US House Democrats strongly criticize proposed OCS policy changes

Proposed US House legislation to extend federal offshore oil and gas revenue sharing to four Mid-Atlantic coastal states and Alaska drew strong fire from a House Natural Resources subcommittee’s Democrats because it also would let the US Interior secretary schedule Outer Continental Shelf lease sales that are not part of an existing 5-year management program.

Proposed US House legislation to extend federal offshore oil and gas revenue sharing to four Mid-Atlantic coastal states and Alaska drew strong fire from a House Natural Resources subcommittee’s Democrats because it also would let the US Interior secretary schedule Outer Continental Shelf lease sales that are not part of an existing 5-year management program.

Section 5 of the proposal that the Energy and Mineral Resources Subcommittee discussed on Oct. 11 would let the secretary conduct an additional lease sale as soon as practicable after announcing it, but no later than one year after doing so.

Subcommittee Chairman Paul A. Gosar (R-Ariz.) noted in his opening statement that the 1953 OCS Lands Act dictated that management programs be developed and implemented every 5 years but added that the Obama administration turned the process into a political football when it excluded 94% of the US OCS from oil and gas activity, including new withdrawals which denied many coastal states and communities potential jobs and revenue.

“Section 5 of this draft aims to provide increased flexibility to the leasing structure by allowing the secretary to hold lease sales in areas excluded from a 5-year plan, contingent on stakeholder engagement and environmental reviews,” Gosar said. “By providing the secretary this option, he can carefully evaluate and manage these resources according to the immediate needs of our nation.”

Rep. Alan Lowenthal (D-Calif.), the subcommittee’s ranking minority member, disagreed. “In addition to ethical and fact issues, I believe Sec. [Ryan] Zinke is demonstrating the wrong set of characteristics to lead the Department of the Interior,” he said in his opening statement. “Under this legislation, we’d be dependent on a single-minded secretary who’s determined to increase drilling off our coasts and take regulations backward.”

The discussion draft also would limit a US president’s authority to withdraw areas of the OCS from oil and gas leasing and terminate his power to establish marine national monuments. It would nullify a rule adopted late in President Barack Obama’s second term that prohibits oil and gas activity on the Arctic OCS. And it would order the Interior secretary to study operations at the Bureau of Ocean Energy Management and Bureau of Safety and Environmental to make them more efficient, including possibly recombining them into a single agency.

Reversing Obama policy steps

The document, called the “Accessing Strategic Resources Offshore (ASTRO) Act,” clearly was an attempt by Republicans on the committee to reverse offshore oil and gas policy steps taken late in the Obama administration. National Ocean Industries Association Pres. Randall B. Luthi, who directed the US Minerals Service during President George W. Bush’s second term, called the hearing “a slam dunk” after it concluded.

Other Democrats on the subcommittee criticized the proposal’s provisions. One responded directly to Gosar’s statement that extending federal offshore oil and gas revenue and royalty shares that Alabama, Mississippi, Louisiana, and Texas receive under the 2006 Gulf of Mexico Energy Security Act (GOMESA) to Virginia, North Carolina, South Carolina, Georgia, and Alaska could help win more public support for allowing oil and gas activity off those states’ coasts.

“We are now moving forward with a bill that would prevent coastal states like mine from having a voice in the offshore planning process,” said Rep. Anthony G. Brown (D-Md.). “This sounds like the big government overreach that the majority decries and an effort to win the support of states like Virginia for dangerous offshore drilling. Marylanders have been overwhelmingly clear that offshore drilling poses too great a risk off our coast, and they oppose it.”

Former US Sen. Mary L. Landrieu (D-La.), one of four witnesses who testified at the hearing, led efforts to include sharing of federal offshore oil and gas revenue and royalties in GOMESA when it was enacted. Congress did not establish revenue sharing with onshore US states as an incentive for development when it enacted the 1920 Mineral Leasing Act but to help those states cope with impacts from development of federal mineral resources within their borders, she told the subcommittee.

“In essence, a mutually respectful partnership was established, and that principle stands to this day providing a 50% revenue share to those states,” said Landrieu, now a senior policy advisor at Van Ness Feldman LLC in Washington. OCSLA does not contain a similar provision, although the 1953 Submerged Lands Act, which was enacted the same year, did give coastal states ownership of the first three miles of land in the 200-mile US economic zone off its shores, she noted. Texas and Florida already owned three marine leagues off their coasts since these were jurisdictional waters when they entered the union, she added.

“I believe that the partnership that has worked so well for the interior states to develop federal resources should be established for the coastal states that also host federal offshore mineral development, and that to secure broad support for such a measure, a sharing mechanism should be established for all coastal states,” Landrieu said.

Sentiment equally divided

A second witness—South Carolina State Sen. Stephen L. Goldfinch (R), who represents Charleston, Georgetown, and Horrie Counties—said that support for and opposition to future offshore oil and gas development is roughly equally divided. But he added that it could provide needed jobs and economic growth because that part of the Palmetto State has not benefited as much from tourism that has grown elsewhere.

“I think, quite honestly, what’s lacking is the truth. There are valid concerns on the environmental side, but we also need to be talking about the truth,” he told the subcommittee. “There are charges now that seismic is going to kill all the dolphins and other mammals. BOEM’s top scientist, who was appointed by Obama, said there’s never been one example of a mammal that’s been killed by seismic.”

Another witness—Erik Milito, upstream and industry operations director at the American Petroleum Institute—said that the US has kept parts of its OCS such as the Atlantic off-limits while its neighbors and other countries around the Atlantic Basin are moving forward to develop oil and gas off their shores.

“Just to the North, Canada has secured tremendous economic and energy security advantages by developing oil and gas off the coasts of Nova Scotia, Newfoundland, and Labrador, effectively reviving seaports that were considered ‘near-extinct’” like the town of St. Johns,” he testified. “Also, Cuba and the Bahamas have both moved forward with exploratory drilling or development planning. And the rest of the Atlantic continues to seize this opportunity, including Norway, the United Kingdom, Venezuela, Brazil, and Nigeria.”

There obviously are many people in coastal states who oppose expanded offshore oil and gas development, and their opinions should be considered fully, suggested the fourth witness, Michael R. Bromwich, founding and managing principal of The Bromwich Group in Washington. But he expressed greater concern about possibly recombining BOEM and BSEE since he oversaw the division of their predecessor as he helped complete the breakup of the Minerals Management Service in October 2011 when he oversaw separation of its leasing and management function from its safety and environmental protection responsibility.

“So far as we know, there has been no public announcement to recombine these agencies,” Bromwich told the subcommittee. “The truth is I am puzzled by the impetus to undo the reorganization that was so broadly supported a few short years ago. I am unaware of any pressure to do so from industry or from any other stakeholder. If there is any such pressure, and it is based on evidence of structural problems with the reorganization, let’s hear what it is and let’s fix the problems.”

Contact Nick Snow at nicks@pennwell.com.

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