US House passes bill requiring DOI to hold canceled OCS lease sales

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, May 5 -- The US House of Representative approved a bill that would compel the US Department of the Interior to hold federal Outer Continental Shelf lease sales that it canceled following the 2010 Macondo well accident and crude oil spill. The measure passed by 266 to 149 votes on May 5 after several hours of debate.

HR 1230 would require DOI’s Bureau of Ocean Energy Management, Regulation, and Enforcement to hold OCS sales in the eastern Gulf of Mexico and off Virginia’s coast, both of which were scheduled for 2011 before the Apr. 28, 2010, blowout and explosion that killed 11 workers and spilled 5 million bbl of oil into the gulf before the well was capped late last summer.

A companion measure, HR 1229, would require the Interior secretary to act on offshore drilling permit applications within 30 days. Interior Sec. Ken Salazar said that more time is needed than currently allowed under the 2005 Energy Policy Act. The bill would authorize up to two 15-day extensions if he explains in writing to the applicant why the permit has been delayed or rejected. The House apparently plans to take this bill up in another week.

May 5 debate on the measures introduced earlier this year by Natural Resources Committee Chairman Doc Hastings (R-Wash.) showed Republicans supporting them to raise US oil and gas production, put more people to work, and improve the general economic recovery. “Gasoline prices are high because the Obama administration has cut off access to billions of barrels of domestic supplies,” said Steve Scalise (La.), a member of the Energy and Commerce Committee.

Democrats strongly opposed them as unnecessary “giveaways” to the oil and gas industry during a federal budget crisis and a return to lax regulations already in place before the Macondo well accident and spill. “We need to take back the oil industry’s tax breaks and use the money to reduce the federal deficit and preserve Grandma’s Medicare benefits,” said Edward J. Markey (Mass.), the Natural Resources Committee’s ranking minority member.

Sought compromise
Another Democrat, Sheila Jackson Lee (Tex.), called for a reasoned debate, noting that her Houston area constituents are still recovering from the effects of the 2010 spill, but also want to get back to work. She expressed disappointment that Republicans would not consider her amendment to resume offshore leasing, but also give Interior more time to review drilling permit applications.

The bill’s approval was more symbolic than substantive since it’s unlikely that the US Senate, where Democrats are in the majority, will take it up. The White House has said that it opposes HR 1230, but has not threatened an outright veto.

The measure attracted strong support from parts of the oil and gas industry frustrated by offshore drilling permit delays under regulations BOEMRE imposed after the spill. “The proposals would create thousands of US jobs and help bring skyrocketing [gasoline] prices back to earth,” said Jim Adams, president of the Offshore Marine Service Association. “Taxpayers would also benefit. The Congressional Budget Office estimates that HR 1230 would bring $40 million in federal revenue over the next decade.”

Speaking at a Richmond gasoline retailer’s station on May 5, Virginia Gov. Robert F. McDonnell (R) noted that by requiring the Atlantic coastal and eastern gulf lease sales to move forward, “we will be well on our way to restarting offshore energy production which will create jobs, lower energy costs, and generate revenue to pay down the national debt.”

Virginia Petroleum Council Pres. Mike Ward, who also attended the event, added, “The energy markets are constantly looking for signals to guide today’s investment strategies for producing tomorrow’s energy. Regrettably, the signals the Obama administration has been sending encourage less investment in future domestic energy production. America must pursue policies that encourage responsible development of our resources instead of relying on imported energy from unstable parts of the world.”

Contact Nick Snow at nicks@pennwell.com.

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