Marc Morano 202-224-5762
Matt Dempsey 202-224-9797

Statement of Senator James Inhofe
A Perspective on the Endangered Species Act’s Impact

on the Oil and Gas Industry

Full Committee Field Hearing, Tulsa, OK

August 23, 2007


Good morning.   Today’s hearing is about the oil and gas industry, an industry that is absolutely critical to Oklahoma. 


The oil and gas industry represents 10% of our gross state product and employs more than 55,000 Oklahomans.  For the past 15 years, Oklahoma’s oil and gas producers paid production taxes in excess of $400 million annually.  This money funds schools, roads, health care and other services.   A healthy oil and gas industry is critical not only to the livelihood of Oklahomans but to the nation’s overall energy security.  For example, 10% of the nation’s natural gas reserves are in Oklahoma and for the past two years, the industry has produced energy valued in excess of $10 billion.   


It is more important than ever to foster the domestic development of oil and gas resources.  Today, we will hear from witnesses about how the Endangered Species Act has impacted that production. 

Enacted in 1973, the Endangered Species Act remains one of our most celebrated environmental laws despite the fact that it has not reached many of its stated objectives and has cost the country billions in the process.  For example, a 2004 Department of Energy report on natural gas (insert into the record), stated that critical habitat designations and section 7 consultations under ESA have caused enormous delays to natural gas projects with an estimated cost to the economy of $261 to $979 million over the past 30 years. 

In Oklahoma, the ESA protection of the American Burying Beetle has proven a formidable barrier to oil and gas exploration, production and distribution.  The American Burying Beetle was listed in 1989 based on museum collector’s data.  Nearly 20 years later, actual field data show that the populations of the beetle were and are very extensive.  According to the Fish and Wildlife Ecological Service, there may be more than 72,000 beetles in Oklahoma alone.   This doesn’t sound like a species that is “in danger of extinction.” 

But the lack of robust science in the listing process is not the only issue.  The conservation policies have also taken their toll on the energy industry.  As we will hear from one of our producers today, the long-standing policy for winter oil and gas construction activities in Oklahoma was suddenly changed without notice to the industry, costing millions of dollars.   Unfortunately, changing the rules in the middle of the game is the rule rather than the exception when implementing ESA.   

Earlier this year, we got a bit of good news.  The Service announced it would begin a status review of the American Burying Beetle; something the ESA requires the Service to do every 5 years.  The beetle has been waiting for 13 years.  I hope the Service will have some answers for us today about what they have learned and when we can expect some decisions. 


The problem goes beyond the oil and gas industry to the consumer, who ultimately pays the price.  For example, overregulation drives up natural gas prices for farmers and ranchers, another industry critical to Oklahoma.  Natural gas accounts for up to 90% of the total costs of manufacturing fertilizer, an obviously important component of farming.  Since 2000, 24 nitrogen fertilizer plants have shut down. Only 6 U.S. plants remain, three of which are in Oklahoma .

And Oklahoma’s farmers get hit more than once.  They not only face increased natural gas prices but have ESA issues of their own.  In an attempt to be good stewards and to avoid the burdensome designation of critical habitat for the Arkansas River Shiner, the Oklahoma Farm Bureau created a voluntary species management plan.  Today we will hear how this project is going.    


Sadly, the ESA is just one of a host of laws that, although well intended, frustrate domestic energy production in this country.  After decades of activist judges and lawsuits by anti-energy special interests, environmental laws are not used to ensure that human actions do not harm the environment but are used to stop human activity all together.  These interests don’t believe what all Oklahomans know to be true – that we can develop our energy resources without sacrificing the environment.  I am proud that Oklahoma leads the rest of the country in so many ways when it comes to energy exploration, production, and research, as well as protection of the environment.  The Oklahoma Energy Research Board, for example, is a model for many other states.


The fact of the matter is that this engine we call America needs energy to run.  If our domestic oil and gas producers are prevented from obtaining that energy, then businesses are hurt and people lose their jobs.  Here are just a couple of examples.  According to the American Chemistry Council, “one in every 10 chemical-related jobs has vanished in the past five years.”   The American Forest & Paper Industry “has lost more than 120,000 high paying manufacturing jobs and closed more than 220 plants.” In fact, the Pacific Northwest timber industry was essentially shut down 10-15 years ago to protect the Northern Spotted Owl.  It is now thought that many of the spotted owl’s problems were not from logging but due to competition for food and habitat from other owls.  


The obstacles to efficient development of our natural resources are many.   Most of them have nothing to do with scarcity of resources, but are created by those in Washington DC who say they dislike “relying on foreign oil” but do everything they can to prevent domestic production.  When Congress resumes in September, we will have a conference committee to reconcile differences between the Senate and House energy bills.  If the goal is to actually improve US energy security, these bills not only fail to meet the mark but they also put in place a new set of roadblocks.  I had hoped we could do better.  I want to welcome all the witnesses and I look forward to sharing your wisdom with my colleagues in Congress on both sides of the aisle.

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