Floor Situation

On Wednesday, June 25, 2014, the House will begin consideration of H.R. 4899, the Lowering Gasoline Prices to Fuel an America that Works Act of 2014, under a rule.  H.R. 4899 was introduced on June 19, 2014 by Rep. Doc Hastings (R-WA) and was referred to the Natural Resources Committee.  The bill includes the text of H.R. 2231, the Offshore Energy and Jobs Act,and H.R. 1965, the Federal Lands Jobs and Energy Security Act of 2013,both previously passed by the House.[1]

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[1] H.R. 2231 passed by a vote of 235-186 (Roll Call # 304).  H.R. 1965 passed by a vote of 228-192 (Roll Call # 600).

Bill Summary

H.R. 4899 includes a package of bills to expand onshore energy production, streamline permitting processes, and reduce red tape.  A Title-by-Title Summary of H.R. 4899, prepared by the House Natural Resources Committee, is available here.

Title I: Offshore Energy and Jobs

Title I of H.R. 4899 includes H.R. 2231, the Offshore Energy and Jobs Act,[2] which was introduced on June 4, 2013 by Rep. Doc Hastings (R-WA).  H.R. 4899 requires the Secretary of Interior to develop a new 5-year oil and gas leasing program that focuses on areas with the greatest potential resources and seeks to meet production goals that align with U.S. need.  It also requires the Secretary to conduct three specific Outer Continental Shelf (OCS) lease sales in Virginia, South Carolina, and Southern California respectively.

H.R. 4899 requires the Secretary, when conducting lease sales, to continue working with the Secretary of Defense within the framework of a 1983 Memorandum of Agreement to maintain balance between the role of the OCS as part of the nation’s energy security and the armed forces’ use of the OCS to maintain military readiness.

H.R. 4899 creates a new revenue sharing formula to be phased in for coastal states, but allows the current revenue sharing plan to continue for four Gulf states (Texas, Louisiana, Alabama, and Mississippi) under the Gulf of Mexico Energy Security Act.  After the new revenue sharing formula is completely phased in, it will grant a 37.5% portion of the revenues received by the U.S. to all coastal states within 200 miles of leased track, dividing the proceeds among the states in relation to their proximity to the leased track.[3]

H.R. 4899 eliminates the Minerals Management Service (MMS), which was traditionally responsible for overseeing leasing and development of energy and mineral resources on OCS lands.  The bill instead creates three separate agencies to handle various aspects of offshore energy operations.  H.R. 4899 also establishes a new Under Secretary of Energy, Land, and Minerals to oversee all offshore and onshore energy operations, ensuring that energy production is prioritized within the Department of the Interior.

H.R. 4899 authorizes for ten years the existing inspection fees imposed for offshore drilling, providing for adjustments in accordance with the Consumer Price Index.  Other fee increases must be approved by Congress.  The bill directs the proceeds to regional offices to fund inspectors in the field.

Title II: Offshore Federal Lands and Energy Security

Title II of H.R. 4899 includes the text of H.R. 1965,the Federal Lands Jobs and Energy Security Act of 2013,[4] a package of bills previously passed by the House.  The following Summary and Background Information was provided by the Natural Resources Committee:

Subtitle A: Federal Lands Jobs and Energy Security:

• The Federal Lands Jobs and Energy Security Act, introduced by Rep. Doug Lamborn (CO-05), would streamline government roadblocks and bureaucratic red-tape that block and delay onshore American energy production and job creation.
• The bill would reform the leasing process for onshore oil and natural gas projects on federal lands to eliminate unnecessary delays; reform the process for energy permitting, once a lease is in hand, to encourage the timely development of our federal resources; ensure funds are available for efficient wind and solar permitting; and set clear rules for the development of U.S. oil shale resources.

Leasing

• The Obama Administration has had the four lowest years of federal acres leased for energy production going back to 1988.
• This bill would expand onshore energy production by requiring the Interior Secretary to conduct new lease sales in areas identified with the greatest energy potential, prohibit the Interior Secretary from taking away leases already sold, set firm timelines for the Secretary to issue leases, and prohibit the Secretary from changing the rules after the leases and contracts have been finalized.

Permitting

• Under the Obama Administration, energy producers on federal lands have to wait on average 30 percent longer for approval of an application for permit to drill. While the average time to get a permit to drill approved on state lands is 12-15 days, according the Bureau of Land Management (BLM) the average time to get a permit approved on federal lands is 307 days.
• This bill would ensure the timely approval of permits by setting a firm timeline for the Interior Secretary to act on a permit to drill; direct a portion of permit processing fees and rights of way fees to the local office where they were collected in order ensure the permitting agencies have the personnel, expertise, and resources to keep American oil, natural gas, wind and solar production on track by processing permits, leases and protests in a timely manner; and ensure American energy projects are not indefinitely delayed by frivolous lawsuits by setting reasonable time limits for litigation.

Oil Shale

• According to the U.S. Geological Survey, the U.S. holds more than half of the world’s oil shale resources – six times Saudi Arabia’s proven resources, and enough to provide the United States with energy for the next 200 years.
• Since taking office the Obama Administration has repeatedly hindered oil shale development, preventing the production of this new energy resource and blocking the creation of thousands of American jobs.
• This bill would direct the Secretary of the Interior to issue additional Research, Development & Demonstration (RD&D) leases within 180 days after enactment of bids published on January 15, 2009; direct the Secretary of the Interior to issue at least 5 separate commercial lease sales by January 1, 2016; provide regulatory certainty to oil and natural gas producers for commercial development; and provide the Secretary of the Interior the ability to temporarily reduce royalties and fees paid by oil producers in order to further incentivize and encourage energy development

Subtitle B: Planning for American Energy:

• The Planning for American Energy Act, introduced by Rep. Scott Tipton (CO-03), would establish common sense steps to create an all-of-the-above American energy plan using our vast federal resources.
• The bill ensures that our Nation’s energy needs are met through development of both traditional and alternative energy resources–a true all-of-the-above approach that will lower the cost of energy, grow our economy, and get Americans working.
• Specifically, the Planning for American Energy Act would:
  o   Strengthen our energy security by requiring the Secretary of the Interior to develop a Quadrennial Federal Onshore Energy Production Strategy (a strategic action plan) every four years on how to responsibly develop our federal onshore energy resources in order to meet the United States’ energy demands and promote the energy security of our Nation.
  o   Require the Secretary to set production objectives for the development of our Federal resources. Also requires the Secretary to report annually to Congress on the progress of meeting these objectives.
  o   Ensure the development of a true all-of-the-above energy plan that embraces all of America’s vast energy resources by requiring that oil, natural gas, coal, wind, solar, hydropower, geothermal, oil shale and minerals be included in the plan.

Subtitle C: National Petroleum Reserve Alaska Access:

• The National Petroleum Reserve Alaska Access Act, introduced by House Natural Resources Committee Chairman Doc Hastings (WA-04) and Rep. Don Young (AK-at large), would create new jobs, support current energy jobs in Alaska, expand American energy production, and lower energy costs by ensuring that oil and natural gas resources in the National Petroleum Reserve – Alaska (NPR-A) are developed and transported in a timely, efficient manner.
• The NPR-A was specifically established as a petroleum reserve in 1923 and again in 1981 when stewardship was passed from the Navy to the Interior Department. According to estimates by the U.S. Geological Survey, there are over 896 million barrels of oil and 53 trillion cubic feet of natural gas in the NPR-A.
• In February, the Obama Administration finalized a plan to close over half of the NPR-A to energy production. In addition, bureaucratic delays have slowed construction of necessary roads, bridges and pipelines needed to transport the energy out of the Reserve once it is produced and the Administration’s new management plan establishes a “special area” around the entire southeastern boundary of NPR-A.
• Specifically, the National Petroleum Reserve Alaska Access Act would:
  o   Clearly state and affirm that the NPR-A is explicitly designated for the purpose of providing oil and natural gas resources to the United States.
  o   Nullify the plan released by the Obama Administration in February 2013 and require the Interior Department to issue a new integrated activity plan.
  o   Require that annual lease sales be held in the NPR-A in areas with the most oil and natural gas resources.
  o   Streamline the permitting process to ensure lease sales actually lead to energy being produced and transported out of the NPR-A and delivered to the continental U.S.
  o   Set firm timelines for infrastructure permits to be approved to ensure that bureaucratic delays do not prevent oil and natural gas resources from being transported out of the NPR-A.
  o   Require the Secretary of the Interior to prepare a right-of-way plan detailing how existing and future leases will be within 25 miles of an approved road or pipeline.

Subtitle D: BLM Live Internet Auctions:

• The BLM Live Internet Auctions Act, introduced by Rep. Bill Johnson (OH-06), would modernize and update the bidding process for federal onshore oil and natural gas leases, bringing the process into the 21^st century and saving taxpayer dollars.
• It gives the Secretary of the Interior the authority to conduct Internet-based auctions for onshore leases to ensure the best return to the Federal taxpayer, reduce fraud, and secure the leasing process.

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[2] Note: H.R. 4899 does not include Title VI, Sec. 603 of H.R. 2231.
[3] The new revenue sharing formula will apply immediately to the three OCS lease sales the bill requires in Virginia, South Carolina, and California.
[4] Note: H.R. 4899 does not include Title V of H.R. 1965, the Native American Energy Act.

Background

The federal government is authorized to regulate offshore oil and gas development in areas outside the states’ control.[5]  A state’s jurisdiction generally extends three geographical miles from its recognized coast.[6]  The Outer Continental Shelf Lands Act (OCSLA) gives the Secretary of the Interior the ability to grant leases to qualified bidders as well as to formulate the regulations necessary to enforce the OCSLA.  Eligible areas of the OCS are determined through a 5-year oil and gas leasing program that is developed by the Secretary.  To be eligible for leasing,an area mustbe included in an approved five-year plan.[7]

When President Obama assumed office, the Administration did away with an existing Draft Proposed Plan for the 2010-2015 period, creating instead a new 2012-2017 plan.[8]  The new plan cancelled several lease sales and opened no new areas for development.  Areas such as the entire West Coast and the entire Eastern Seaboard were completely excluded.[9]  In sum, the 2012-2017 plan prevents 85% of the nation’s OCS acreage from being developed.[10]

Although less than 3% of federal OCS lands are currently under lease, the producing leases on those lands in 2010 accounted for 30% of U.S. crude oil production and 10% of U.S. natural gas production.[11]  Despite the importance of these resources to overall U.S. production, a recent report showed an 8% decrease in federal offshore production volumes for FY2012 and an 18% decrease since 2010.[12]

The MMS traditionally has been responsible for issuing leases, collecting revenues from the leases, and conducting safety oversight of offshore operations.  However, oversight concerns and ensuing investigations, combined with the Deepwater Horizon explosion and oil spill, made MMS reorganization a pressing issue.[13]

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[5] Offshore Oil and Gas Development: Legal Framework, Congressional Research Service, June 25, 2013 at 2.
[6] Id.
[7] Id. at 5.
[8] See Natural Resources Committee Report 113-125 at 14.
[9] Id.
[10] Id.
[11] Id. at 15.
[12] Id.
[13] Id. at 19.

Cost

According to CBO estimates, implementing H.R. 4899 would reduce direct spending by $695 million from FY2015-2019 and by $1.7 billion from 2015-2024.

Amendments

1)         Reps. Wittman (R-VA), Duncan (R-SC) Amendment #6 – Amendment grants the Secretary of the Interior the ability to add a lease sale area to a finalized 5 year plan, as long as all of the National Environmental Policy Act requirements have been met on that specific area within the last 5 years.

2)         Reps. Lowenthal (D-CA), Capps (D-CA), Farr (D-CA), Holt (D-NJ), Honda (D-CA), Huffman (D-CA), Langevin (D-RI), Peters (D-CA), Pingree (D-ME), Shea-Porter (D-NH), Lee (D-CA) #7 – Amendment strikes section 10410 which prohibits BOEM and BSEE from coordinating coastal and marine spatial planning under the National Ocean Policy.

3)         Reps. Duncan (R-SC), Rigell (VA), Wittman (R-VA), Hudson (R-NC), Graves (R-GA), Ellmers (R-NC) #1 – Amendment directs the Bureau of Ocean Energy Management to include Virginia, North Carolina, South Carolina and Georgia into an administrative planning area for offshore leasing purposes.

4)         Rep. Wittman (R-VA) #5 – Amendment fosters STEM education in the South Atlantic states by allowing colleges, universities and historically black colleges and universities (with a preference to military veteran serving institutions of higher education) to partner with the Bureau of Ocean Energy Management to train the next generation of geological and geophysical scientists to better understand the oil, gas and other hydrocarbon potential of the offshore South Atlantic.

5)         Reps. Capps (D-CA), Brownley (D-CA), Huffman (D-CA), Lowenthal (D-CA) #13 – Amendment requires the Secretary of Interior to notify all relevant state and local regulatory agencies and publish a notice in the Federal Register, within 30 days after receiving any application for a permit that would allow the conduct of any offshore oil and gas well stimulation activities.

6)         Rep. Deutch (D-FL) #16 – Amendment strikes the provision that an action involving a covered energy decision shall take precedence over all other pending matters before the district court.

7)         Rep. Blumenauer (D-OR) #18 – Amendment requires companies holding leases, which allow them to drill on public lands offshore without paying a royalty, to renegotiate those leases prior to bidding on new leases issued pursuant to Title I of this Act.

8)         Rep. Rob Bishop (R-UT) #3 – Amendment prohibits the Secretary from canceling, deferring or withdrawing any lease previously announced to be auctioned based on public comments received by the Department after the public comment period has expired.

9)         Rep. Jackson Lee (D-TX) #10 – Amendment establishes an Office of Energy Employment and Training to ensure that veterans, women, and underrepresented minorities are fully included in the hiring and training efforts of the Department of the Interior’s energy planning, permitting, and regulatory agencies.

10)      Rep. DeFazio (D-OR) #9 – Amendment authorizes $10 million of the revenue generated by the underlying bill for the Commodity Futures Trading Commission to use existing authority to limit speculation in energy markets.

Additional Information

For questions or further information contact the GOP Conference at 5-5107.