, to get everybody back on to utilize it, to work with 
the different system that we have out there.
    The Chairman. So how long is it going to take your security 
office to figure out who's going to get access to the system so 
that you can function?
    Mr. Graham. I can't speak for the security office. I just 
know that we sent our--the people that need to deal with 
generating payments from the FIMO Office and also the Navajo 
Regional Office and agencies to the people in Washington and 
identify the people that need access to the system.
    When the system went down and started to come up, there was 
a very limited amount of people that were given access to the 
system. And since that time in--prior to March, when we started 
making payments, there has not been any other additional 
individuals that have been given access to the system.
    So that hindered the people out there in the field to 
update their records in order to post new probates, if there's 
a problem with the lease or whatever is identified in the 
payment issue, for us to clarify and rectify that issue.
    The Chairman. So we've identified two bottlenecks: One is 
with the Mineral Management trying to verify the information 
from Burlington in this case. That's the only area that's 
related to the Navajo allottees that is currently not 
functioning in a normal way. Is that fair?
    Ms. Martinez. That is correct. We have today's business to 
deal with as well as the accumulated inventory during the 
shutdown. So we not only have to get current with this month's 
activity, but reduce the backlog. And we've made great strides 
toward that. But right now, given that Burlington was finally 
able to report, now the ball is in our court, yes.
    The Chairman. Okay. So that's one bottleneck. And then 
there's a bottleneck within BIA getting these security 
clearances accomplished?
    Mr. Graham. That's one issue. And also the office there in 
Farmington, because of their location, doesn't have access to 
the system like they did prior to the shutdown. So they're 
having to go offsite to process payments, which is also slowing 
down the process.
    The Chairman. Now, tell me a little more about that. Why 
doesn't the Farmington office have access? I thought the 
Judge's order had been lifted?
    Mr. Graham. Maybe Kevin can speak to that, because I don't 
know all the firewall and that kind of computer stuff. Because 
they're in a different location with the three different 
agencies working together at the Farmington Minerals Office--
BLM, MMS, and BIA. And I don't know what system they're running 
off of to get back in to work with our system. Kevin may be 
able to answer that question.
    The Chairman. Kevin, are you able to give us more 
information?
    Mr. Gambrell. Kevin Gambrell with the Farmington Indian 
Minerals Office. We shared the offices since the December 
shutdown, and we will be able to serve. BLM has recently got 
their trust data back on line 2 weeks ago. And I've been back 
in D.C. working with the special master to get the Farmington 
Indian Minerals Office back on line.
    The Chairman. The special master has not permitted that as 
yet?
    Mr. Gambrell. Not the FIMO office. Because we're a multi-
bureau office at present. There's other things that have to go 
on, to tell you the truth. Everyone's in my office--there's a--
it's kind of complicated in terms of security and how we go 
through the security changes.
    The Chairman. All right. Let me just make a statement, and 
then we will go ahead to hear from some of the other people who 
have signed the list wanting to testify here.
    Obviously, this is an amazingly confused and multi-agency 
process that needs to be sorted out and streamlined so that 
once a payment is made by an oil company that's producing from 
a lease, fairly quickly after that, the check will go to the 
royalty owner, I would think.
    Now, Mr. Lords, you indicated in your testimony that there 
are some Tribes that have received payments from producers 
directly by a lockbox arrangement with banks. Is there a reason 
why we couldn't institute that for the Navajo Nation?
    Mr. Lords. Senator, I don't have anything to do with direct 
pay, so that's why I'm not going to try and answer that.
    The Chairman. Okay. Is there any of the people here who 
could tell me whether this is a possibility for us to try to 
institute this for the Navajo Tribe so that they do not have to 
go through the three or four agencies?
    Mr. Graham. The Navajo Tribe--the Tribe on tribal leases is 
currently on a lockbox arrangement. Individual allottees for 
individual allotments aren't on direct payment. They have no 
boxes that are available, even in the lease, to opt for direct 
pay. But that has to be between the individual owner making 
application, and then they will work directly with the oil 
company on receiving payments.
    The Chairman. So each allottee has that option?
    Mr. Graham. There is an option for direct pay in our 
current oil and gas leases.
    The Chairman. But now, is that an option for the allottee, 
or an option for the oil company?
    Mr. Graham. It's the individual owner's option to request 
for direct pay. Then it would not run through our system.
    The Chairman. Is that information that is made available to 
all the allottees, that they can start getting their payments 
directly from the oil companies and not have to go through this 
whole mess?
    Mr. Graham. I don't know if that was offered to them. The 
leases that are negotiated for allotted leases are handled from 
the Farmington Indian Minerals Office.
    The Chairman. But if I am an allottee at the Nageezi 
Chapter and I want to start getting my payments directly from 
the oil company, who do I talk to in order to get that 
accomplished?
    Mr. Graham. I'll have to let Kevin answer to that, because 
his office is the one that administers allotted leases, so they 
would be dealing with his office in requesting direct pay, if 
that's something that an owner wished.
    The Chairman. Kevin, do you have any information about 
that? Is that a real option that people have?
    Mr. Gambrell. There is an option with oil leases that pay 
direct pay. There are some trust responsibility issues that are 
problematic in trying to reconcile the payment that went to the 
individual's account on an off-line system versus a royalty 
report. That's some of the problems they've experienced in 
Oklahoma. But direct pay is an option. It hasn't been exercised 
in this area, and not anywhere else but Oklahoma, I believe. 
That is our indication. Is that correct?
    Ms. Martinez. My understanding is that the direct pay 
option was being exercised in Oklahoma up until recently, and 
I'm not sure why or what the rationale was, but my 
understanding is that Oklahoma is now reversing all of their 
direct pay leases back to agency pay. Again, I don't know 
enough about the Bureau of Indian Affairs policies or 
processing procedures, but that is my understanding as I've 
spoken to them in doing research on other leases.
    The Chairman. Okay. Well, why don't you give me back the 
microphone and I'll quit asking so many questions.
    Let me thank all of the witnesses. I'm not trying to point 
the finger here except to point out the various problems that 
we clearly have in this system. As I understand it, we have 
payments being made by an oil and gas company that is producing 
from a well. The payment to the royalty owner is being made, 
and it goes first to the information goes first to the BIA, is 
that right? To the MMS, the Minerals Management Service.
    They get the payment and they then look to the BIA to 
verify how much payment has been made and who it goes to or----
    Ms. Martinez. No. Just----
    The Chairman. Please tell me the three- or four-step 
procedure that is followed.
    Ms. Martinez. I'm going to stand up, and hopefully my voice 
will project. Can you hear me in the back?
    The Chairman. Here. Hand her this microphone again. Give us 
the very short version of how a payment gets made from the oil 
company to finally being a check that someone can take to the 
bank and cash.
    Ms. Martinez. Okay. In most situations for allotted leases, 
Minerals Management Service, MMS, receives a check and a 
report. The day that I get a check, it gets deposited into the 
Treasury, and the next day I tell OTFM about all of the 
deposits that I made for all of the allotted agencies. And so 
immediately that day they have information so they can start 
investing that revenue.
    I start working in that royalty report and check and make 
sure--if they come in together, I start working with the 
computer to make sure that the computer understands here's the 
check, here's the lease number it meant to pay.
    And once I confirm that it's the right lease number--
accuracy is very important to us--once I confirm it's the right 
lease number, then that data is sent to BIA. BIA checks their 
records to make sure that they understand who the owners are.
    That data is married with the MMS file on lease payment, 
Navajo ownership data. Now, that file goes back to OTFM so that 
they can process.
    Mr. Lords. What she's outlining, Senator, is correct. Once 
BIA sends me a lease file, like for example they send me a 
lease file today, we interface it tonight, and if there are 
checks that were to be generated, they will go out tomorrow.
    The other thing I need to point out is that our 1-800 
number is 1-888.
    The Chairman. Okay. I'm sure there are a lot of unanswered 
questions that people have after hearing these various 
explanations. I have quite a few still myself. But I think 
probably the best course--we have about 55 minutes now before 
we have to conclude the hearing, and let me go ahead to the 
various people who have signed up to give some short testimony 
about the royalty payments and the issues that they want to see 
addressed or the points they want to make.
    We will take as many of these as we can before noon, but we 
are going to have to quit by noon. So let me call on people in 
the order in which people have signed up and ask them to come 
up. And we will have the microphone for them, and I ask you to 
keep your comments to 2 or 3 minutes, if you can, so we don't--
excuse me? I'm told 2 minutes each.
    If we try to keep the comments very short, that way 
everybody on our list will be able to make comments. If people 
drag on too long with their comments, that's going to keep 
someone else from testifying.
    Let me first call Chris Martinez. Is Chris Martinez still 
here? He is gone.
    Kevin Gambrell? Is Kevin here? You do not have anything 
more to say, okay, thank you very much.
    Chris Velasquez? Is Chris Velasquez here? Well, we are 
getting through this list in a hurry.
    Lela Haseesa? Is that the correct? Is Lela--she left? Okay, 
she's next door, that's fine.
    What is this? Is this Orlen Blaki? Blakey?
    Audience member. Arlene Blackie.
    The Chairman. Arlene Blackie? She did not want to speak? 
Rose Pettigrew? Dorothy Bitsue or Bitsie?
    Mr. Garcia. Bitsue.
    The Chairman. Bitsue. Is Dorothy here? Would you like to 
speak?
    Ms. Bitsue. Yes.
    The Chairman. Would you like the microphone? Please come 
up.
    Ms. Bitsue. My name is Dorothy Bitsue. We're having 
problems with our payment. We haven't gotten paid for 6 months 
now, ever since November, last November. So we haven't gotten 
anything yet.
    The Chairman. You haven't received any payments since last 
November?
    Ms. Bitsue. That's correct.
    The Chairman. Okay.
    Ms. Bitsue. And I got a check for one penny. That doesn't 
mean--that's a check?
    The Chairman. Have you had a chance to look at the sheet 
that Mr. Lords brought to see what they indicate you are owed?
    Ms. Bitsue. No.
    The Chairman. Okay. I think that would be a good thing to 
do while you're here today.
    Ms. Bitsue. Okay.
    The Chairman. But thank you very much. I know Ervin Chavez 
is here to speak, and we are glad to have him. Please come 
forward, Ervin.
    Mr. Chavez. Good morning Senator. By the way, Miss Arlene 
Blackie gave me her 2 minutes.
    The Chairman. Very good.
    Mr. Chavez. I'm just kidding. There was a confusion, 
Senator. Apparently they thought that you had a bag of checks 
that you brought today for them to distribute.
    The Chairman. I thought you had the checks, Ervin.

     STATEMENT OF ERVIN CHAVEZ, PRESIDENT, SHII SHI KEYAH 
                  ASSOCIATION, BLOOMFIELD, NM

    Mr. Chavez. But it's good to see you again. And I do want 
to make a statement regarding--and I would like for you to bear 
with me, because I'm going to put a little different twist on 
this, because I've been dealing with allottee issues for about 
almost more than 20, 25 years. And I dealt with your office on 
various issues like health issues, and I'm very familiar with 
your staff.
    Let me start off by saying my name is Ervin Chavez. I'm 
here today representing an allottee association called Shii Shi 
Keyah Association. This organization was first organized in 
1982. The association is not a stranger to the Department of 
the Interior. In fact, this association filed a similar class 
action lawsuit as a Cobell lawsuit in 1984.
    In 1997, Shii Shi Keyah Association agreed to a consent 
decree whereby the U.S. Government agreed to make, among other 
things, timely payments, development of an explanation of 
payments, and to respond to complaints on environmental issues 
on well sites, especially dealing with livestock.
    Also coming from this action is the development of the 
Farmington Indian Minerals Office, whereby three agencies were 
supposed to come together to resolve issues for Indian oil and 
gas problems. Today, the Bureau of Land Management and the 
Mineral Management Service is the only ones to respond. The 
Bureau of Indian Affairs continues to hold out.
    So the problems with royalty payments is not new. When I 
say this, this is an understatement. Historically, the Bureau 
of Indian Affairs has never lived up to its trust 
responsibility, never kept adequate records for Indian people, 
especially dealing with royalty payments for oil and gas taken 
from their land.
    I might be oversimplifying, but I ask you these simple 
questions. How much longer do we as Indian people, Navajo 
people, have to put up with this?
    How many more lawsuits, oversight hearings will it take for 
the Federal agencies, Mineral Management Service, Bureau of 
Land Management, Bureau of Indian Affairs to do their jobs, 
live up to their trust responsibilities to Indian people?
    When will Congress step forth and say enough is enough, 
take the responsibility, take major action in revamping the 
section of the Department of the Interior who is responsible 
for individual Indian monies by appropriating money to repay 
the Indian people the money which was taken from them by this 
faceless governmental system?
    This appropriation is not to be confused with the annual 
Congressional Interior Appropriation, because every time Indian 
people ask for more funding, it is subject to the Balanced 
Budget Act, where money is just shifted. This money--this needs 
to be real money.
    In 1988-89, it was my understanding that the Senate Select 
Committee on Indian Affairs was established in response to an 
article which appeared in the Arizona Republic newspaper on 
mismanagement of IIM. This committee was to address the very 
issue that we're talking about today. On behalf of Shii Shi 
Keyah Association, our attorney and I were involved in those 
hearings on the Hill. Sad to say, that never was completed nor 
did anything materialize, because their attention was focused 
to investigate one Indian leader in Window Rock.
    Meanwhile, millions of Indian money continued to walk out 
the back door of the BIA for another 12 to 13 years since 1988. 
We have gone through a Reagan administration, a Bush 
administration, a Clinton administration, and now another Bush 
administration. Everybody is stalling and passing the buck. BIA 
and MMS, or the system, is continuing losing millions on 
millions of dollars. The only difference is that it is only 12 
to 13 times today. We are still holding hearings on the same 
issue--we are still at the same place.
    As long as the system is not addressed, corrected, lawsuits 
will continue to be filed. Internets, computers will still be 
unplugged and blamed for the inaction of those responsible.
    Many of the problems for nonpayment that were addressed 
today were even in place when the computers were up and 
running. Navajo families will continue to get caught in the 
middle of this system and politics. That's what I meant when I 
said the system is not a new problem. Navajo families are not 
being paid, are not being able to pay for food, clothing, and 
make house payments, car payments. They are faced with 
repossession of these items they bought. Meanwhile, they look 
out their window and still see oil and gas wells producing, but 
no money in return.
    It will probably continue until someone deals with it and 
solves this problem.
    It is time Congress appropriates the money, reassigns the 
responsibility of IIM accounting to another responsible entity 
and repays the Indian people, Navajo people, their money. Stop 
passing the buck.
    Thank you.
    The Chairman. Thank you very much. Is George Werito here? 
Yes? Does he wish to speak?
    Audience member. Mrs. Werito.
    The Chairman. Yes, ma'am.

                   STATEMENT OF EILEEN WERITO

    Mrs. Werito. Senator Bingaman, my name is Eileen Werito, 
and I just had a concern, and I direct my question to the BIA. 
We've been receiving the same information over and over as to 
the process that it goes through. But the question we have, or 
I have, is, you know, we've stopped getting payments as of 
November, and we have the estimated payments, which some of us 
had been paid and have a zero balance.
    And right now, what I want to know is--and I'm pretty sure 
some of the allottees would like to know also when do we get 
our payments?
    Do we get a lump sum for the 6 months that we haven't been 
paid? And if there's any reports to that effect as to how 
much--what money has been paid and which months, I still don't 
have anything in writing to that.
    I received a payment this month, but I'm just questioning 
whether that's my regular payment or whether it's one of the 
other months' payment. So I still question that, and just 
wondering whether I should be getting another lump sum from 
previous months.
    Just like I said, we've just been getting the same 
information over and over. Seems like it's not moving forward. 
And I'm pretty sure some of the allottees still have a question 
about that.
    The Chairman. Let me ask if you have had a chance to look 
at the sheet that Mr. Lords brought that sets out each payee 
and how much has been paid and how much is expected to be paid 
to them?
    Mrs. Werito. Yes, I did. And it's the same information that 
we've looked into when we had our meeting with the different 
departments at Nageezi.
    The Chairman. So it did not tell you what you want to know?
    Mrs. Werito. No.
    The Chairman. What more do you want to know beyond that?
    Mrs. Werito. What I wanted to know is, when will the 
payments stop. And I'd like to know for each month, you know, a 
report as to say, how much money is in my account and how much 
money was paid out. Of course, you said that my estimated 
amount that I've repaid, and I have a zero balance. And what I 
wanted to know is, how much money is in the account and how 
much money I've been paid out, which I don't think maybe just 
one payment out of that.
    The Chairman. Okay.
    Mrs. Werito. And I still want to know how much in my 
account I still have.
    The Chairman. Mr. Lords, are you able to respond to this, 
or you just--maybe once we conclude the hearing, maybe we could 
be sure to just verify any additional information that we could 
provide on your payments.
    Mrs. Werito. Yes, that's what we're looking for more 
information as to, you know, regarding our payments.
    The Chairman. Okay.
    Mrs. Werito. Thank you.
    The Chairman. Yes, thank you very much. Next is Wilson Ray, 
I believe? Please. How are you?

                    STATEMENT OF WILSON RAY

    Mr. Ray. Good morning, Senator.
    The Chairman. Good morning.
    Mr. Ray. You chair the Energy and Natural Resource?
    The Chairman. That's right.
    Mr. Ray. And I'm very thankful that you're here this 
morning and to hear our problems and to give our input what 
needs to be done. We started to--well, the people, the 
allottees themselves, have been coming to our chapters. And the 
problem that they're having, that they're not receiving their 
payments. And it seems like we're the ones that they chew on, 
me and Calvert.
    But somebody's got to start the fire somewhere. And this 
problem has to be resolved in some way. And as we listen, as we 
have these meetings, it seems like from the very start, that I 
was confused, just like you, when you were listening. And all 
these--how the money flows into different departments and what 
it does. And all this, we kind of like said that this is so 
confusing that a lot of times we just don't understand how this 
money flows.
    And I think from you being a Senator and being the chair of 
this committee, that this really needs to be looked into. And 
there needs to be something done on this. There's got to be a 
shorter way to do this.
    And talking about direct payments, we know that that can be 
done somehow. And even though there's an organization that 
exists now, and I think they talk about it, they talk about it, 
they talk about but never resolve anything. But we need this to 
be resolved in some way.
    And we need the checks going directly to the land owners, 
to the allottees, instead of going from there to there to there 
to there. When we had this May 3 meeting, I talked to all the 
department heads, the people that work in these departments, 
like Denver, Albuquerque, Gallup, and even Farmington.
    I talked to each one of them and I told them we need to 
work together. What I understood from that meeting is that 
these departments don't have a good communication going, see? 
Like everybody blames this department and they just blame each 
other, is what I understood. So I told them in order to resolve 
the problem that they all need to work together somehow, even 
Navajo Nation needs to be involved.
    To me, the Navajo Nation don't have anything in place. 
That's what I see. And that's the reason why we have this 
problem. And we live on Navajo country. We don't really call it 
reservation, we call it Navajo country. Because of the land 
status, the way the lands are in our area. And those are the 
reasons why we--any--any projects, anything like that, like 
running the water lines, we have to run to that. And power 
lines, same thing. And we just have to work through it. And it 
takes years in order to do something. But I know it can be 
resolved some way.
    And from where you stand as a Senator and chair of the 
Energy and Natural Resource Committee, would you please do 
something for us?
    The Chairman. Okay.
    Mr. Ray. It should be looked into and to be resolved and to 
shorten this process, please. Thank you.
    The Chairman. Thank you very much. We have Tom Etcitty. Is 
Tom here and does he wish to speak?
    Ada Etcitty?
    Is this Tommy Lou, is that right? Tommy Lee? Excuse me. 
Tammy Lee?
    Pauline McCauley?
    Ms. McCauley. They said get it all out, so I will.
    The Chairman. Thank you.

                 STATEMENT OF PAULINE McCAULEY

    Ms. McCauley. Thank you, Senator, for taking your time to 
come out here to listen to our problems. I think I met with you 
at Nageezi one time.
    I have a letter here that I want to give to you. There's a 
little corrections on it, but----
    The first thing is when President Bush encouraged more oil 
and gas development and all this, and then the Judge comes 
around and puts the Secretary of the Interior in contempt of 
court for not doing the Indian job. Then it goes further, shuts 
down all the Indian royalties while the rest of the Nation, 
they still got their royalties.
    I was talking to Tweeti. She was saying she still got her 
royalty, Tweeti Blancett. And she is still being paid. And she 
said even by Burlington. And this to me is like eating ice 
cream in front of your family.
    The Chairman. When they do not have ice cream?
    Ms. McCauley. Yes. They all have the ice cream, we just sat 
there and drooled.
    And then in October, we used to get some $800 to $1,000 a 
month. Last summer. Then starting in October, it started going 
down to less than $100 a month. And they keep telling us this 
was the drop-off for all gas prices. And I don't know why it 
dropped so much. We had communitizations, like two wells on one 
allotment. And still the payment didn't increase, still stayed 
the same.
    And I was saying here, Mr. Senator, Honorable Senator, I 
only wish you had a Navajo census number and an IIM account, 
you'd know the frustrations we're going through.
    We go to BIA, we know they have their trust 
responsibilities on our allotments. But yet it seems like they 
just completely ignore us from the area level. And then the 
agency level, the people try to work with us, but things are at 
Window Rock, and it just makes things harder.
    These people at the agency level is like having their hands 
tied and not doing anything unless the area tells them to. We 
are so frustrated for not getting paid.
    I, too, am one who thanks the Navajo Nation for my 
assistance of the grant money they got, only now I hear them 
saying I want that money back. And I say don't take it from us.
    And then the Indian Minerals came out and gave us like an 
estimated payment for 2 months. Then when this money came by, 
when the court lifted its order, we kept saying we are going to 
get paid every week. Well, every week I've been paying back 
what was advanced to me. I finally got $18, and nothing after 
that.
    And the Farmington Indian Minerals Office has taken a lot 
of rap from all the allottees when they do not have the 
Internet back to their office. Because right now, the Internet 
just goes to IIM in Gallup, Window Rock. And the Farmington 
Indian Minerals Office, they have to drive by vehicle to Window 
Rock to try to get some of this information to us.
    And I don't think that--and then what I wanted to see was 
maybe the Bureau, or all these people who handle our royalties 
and leases, they should be centralized in one place. Right now 
if we go to Farmington Indian Minerals, we get what we want. 
But yet the information we want, they know how much the oil 
companies have paid, and then they send that money to BIA, and 
it seems like that's where the hang-up is.
    And to me, that's the way I look at it. And we don't get 
the money in Window Rock and Gallup. They don't have like a 
public or open office atmosphere. You go over there, you come 
to doors that's shut off, you have to stand out in the hall. 
That's no way to follow people on something like this.
    I would suggest that they centralize this in the Farmington 
office, because this is the most centralized location. And 
that's what I'm asking.
    And then we have the Mescal case that you're familiar with? 
Well, I was one of those. We owned the skin, but now we own the 
whole thing. And thanks to the court for giving us that.
    And then this one here, for some reason or another, the 
Mescal case was paid at the end of the month, not with the 
other royalties. And it's all manually done at Window Rock. And 
when we come out here to Indian Minerals, everything is 
automated.
    And I believe that they should go to automation to get 
better and faster service. Just like today, I mean, let's see--
Wednesday I went to the Indian Minerals Office, and I asked 
them if they had seen anything on the Mescal cases coming up. 
And they said no, that the one person who handles those 
accounts was on leave at Window Rock, so no payments were going 
to go out.
    So in the meantime, I've been picking on Tweeti, and I told 
her, I said, I pawned my belongings, and I think one went 
there, and Tweeti has it all.
    And now, people are being--like I said, being threatened 
with repossessions. And a lot of people are pawning their 
belongings. And then there's places where these people are 
being reported to the Credit Bureau for bad credit. And I think 
that all that is unnecessary.
    And I even went to an Indian Minerals Steering Committee 
meeting, and their area regional director told me this Mescal 
case, we had to take it back to court to get things the way we 
wanted. So I wrote to Paul Fry and I asked him about it, and he 
said it's not necessary for it to go back to court. This kind 
of stuff is going on. I don't like it.
    I am an ex-Bureau employee. I used to help people even 
through my lunch hour. There was people who complained because 
I was working there too long. They said I was getting--but we 
were there to serve the Navajo people, and that's what I 
believe in. And you remember the late Ed Plummer?
    The Chairman. Right.
    Ms. McCauley. He backed me up and told me, he says, you're 
doing the right job, so keep at it.
    So this is what I have here, and I wish that something 
would be done centralizing this leasing and IIM and Indian 
Minerals Office all in one location where when we want to talk 
about IIM stuff, we don't have to go to Gallup, or we don't 
have to go to Crownpoint, the agency staff there will want to 
help you, but yet they said your records are at Window Rock. 
And you go to Window Rock--this was before one of them retired, 
I went to her office. And I asked her about my allotted status 
and leases and all that, and she says--and I was affected by 
the Indian Irrigation Project.
    And I went over there asking for that, too, and she says 
well, when I find your allotment, I'll look into it. And she 
had a stack of allotment files around the wall. And I thought 
this was confidential information. And I didn't like that, and 
I just came back. And I was just disappointed.
    And to this day--maybe they have corrected it, but the last 
time I saw it, that's the way--I hope those files are in a file 
cabinet under lock and key. So this is one reason why I want to 
see this thing centralized, so we don't have to run to Window 
Rock and Gallup, and then--and they pay us. I don't mind that 
part. They can stay where they want if they pay us, but--as 
long as they pay us. But this information has to come out and 
quit being withheld from us.
    Thank you for----
    The Chairman. Thank you very much.
    Ms. McCauley. Thank you.
    The Chairman. I appreciate it. The last person we have--
well, we have two others here. Alice Jordan? Is Alice here? And 
Louise Blackie? Okay. I guess they're not here at this point.
    We have one more person who wants to make a statement. 
Could you make it in just a few minutes, and then we'll let the 
witnesses make their--oh, excuse me. Are you Louise?
    Ms. Blackie. Yes.
    The Chairman. Why don't you go right ahead, Louise.

                  STATEMENT OF LOUISE BLACKIE

    Ms. Blackie. Good morning, every one of you, and the 
Senator. We appreciate being here. I had an estimated payment, 
but they told us to pay it back. I checked with the people at 
La Plata Office, I found out money goes back into my account. 
So I'm concerned about it. And this has just been going on and 
I haven't been paid for 6 months. Last year, I get more money, 
and I had a question. How much does the oil costs today? Does 
anyone know?
    The Chairman. How much--what is the price of oil today?
    Ms. Blackie. Yes, a barrel.
    The Chairman. I don't know. I think it's what, $25 a 
barrel, $26 a barrel, something like that. This is on the world 
market you're talking about?
    Ms. Blackie. Yes.
    The Chairman. Yes.
    Ms. Blackie. So some years ago, the oil was $25, and I get 
more money. So when I read it in the newspaper, the oil price 
is $25 and $26 a barrel. So I expect I should have more money. 
So that is a concern for me today. Thank you, Senator. Help us 
today.
    The Chairman. Thank you very much. Yes, sir? Please come 
give us your comments.

                  STATEMENT OF CHESTER BENALLY

    Mr. Benally. Chester Benally. I'm sorry I didn't put my 
name in it. I wanted to say something all along, but I guess 
after sitting through some of the statements that individuals 
are making here, I began to wonder if I should also say 
something on behalf of my mother. She's living in Utah. And I 
see there's some other individuals that are from Aneth area.
    A lot of times I think these type of concerns that we're 
talking about and addressing here is--I guess the idea is more 
relevant to Nageezi's area. There's also families in Aneth area 
that have IIM accounts, too.
    I have just only recently become--I hate to say owner, but 
through probate--my father is deceased, and I investigated the 
IIM. I didn't know what it was and I didn't really want to 
express any concern over that, because for the longest time 
since his death about 8, 10 years ago, we've been getting 
statements that we have a dime in the account.
    And my brothers and sisters, they probably have a dime or 
maybe eleven cents. And I often wondered why it was the case. 
You're out there every day, you see oil wells pumping, there's 
activities taking place, and yet you only have a dime. I often 
wonder if there was at any time MMS, BIA, ever had the 
fortitude to go out and really try to verify the production 
that is taking place out in the oil field.
    I often wonder if the companies that operate out there 
truly and honestly report the amount of production that they're 
making to MMS. If no one is doing it, I think something needs 
to be done there, too.
    Perhaps maybe this is one of the reasons why these people 
here are complaining about not getting their money. Maybe 
there's dishonesty on the part of the companies. That needs to 
be followed through.
    And I was just amazed to listen to this lady over here 
saying that we have a hard time identifying owners of these 
leases. Every month when a report comes in, I sit here and 
wonder: If these owners have been on the books for 10, 15, 20 
years, and they're the same people every month, why is it so 
hard to identify the lease owners of that piece of property? 
Why should you have to go through to identify that when the 
paperwork is already in place and the identity of the lease 
number is there? Why is it so hard not to coordinate those two 
papers to identify the names of the individuals that own that 
property? It just seems like it's just another excuse for them 
to sit back and say that we can't identify them.
    This is not something that's changing every single day. And 
the lady that came before me asked the price of oil. Most of 
us, and probably about 99\1/2\ percent of the people here, have 
an ownership of a vehicle. As we gas up every day, the price 
jumps from a dime, nickel--whatever is the case on a daily 
basis. The fluctuation of the price is so much that we have to 
reach in deeper just to pay for the price of gasoline. And yet 
the prices that were maybe perhaps negotiated a hundred years 
ago is still the same amount of price that is being paid to 
these individuals. And maybe perhaps that is the reason for the 
low statements that they have, the amount of funds that they 
have in their account.
    I often wonder why BIA has to continue to approve leases on 
the lands that we have. Why should they have to be continued to 
be our fathers when perhaps maybe that they could work for us, 
or perhaps we should do it and negotiate the prices of the 
product that is being produced from these lands. Maybe then can 
we get better funding and have a better accounting of what is 
in our account.
    The Chairman. Could you go ahead and summarize your 
remaining points?
    Mr. Benally. Yes, yes. I had not thought, you just got me 
lost now. But anyway, this is a great concern that I have, and 
I wish that somebody, Senator perhaps, under your 
administration, in the program, and doing this, a lot of these 
problems will be identified. And I think the concerns are 
legitimate and that we need your help, we need everybody's 
help. I'm thankful for the Navajo Nation to be a part of this.
    So I do thank you, thank you for coming.
    The Chairman. Thank you for your comments very much. 
Matilda Lizer? Is that----
    Ms. Lizer. Yes.
    The Chairman. Matilda?
    Ms. Humphrey. No, Mary.
    The Chairman. Mary, are you going to speak, too? I didn't 
know that. Matilda first, and then Mary. And you'll be last. Go 
ahead.

          STATEMENT OF MATILDA LIZER, WINDOW ROCK, AZ

    Ms. Lizer. Good morning, Senator and staff members. My name 
is Matilda Lizer, and I'm coming in from Window Rock, Arizona. 
And I'm wondering--there's two that's under the Mescal account.
    I have two questions, one for Kathy. Why under the Mescal 
account with the PNM Coal don't I have a listing like the oil 
and gas estimated listings for the feet of coal?
    Ms. Martinez. I'm sorry, could you repeat your question? 
It's very hard to hear.
    Ms. Lizer. Okay. I was wondering why the Mescal account 
with the PNM Coal has no estimated listings, just like the oil 
and gas?
    Ms. Martinez. Your question was what?
    The Chairman. Yes. The Mescal account, I guess, involves 
coal production, right?
    Ms. Lizer. Coal, yes.
    The Chairman. And she was asking why there is not a similar 
ability to determine what's owed on that as there is in oil and 
gas.
    Ms. Martinez. Your question is that you're not getting an 
explanation of payments on the coal leases?
    Ms. Lizer. Yeah. Yes.
    Ms. Martinez. My understanding of the Mescal settlement is 
that it is still to be treated as a Federal lease. We collect 
the money and then we tell OTFM about it. And I really don't 
understand the mechanics of why you're not getting any EOPs, 
but I did write Pauline's name down. Is she still here? She had 
some issues and questions about Mescal, and I'd be glad to talk 
to her about that.
    The Chairman. If you would give her your information here 
right after the meeting, then she could get back to you with an 
explanation.
    Ms. Lizer. Okay. And then I had another question. I'd like 
to know, because like they said I received my last payment back 
in November also. And then from that time, you know, I'm one of 
the persons that lost a vehicle already. And then my--because, 
you know, this Mescal account was my only source of income. And 
then my employment also, but it's not enough. And is there a 
letter that can be written or some information for creditors 
not to ruin your credit for the Credit Bureau type?
    The Chairman. This would be information about what you are 
owed or what you are likely to be paid? Is that what you mean?
    Ms. Lizer. Yes.
    The Chairman. Again, I think--why don't you ask when we 
conclude the hearing, and they'll tell you anything they can 
about what is owed or expected to be paid.
    Ms. Lizer. Okay. Thank you.
    The Chairman. Thank you very much. Mary, did you wish to be 
the last witness? Please.
    Ms. Humphrey. Well, I hope not to be the last.
    The Chairman. No, I think you're the last.
    Ms. Humphrey. Really? Oh, no. Well, let's see how much time 
we got. Plenty of time.
    The Chairman. No, we don't want you to take all this time.
    Ms. Humphrey. No?
    The Chairman. We want to have some time for these people to 
give final comments.

                   STATEMENT OF MARY HUMPHREY

    Ms. Humphrey. Oh, okay. Well, it's good to see you again 
and everybody here. I wanted to ask some questions about my 
IIM. It seems like every time I call, they either say well, the 
check's in the mail. And then when that time comes, they say 
you'll get it tomorrow or by Friday. When the time comes, I go 
and there's no checks. And then I call back, and then they tell 
me well, on this listing that we got, your name is not on it. 
So that really gets me upset. And I ask how come? And they said 
that you had borrowed money from somebody I don't even know, 
somebody I'm sure that don't know me. And they say we're 
getting your IIM money and paying that money back. And they 
tell me you got, I think, 251 cents to go until you're all 
paid.
    To who, to what? I never even talked to this person, and 
I'm sure that that person don't know me. Don't know my IIM 
account, don't know nothing about me. And I think that is 
wrong. Because it is my civil rights are being all stepped on, 
name it. It's been done.
    And also, they also tell me my brother has got a sheep that 
he took back over there, over there to the IIM Department over 
there in Farmington, and they told him that he was all paid up 
for what he's got. He's all paid off. He doesn't owe nothing 
else.
    Why is his different than mine when we both get equal 
amounts? And to this day--my brother's here, he tells me why, 
if they tell me that I am already paid up, why have they not 
sent me a check? This is what I want to ask.
    The Chairman. Have you had a chance to talk to the ladies 
who have the list of what is owed to each allottee who could go 
over this with you?
    Ms. Humphrey. I'll do that.
    The Chairman. They're in the next room. And I think if you 
would sit with them and go through this, they could give you 
whatever information they have, both about your account and 
about your brother's account.
    Ms. Humphrey. Well, what I don't understand is how come his 
is paid off and mine's not, and he's still not getting a check?
    The Chairman. Well, that's a good question. But you'll need 
to ask them that question, I don't have the answer. And I think 
the only ones who would are the folks that have that list.
    Ms. Humphrey. All right. Thank you for your time, Senator.
    The Chairman. Thank you very much, appreciate you being 
here.
    Let me do this: Let me just ask if any of the people who 
have been on our panel here have some concluding remarks, 
anything they would like to make. Mr. Garcia, Mr. Begay, Mr. 
Trujillo, Mr. Lords?
    Let me just have the microphone passed over. And maybe we 
would go in the reverse order that we went before, so that--why 
don't you make your concluding remarks in a couple of minutes, 
if you could, each one, and then we would conclude the hearing.
    Mr. Garcia. Thank you, Senator. Seems listening to various 
testimonies being given and observing the whole environment 
here, I don't think this is any different than what we have 
heard as chapter leaders in these affected communities.
    I personally believe that there is a problem all the way 
from MMS as far as the oil companies paying their share for 
their production leases or whatever.
    Also, the next biggest problem is up to the BIA. I don't 
believe the BIA has the resource and a meaningful way to 
expedite these payments. And I don't really blame the Office of 
Trust Funds Management. I think they're in a position after 
they receive the data from the BIA to process these checks.
    I do believe, however, that the BIA has a trust 
responsibility to ensure that our Navajos, our community 
members, receive a fair and honest amount. But I believe the 
system is not working. It's going to take coordination on 
behalf of the Navajo Nation, various departments of the 
Interior, and all players need to come together and coordinate. 
And this has been ongoing for numbers of years, this is not new 
to these people.
    And the other thing that really bothers me here is if you 
heard all the testimony, none of these people are receiving 
what they normally have been getting prior to the shutdown. So 
there's still something wrong where maybe the companies are not 
paying. Well, who's monitoring that? Who is the person to 
ensure that these companies pay the rightful amount to these 
land owners? And I think the more we wait, we're going to see 
some very tragic things are going to happen, both socially and 
financially. And I'd like to summarize, Senator, really 
briefly, in Navajo.
    [Navajo spoken.]
    And I'd like to thank Mr. Brunner from the Senator's 
Office, and everyone else. This is from the Albuquerque, the 
chairperson, and they have made every effort to ensure that our 
comments and our problems be heard. And we have met with them 
at our Chapter House, and I'd like to thank you for making that 
time and making that effort to ensure that our people be heard.
    [Navajo spoken.]
    This is a problem for us. We need your input, we need your 
participation. And as a Chapter leader advocating on my behalf 
for the community, our Navajo Nation will take 100 percent 
effort to ensure that this problem be corrected and make this 
service efficient to all these people here. Thank you.
    The Chairman. Thank you very much.
    Mr. Trujillo.
    Mr. Trujillo. Thank you, Senator.
    The Chairman. Mr. Trujillo, could you make yours short? We 
are about out of time.
    Mr. Trujillo. Thank you, Senator. Very quickly, just a 
couple of observations here.
    One, I think it's very apparent through your questioning 
that the community members from the eastern agencies, as well 
as the other allottees, are wondering. They're used to a 
certain payment coming within a certain time period. And 
because of this, that's been disrupted and there's been a 
change.
    As a result, as with anything else, people are reacting to 
that change. Yet, I think it's becoming somewhat apparent that 
the explanations are not coming forward as to why these changes 
are happening. And because of that, there's still a tremendous 
amount of confusion as to what's happening, when it's going to 
be resolved, and how it will be resolved.
    So one, I would ask that you continue to work in this area. 
And if there's any way that you would require the assistance of 
the President of the Navajo Nation or his staff to assist you 
in that, we would be willing to assist you with that.
    The other point I'd like to also make is that again, the 
Navajo Nation is continuing to focus on how we can assist 
individuals within the Navajo Nation. As with any other entity, 
there are a tremendous amount of needs. One very important one 
right now that we're working on is the drought. So at times we 
feel some gain.
    We need to help these communities and these families. But 
on the other side of it, as we take money to do that, as we go 
into the drought season, that may impact us even more.
    So again, to reiterate one point as we go through this 
process and watch it completed, we will go through audits, but 
I think we'll be looking to see the Federal Government 
reimburse us for the money that we're trying to help the 
communities with.
    But to clarify that, I don't want those dollars to impact 
the communities. This is a Federal Government issue. They 
should pay for it, not the people out here.
    So those are the two things that we are looking at. Again, 
I appreciate your time, Senator.
    Mr. Begay. Thank you, Mr. Chairman. Quickly, there have 
been suggestions that there should be a consolidation of 
various agencies to relocate in one area. I guess that it's an 
easy suggestion to be made. All of us here must remember that 
Secretary Norton, under her leadership, had proposed to 
reorganize this effort. But as for the Navajo Nation, it's 
going to have a tremendous impact. Just, for example, if the 
Trust Manager is all housed under one roof, then Navajo Nation 
has--Navajo Region Office is going to have to give up 200 FTEs, 
$12 million in our budget in order to be part of the 
consolidation.
    Because on the initial planning, it was going to cost $300 
million to reorganize under one roof with that concept. Because 
this will impact the Navajo Nation. That's why we resist that. 
So I think there should be another alternative that could be 
reviewed for that consideration. Thank you.
    The Chairman. Thank you. Mr. Lords, you have the final word 
here.
    Mr. Lords. Thank you, Mr. Chairman. Thank you for inviting 
the Department of the Interior to your hearing, I'll make my 
comments very quick.
    For the people who are part of Mescal settlement, OTFM 
received its first lease file yesterday, since the Internet 
shutdown. There should be credits going into allottee accounts 
today. The total for that file was approximately $750,000.
    Just because we make weekly distributions, Senator, does 
not mean that everyone gets a weekly credit to their account. 
As Mr. Garcia stated, that depends on which lands MMS receives 
funds for.
    And then lastly, based on what I heard today, I will go 
back and will look at what we can do to update the account 
holders on the estimated payments and what was offset so that 
we get something to them so they have some information in hand.
    The Chairman. Good. Let me get the microphone again.
    Well, let me just thank everybody who has given us 
information today. I think even though there are a lot of 
problems, and there clearly are, with the way we are having 
this administered, the way it's been set up, I think that the 
people who have been here today have been trying to give us 
information about their view of what needs to be done.
    I do believe it would be helpful to see if we can improve 
the communication about what people are owed and what people's 
accounts reveal, about what's going into these accounts. And 
anything that can be done along those lines would be very much 
appreciated.
    We are going to regroup with the Department of the Interior 
officials when we get back to Washington and try to find ways 
to get these problems resolved and get them resolved as quickly 
as possible. This is something which I know has been an ongoing 
issue for a long time.
    I hope we can work cooperatively with the Department of the 
Interior to get the problem solved so that people do get their 
payments, get them quickly, and get their full payments. And 
that people also have confidence that the oil companies are, in 
fact, paying the full royalties that are owed to the royalty 
owners. That's something that people need to have confidence 
of, and we obviously haven't been giving people enough 
information to give them that confidence up until now.
    Let me once again just indicate Terry Brunner, who is over 
here by the door. He works with me and my staff, and I know he 
has met with Mr. Garcia and some others here. He is available 
to continue working with you on this, and we look forward to 
helping get this resolved as quickly as possible.
    I thank you all for coming, and I hope that some of the 
information here has been useful. And again, I thank the City 
of Bloomfield for providing this facility and all the help 
they've given us to make this happen.
    So this concludes our hearing and thank you very much.
    [Whereupon, at 12:05 p.m., the hearing was adjourned.]
                                APPENDIX

              Additional Material Submitted for the Record

                              ----------                              

                             Eastern Navajo Agency,
                         Nageezi Chapter--District 19--#92,
                                         Nageezi, NM, May 31, 2002.
Hon. Jeff Bingaman,
Hart Senate Office Building, U.S. Senate, Washington, DC.
    Dear Senator Bingaman: The Navajo Allottee's in the Nageezi 
Community are deeply concerned and disappointed that some Individual 
Indian Monies (IIM) has not resumed payments since the computer 
shutdown on November 21, 2001.
    The Department of the Interior through the Bureau of Indian Affairs 
(BIA) has mismanaged billions of dollars through royalty payments from 
the Navajos, also known as Individual Indian Monies.
    What will make the Bureau of Indian Affairs to account for all 
missing funds and return it to the rightful owners?

   It was over a century ago that the United States Government 
        obligated to have the ``trust responsibility'' to ensure Native 
        Americans with protection and management of their affairs.
   Most of our elderly rely on this income to meet their basic 
        living needs and to care for their livestock. This income is 
        deeply needed by our community to supplement what income they 
        have, if any.
   A great percentage of our Indian Allottee's have not 
        received or resumed any royalty proceed since the shut down, 
        which created critical financial hardship. Some resorted in 
        selling their personal possession, livestock or other items of 
        value.
   On May 3, 2002, the Navajo Allottee's conducted a meeting 
        with Mineral Management Service from Denver, Colorado, Office 
        of Indian Trust Funds Management of Albuquerque, Bureau of 
        Indian Affairs of Gallup and Farmington Indian Mineral Office 
        of Albuquerque. It was evident at that time that some oil 
        companies were not making payments to MMS on Indian Land for 
        production and leases. Mineral Management Service personnel 
        confirmed the discrepancies, which resulted in non-payment to 
        Navajo Allottee's.

    Speaking on behalf of Navajo Allottee's, there are numerous 
problems with the current program operation on Indian Trust Management 
operation. Secretary Norton's plans to reorganize and consolidate 
Indian Trust Asset Management functions into a separate new 
organization unit will not work unless each tribe develops a realistic 
and workable plan with individual input. Creating another department 
with current Department of the Interior personnel will only create 
further bureaucracy thereby hindering improvement and customer service.
    Our recommendation to you as our Senator, is to support the 
following:
    1. Allow our Navajo Allottee's to utilize the Indian Self-
Determination Act by creating a local Individual Indian Monies (IIM) 
payment distribution preferably in Farmington, New Mexico. Current 
process for payment are distribute as follows: Oil Companies to Mineral 
Management Service (Denver, Colorado) to Area Bureau of Indian Affairs 
(Gallup, New Mexico) to Office of Trust Funds Management (Albuquerque, 
New Mexico) to Indian Allottee's.
    2. Coordinate proposed plan and set up with Farmington Indian 
Mineral Office (Farmington, New Mexico). Plans are as follow: Oil 
Companies make direct payment to Navajo Allottee's. The Farmington 
Indian Mineral Office will monitor and ensure that oil companies make 
proper and timely payments.
    3. Develop a Feasibility Economic Plan, which will enable the 
Navajo citizens to have a direct impact utilizing mineral extraction 
for employment and other positive means. SUGGESTION: Since our 
community averages a pay out over $650,000.00 a month, would it be 
feasible to have our own Navajo Refinery?
    We urge you to support and seek ways to improve the system that has 
failed our people for many years. There are ways to prevent wasteful 
and unnecessary government bureaucracy in hindering direct service to 
our community members. Please give this matter your highest priority. 
May we hear from you very soon with your plans?
            Sincerely,
                                            Calvert Garcia,
                                                         President.
                                 ______
                                 
 Statement of Dr. Stephen C. Torbit, Senior Scientist, Rocky Mountain 
         Natural Resource Center, National Wildlife Federation
                              introduction
    My name is Stephen C. Torbit, and I appreciate the opportunity to 
submit this statement to the Committee on Energy and Natural Resources. 
I am testifying today on behalf of the National Wildlife Federation, 
Wyoming Outdoor Council, Biodiversity Associates and myself.
    On March 13, 2002, I testified before the Committee on Government 
Affairs on the Impact of the National Energy Plan on Western Public 
Lands and submitted this statement for the record. Today's field 
hearing will address similar issues outlined in my earlier testimony 
before the Committee on Government Affairs. Therefore, I would like to 
request that this statement be submitted for the record.
    The National Wildlife Federation (NWF) is the nation's largest 
member-supported conservation education organization. For more than 65 
years, millions of NWF members and supporters from across America have 
invested their time, energy, passion, and grassroots action in 
conserving and restoring the living legacy we will bequeath to our 
children--in keeping the wild alive.
    Established in 1967, the Wyoming Outdoor Council is the state's 
oldest and largest independent statewide conservation organization. 
Their mission is to protect and enhance Wyoming's environment by 
educating and involving citizens and advocating environmentally sound 
public policies and decisions.
    Biodiversity Associates is a Wyoming-based conservation group 
dedicated to preserving wildlife and wild places. This group serves as 
a voice for native species and public lands in the Red Desert and other 
parts of the Intermountain West and Great Plains.
    I earned my Ph.D. in Wildlife Ecology from Colorado State 
University in 1981, and have worked as a wildlife educator, researcher 
and biologist for the Colorado Division of Wildlife, the Wyoming Game 
and Fish Department and the U.S. Fish and Wildlife Service. I currently 
am the Senior Scientist for the National Wildlife Federation.
    I am a native of the west and have been involved with energy 
development on western public lands for more than 20 years. I am here 
today to discuss this Administration's National Energy Policy and its 
impacts on our western landscape. Although this Congress is currently 
considering legislation to enact this National Energy Policy, I can 
assure you that significant pro-energy development policies have 
already been put in place by this Administration. These radical changes 
have completely reversed the logical sequence of environmental 
analysis, public input and agency decision. This has occurred in a 
vacuum of no public input and in a manner that compromises unbiased 
environmental analysis and disregards the other public-trust resources 
on the federal estate.
    I also understand the debates in this Congress concerning the 
opening of the Arctic National Wildlife Refuge for oil and gas 
development. NWF has been actively engaged on this issue and has been 
working to protect the wildlife values of this unique area. Its 
addition to the Arctic Refuge, NWF is extremely concerned about the 
many other actions already threatening wildlife and other resources on 
our western public lands. In my testimony, I will illustrate some of 
the impacts of the Administration's energy policies on an area that is 
personally and professionally very important to me, Wyoming's Red 
Desert.
    As a professional biologist, I have been engaged with wildlife 
issues in Wyoming's Red Desert since the late 1970s. Additionally, I 
have used the Red Desert personally for recreation including hunting, 
hiking, photography and camping. The Red Desert epitomizes the west; 
its wide-open spaces and its abundant wildlife resources allow me to 
reconnect to my western heritage. I have harvested significant numbers 
of mule deer and pronghorn antelope from the Red Desert and those 
animals were an important source of food for my family when we resided 
in Wyoming. I continue to hunt, hike and camp in the Red Desert 
although I no longer live in Wyoming.
                          wyoming's red desert
    Despite its name and its appearance to the uninitiated, the Red 
Desert is not an empty wasteland. The Red Desert of Wyoming is truly an 
ecological, geological and wildlife wonder. The Greater Red Desert 
region includes the largest undeveloped high elevation desert left in 
the United States, the continent's largest active sand dune system, 
two-thousand-year-old rock art and Shoshone spiritual sites, portions 
of the Oregon, California and Pony Express Trails and 10 Wilderness 
Study Areas. This special area is rich in wildlife because of the 
integrity of the habitat. More than 350 wildlife species call this area 
home including the largest desert elk herd in North America, and the 
largest migratory game herd in the United States outside of Alaska 
consisting of some 45,000-50,000 pronghorn. The Red Desert also 
provides important habitat for mule deer, sage grouse, numerous small 
mammals and nesting and wintering habitat for birds of prey. It was 
principally because of the integrity and viability of these habitats 
that the Department of the Interior chose not to list ferruginous hawks 
under the authorities of the Endangered Species Act of 1973, as 
amended.
    Since 1898, there have been efforts to set aside and protect 
portions of the Red Desert and the wildlife habitat it supports. In 
1935, the Governor of Wyoming proposed establishing the Great Divide 
Basin National Park. In 1973 and again in 1976, the National Park 
Service reviewed Adobe Town, a series of badlands formations on par 
with Badlands and Bryce Canyon National Parks, for designation as a 
National Natural Landmark. The reviewers concluded, ``the greatest 
natural value of this area is that it is still a `howling wilderness,' 
'' (1) and rated the area as having the highest rating for ecological 
and geological values, a rating that reflects the ``high degree of 
national significance,'' (2).
    But now this area rich in ecological, geological and cultural 
wonders is at risk from multiple entities that would cast aside these 
public values and dominate the landscape with energy development.
                      expedited energy development
    Our public lands already provide a substantial amount of oil and 
gas from an estimated 57,800 producing oil and gas wells. According to 
a 1999 report published by the National Petroleum Council, roughly 95% 
of BLM lands in the Overthrust Belt of the Rocky Mountains are already 
open for mineral leasing and development.
    While this Congress considers and debates the National Energy 
Policy, many actions are already accelerating energy extraction on the 
Red Desert and other public areas in a way that will permanently alter 
the character and resources of these public lands. Currently, public 
land managers are not considering the multiple assets of public lands 
and are not working proactively to balance conservation of these assets 
with energy development demands. Rather, this Administration is using 
its discretionary authorities to totally skew decisions toward 
domination of the landscape by extractive industries. Indeed, we are 
witnessing the rapid industrialization of our western public lands.
                        recent executive orders
    There is ample evidence to justify our concern. Until now, federal 
land managers were expected to fully evaluate the impacts of their 
proposed decisions on the environment, to disclose those impacts to the 
public and consider public input prior to finalizing their decision. In 
decisions to lease or permit drilling, prescriptive restrictions were 
often attached to minimize or avoid impacts to public resources (water 
quantity and quality, air quality, historical and wildlife resources, 
etc.). In essence, the logical framework was to ``look before you 
leap'' to assure no irretrievable commitments of resources were 
unknowingly made.
    However, this Administration has turned this entire process on its 
head by ordering agencies to first analyze whether any proposed actions 
(e.g. winter range improvement for wildlife) will impede or accelerate 
energy development on public lands before issuing a final decision. 
Specifically, Executive Orders 13211 (3) and 13212 (4) now require an 
``Energy Effects Statement'' to specify ``any adverse effects on energy 
supply, distribution or use . . .'' of federal actions. Furthermore, 
for energy related projects, agencies are encouraged to ``expedite 
their review of permits or take other actions as necessary to 
accelerate the completion of such projects . . .'' This message has 
been heard clearly by those who manage the federal estate. The result 
is that certain actions are discouraged if they impair the federal 
government's ability to extract energy reserves. If environmental 
protections are already incorporated into existing energy development 
decisions, federal managers are encouraged to be creative in 
circumventing those protections to benefit energy extraction.
                       threats to the red desert
    Examples of what this new policy of expedited development has meant 
to the Red Desert include:

   The BLM released a proposal in June 2001 to allow up to 
        3,880 coal-bed methane wells in the Atlantic Rim Project Area, 
        an area of critical importance to wintering wildlife. 
        Consistent with new policies to accelerate oil and gas 
        development on public lands, the BLM is proposing piecemeal 
        development of up to 200 wells before completing a thorough and 
        comprehensive environmental analysis of the entire proposal. 
        This piecemeal approach is designed to leverage the ultimate 
        decision by establishing a ``beach head'' for energy 
        development by first minimizing the environmental impacts of 
        these smaller projects.
   In August 2001, the BLM approved seismic exploration in the 
        Adobe Town area. Seismic trucks drove through roughly 50,000 
        acres of citizen-proposed wilderness areas in September through 
        December 2001, degrading this fragile landscape, laying the 
        foundation for future development and thus undermining the 
        integrity of the citizen's proposal. Exploration continued 
        within crucial wildlife winter ranges during the winter months, 
        in violation of agency commitments to avoid the area during 
        that sensitive time.
   The BLM proposed in December 2001 to permit an eight-mile 
        long hand-laid seismic study entirely within the boundaries of 
        the Adobe Town Wilderness Study Area. Thereby, BLM may have 
        undermined wilderness designation for Adobe Town.
              the administration's national energy policy
    There are more examples of the Administration expediting permits 
evaluating impediments to leasing public lands and removing these 
impediments as ``unnecessary'' obstacles to energy production. These 
examples come from many areas in the west in the new rush for energy 
development, including:

   BLM authorizing seismic exploration in Utah's Dome Plateau, 
        just outside of Arches National Park. The Interior Office of 
        Hearings and Appeals (OHA) halted this project finding it was 
        likely that BLM had inadequately considered the environmental 
        impacts of this action on public lands.
   In January 2002, the Wyoming State BLM Director presented an 
        Award for Excellence to the Buffalo Field Office. This one 
        field office was recognized for approving more drilling permits 
        than all other BLM offices combined, excluding New Mexico. This 
        one area of northeastern Wyoming is proposed to soon be home to 
        tens of thousands of gas wells. The Buffalo Field office was 
        praised for working ``diligently'' and ``creatively'' with 
        industry in approving the record number of oil and gas permits.
   BLM is characterizing wildlife lease stipulations as 
        obstacles to production. These minimal measures are now the 
        only wildlife mitigation measures found on drilling permits and 
        leases. They are intended to balance natural resource values 
        against energy development and protect critical wildlife 
        habitats, such as crucial winter ranges, migration corridors, 
        calving and nesting grounds. If these protections are stripped, 
        the vast array of wildlife species calling the Red Desert home 
        will diminish in the onslaught of energy development.
   Overturning lease stipulations designed to protect important 
        wildlife habitats. The Wyoming BLM has already approved nearly 
        70 percent of the 88 requests for exceptions to lease 
        stipulations requested by the natural gas industry for the 
        Green River Basin this winter. These waivers follow two years 
        of extensive drought when wildlife and wildlife habitat is 
        already stressed.
   Opening ``all public lands'' regardless of existing 
        environmental safeguards as promoted by the National Energy 
        Policy. This attitude is manifested by BLM's seismic testing 
        operations in federally designated Wilderness Study Areas in 
        the Red Desert. It is important to point out that all of the 
        seismic operations in the Red Desert were proposed after the 
        Administration's National Energy Policy was released.

    Previous legislation enacted by Congress, approved by other 
Administrations and consistently upheld in the courts, promote multiple 
uses of public lands where a mix of resource values are developed or 
maintained across the public estate. The provisions of the National 
Energy Policy ignore the multiple use mandate and propose to eliminate 
even the token balance between resource conservation and energy 
exploitation and substitute a dominant use for-multiple use.
    Certain special areas on our public lands are simply too wild to 
waste. These areas include our National Parks, National Monuments, 
National Wildlife Refuges, roadless areas, and lands with special 
values such as Wyoming's Red Desert, Montana's Rocky Mountain Front and 
Colorado's Vermillion Basin.
    Well-planned, responsible development can balance our country's 
energy needs with the conservation of wildlife habitat and other 
natural treasures for future generation to enjoy. Responsible 
development requires thorough pre-leasing environmental review, full 
compliance with all environmental and land management laws, measures to 
protect wildlife migratory routes and other sensitive lands, full 
reclamation of developed areas once operations cease and minimization 
of road building.
    Unfortunately, rather than encouraging a thoughtful, strategic and 
balanced approach to energy development, the Administration's National 
Energy Policy is recreating the chaos of the western gold rush of the 
1800s. Like that archaic approach, these new tactics give no 
consideration for other users or resources. Like the old western gold 
rush, this new ``western energy rush'' will leave impoverished natural 
resources and cleanup as the legacies for future generations. I invite 
the members of this committee or their staff to come to Wyoming with me 
and visit Adobe Town, Jack Morrow Hills and other unique and valuable 
areas of the Red Desert to view these areas and the consequences of 
industrialization.
    I appreciate the Committee's interest in these critical issues and 
urge you to take action to ensure that we do not replicate the mistakes 
of the past and instead manage the public lands in the public interest 
not only for today but for tomorrow as well.
                                 ______
                                 
                                      Bloomfield, NM, May 30, 2002.
    Senator Bingaman: The negative impact of oil and gas operations in 
San Juan County is extensive. Pipeline rights-of-way are wide and, 
coupled with adjacent roads, affect the movement of wildlife. These 
rights-of-way are supposed to be reclaimed by revegetating but seem 
mostly to grow more invasive weeds, if anything at all. A one time 
planting may not be enough to restore what has been denuded; those 
responsible must check later to see if reseeding was successful, and, 
if not, must work to correct the problem.
    Compressors not only are multiple additional man-made units in wild 
areas but are also noisy beyond what is acceptable. In addition, New 
Mexico EPA recently advised the public in San Juan County that the 
county is nearing non-attainment status for ozone and that compressor 
emissions are a part of the problem. It seems that recently we are 
seeing these units scattered in large numbers throughout the county. We 
are concerned because the public is not being asked about installations 
nor are expressed concerns being positively addressed. We do not 
consider the legals in the newspaper adequate notification. Many local 
land owners, primarily ranchers, believe their concerns are being 
ignored and their rights overrun. It is important to remember that 
these ranchers serve our nation by putting food on our tables. Judging 
from what we see on our birding expeditions into the wild areas of San 
Juan County, we believe their concerns are justified.
    If current laws are inadequate to protect the land, both public and 
private, then we may need to look at new or additional legislation to 
correct the problems.
    More is often not better. The oil/gas industry would go a long way 
by minimizing the areas they use and by seriously addressing the 
problems of restoration. BLS must be more diligent in the permitting 
process and in approving revegetation efforts.
                                               Janet and John Rees.
                                 ______
                                 
                                           Aztec, NM, May 31, 2002.
                    gas wells along the animas river
    Dear Senator Bingaman; My wife and I are schoolteachers (along with 
our two children) living near the Animas River at Cedar Hill, New 
Mexico, about nine miles north of Aztec. We are very concerned with the 
potential environmental impact from the recent and future down spacing 
of gas wells.
    Our river community has been impacted in years past from methane 
migrating through porous alluvial soil taking the path of least 
resistance into water wells, agricultural land, or into the river 
itself. Some landowners have settled through litigation, but the Animas 
River and riparian ecosystems cannot defend itself.
    How can the oil and gas industry be allowed many exemptions from 
hazardous waste and drill in our backyards or along the banks of a 
fragile river? We desperately need state and federal legislation passed 
establishing no-drill buffer zones along America's rivers. The effluent 
from leaking wells or accidental chemical spills (some wells are 
literally on the banks of the Animas) leave little or no response time. 
A conflict of resources exists. Oil and gas should never have priority 
over our precious water. With four billion cubic feet of gas being 
produced daily in the San Juan Basin our ``community share'' of the 
economic resources is small in comparison to our ``disproportionate 
share'' of the spillover costs.
    While some Oil and Gas CEO's and stockholders may enjoy the quiet 
and privacy of their posh gated communities, we see the continued 
depletion and deprivation of irrigated farmland, the damage to river 
ecosystems and hear the unnerving relentless sound of compressors. We 
have the technology, but not the political will, to establish a no-
drill buffer zone at least a half-mile away from either side of our 
rivers. We have had to absorb the spillover costs from ``government 
subsidized'' coal seam wells, why not subsidize a ``Riparian protection 
zone''. The every-day citizens living in the river valleys of the San 
Juan Basin deserve to be ``equal partners'' at the negotiating table. 
Government should not exist as a private club for lobbyists 
representing the corporate elite.
            Sincerely,
                                                       Ken Stanley.
                                 ______
                                 
                                      Farmington, NM, May 30, 2002.
    As a teacher in San Juan County for the past 25 years, I have taken 
many field trips with students into our BLM lands. Over the years, I 
have seen a remarkable increase in the land damage that the oil and gas 
industry has caused. This primarily includes a huge increase in noxious 
weeds, erosion at poorly maintained road sites, and oil/chemical spills 
at well locations. The increase in roads then opens up illegal dumping 
sites for trash, dead animals, etc. It is a raping of our land with 
little thought of preserving the natural beauty of our fragile 
ecosystem. The billions ($2.49 to be more precise) of dollars that our 
land generates needs to be used in a timely manner to repair this 
damage as soon as possible.

                                                       Kathy Price.