Earlier this week the Obama Administration announced that it will require increased environmental reviews of all offshore oil and natural gas exploration and production on the U.S. OCS. DOI and BOEM will restrict categorical exclusions, and expect to conduct a comprehensive environmental review of operations on the OCS. The New York Times provides additional information.

On July 30, 2010, the U.S. House of Representatives passed two oil spill bills before adjourning for its summer recess: the Consolidated Land, Energy and Aquatic Recourses Act of 2010 (H.R. 3534 or the “CLEAR Act”) and the Offshore Oil and Gas Worker Whistleblower Protection Act of 2010 (H.R. 5851).  The CLEAR Act would eliminate OPA’s $75 million liability cap on economic damages, lift the moratorium on offshore drilling for companies that comply with certain safety standards, create new Department of Interior agencies, and impose an annual conservation fee of $2 per barrel on oil produced from federal leases.  H.R. 5851 seeks to add protections for offshore workers who report safety violations.  

Senate Democrats may consider their companion bill, the Clean Energy Jobs and Oil Company Accountability Act of 2010 (S. 3663), in September when the Senate reconvenes after its August recess.

Yesterday the U.S. House of Representatives passed two bills focusing on oil spill response. The first, H.R. 2693, reinforces current efforts to research methods of mitigating the effects of oil spills and establishing a committee of executive branch officials to direct these research efforts. The second bill, H.R. 5716, focuses on researching safety measures for deepwater oil and gas wells.

Yesterday President Barack Obama signed an executive order adopting many of the recommendations put forward by the Interagency Ocean Policy Task Force.  The order sets forth policy guidelines for managing the ocean, U.S. coasts, and the Great Lakes, and mandates that executive agencies follow these new guidelines.  The order also creates a National Ocean Council to “ensure that executive departments’, agencies’, or offices’ decisions and actions affecting the ocean, our coasts, and the Great Lakes will be guided by the stewardship principles” described by the Task Force.

In testimony before the U.S. House Natural Resources Committee, Randall Luthi, president of the National Ocean Industries Association (NOIA), said that members of his organization “stand ready to provide information, expertise, and self critique of offshore operations, equipment, procedures and practices.”  Luthi went on to note that the offshore energy industry is assisting the investigations to determine the cause of and respond to potential effects of the BP spill in the Gulf of Mexico.

Sen. Mary Landrieu (D-LA) is urging the Obama administration to end the shallow-water component of the recently issued moratorium on oil drilling in the Gulf of Mexico.  Sen. Landrieu argues that "[t]he inspections and regulations [for shallow-water drilling] need to be different than [for] deep water."  She also introduced a new bill (the RESPOND Act) that would begin revenue sharing with energy-producing Gulf states immediately.  Such revenue sharing, which redirects offshore drilling royalties from the federal treasury to state coffers, has been a hot topic in recent months.  For more information, see yesterday's E&E GreenWire [subscription required].

The six U.S. senators from California, Oregon, and Washington have proposed a bill called the West Coast Ocean Protection Act that would prohibit oil and natural gas exploration and production on the U.S. OCS off the coasts of California, Oregon, and Washington. The senators sponsoring the bill include Sens. Barbara Boxer (D-CA), Diane Feinstein (D-CA), Jeff Merkley (D-OR), Ron Wyden (D-OR), Maria Cantwell (D-WA), and Patty Murray (D-WA).

On May 13, 2010, Senators David Vitter (R-LA) and Jeff Sessions (R-AL) introduced the Oil Spill Response and Assistance Act (S.3375), which seeks to increase the liability cap for economic damages under the federal Oil Pollution Act.  Under this bill, such liability would be capped at either $150 million (double the current cap) or an amount equal to a responsible party's profits over the last four quarters, whichever is greater.  "Under our bill," announced Sen. Vitter, "the bigger companies would be liable for more than the $10 billion cap others propose.”  Senate Democrats attempted a unanimous voice vote to pass their proposal to raise the cap to $10 billion on Thursday, but Sen. Lisa Murkowski (R-AK) objected.

The Center for Biological Diversity (CBD) has filed a formal notice of its intent to sue Secretary of the Interior Ken Salazar for not evaluating the environmental impact that could result from an oil spill off Alaska’s northern coast.  In late 2009, Secretary Salazar approved Shell’s plan to drill in the Beaufort and Chukchi seas.  The CBD argues that the Endangered Species Act requires Secretary Salazar to re-evaluate the validity of Shell’s drilling permits. 

The U.S. Department of Interior's Mineral Management Service announced today that its previously scheduled public meetings regarding the analysis of potential environmental impacts of OCS Lease Sale 220 have been cancelled.

Following his letter to President Obama, Senator Bill Nelson (D-FL) introduced two bills in response to the Gulf of Mexico offshore rig spill incident.  The first bill, S. 3308, seeks to halt the Department of the Interior’s five-year plan to expand offshore drilling.  A companion bill has been introduced in the House by Representative Kendrick B. Meek (D-FL), who also is running for U.S. Senate.  Senator Nelson’s second bill, S. 3305, seeks to retroactively amend the Oil Pollution Act of 1990 to increase the liability limit for economic damages from spills from offshore facilities from $75 million to $10 billion.  Representative Rush Holt (D-NJ) introduced a similar bill in the House.

On May 3, 2010, California Governor Arnold Schwarzenegger (R-CA) withdrew his support for expanding offshore drilling off the coast of California. According to the Governor, "If I have a choice between the $100 million and what I see in the Gulf of Mexico, I'd rather just figure out how to make up for that $100 million." Governor Schwarzenegger previously had supported drilling off Santa Barbara County.

Virginia Governor Bob McDonnell (R-VA) has taken a different stance. According to Gov. McDonnell, "what we do as Americans is we find out what went wrong and how can we do things better." Governor McDonnell is still looking to drill off Virginia’s coast by 2012.

Last week Plains Exploration & Production Co. agreed with a number of environmental groups on a plan to move forward on a proposal to drill for oil and gas in the Tranquillon Ridge in California waters.  However, the agreement would also phase out Plains’s oil and gas drilling off the California coast beginning in nine years and halt all of the company’s oil and gas drilling offshore California in fourteen years.  Read more in Business Week.

The EPA has issued an air permit to Shell Gulf of Mexico, Inc. (Shell) for the drilling of three exploratory wells in the Chukchi Sea, off the coast of Alaska.  This permit is reportedly the first "major-source" air-quality permit ever issued for the Arctic OCS.  MMS approved Shell's Exploratory Plan related to these three wells in December.

Yesterday Gov. Bob McDonnell (R-VA) released a statement praising the oil and natural gas lease sale recently concluded  by MMS  for offshore lands in the Gulf of Mexico. In an interview with the Associated Press (via the Hampton Roads Pilot) today, Gov. McDonnell suggested that in light of such successful sales, the planned lease sale off the Virginia coast should be expanded. Gov. McDonnell noted that the oil and gas lease sale acreage is artificially constrained due to the shape of Virginia’s coastline. According to the article, Sen. Mark Warner (D-VA) also  previously has supported expanding the lease area.

The U.S. Minerals Management Service (MMS) announced in today’s Federal Register that its Environmental Assessment (EA) for the Cape Wind project is now available.  The announcement also states that the EA includes a draft Finding of No New Significant Impact of information MMS received following its issuance of the Final Environmental Impact Statement earlier this year.

Sen. Lisa Murkowski (R-AK), ranking member of the Energy and Natural Resources Committee, has prepared a discussion draft of a bill that would extend drilling in the eastern Gulf of Mexico, authorize drilling in the Arctic National Wildlife Refuge, establish royalty revenue sharing with coastal states that permit offshore drilling, and streamline offshore environmental review and permitting procedures.  Sen. Murkowski believes that the expansion of domestic drilling should accompany any new climate legislation Congress considers.

The Interior Department on February 25 notified the D.C. Circuit Court of Appeals that it would miss its self-imposed February 26 deadline to complete its internal review of a draft environmental sensitivity analysis of areas of the OCS, and an internal review of the balancing and exclusion determinations contained in the 2007-2012 Five Year Program.  Interior is conducting these reviews pursuant to court order.  It expects to complete them by March 29.

MMS announced yesterday that it will collect new fees ranging from $2,000 - $6,000 per facility to recover the costs of offshore inspections, including safety and environmental inspections of offshore facilities and associated equipment.  The fees will apply to inspections conduced on all bottom-founded structures and floating production facilities on the OCS in the Gulf of Mexico during FY 2010.  Authority for these new fees comes from legislation signed into law by President Obama on Oct. 30, 2009, directing MMS to collect $10M for safety and compliance inspections in the Gulf of Mexico and certain areas offshore California.

Today the White House Council on Environmental Quality released an Interim Framework for Effective Coastal and Marine Spatial Planning ("Framework").  The Framework was developed by the Interagency Ocean Policy Task Force, which is composed of twenty-four senior officials from administrative agencies, departments, and offices, and is led by White House Council on Environmental Quality Chair Nancy Sutley.  It was developed pursuant to one of the nine priority objectives proposed earlier this year in the Task Force's Interim Report.  While the Framework does not purport to establish actual marine planning zones, it does establish a process for federal agencies to work with state and local governments to develop and implement coastal and marine spatial plans over the next five years.  
 
In a press release announcing the Framework, Sutley stated, "The uses of our oceans, coasts and Great Lakes have expanded exponentially over time...Without an improved, more thoughtful approach, we risk an increase in user conflicts and the potential loss of critical economic, ecosystem, social, and cultural benefits for present and future generations."

The Senate Committee on Energy and Natural Resources held a hearing on the environmental impacts of offshore energy” on Nov. 19.  Representatives from MMS, industry, and experts on ocean resource conservation testified.  The hearing was held at the request of Sen. Byron Dorgan (D-ND), who stated that he plans to offer amendments to Senate energy and climate change legislation to help expand offshore oil and natural gas production.  Sens. Lisa Murkowski (R-AK) and Mary Landrieu (D-LA) said they plan to offer an amendment that would permit costal states that allow offshore drilling in federal waters to receive 37.5% of royalties.

The Maritime Administration (MARAD) announced this morning in the Federal Register that the Draft Supplemental Environmental Impact Statement prepared for the TORP Bienville LNG deepwater port project is now available in the Regulations.gov system under Docket No. USCG-2006-24644. MARAD also announced that it has scheduled a public meeting  to accept comments on the project in Mobile, Ala., on December 9, 2009.

Florida, Georgia, South Carolina and North Carolina have recently formed an alliance to increase collaboration  on the protection and management of ocean and coastal resources.  The Governors’ South Atlantic Alliance, which is supported by NOAA and other federal agencies and regional organizations, plans to work together on four priorities: enhancing and supporting healthy ecosystems; sustaining and enhancing waterfront cultural traditions; improving water quality; and preparing for natural disasters.  For more information, click here.

On Monday, U.S. District Court Judge John C. Coughenour denied American Petroleum Institute's (API) motion to intervene in Center for Biological Diversity v. EPA, a suit in federal court in Washington State attempting to force the EPA to consider ocean acidification when evaluating state water quality under the Clean Water Act.  The Clean Water Act requires each state to submit an "impaired waters" list to EPA every two years, and EPA must either approve or disapprove each state's list.  The Center for Biological Diversity claims that EPA violated federal law by approving Washington's most recent impaired waters list, which did not include any ocean water areas affected by acidification.  API sought to intervene in support of EPA, arguing that because some of its members currently hold licenses to discharge into Washington's coastal waters, it has an interest in the litigation that would not be adequately represented by EPA.

The MMS today published a notice of preparation of an Environmental Assessment (EA) for the proposed oil and gas lease sale (215) in the Western Gulf of Mexico Planning Area (off the Texas and western Louisiana coasts), which is tentatively scheduled for mid-2010.  The EA will examine the potential environmental effects of and alternatives to the proposed lease sale, based on any changes and any new relevant information not available at the time the Supplemental Environmental Impact Statement for Western Planning Area Sales 210, 215 and 218 was prepared published September 2008).  Comments regarding the Environmental Assessment are due by October 9, 2009.

The U.S. Court of Appeals for the Ninth Circuit in North Slope Borough v. Minerals Management Service et al., Case No. 08-35180, recently upheld MMS's actions regarding the proposed sale of certain oil and gas leases in the Beaufort Sea.  North Slope Borough and the Alaska Eskimo Whaling Commission had challenged the MMS's decision not to prepare a supplemental environmental impact statement for a proposed oil and gas lease sale on a tract of the OCS on the Beaufort Sea.  The three-judge appellate panel found that MMS's determination that new environmental assessments were unnecessary was not arbitrary and capricious, that the agency satisfied its duties under the National Environmental Protection Act, and that MMS took the required "hard look" at new information related to the impact of rising oil prices.  In addition, the court tip-toed around the climate change issues in the case and found that MMS did not act improperly in determining that the cumulative effects of global warming on polar bears could be mitigated.  In effect, this decision supports the lower court's finding that "the public interest in energy development favors proceeding with the scheduled sales" of the leases.

National Public Radio provides coverage of the effects of Massachusetts’s ocean resource zoning efforts, including effects on the existing LNG deepwater ports located offshore Boston.

Yesterday, freshman Alaska Senator Mark Begich (D) called for ratification of the Law of the Sea Treaty and introduced a package of seven bills addressing a variety of Arctic policy issues.  The energy and shipping related measures in the package include:
 
Arctic OCS Revenue Sharing Act (S. 1560) - gives Alaska natives the same 37.5% share of royalties from offshore oil and gas production in federal waters that Gulf of Mexico states currently receive.  This is similar to the measure introduced by senior Alaska Sen. Lisa Murkowski (R) last week.
Arctic Climate Change Adaptation Act (S. 1566) - provides funding for Alaskans to adapt to the impacts of climate change, including clean energy development.
Arctic Ambassador Act (S. 1563) - creates a new U.S. Ambassador to the Arctic Council.
Arctic Marine Shipping Assessment Implementation Act (S. 1564) - provides funding to replace the U.S. icebreaker fleet and build new forward operating Coast Guard air bases, as well as other measures to ensure safe and reliable maritime transportation in the Arctic region.
Arctic Oil Spill Research and Recovery Act (S. 1561) - calls for more research to improve oil spill prevention and response in the Arctic.
Arctic Science, Coordination and Integration Act (S. 1562) - requires a new study to create a comprehensive strategy to coordinate Arctic research and make recommendations to Congress. 
 
The bills are available through Thomas.  You can view Sen. Begich's press release here.

Sen. Murkowski (R-AK), the ranking member of the Senate Energy and Natural Resources Committee, released a statement yesterday urging the Interior Department to complete its environmental analysis of the 5-year offshore leasing program (2007-2012) as quickly as possible. The D.C. Circuit ordered this analysis in April when it vacated and remanded the plan, and this week clarified that its order applied only to leases off Alaska.

On July 1, the EPA released a pre-publication rule that would reduce emissions from diesel engines on oceangoing vessels by banning the production and sale of marine fuel oil above 1,000 ppm sulfur, as well as introducing new NOx standards for Category 3 marine diesel engines.  Once the proposal is published in the Federal Register (expected before July 24), there will be 30 days to comment.  

The National Marine Fisheries Service (NMFS) has issued an incidental harassment of marine mammals authorization to Neptune LNG, LLC for one year until June 30, 2010. The announcement is available in the Federal Register.

On June 30, 2009, the Massachusetts Executive Office of Energy and Environmental Affairs issued a comprehensive draft ocean management plan that is intended to "serve as the basis for the protection and sustainable use of our ocean and coastal waters." Massachusetts becomes the first state in the nation to release such a comprehensive plan, which is the result of more than a year of consultations, public meetings and scientific and policy analysis. The final plan will be issued by December 31, 2009, after a six-month public review and comment period. The draft plan is now available on the EOEEA website.

MMS announced today in the Federal Register the availability of Site-Specific Environmental Assessments (SEA) and Findings of No Significant Impact (FONSI), conducted under the National Environmental Policy Act (NEPA) for more than seventy proposals relating to exploration, development, production and transport of oil, gas, and mineral resources on the Outer Continental Shelf (OCS) of the Gulf of Mexico and Atlantic Ocean. 

Noting the environmental impacts of climate change and industrial activity in sensitive areas, 67 House Democrats transmitted a letter to President Obama yesterday urging a "science-based" approach to management of the Beaufort and Chukchi Seas and the Arctic National Wildlife Refuge (ANWR).  They contend that "[t]he most notable and immediate ... threat is from the aggressive and risky expansion of oil and gas activities in the region from the last eight years."  The letter outlines four specific proposals: create an interagency task force to craft comprehensive Arctic energy policy; pass new legislation to protect ANWR; conduct a new assessment of Arctic ecosystems; and suspend new offshore leasing, E&P, shipping, commercial fishing, and mining.  The letter was authored by Reps. Inslee (WA), Markey (MA) and McCollum (MN), and key signees include Energy and Commerce Committee Chairman Henry Waxman (CA), Natural Resources Committee Chairman Nick Rahall (WV), and Foreign Affairs Committee Chairman Howard Berman (CA).

Last week, the Massachusetts Energy Facilities Siting Board tentatively approved granting Cape Wind Associates, LLC, a Certificate of Environmental Impact and Public Interest regarding the construction of two new transmission lines that would interconnect to a proposed wind facility in Nantucket Sound.  While the decision is not final, it is an encouraging step for the project developers.  The Board expects that a final vote on the Certificate will be taken within 60 days.  If approved, the Certificate, comprising nine state and local permits, would overturn the Cape Cod Commission's denial of the project. 

In a news release, Cape Wind President Jim Gordon said, "This decision represents a major victory for the people of Massachusetts who are waiting for the clean energy jobs from Cape Wind which will help us become more energy independent and make Massachusetts a global leader in clean offshore wind energy production."  Cape Cod Commission attorney, Eric Wodlinger, suggested the Board needs to consider the project's impact on state resources when making a final determination, noting "We argue that the siting board should not put on blinders at the three-mile border."  The Cape Cod Times provides additional coverage.

Today the Environmental Protection Agency (EPA) issued a Final Rule and a Proposed Rule to update the OCS air quality standards in North Carolina and Alaska, respectively. These rules are promulgated pursuant the Clean Air Act (CAA). The CAA mandates the routine update of air quality regulations governing OCS sources located within 25 miles of a state’s seaward boundary except for certain areas in the Gulf of Mexico. The OCS standards must be updated to match the corresponding on-shore air quality regulations (COA). These rules will append the Code of Federal Regulations to make the appropriate COA rules applicable to sources on the OCS.

The House Natural Resources Committee today convened the second in a series of hearings addressing the nation's policy on offshore drilling.  In his opening statement, Committee Chairman, Nick Rahall (D-WV), noted that he is "not opposed to drilling," but is "aware of the risks" associated with the development of the OCS.  This sentiment was echoed by several of the Committee's members who, while not in favor of reimposing the longstanding congressional drilling moratoria, understand that opening the offshore to greater production will trigger environmental concerns, including the addition of more greenhouse gases to the atmosphere.  On this point, several members asserted that it is not yet clear that such activities have significantly contributed to global warming.  Not surprisingly, there was generally a clear divide between Committee Democrats and Republicans on these issues, although both sides appeared interested in developing a national energy policy.    
 
The first panel included Reps. Sam Farr (D) and Dana Rohrabacher (R), both from California.  Rep. Farr was in favor of reinstating the moratoria, noting that he supports a temporary ban until a more comprehensive approach can be established.  Rep. Farr also advocated for "marine spatial planning," a process that allows the government to "assess and then allocate areas of the OCS" for development in a manner that preserves the oceans and benefits the economy.  He contrasted this method with onshore development, where certain regions hosting critical habitats are restricted from development.  In contrast, Rep. Rohrabacher strongly advocated for OCS drilling while noting that he is an avid surfer and scuba diver.  He cited environmental groups as a key obstacle to expanded exploration and production.  He added that the lack of OCS production requires the United States to import oil and gas by tanker.  Noting that tanker spills cause greater damage than spills from OCS production, he said opponents "ironically make oil spills more likely" by blocking the development of such production.  Rep. Rohrabacher also suggested, somewhat facetiously, that providing pleasant "facades" on offshore platforms (e.g., painting trees on them) may help to win the support of environmental opponents. 
 
After a rousing first session, the atmosphere surrounding the second panel was less colorful.  The lighting rod on the panel, at least for Republicans, was Secretary Mike Chrisman of the California Natural Resources Agency.  Secretary Chrisman was frequently questioned about his state's staunch opposition to offshore drilling.  Committee Ranking Member Doc Hastings (R-WA) also asked why California appears to support the importation of liquefied natural gas (LNG) over offshore production, implying that the nation would be better served by producing natural gas domestically than importing from "Saudi Arabia, Venezuela and Brazil."  Secretary Chrisman noted that the state is evaluating importing LNG from Australia and that LNG is part of a broader energy policy, which includes a heavy renewable energy component.  Virginia State Senator Frank Wagner (R), a longtime supporter of drilling offshore Virginia, noted that he disagrees with Governor's Kaine's support for Interior Secretary Salazar's recent decision to extend the comment period on the 5-year OCS plan by 180 days.   
 
Tomorrow the Committee will host the third hearing in the series, focusing on industrial perspectives.  Based on past hearings, this one promises to be the most contentious. 

Rep. Markey (D-MA) introduced legislation today (H.R. 790) designed to prohibit oil and natural gas leasing and production in the Georges Bank, off the coast of Massachusetts. Georges Bank supports several of New England's largest fishing ports, including the nation's most productive port in New Bedford, Mass. Given that oil and gas leasing is no longer prohibited on the majority of the Outer Continental Shelf, coastal state members may be inclined to introduce measures prohibiting offshore development in specific areas, such as the Georges Bank. Read Rep. Markey's press release for more details. 

 

Similar legislation (H.R. 204) was introduced earlier this year by Rep. Mike Thompson (D-CA) to prohibit drilling offshore Northern California.

Senator Bingaman issued a short statement today applauding Interior's analysis of the environmental and safety impacts of the Cape Wind Energy Project proposed for offshore Massachusetts.  He also expressed support for a team-oriented approach to offshore drilling, including collaboration from DOI and the coastal states.  With the Obama Administration and Secretary Salazar supporting a "thoughtful approach" toward offshore drilling, it seems increasingly unlikely that a comprehensive offshore moratorium on the east and west coasts will be resurrected by Congress.

The long-stalled wind energy project proposed for offshore Massachusetts received a positive Final Environmental Impact Statement (FEIS) today from the Interior Department’s Minerals Management Service (“MMS”), clearing the way for MMS to issue a lease to the project developer, Cape Wind Associates. While this positive FEIS sets the basis for final approval, the Obama Administration ultimately will determine the future of Cape Wind -- an interesting dilemma for President Obama given his support for renewable energy but the strong opposition to Cape Wind of Senator Ted Kennedy (D-MA), a critical supporter of candidate Obama during the Democratic primary. If approved, this will be the first offshore lease for a wind energy project authorized by MMS.

Two Congressional Democrats from California have proposed legislation aimed at blocking drilling off the coast of Northern California. Rep. Mike Thompson (D-CA) and Rep. Lynn Woolsey (D-CA) introduced separate legislation yesterday in an "effort to protect th[e] area and to keep it pristine."  Rep. Thompson’s legislation aims to prohibit oil and gas drilling off Mendocino, Humboldt and Del Norte counties, and Rep. Woolsey reintroduced legislation seeking to expand two national marine sanctuaries off the coast of Sonoma County.  The Press Democrat has more details.

Given the unlikelihood of a comprehensive moratorium on offshore drilling on the east and west coasts, targeted legislative efforts at banning drilling in specific locales may become more frequent.  More to come ....