gas, it foresees our robust move into moving forward with development of oil and gas resources in the gulf of mexico, and all of you, including senator landrieu, who is at the point of the spear on dealing with the deepwater horizon macondo oil spill know how important it is that we do the job and that we do it right. so we appreciate the appropriations from this committee, or from the congress last year relative to helping us do our job in the oceans of america. we have a lot more work to do. but we're moving forward not only in the gulf of mexico and decisions still have to be mabel on how we will move forward in the arctic, but preliminary decisions have been made there on additional opportunity there's. on the renewable energy front, which i know senator shaheen and others have been so strongly supportive of, along with the chairman, we are doing a lot of different things.

but the 29 projects with chairman bingaman mentioned at the beginning, that really has created a renewable energy revolution on public lands. and it's not just in california and arizona and new mexico, but also places senator lee in milford, utah where we see wind energy and senator barrasso who are now contemplating and reviewing the potential for 3,000 megawatt project on the eastern part of wyoming. there are huge things happening in renewable energy. it's something we're very proud of in the department. and we couldn't have done it without you. and there are differences in each one of the states. so for example, senator murkowski, small renewable energy projects would serve of the alaska native villages is something we're very focused on. and again here deputy secretary hayes has been leading an effort to try to bring down the costs of energy for native villages by looking at opportunities with renewable energy and actually

working with some members of industry to see how we can get that done. so jobs and energy are a big part of this budget. secondly, jobs and outdoor croatian and conservation and preservation. i think without a doubt in each one of your states there is a huge cornerstone of your economies that is dependent on our outdoor recreation activities. its boaters, the hikers, the hunters, the anglers who bring so much to the economy of the states from utah to new hampshire, minnesota to virginia. everywhere around this country, outdoor recreation is a huge addition to our economy. when we look at job prospects for the next ten years, we believe that tourism is one of the top two areas where we can create additional jobs in the united states of america. i'm proud to say the president has asked me and secretary rice to implement a new tourism strategy that will also focus in

on some of the outdoor recreation activities and opportunities that we have as a nation. independent sources, independent reports, outside groups contemplate that there is approximately 8 million jobs a year that are created through outdoor recreation. mckenzie international has predwibd can create an additional 2.13.3 jobs. much comes through our conservation efforts. in addition the department is moving forward with supporting water fly issues which are so important to all of you who share the colorado river basin, for example. it's an area where the 31 million people who depend on reclamation projects, including the production of much of the food of the united states and the agricultural communities of the southwest. we continue to push on that agenda. so there is a $20 million increase for 2012.

it will result in an increase of water supply of some 730,000-acre fee. you think about 730,000 acre fee. that's a very significant amount of water through the water smart program that's included in this project, and a working with local communities and the water users, we expect we will achieve that goal. finally, let me just say that the budget honors the commitment that the united states of america does have to the tribal nations of the united states. president obama vowed from day one when we became president of the united states that we would change the relationship with native americans in this country. as we have implemented that agenda over the last three years we have much to be proud of, from the major indian water rights settlements which this committee has helped lead and helped define to the settlement of koelbel and so many other efforts. law enforcement, we have a number of high-performing priority areas where we have

been able to reduce violent crime on reservations by as high as 36%. we intend to continue those law enforcement efforts. and they are set forth in this budget as well. in conclusion, mr. chairman, and all of you, because i consider you to be friends on this committee, let me just say this is a good budget, but it is a squeeze budget. and there are tough and painful decisions that are included in this budget. it invests in job creation through energy, conservation, water, science, and in the honoring of our commitment to tribe -- to the tribes of america. and with that, mr. chairman, i'd be happy to take questions. >> well, thank you very much. let me start with a few questions. related to the oil and gas industry. i think senator murkowski said that it's her information that there has been a reduction in oil and gas production on federal lands, although the oil

and gas production in the country overall has increased. that's not my understanding. but i wanted to ask you, mr. fgures available, and if you could inform us as to what happened with regard to production of oil and natural gas on federal lands, both onshore and offshore. >> chairman bingaman, i appreciate the question. i think the bottom line that we should all be very proud of is the fact that we have been able to develop our domestic resources in a very robust way. when you look at the crude oil production in the united states in 2011, it's the highest level it's been since 2003. when you look at oil imports into this country, they dropped below 50%. i remember being on that side of the table when we were speaking about import levels that were

above 60% and not so long ago at 70%. so we're moving in the right direction. and it's coming about as a result of multiple approaches, including what has happened with the development of private lands and the domestic gas industry, which is so abundant and so important to the future of this country. but it's also happening with respect to our efforts in the onshore as well as the offshore. so let me just say something about the public lands onshore. on public lands, we have had natural gas production just on the public lands alone, senator murkowski. was the second highest since 2004. and oil produced on public lands highest in 2010 since 1997. so the amount that is being produced is very huge. i would also say that contrary to some of the reports that you see from some of the trade associations in the press, we've

continued to provide permits and to lease out vast amounts of acreage. right now on the onshore, for example, 7,000 permits are out there that companies hold in their hands, and they ought to be moving forward on those -- on those 7,000 permits. offshore, this committee knows very well because of the number of hearings that you held with respect to the deepwater horizon and the gulf oil spill. we have stood up the industry again. and today we have more rigs working out there in the gulf of mexico than there were right before -- right before the oil spill. and we've continued to do leases in the outer continental shelf, including the first lease in the gulf which we held back in december. i attended that hearing in new orleans. and it was one which attracted more than $338 million in bids in the gulf of mexico. we expect to have a combined

lease sale from two areas in june or july of this year. in addition to that, secretary clinton and at the direction of president obama and problem calderon and i just signed a major transboundary agreement in the gulf of mexico that will allow development to move forward with both our resources on the transboundary areas as well as with the resources on the mexican side. so we continue to be very bullish about the opportunity to develop our oil and gas resources on the public lands, both onshore as well as offshore. >> let me ask on a different issue. the park service has been working for some time to put in place a final rule with regard to overflights in the grand canyon. the reason i'm asking about this is we have a transportation bill on the senate floor. and one of the amendments that has been offered is an amendment

we've seen before. which would essentially override what the park service would propose in that regard. could you tell me when the park service would expect to have a final rule in place on this issue? do we have a date certain that we could say that this will be established by a certain date? >> chairman bingaman, i do not. to work through, and i will be happy to speak with director jarvis and get that information to you. >> okay. it will be helpful. let me ask about another somewhat parochial issue. in 2006, we passed the united states/mexico transboundary auch fer aquifer assessment act. this was directing the

geological survey to work with states and universities both in the u.s. and mexico to do an assessment of underground water aquifers on the two sides of the border. it's my understanding that we don't have any funds being allocated to continue with this work at the current time. and i don't know if this is something you focused on, but to me it's important. we have large population centers in el paso and juarez that you're very familiar with that there is great disagreement between officials in the two countries as to what the groundwater situation is. and the thought behind this legislation was to try to correct that. s this an issue you could give us any information on today? or maybe you need to get back to me on the record for this? >> let me get back to you.

on the record, let me just say have i been to el paso and have worked on issues regarding both the rio grande and the colorado river systems. and under the great leadership of the bureau of reclamation commissioner mike conner, we have made huge progress on the surface water issues between the united states and mexico. we have developed a series of agreements with the states on the colorado river. we are working on some on the rio grande as well. the underground issues with respect to the transboundary aquifers, i believe that we were not able to fund those studies because the money just was not in the budget. but i recognize the importance of the issue, and let me get back to you, chairman bingaman with more specific information on what if anything we were able to do with the money that we have or hasnoou. senator murkowski?

>> thank you, mr. chairman. on the discussion that you were having with senator bingaman, it sounds like there is going to be some debate back and forth in terms of what the real numbers are, what the real activity. but i'm looking at a map here of the lower 48 states that indicate that 93% of shale oil and gas wells are on private and state land. and a that's where we're seeing this uptick. i think it is important for us to understand where we're seeing the increased activity. and i would like to see more on the federal side, not only in the lower 48, but of course up north. so i think this is a pretty telling map. so we'll share that with you. i wanted to ask you about this royalty study that came out pay apparently last week. the department of interior had commissioned it last year to compare the federal royalty

rates with other regimes. a and the report says when comparing other jurisdictions based on average government take among the case generated for this study, all three federal jurisdictions are living a higher government take than other jurisdictions relative to their remaining recoverable reserve ranking. it also found that the bonus bids, which of course are pretty significant, can top $3 billion in a single lease sale, aren't being counted when the government assesses whether the taxpayers are getting a fair return on their resources, which is a pretty large factor to leave out. so as it relates to the onshore piece, the question that i would ask is whether we're really ready to call for an increase in royalties on federal onshore areas. the report said, and this was just one piece pulled out of it, any suggested alternative rates for wyoming federal lands, however will, deteriorate their competitive position in the market, which is rather weak as it is. that's coming from your report.

indicates that onion shore, it really questions whether or not we should be increasing the royalty rates because it will make the lands less competitive. and then as it relates to offshore royalty, the study says any increase of the already high royalty rate leveed in the gulf of mexico will increase the risk of system instability. any potential gains from the higher royalty rate are likely to be offset from future bonuses and the lower pace of leasing. so what i'm trying to understand is given what your own report has said, why are we proposing within this budget to raise the royalty rates both onshore and offshore? >> senator murkowski, i'm going have david hayes respond to the specific question. but let me just say that the principle that we have followed and we will follow in looking at these royalty rates, including the onshore royalty rates is the principle of a fair return to the taxpayers.

i think as i've not reviewed the whole of the study. but from what i remember from the pieces i did read, when you look at the onshore royalty rates, texas, alabama, and many other states have a royalty rate that is significantly higher than what the united states has. and so the question is whether the united states citizen and the taxpayer is getting a fair return on these lines. and that's what we will look at. >> okay. >> and i need to take a look at the whole of the report. but let me have david because i think he may have -- >> and if you can also address the issue of whether or not the bonus bids then are being counted when the government assesses whether the taxpayers are getting a fair deal. because it's my understanding that they're not. and i would further add that the difference that you might have in north dakota or texas is -- you've got a level of stability

and predictability there that we're not seeing certainly with the federal leases. so mr. hayes? >> senator, there are a variety of studies that are under way to help address the question of whether the taxpayer is getting an appropriate royalty rate or not. of course this started with the gao study, which very strongly suggested that the federal leases were not getting an equivalent rate to many state leases, with texas being a prime example. this study, as you know primarily looks at the global question of -- and there are very few u.s. jurisdictions in this particular study. we're looking at that analysis, and we'll address it. i don't know the answer to your specific question about the bonus issue or not. it's a very important study, and it's part of it. we have another significant study under way as well. and it's the cumulative impact of all of these studies that we will utilize to determine if and

what an appropriate proposal would be for a royalty rate. >> well, it was my understanding that the gao study was the one that left out the bonus bids. and again, extraordinarily significant when you factor in what the federal government receives. $3 billion is pretty significant. i guess i would -- well, my time is up. but i'll come back for a second round. what i would leave you with is this is the department of interior's study. this is what you had request in terms of a comparative royalties studies. so the fact that you're saying we didn't really -- it was more of a global study as opposed to one domestically, i obviously need to understand a little bit more about what was requested. but what came out i think is pretty telling in saying that efforts to increase the royalty rates onshore or offshore will

make us less competitive. and i don't think that's a position we would like to be in. thank you, mr. chairman. >> i may, senator murkowski. >> yes. >> i think the study has to be read as a whole. and we will obviously do that. but it was the gao's finding back in 2008 that said that the american taxpayer was not getting its fair return. and so these studies have been put together to do that. my understanding is that it has a very different conclusion than the one that you articulated. but we'll take a look at it and we'll work with you. because at the end of the day, we ought to be getting a fair return to the taxpayer. >> senator white? >> thank you, secretary. i want to welcome secretary salazar as well today. as a former member of this committee, he always reaches out to us. he did again with me last night. mr. secretary, it's very much appreciated. and i know other colleagues feel the same way. let me ask you a question about gasoline prices, if i might, to start with. the argument is being made that

the reason gasoline prices are so high is that you haven't opened up enough public land. u. you've heard that argument. it's been made by a variety of groups and individuals. your testimony of course today counters that and describes that you disagree with that position. so i think it would be helpful if you could lay out on the record, particularly because trends are so important, what areas in the last year, offshore and on shore, have you opened up energy development? >> thank you, senator widen for that question. we have moved aggressively in opening up and putting on the market two areas in the gulf of mexico. we are -- the conclusion of the treaty that secretary clinton

and i signed last week or the agreement, which still has to be ratified by the congress, is part of that effort in the gulf of mexico. we're moving forward to look at the potential for oil and gas exploration in the arctic seas, on shore alaska senator murkowski well knows the 22 million acre national petroleum reserve area to the construction of the bridge and to cd-5, it may open that up in a very significant way. and on shore i believe the numbers are close to 40 million acres of land has been leased to oil and gas companies. there are 7,000 permits given on shore and just waiting for companies to drill. the gulf is back and the gulf is working. i think we're doing everything we can in terms of the gas price question. i think the reality of it is that it's easy to play politics

with gas prices and everybody has their bumper sticker solution to what we can do with it. the reality is gas prices are set on the global market. the instability in the middle east is part of what has created the most recent gas spikes and we've seen these spikes dating back over a long period of time, dating back to a report i have in the interior to 1857. these are issues we've confronted in the past. >> well, there's no question that there a variety of factors with respect to gasoline prices. you didn't mention iran, for example. i sit on the intelligence committee. we can't get into classified matters obviously, but there are a whole host of issues. the other other point on gasoline prices is i think it will be very helpful for the record and i think you have this information, mr. hayes, if you can get us specific the secretary went through i think

three major areas with respect to development offshore that he felt would constitute significant additions in supply, couple of comments with respect to on shore. i think for the record if you could tell us your projections of what that would mean in terms of additional supply, i think that would be helpful. let me move on to one other quick question, it involves the matter that you and i talk about often, secretary salazar. that's the forestry situation in my home state. as you know i'm particularly concerned because the cut level doesn't seem to be going up at the rate we need particularly in southern oregon and in medford. to your credit, you all are proposing five new pilot projects. you're dealing with a host of protests of sales from previous years and so the question is going to be how are you going to balance all of these multiple

tasks, get out the timber sales and get the volume up, which means that you've got to essentially perform on a number of front in order to try to strike the kind of balance multiple use approach we want for forestry. >> thank you for your interest on the issue. it a difficultish issue. we've followed the lead of the most respected in terms of how you can do ecological forestry. i saw timbering going on. timber is being cut and not just thinning out of the forest but also timber that is substantial

that will provide timber to the mills. there are some 200 sim ber sales that are forecast by the blm to go on the market in the year ahead. we hope that we are able to move forward with the sustainable forrestry principles developed by dr. johnson and dr. franklin to be able to provide timber to the mills and at the same time be able to move forward with a healthy forest initiative and restore the habitat and address issues related to the bart owl and to do with the species of the spotted owl. >> thank you, mr. chairman. thank you very much, mr. secretary, for joining us today. i appreciate your willingness to discuss your budget proposals and other matters of importance and concern to americans. blm is currently operating under

an interim plan that outlines certain procedures for maintaining the habitat of the sage grouse. i wanted to ask just off the bat if there's any possibility that a state plan could be approved as a substitute to that interim habitat management plan. >> senator lee, i think you have your finger on what is one of the most important issues for us in 11 states in the west. in that vein governor mead from wyoming and the governor from colorado are working with bob abbey, the director of the blm to see how we can move forward with the template that was developed in wyoming so we can allow development to move forward and at the same time have a western state strategy that is protective of the habitat and that is protective of the sage grouse. it seems to me that in dealing with all of these esa issues, that being pro active, as we are now doing in southern new mexico

and in texas with the dunes lizard, working with oil and gas industry to set up conservation programs that will allow oil and gas development, that that's the way to go. my hope is that we're going to be able do that with respect to the sage grouse. >> okay. >> and utah and your governor obviously are very involved with us. >> so you could potentially be supportive of that, such a plan in utah, especially given that the state would bear the primary burden of the regulations and enforcing them, implementing them and so forth. that's a possibility? >> it is. >> great. i next wanted to talk to you about the central utah water project which you mentioned in your opening remarks. as you know, of course, in your proposed budget, you proposed authorizing language that would place management supervision, the oversight of this project back within the bureau of

reclamation. of course it came out of the supervisory jurisdiction of the bure bureau of reclamation after congress passed the water act of 1992. while this project was under the jurisdiction of the bureau of reclamation prior to the 1992 act's passage, there were often significant cost overruns. sometimes the overhead costs exceeded 50% of the total project costs. since 1992, since that act took effect and since the central utah water project was placed under the jurisdiction of the central utah water conservancy district, the overhead costs have been reduced rather substantially pip believe the department of the interior not too long ago recognized this good management by giving it a

secretarial award. given how well it's been managed under the central utah water conservancy district and given the problems that we had when it was previously under the jurisdiction of the bureau of reclamation, why is it a good idea to change that to offset that balance that congress struck or that congress imposed as fixed for back in 1992? >> senator lee, first let me say that the central utah project has been a priority for president obama and for me as secretary of interior, we have invested literally hundreds of millions during my time including significant allocations from the stimulus program american recovery act, get that project moving on a timeline that's a good timeline. we're not abandoning the project. it's an important project. the consolidation issue of the agency into the