Mr President, today I am reintroducing legislation that seeks to answer a question more and more Americans are asking in light of our economic woes and our struggle towards energy independence: Why aren’t the oil companies developing 65 million acres, or nearly 75%, of land that they are leasing from the U.S. government? Those same companies and some of my colleagues continue to argue that we need to open more federal lands to drilling, and recently have been insisting on opening up part of the Gulf of Mexico off Florida’s coast that Congress agreed to keep closed during debate in 2005 for military and security purposes. I’d first like to know why the oil companies are not producing on most of the federal lands they already have under lease. 

Last year, at a Senate Judiciary Committee hearing, I had the chance to ask top oil executives just that question.  They couldn’t come up with a good explanation. In fact, one of the executives told me that they have the manpower and infrastructure to put all their existing leases of federal lands into oil production. 

I find this troubling. No one is talking about pulling oil out of a hat. But with nearly 75% of currently leased federal lands and waters not producing oil and gas, Congress must insist on some accountability. This is why today I am introducing—along with Senators Dodd and Menendez—the Responsible Federal Oil and Gas Lease Act, also known as “Use It or Lose It” legislation. This bill says that if oil and gas companies want to lease additional federal lands, they must either be producing or diligently developing their existing federal leases, or they have to first give up those leases. Under my bill, the Department of Interior is required to establish diligent development benchmarks, which will encourage leaseholders to demonstrate they are taking steps that may lead to oil and gas production. This is a responsible way to increase production and keep the private sector accountable for production of existing federal resources. 

Last fall, the Government Accountability Office issued a report, “Oil and Gas Leasing: Interior Could Do More to Encourage Diligent Development,” that looked at whether enough is being done to ensure oil companies are taking steps to develop federal oil and gas leases. The report found that the Department of Interior (whose Minerals Management Service manages offshore leases and Bureau of Land Management manages onshore and National Petroleum Reserve leases) lags behind state and private landowner efforts to encourage development of land leased for oil and gas development. The GAO recommends that the Secretary of Interior “develop a strategy to evaluate options to encourage faster development of its oil and gas leases.” 

Though both MMS and BLM require “reasonable diligence” in developing and producing oil and gas on federal leases, the GAO found that the Interior Department has not clearly defined what activities or time frames constitute reasonable diligence—something my bill requires the agency to do. Currently, the GAO concludes that leaseholders, in general, are not required to take actions to develop a lease during the primary term. The only specific diligent development requirement that Interior officials identified to the GAO applies only to lessees of 8-year leases in the Gulf of Mexico and requires drilling to occur before the end of the fifth year or else the lease terminates. However, these leases represent less than one percent of the total lease universe.

In addition to the GAO evaluation, the Department of Interior’s Office of the Inspector General issued a report in February 2009 on its investigation of whether oil and gas companies were adequately developing federal leases and whether the Department of Interior was ensuring companies bring their leases into production. The Inspector General concluded that, while there is no guarantee that a particular lease contains oil and gas in commercial quantities, there are no requirements to ensure lessees are taking steps to reach this conclusion and to ensure the development of leases capable of production. Specifically, the Inspector General found there are no requirements for the Department to monitor production progress or compel companies to develop leases, and there is no requirement to detail activity on non-producing leases. My bill will ensure the federal government develops diligent development requirements for oil and gas leases.

With over 100 billion barrels of oil under federal lands and waters that are being leased or are available for leasing, Congress must properly encourage their development. This won’t solve our energy problems—the unfortunate truth is that in today’s global market, gas prices are dictated less by our domestic production and more by OPEC’s actions. Nevertheless, Congress must ensure appropriate oversight of our federally leased lands and waters, as we simultaneously reduce our dependence on foreign oil through continuing to be a world leader in oil and gas production, decreasing our demand of oil and gas since we are the number one consumer of both in the world, and pursuing alternative energy sources especially in the transportation sector.