Thursday, May 05, 2011

Oil Jobs in Virginia On the Line

H.R. 1230—Restarting American Offshore Leasing Now Act

FLOOR SITUATION

On Thursday, May 5, 2011, the House is scheduled to consider H.R. 1230, the Restarting American Offshore Leasing Now Act, under a rule. A summary of the rule, and any amendments made in order under the rule will be distributed when it becomes available.

H.R. 1230 was introduced by Rep. Doc Hastings (R-WA) on March 29, 2011, and was referred to the House Committee on Natural Resources. On April 13, 2011, the House Committee on Natural Resources held a markup of H.R. 1230 and ordered the bill to be reported by a vote of 29-14.

Summary

H.R. 1230 would require the Department of the Interior (DOI) to auction offshore oil and gas leases in the Central and Western Gulf of Mexico, as well as in an area off the coast of Virginia. Specifically, H.R. 1230 would require the Secretary of the Interior to conduct offshore oil and gas lease sales as follows:
1. Lease sale 216 in the Central Gulf of Mexico “as soon as practicable,” and no later than four months after enactment of the Act;
2. Lease sale 218 in the Western Gulf of Mexico “as soon as practicable,” and no later than eight months after enactment of the Act;
3. Lease sale 220 on the Outer Continental Shelf (OCS) offshore of Virginia “as soon as practicable,” and no later than one year after enactment of the Act; and
4. Lease sale 222 in the Central Gulf of Mexico “as soon as practicable,” and no later than June 1, 2012.
The bill would prohibit the Secretary of the Interior from making any tract available for leasing if the President, through the Secretary of Defense, determines that drilling activity on the tract would create an unreasonable conflict with military operations.

H.R. 1230 would state that, for purposes of lease sales, the Environmental Impact Statement for the 2007-2015 five-year OCS Plan and the Multi-Sale Environmental Impact Statement satisfies the requirements of the National Environmental Policy Act of 1969.

The bill would define “Environmental Impact Statement for the 2007-2015 five-year OCS Plan” as the Final Environmental Impact Statement for Outer Continental Shelf Oil and Gas Leasing Program: 2007-2010 (April 2007), prepared by the Secretary of the Interior.

The bill would also define “Multi-State Environmental Impact Statement” as the Environmental Impact Statement for Proposed Western Gulf of Mexico OCS Oil and Gas Lease Sales 204, 207, 210, 215, and 218, and Proposed Central Gulf of Mexico OCS Oil and Gas Lease Sales 205, 206, 208, 213, 216, and 222 (September 2008), prepared by the Secretary of the Interior.

BACkground
According to House Report 112-068, the Outer Continental Shelf Lands Act (OCSLA) provides a system for offshore oil and natural gas exploration, leasing, and development in federal waters. The federal government develops five-year plans to determine where and when offshore leasing and energy production will occur.
The current five-year plan (2007-2012) included a lease sale off the Virginia coast in 2011 (#220), two Gulf of Mexico lease sales (#216 and #218) in 2011, and another Gulf of Mexico lease sale (#222) to have taken place in 2012. All of these sales have been either canceled or delayed by the Obama administration, threatening to make 2011 the first year without any lease sales in the OCS since 1958. As a result, the President's budget predicts that OCS revenues from bonus bids and rents will be only $150 million, approximately 1.5 percent of the $9.85 billion in revenue generated by OCS sales in FY 2008. This loss of billions in revenue will have a real impact on the federal budget and delay America’s domestic energy production.
In 2008, the Congress and the President lifted the decades-long ban on offshore drilling. This opened an additional 500 million acres to offshore drilling--including areas off the Atlantic coast. Lifting the ban allowed the scheduled Virginia lease sale in 2011 to proceed. However, in 2010 the Secretary of the Interior delayed the Virginia lease sale until 2012 and announced that areas off the Atlantic coast would not be available for leasing and energy development in the next five-year plan (2012-2017). In 2010, the Secretary of the Interior also canceled two scheduled Gulf of Mexico lease sales from 2011 until 2012. H.R. 1230 will reverse the administration's delays by validating the existing completed Environmental Impact Statements (EIS), prepared for these lease sales under the National Environmental Policy Act, ensuring these lease sales move forward in a prompt, timely and safe manner. H.R. 1230 expands American energy production, creates jobs and generates revenue for taxpayers.
It is important to note that the EIS work for the Gulf lease sales is complete, thorough, and sufficient to safely and responsibly conduct lease sales. The EIS for the Virginia lease sale is to be completed within one year. Furthermore, each lease undergoes an environmental assessment along with additional environmental reviews of the submitted Exploration Plan. In totality, before an oil and natural gas project on a lease in federal waters takes place, there will be at least four separate environmental reviews to determine the overall environmental effects of development down to the site-specific review of impacts. The EIS for the Virginia lease sale is to be completed within one year.
Cost

According to Congressional Budget Office (CBO) cost estimates, enacting H.R. 1230 would affect direct spending or revenues; therefore, pay-as-you-go procedures apply. CBO estimates that enacting this legislation would reduce net direct spending by $25 million over the 2011-2016 period and about $40 million over the 2011-2021 period. Enacting the bill would not affect revenues.

In addition, CBO estimates that DOI would spend about $2 million to implement the legislation (completing environmental assessments, etc.), assuming the availability of appropriated funds.

Staff Contact

For questions or further information contact Sarah Makin at 6-2302.

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