H.R. 6082: Congressional Replacement of President Obama''s Energy-Restricting and Job-Limiting Offshore Drilling Plan

H.R. 6082

Congressional Replacement of President Obama''s Energy-Restricting and Job-Limiting Offshore Drilling Plan

Sponsor
Sen. Bernard Sanders

Date
July 24, 2012 (112th Congress, 2nd Session)

Staff Contact
Sarah Makin

Floor Situation

On Tuesday, July 24, 2012, the House began consideration of H.R. 6082, the Congressional Replacement of President Obama's Energy-Restricting and Job-Limiting Offshore Drilling Plan, under a rule. The bill was introduced on July 9, 2012, by Rep. Doc Hastings (R-WA) and referred to the Committee on Natural Resources. The bill is being considered under a rule (H.Res. 738) that would provide for one hour of general debate equally divided and controlled by the chair and ranking minority member of the Committee on Natural Resources.  The rule would also make in order eight amendments and would allow for one motion to recommit.  Amendments made in order under the rule are summarized below. 

Bill Summary

H.R. 6082 would officially replace, within the 60-day Congressional review period under the Outer Continental Shelf (OCS) Lands Act, President Obama’s Proposed Final Outer Continental Shelf Oil & Gas Leasing Program (2012-2017) with a congressional plan that will conduct additional oil and natural gas lease sales to promote offshore energy development, job creation, and increased domestic energy production to ensure a more secure energy future in the United States. 

The bill would require the Secretary of the Interior to implement the Proposed Final Outer Continental Shelf Oil & Gas Leasing Program (2012-2017) in accordance with the schedule for conducting oil and gas lease sales set forth in the Outer Continental Shelf Lands Act and otherwise applicable law.  The bill would also require the Secretary to conduct oil and gas lease sales in the OCS Planning Areas as specified in the following table:

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Lease Sale No.                                  OCS Planning Area Year 
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           229                             Western Gulf of Mexico 2012 
           220                                       Mid-Atlantic 2013 
           225                             Eastern Gulf of Mexico 2013 
           227                             Central Gulf of Mexico 2013 
           249 Southern California (existing infrastructure sale) 2013 
           233                             Western Gulf of Mexico 2013 
           244                                         Cook Inlet 2013 
           212                                        Chukchi Sea 2013 
           228                                Southern California 2014 
           230                                       Mid-Atlantic 2014 
           231                             Central Gulf of Mexico 2014 
           238                             Western Gulf of Mexico 2014 
           242                                       Beaufort Sea 2014 
           221                                        Chukchi Sea 2014 
           245                                       Mid-Atlantic 2015 
           232                                     North Atlantic 2015 
           234                             Eastern Gulf of Mexico 2015 
           235                             Central Gulf of Mexico 2015 
           246                             Western Gulf of Mexico 2015 
           237                                        Chukchi Sea 2016 
           239                               North Aleutian Basin 2016 
           248                             Western Gulf of Mexico 2016 
           241                             Central Gulf of Mexico 2016 
           226                             Eastern Gulf of Mexico 2016 
           217                                       Beaufort Sea 2016 
           243                                Southern California 2017 
           250                                       Mid-Atlantic 2017 
           247                             Central Gulf of Mexico 2017 
           255                      South Atlantic-South Carolina 2015 
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H.R. 6082 would require that the Secretary offer for sale leases of tracts in the Santa Maria and Santa Barbara/Ventura Basins of the Southern California OCS Planning Area as soon as practicable, but not later than December 31, 2013. 

The bill would prohibit any actions by the Secretary affecting the existing authority of the Secretary of Defense, with the approval of the President, to designate national defense areas on the outer Continental Shelf.  H.R. 6082 would also prohibit any person from engaging in any exploration, development, or production of oil or natural gas on the Outer Continental Shelf under a lease issued that would conflict with any military operation, as determined in accordance with the Memorandum of Agreement between the Department of Defense and the Department of the Interior on Mutual Concerns on the Outer Continental Shelf. 

H.R. 6082 would require the Secretary, in order to conduct lease sales in accordance with the lease sale schedule established under the bill, to prepare a multisale environmental impact statement for all lease sales required under this Act that are not included in the Proposed Final Outer Continental Shelf Oil & Gas Leasing Program (2012-2017).

The bill would not affect restrictions on oil and gas leasing under the Gulf of Mexico Energy Security Act of 2006.  Finally, the bill would require that in determining the areas off the coast of South Carolina to be made available for leasing under this Act, the Secretary of the Interior must do the following:

(1) Consult with the Governor and legislature of the State of South Carolina; and

(2) Focus on areas considered to have the most geologically promising energy resources.

Background

The following is according to the Committee on Natural Resources House Report 112-615:

“Under the Outer Continental Shelf Lands Act (OCSLA), every five years the Secretary of the Interior is required to prepare, revise and maintain an oil and natural gas leasing plan for developing the Nation's resources on the Outer Continental Shelf (OCS).  The plan must consist of a schedule of proposed lease sales indicating size, timing and location of the leasing activity—all of which is supposed to ‘best meet national energy needs for the five-year period following its approval or reapproval.’

“In 2008, as a result of escalating oil and natural gas prices, President George W. Bush and the Congress, in a bipartisan fashion, overturned the two decade-long moratoria on new offshore drilling on most of the OCS.  Prompted by the availability of these broad new swaths of OCS acreage that were newly made available for leasing, the Department of the Interior moved in August of 2008 to prepare a new five-year OCS plan for the 2010-2015 period.  This proposed plan was published on January 16, 2009.  That plan opened the Atlantic OCS planning area, very small areas off the coast of California with known resources, a small area in Alaska, the Western and Central Gulf of Mexico, and an area in the Eastern Gulf of Mexico—12 areas in total (4 areas off Alaska, 3 areas off the Atlantic coast, 2 areas off the Pacific coast, and 3 areas in the Gulf of Mexico).

“However, upon assuming office, Secretary of the Interior Ken Salazar slowed the new Draft Proposed Plan by extending the comment period for six months.  Furthermore, after the Deepwater Horizon event on April 20, 2010, the Department of the Interior officially announced that the plan would be changed from the 2010-2015 time period to 2012-2017.

“In November, 2011, Secretary Salazar introduced a Draft Proposed Five-Year Plan for 2012-2017. The Obama Administration boasts that the plan ‘makes available more than 75 percent of undiscovered technically recoverable oil and gas resources (UTRR) estimated in federal offshore areas.’  By focusing on unknown or outdated estimates of UTRR rather than focusing on opening new areas, the Administration obfuscated the fact that no new areas are opened up to new oil and gas leasing under its proposed plan.  This draft plan was a marked departure from the earlier action to open up vast new areas that were no longer under lock and key due to the moratoria.

“On June 28, 2012, the Obama Administration presented the Congress with the Proposed Final Outer Continental Shelf Oil & Gas Leasing Program for 2012-2017.  Its final plan included 15 lease sales to be conducted over the next five years in the Gulf of Mexico and limited areas off the coast of Alaska. The lease sale schedule was nearly identical to their draft plan presented in November 2011, with the exception of delaying two lease sales in the Arctic—Lease Sale 244 in Cook Inlet and Lease Sale 242 in the Beaufort Sea--to 2016 and 2017, respectively.

“Of importance is that Section 18 of the OCSLA specifically requires that the plan be presented to Congress before it is considered approved: ‘At least sixty days prior to approving a proposed leasing program, the Secretary shall submit it to the President and the Congress, together with any comments received.’  The past several five-year plans have all been presented to Congress with enough lead time so that the plan would be approved by July 1 so as to be in place prior to the expiration of the preceding plan.  For instance, the 2007-2012 five-year plan was approved on July 1, 2007.  However, the Obama Administration's failure to produce the 2012-2017 five-year program by May 1, 2012, ensured that its plan would not be considered approved under current law until after the expiration of the 2007-2012 on June 30, 2012.  This means that for the first time in the history of the program, the United States is operating without an Outer Continental Shelf plan in place.

“Because the proposed final plan presented to the Congress by the Administration this June failed to include any new leasing areas, effectively reinstating a moratorium for the next half decade on roughly 85% of the Nation's 1.71 billion acres of Outer Continental Shelf lands, the Committee determined legislative action was necessary. H.R. 6082 replaces the President's proposed final plan with a leasing plan that incorporates all of the proposed 15 lease sales on an accelerated schedule, and adds an additional 14 lease sales in new areas of the Nation’s Outer Continental Shelf, including in the Atlantic and the Pacific.  The robust lease sale schedule included in H.R. 6082 is a legislative assertion of the importance of offshore energy production in the United States to pave a path towards energy independence as well as increased economic activity and job creation on our shores.

“Fewest submitted lease sales in history of five year program

“On July 16, 2012, the nonpartisan Congressional Research Service (CRS) issued a historical report on the five-year leasing program that included a table depicting the details of each five year program going back to the first program in 1980.  The table (seen here) clearly confirmed that the 2012-2017 lease sale plan put forward by the Obama Administration contains the lowest number of lease sales in the history of the program.

“Resuming cancelled and postponed lease sales

Some of the lease sales in H.R. 6082 are sales that had been previously planned but cancelled by the Obama Administration.  Lease Sale 220 off the coast of Virginia serves as one example of a lease sale that had been scheduled to be conducted in 2011 under the Bush 2007-2012 final leasing program; however, the sale was first postponed and then cancelled by the Obama Administration, despite the support by the Governor of the Commonwealth of Virginia, Virginia’s General Assembly, and a bipartisan majority of Virginia’s Congressional delegation.  Other sales included in H.R. 6082 were included in the previously mentioned draft proposed plan for 2010-2015 that was initiated though never finalized. Additional lease sales in lease sale planning areas were included to show a dedicated effort to provide regularly scheduled lease sales in new areas.

“California lease sales

“H.R. 6082 includes two lease sales in the Southern California Outer Continental Shelf (OCS) Planning Area.  Lease Sale 249 is required to be conducted by 2013.  The expedited timing of this lease sale is a result of the lease sale criteria, which requires the Secretary to conduct a lease sale comprised only of lease blocks that allow industry to utilize existing infrastructure already in place. This sale conforms to applications already underway in California where a company is looking to drill in California State waters from a platform in federal waters. The State of California has been helping the company move permits through the State and federal process.  The Committee believes that can serve as a model for the special lease sale in California waters. In developing this sale, the Committee consulted with a group of California petroleum geologists who estimate that there are 1.6 billion barrels of oil on unleased acreage that could be reached with extended reach drilling without a single new platform off the California coast.  Lease Sale 243 in Southern California is scheduled for much later in the plan 2017 to provide sufficient time for planning.

“Eastern Gulf of Mexico

“H.R. 6082 specifically includes a section to make very clear the fact that the bill does not in any way repeal the moratorium on oil and natural gas leasing through 2022 in specific sections of the Eastern Gulf of Mexico, as is currently law under the Gulf of Mexico Energy Security Act of 2006 (GOMESA, Public Law 109-432).  However, there is a very small amount of acreage in the Eastern Gulf of Mexico that is not under the GOMESA moratorium, and therefore is open and available for leasing.  As a result, H.R. 6082 includes three lease sales for this very small open area, which borders the Central Gulf of Mexico planning area, two of which reflect lease sales included in President Obama’s proposed final plan presented to Congress on June 28, 2012, and an additional sale in the same area.

“Protection for Defense operations

“Currently, in conducting lease sales in the OCS, the Secretary of the Interior works within a mutually-agreed to framework that was developed between the Department of the Interior and the Department of Defense under a Memorandum of Agreement (MOA) signed by both Secretaries in 1983.  This Act requires the Secretaries to continue to work inside that framework established by the Memorandum of Agreement or any update of that agreement that follows.

Energy companies and state sponsors of terrorism

The Committee has been increasingly concerned that some foreign multinational energy companies and/or their subsidiaries that are currently operating on the Nation’s OCS area are engaged in business operations with nations that are designated as State Sponsors of Terrorism by the U.S. Department of State.  While this bill does not change existing laws that limit economic activity with state sponsors of terrorism, the Committee remains concerned that companies are increasingly choosing to operate in these countries, counter to U.S. national security interests.

“The Committee expects the Administration to do a better job of tracking and identifying those companies that currently operate in the United States and have subsidiaries that are known to have operations in conjunction with State Sponsors of Terrorism.  The Committee requests that the Administration report those findings back to the Committee.  Furthermore, the report to the Committee should review current laws and regulations available to the Administration to review operations by any companies operating in the United States OCS that may be somehow linked through business operations with State Sponsors of Terrorism as well as possible actions that may be taken should these companies insist on continuing to collaborate with State Sponsors of Terrorism.”

Cost

According to the Congressional Budget Office (CBO), implementing H.R. 6082 would increase offsetting receipts collected from lease sales over the 2013-2022 period, thus reducing net direct spending by about $600 million over that period.  In addition, CBO estimates that implementing the bill would cost $35 million over the 2013-2017 period, assuming appropriation of the necessary amounts.  Enacting this bill would not affect revenues. Pay-as-you-go procedures apply because enacting the legislation would affect offsetting receipts (a credit against direct spending).

H.R. 6082 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.

Amendments

Amendment No. 1—Rep. Doc Hastings (R-WA): The manager’s amendment would make technical corrections to the underlying bill.

Amendment No. 2—Rep. Rush Holt (D-NJ): The amendment would strike the provision of the bill that would require the Secretary of Interior conduct a single multi-sale environmental impact statement for all of the new areas opened for drilling by the underlying bill.  

Amendment No. 3—Rep. Laura Richardson (D-CA): The amendment would require that in determining the areas off the coast of California to be made available for leasing under this Act, the Secretary of the Interior must consult with the Governor and legislature of the State of California.

Amendment No. 4—Rep. Edward Markey (D-MA): The amendment would prohibit gas produced under new leases from being exported to foreign countries.

Amendment No. 5—Rep. Edward Markey (D-MA): The amendment would create a new statutory requirement that leases offered under the bill would be require to include drilling safety modificiations in response to the BP Deepwater Horizon disaster.  Specifically, the amendment would require that all leases issued be subject to “third-party certification of safety systems related to well control, such as blowout preventers; (2) performance of blowout preventers, including quantitative risk assessment standards, subsea testing, and secondary activation methods; (3) independent third-party certification of well casing and cementing programs and procedures; (4) mandatory safety and environmental management systems by operators on the outer Continental Shelf (as that term is used in the Outer Continental Shelf Lands Act); and (5) procedures and technologies to be used during drilling operations to minimize the risk of ignition and explosion of hydrocarbons.”

Amendment No. 6—Rep. Rush Holt (D-NJ): The amendment would require the Secretary to renegotiate each covered lease to modify the payment responsibilities of the person to require the payment of royalties if the price of oil and natural gas is greater than or equal to the prices thresholds in the OCS Lands Act. 

Amendment No. 7—Rep. Alcee Hastings (D-FL): The amendment would require an additional report from the Secretary on each lease issued, and would require the report include “detailed estimations” of “(1) the amount of oil and gas that is expected—(A) to be found in the area where the well is drilled, in the case of an exploration well; or (B) to be produced by the well, in the case of a production well; and (2) 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, and by when the reductions would occur.”

Amendment No. 8—Rep. Alcee Hastings (D-FL): The amendment would require an additional report from the Secretary on each lease issued detailing an estimate of the impact on global change of the consumption of ay oil or gas found under the permit.