H.R. 1229: Putting the Gulf of Mexico Back to Work Act

H.R. 1229

Putting the Gulf of Mexico Back to Work Act

Date
May 10, 2011 (112th Congress, 1st Session)

Staff Contact
Sarah Makin

Floor Situation

On Tuesday, May 10, 2011, the House is scheduled to consider H.R. 1229, the Putting the Gulf of Mexico Back to Work Act, under a rule.  The rule provides for one hour of debate equally divided and controlled by the chair and ranking member of the Committee on Natural Resources.  Additionally, the rule makes in order 11 amendments, debatable for 10 minutes each, and provides for one motion to recommit with or without instructions.

H.R. 1229 was introduced by Rep. Doc Hastings (R-WA) on March 29, 2011, and was referred to the House Committee on Natural Resources, as well as the Committee on the Judiciary.  On April 13, 2011, the House Committee on Natural Resources held a markup of H.R. 1229 and ordered the bill, as amended, to be reported by a vote of 27-16. 

Bill Summary

H.R. 1229 would amend the Outer Continental Shelf Lands Act to direct the Secretary of the Interior to require that any lessee operating under an approved exploration plan obtain a permit before drilling any well, and obtain a new permit before drilling any well of a design that is significantly different than the design for which an existing permit was issued.  The bill would prohibit the Secretary from issuing a permit without ensuring that the proposed drilling operations meet all critical safely system requirements (including blowout prevention), and oil spill response and containment requirements. 

The bill would require the Secretary to decide whether to issue a permit within 30 days after receiving an application for the permit.  H.R. 1229 would allow this period to be extended for up to 30 days if the Secretary has given written notice of the delay to the applicant.  (This provision of H.R. 1229 would end the de facto moratorium in the Gulf of Mexico.)

The bill would require the Secretary to provide application denials in writing, complete with reasons why the application was not accepted, detailed information concerning any deficiencies, and any opportunities to remedy such deficiencies.  H.R. 1229 would deem an application approved if the Secretary has not made a decision by the end of the 60-day period beginning on the date the application is received by the Secretary. 

H.R. 1229 would set deadlines for certain permit applications under existing leases.  The bill would provide 30 days, with no extension, for the Secretary to restart Gulf permits that were approved before the administration’s moratorium was imposed on May 27, 2010.  The bill would require that if the Secretary fails to act, the leases will be put into suspension (the clock stops ticking on the time-limited lease) until a decision is made.

The bill would establish any district court within the 5th circuit as the exclusive venue for certain civil actions relating to covered energy projects in the Gulf of Mexico, unless there is no proper venue within any 5th circuit court.  H.R. 1229 would define a “covered action” as one seeking relief (other than money damages) and stating a claim that an agency or an agency officer or employee acted or failed to act in an official capacity or under color of legal authority regarding such a project.

H.R. 1229 would provide for an expedited judicial review process for resolving lawsuits relating to Gulf permits by limiting the timeframe for filing a covered civil action; the judicial granting or approval of prospective relief; and attorneys’ fees and other court costs.

Background

According to House Report 112-067, in May 2010, following the Deepwater Horizon explosion, the Obama administration placed a moratorium on all shallow-water and deepwater drilling in the Gulf of Mexico (GOM).  Despite officially lifting the moratorium in October 2010, the Obama administration continued to slow-walk the permitting process, imposing a de facto moratorium, and keeping thousands of Americans out of work in the process.

Prior to the Deepwater Horizon incident, there were 52 approved and pending permits for drilling in the GOM.  Since the time the administration officially lifted the moratorium in October, only 10 permits for deepwater drilling in the GOM had been issued by the middle of April 2011.  Of these 10, only two were a permit for new deepwater exploration; seven permits were simply reissued for projects that had previously been approved prior to the Deepwater Horizon incident.  Consequently, after 10 months, over 40 projects that were approved and underway remain stalled.

Prior to the Deepwater Horizon incident, there were 33 deepwater exploration rigs in the GOM.  Since the administration's actions in 2010, 12 rigs (seven deepwater and five shallow) have moved out of the GOM, bound for other regions, each taking with it hundreds, and potentially thousands, of jobs.

In February 2011, Seahawk Drilling, which owned and operated 20 rigs in the GOM, declared Chapter 11 bankruptcy due to the Obama administrations de facto moratorium.  According to the company's president:

The government's drastic slowdown in the issuance of permits for shallow-water drilling operations--in which companies work in familiar geological formations, typically in less than 500 feet of water, mostly seeking to produce natural gas--has all but crippled the industry . . . Seahawk's bankruptcy risks the jobs of more than 500 loyal employees, a number already diminished 50 percent from pre-spill levels because of attempts to save the company by cutting payrolls since last April.

According to the Obama administration's own estimates, the six-month “official moratorium” (May 2010-October 2010) on drilling may have cost up to 12,000 American jobs.  However, the long-term impacts of the de facto moratorium could be significantly higher.  A study by Dr. Joseph Mason of Louisiana State University predicts that if the de facto moratorium were sustained for 18 months, there could be a loss of 36,137 jobs nationwide, with 24,532 jobs lost in the Gulf Coast region alone.

According to the Louisiana Mid-Continent Oil and Gas Association, each drilling platform averages 90-140 employees at any one time (two shifts per day), and 180-280 for two two-week shifts.  Additionally, each exploration and production job supports four other positions; therefore, 800-1,400 jobs per idle rig platform are at risk if production does not resume as soon as possible.  Wages for those jobs average $1,804 weekly, making potential lost wages more than $5-10 million per month, per platform.

Members may be concerned that the Obama administration's pace in issuing permits is crippling the offshore industry and causing thousands of Americans to remain out of work.  The administration's permitting pace has even been challenged in the courts.  In February, a New Orleans judge gave the administration 30 days to act on five GOM drilling permits, calling the delays “increasingly inexcusable.”  The judge stated, “The government is under a duty to act by either granting or denying a permit application within a reasonable time . . . [N]ot acting at all is not a lawful option.”

Cost

According to Congressional Budget Office (CBO) cost estimates, pay-as-you-go procedures apply to H.R. 1229 because enacting the legislation would affect direct spending.  CBO estimates that enacting this bill would reduce offsetting receipts from OCS leases by $10 million in 2013 (such reductions would have the effect of increasing direct spending).  CBO estimates that enacting the bill would increase direct spending by $6 million over the 2012-2016 period, but would have no significant net effect over the 2012-2021 period.  Enacting H.R. 1229 would not affect revenues.  In addition, CBO estimates that DOI would spend about $2 million to implement the legislation (completing environmental assessments, etc.), assuming the availability of appropriated funds.

Amendments

Amendment No. 1—Rep. Polis (D-CO):  The amendment would require safety review of permits to take into consideration all applicable safety, environmental and fisheries laws including the Endangered Species Act of 1973 and the Marine Mammal Protection Act of 1972.

Amendment No. 2—Rep. Garamendi (D-CA):  The amendment would require that in reviewing a drilling permit, the Secretary of the Interior consult with an independent drilling safety organization not affiliated with the American Petroleum Institute.

Amendment No. 3—Rep. Markey (D-MA):  The amendment would require numerous additional offshore drilling environmental and safety requirements recommended by the British Petroleum spill commission.  The amendment would also require independent third-party certifications and new minimum standards for blow-out preventers, cementing and well design.  Lastly, the amendment would require the Secretary to make additional rules on third-party certification and minimum standards. 

 Amendment No. 4—Rep. Hanabusa (D-HI):  The amendment would prohibit the Secretary from issuing a permit without certifying first that the applicant has calculated “a worst-case discharge scenario” for the proposed drilling operations and has demonstrated to the Secretary that the applicant possesses the capability and technology to respond immediately and effectively to such a disaster.

Amendment No. 5—Rep. Jackson-Lee (D-TX):  The amendment would extend the time allowed for the review of applications and would prohibit the Secretary from automatically approving applications.

Amendment No. 6—Rep. Holt (D-NJ):  The amendment would strike a provision that would allow certain permits to be approved after the 60 day approval deadline has been met. 

Amendment No. 7Rep. Polis (D-CO):  The amendment would lift timeline requirements if the agency lacks an adequate budget or lacks staff to properly review permits.

Amendment No. 8—Rep. Hastings, Alcee (D-FL):  The amendment would require the following detailed estimations:

  • The amount of oil and gas to be found in the area (in the case of an exploration well);
  • The amount of oil and gas to be produced by the well (in the case of a production well); and
  • The amount by which crude oil prices and consumer prices would be reduced as a result of oil and gas found or produced by the well.

Amendment No. 9—Rep. Deutch (D-FL):  The amendment would strike section 202 of H.R. 1229 to allow states outside of the 5th Circuit to have their courts hear civil actions relating to energy projects in the Gulf of Mexico.

Amendment No. 10—Rep. Polis (D-CO):  The amendment would change a provision in the underlying bill that encourages an expeditious court decision and insert a new provision to require “quality above speed” and just court decisions. 

Amendment No. 11—Rep. Hastings, Alcee (D-FL):  The amendment would strike section 207 that provides for limitations on attorneys' fees.