H.R. 3408: PIONEERS Act

H.R. 3408

PIONEERS Act

Date
February 15, 2012 (112th Congress, 2nd Session)

Staff Contact
Sarah Makin

Floor Situation

On Wednesday, February 15, 2012, the House will likely consider H.R. 3813 and H.R. 3408, subject to a rule. A summary of the rule and any amendments made in order will be distributed when available. These bills would be considered as components of H.R. 7, the American Energy and Infrastructure Jobs Act of 2012. Provisions of H.R. 7 will be debated in separate pieces, allowing each major component of the plan to be debated and amended more openly, rather than as a single bill with limited debate and limited opportunity for amendment. H.R. 3813 and H.R. 3408 will likely be considered on Wednesday, February 15, and consideration of H.R. 7 will begin on Thursday, February 16. A Legislative Digest summarizing the provisions of H.R. 7 is forthcoming. H.R. 3408 was introduced on November 11, 2011, by Rep. Doug Lamborn (R-CO) and referred to the Committee on Natural Resources. On February 1, 2012, the Committee held a mark-up and reported the bill, as amended, by a vote of 27-16.

Bill Summary

The Protecting Investment in Oil Shale the Next Generation of Environmental, Energy, and Resource Security Act (PIONEERS Act) would push forward the development of oil shale which began with the enactment of the Energy Policy Act of 2005.

Specifically, the legislation would codify the rules published in 2008 by the Department of Interior for the commercial development of oil shale.  One of the largest hindrances to increased investment in oil shale development is an unclear dynamic of what the costs and government burden will be.  This will likely provide regulatory certainty to companies looking to invest in oil shale.

The bill would also express that it is the intent of Congress that:

  • “This Act will support a healthy and growing United States domestic energy sector that, in turn, helps to reinvigorate American manufacturing, transportation, and service sectors by employing the vast talents of United States workers to assist in the development of energy from domestic sources;
  • “Ensure a robust oil shale industry and ensure that the benefits of development support local communities, under this Act, the Secretary shall make every effort to promote the development of oil shale in a manner that will support the long-term commercial development of oil shale, and shall take into consideration the socioeconomic impacts, infrastructure requirements, and fiscal stability for local communities located within areas containing oil shale resources; and
  • “The Congress will monitor the deployment of personnel and material onshore to encourage the development of American technology and manufacturing to enable United States workers to benefit from this Act through good jobs and careers, as well as the establishment of important industrial facilities to support expanded access to American resources.”

The bill would require that, when possible and practicable, the Secretary of the Interior should encourage the use of United States workers and equipment manufactured in the United States in all construction related to mineral resource development.

Background

According to House Report 112-392, H.R. 3408 would facilitate the production of our Nation's oil shale to create American jobs and advance our Nation's energy security.  The bill would direct the Secretary of the Interior to conduct both commercial and research, development, and demonstration leasing sales for oil shale.  The bill would also codify the 2008 Bureau of Land Management Final Programmatic Environmental Impact Statement (PEIS) and Resource Management Plan (RMP) amendments that allow for oil shale development on public land.

While the Congressional Budget Office estimated that H.R. 3408 would not generate any new revenue to the federal government, it is important to note that the PIONEERS Act would begin to create American jobs shortly after its enactment.  While CBO estimates that in the ten year baseline budget H.R. 3408 would not create new revenue, it would ensure increased revenue earlier in the budget than originally projected.  This means that the federal government will both receive these revenues sooner and, most importantly, thousands of jobs will be created now rather than far off into the future.  Creating jobs now and boosting the federal budget sooner has tremendous positive economic impacts on the nation as a whole.  In contrast, the Administration is rewriting regulations and imposing policies that will block and delay job creation and oil shale development.  The Administration is actively working to close prime areas in the West from leasing for oil shale development and to inject uncertainty and risk to job creators through new oil shale regulations.  This bill would set a clear path, a clear plan and provides real opportunities for job creation, domestic investment and energy production that does not currently exist in law.

Under the Obama Administration, the Department of the Interior has essentially withdrawn its support of the provisions in Energy Policy Act of 2005 that supported the commercial leasing of oil shale and has made little progress on the industry's advancement.  Admittedly in 2009, the Bureau of Land Management (BLM) solicited a second round of 160-acre oil shale Research Demonstration and Development (RD&D); however, the lease terms were less than favorable to oil shale production.  The initial potential for 5,120 acres of commercial development pending a successful project was decreased to 480 acres.  Because of this, there was a lack of interest in the second round of BLM leases as many firms believed a commercial project could not be established on such a small footprint.  Therefore, it is not surprising that only two proposals were submitted.  These RD&D leases have yet to be issued, as BLM continues to hold public meetings and conduct reviews on the proposals and has not indicated when a decision will be made.

Additionally, as a result of a legal settlement, in February the Obama Administration announced it would be re-reviewing the Bush Administration era rules for commercial oil shale leasing, adding further delays to an already unreasonably prolonged process.  H.R. 3408 would codify the Bush Administration's oil shale leasing regulations to provide certainty and allow oil shale development in the United States to move forward.  As a result of the current Administration's delays and inconsistent policies regarding oil shale, companies continue to invest in oil shale research and development, but in foreign nations rather than here in the United States.  Ensuring that there are clear commercial rules and a sound research and development program will help drive jobs and investment here in the U.S.

 

Cost

According to CBO, based on information provided by the Department of the Interior (DOI) and individuals working in the oil shale industry, CBO estimates that enacting H.R. 3408 would affect direct spending; therefore, pay-as-you-go procedures apply.  However, CBO estimates that the net effects would not be significant over the 2012-2022 period.  Enacting the legislation would not affect revenues.  CBO estimates that additional administrative costs to implement the leasing program under the bill would be small and subject to the availability of appropriated funds.

Amendments

Amendment No. 1—Rep. Anna Eshoo (D-CA) Amendment: The amendment would require the Federal Energy Regulatory Commission to review the results of the Pipeline and Hazardous Materials Safety Administration (PHMSA) study, as required by the bipartisan pipeline safety bill (P.L 112-90), before issuing a permit for the Keystone XL pipeline.

 

Amendment No. 2—Reps. Markey (D-MA)/Cohen (D-TN)/Welch (D-VT)/Connolly (D-VA) Amendment: The amendment would ensure that if the Keystone XL pipeline is built, the oil that it transports to the Gulf of Mexico and the fuels made from that oil remain in this country to benefit Americans.  The amendment would allow the President to waive this requirement if it can be shown that an export of the oil or fuels won’t increase our dependence on oil or fuels we buy from hostile nations, that prices for refiners and consumers won’t go up if the export occurs, or if an export is needed to comply with any international treaties or other agreements we have to export oil or fuels.

 

Amendment No. 3—Rep. Bobby Rush (D-IL) Amendment: The amendment would amend Title XIV [KEYSTONE XL PIPELINE] to prohibit the issuance of a permit absent conditions that restrict the ability of the permit recipient from initiating or threatening to initiate proceedings to invoke the power of eminent domain against the will of a property’s owner for the purposes of constructing or operating the Keystone XL pipeline.

 

Amendment No. 4—Reps. Michael Doyle (D-PA)/Christopher Murphy (D-CT) Amendment:   The amendment would require that a permit for the Keystone XL pipeline is not to be issued or deemed issued unless the permit applicant can certify and provide adequate documentation to FERC that at least 75% of the iron and steel to be used in domestic portion of the pipeline is produced in North America.

 

Amendment No. 5—Rep. Jared Polis (D-CO) Amendment:  The amendment would strike subtitle A of title XVII and provides a five year window offset through increasing the federal share of drilling revenue.

 

Amendment No. 6—Rep. Doc Hastings (R-WA) Amendment:  The amendment would change the underlying bill's requirement that the Department of the Interior substitute two new lease blocks for each one lease block that is deferred from a lease sale at the request of the Department of Defense, to replace each deferred lease block with one new lease block.  The amendment would also call attention to the existing authority under the Outer Continental Shelf Lands Act for the President to designate National Defense Areas on the outer Continental Shelf that are restricted from exploration and operation.  The amendment would also require the North Aleutian Basin lease sale to be conducted by 2015 rather than one year after enactment of the Act.

 

Amendment No. 7—Rep. Lois Capps (D-CA) Amendment:  The amendment would strike Section 17304, relating to oil and gas lease sales in the Southern California planning area, and part 4, relating to OCS revenue sharing with coastal states.

 

Amendment No. 8—Rep. Gus Bilirakis (R-FL) Amendment:  The amendment would require the Secretary to conduct an economic impact survey to determine the economic effects that lease sales within 100 miles of the coast of Florida will have on the Florida fishing and tourism industries.

 

Amendment No. 9—Reps. Bishop (D-NY)/Crowley (D-NY)/Rangel (D-NY)/Pascrell (D-NJ)/ Pingree (D-ME) Amendment:  The amendment would prohibit oil and natural gas lease sales in the northeast U.S.

 

Amendment No. 10—Rep. Cedric Richmond (R-LA) Amendment:  The amendment would allow oil and gas revenues to be used for coastal wetlands conservation, coastal restoration, hurricane protection, or infrastructure projects directly impacted by coastal wetland losses.  Currently, HR 7 contains a prohibition on how states can use oil and gas revenues.  Energy producing states use offshore oil and gas revenues to fund their required state cost share of hurricane protection and coastline restoration programs.

 

Amendment No. 11—Reps. Jeff Landry (R-LA)/Cedric Richmond (R-LA) Amendment:  The amendment would raise the Gulf of Mexico Energy Security Act cap to $750 million per year starting in year 2023 until 2055.  The amendment would keep the $500 million cap per year in place through year 2022.

 

Amendment No. 12—Rep. Ted Deutch (D-FL) Amendment:  The amendment would require a person to include in the application for a drilling lease an estimate of the economic impact, including job losses, resulting from a worst-case discharge of oil from facilities operating under the lease.

 

Amendment No. 13—Reps. Mike Thompson (D-CA)/ Lynn Woolsey (D-CA) Amendment:  The amendment would clarify that the legislation does not allow for oil and gas drilling on the northern coast of California.

 

Amendment No. 14—Reps. Holt (D-NJ)/ Bass (R-NH)/Dingell (D-MI)/Dold (R-IL)/Gerlach (R-PA)/Murphy (D-CT)/Kind (D-WI) Amendment:  The amendment would affirm that nothing in the underlying bill will affect funding for the Land and Water Conservation Fund (LWCF).

 

Amendment No. 15—Rep. Colleen Hanabusa (D-HI) AmendmentThe amendment would require that offshore oil and gas leases contain specific safety requirements.

 

Amendment No. 16—Rep. Doc Hastings (R-WA) Amendment:  The amendment would streamline the NEPA process to allow for expedited development of renewable energy projects on federal lands and waters.

 

Amendment No. 17—Rep. Edward Markey (D-MA) Amendment:  The amendment would expand on the oil export ban already included in the Arctic drilling subtitle (Sec. 17706) to prohibit export of any natural gas produced pursuant to a lease issued under Title XVII of this Act.

 

Amendment No. 18—Rep. Edward Markey (D-MA) Amendment:  The amendment would require companies holding defective leases which allow them to drill on public lands off-shore without paying a royalty, to renegotiate those leases prior to bidding on new leases issued pursuant to Title XVII of this Act.

 

Amendment No. 19—Rep. Raul Labrador (R-ID) Amendment:  The amendment would minimize NEPA requirements for a geothermal exploration test project so a project can quickly move forward if resources are found.

 

Amendment No. 20—Reps. Scalise (R-LA)/Bonner (R-AL)/Landry (R-LA)/Miller (R-FL)/ Palazzo (R-MS)/Southerland (R-FL)/Olson (R-TX)/Richmond (R-LA) Amendment:  The amendment would dedicate Clean Water Act penalties associated with the Deepwater Horizon disaster to the Gulf Coast Restoration Trust Fund.