WASHINGTON – Saying the bill could drive up the cost of fuel, administration officials objected Wednesday to new legislation that would change how the government approves some oil and gas drilling projects on public lands and would alter other federal energy policies.
House Natural Resources Committee Chairman Nick Rahall, D-W.Va., introduced the legislation last week and held a hearing Wednesday for administration officials to raise their objections to it. The bill addresses numerous topics on which the panel and its subcommittees have held hearings, including energy corridors, Minerals Management Service audits and carbon capture.
“The bill being heard today seeks to reinstate public accountability and integrity in the Interior Department’s energy programs, to advance alternative energy strategies, begin to grapple with the pressing need to initiate carbon sequestration and tackle the potential effects of climate change on our fish and wildlife resources,” Rahall said.
But Rep. Don Young, R-Alaska, the top Republican on the committee, called the Energy Policy Reform and Revitalization Act of 2007 a “bastard bill” and said it would make energy more expensive.
Rahall said he’s open to altering the bill.
The bill would amend the 2005 Energy Policy Act to eliminate the use of exemptions from some environmental analysis for certain oil and gas drilling projects. The act allows “categorical exclusions” to exempt certain projects requiring an environmental assessment or an environmental impact statement.
The new bill would eliminate categorical exclusions now used for projects in areas with land-use plans approved within the previous five years, or with surface disturbance limited to 5 acres and a previous project with a National Environmental Policy Act decision.
Supporters of the provision say it would return balance to administration policy that has favored drilling over other public land uses.
But Henri Bisson, deputy director of the Bureau of Land Management, said the agency looks at every permit application to drill in the same manner and follows a complete process, not skipping consultations even for projects using categorical exclusions. “It’s a matter of taking advantage of existing documentation to make the decision,” he said.
If categorical exclusions were eliminated, Bisson said, the additional environmental analysis would increase the cost and time to make those decisions. That, he said, would be likely to increase the cost of fuel.
Bisson said that in 2006 the agency processed about 2,200 categorical exclusion decisions and that it would have cost $5.5 million more to process them otherwise.
Melissa Simpson, deputy undersecretary at the U.S. Forest Service, said 300 projects have been approved by that agency under the categorical exclusions section. She called it a “useful tool.”
The bill would also require public review and comment before the BLM could waive any stipulation of an oil and gas lease. It would repeal a provision of the 2005 Energy Policy Act that gave a 30-day deadline for the BLM to process onshore oil and gas permits.
The bill would require an assessment of where energy corridors are needed and defer designation of corridors until after the study was completed.
Bisson said that provision would stop the collaborative process under way among federal, state and tribal governments that will result in a draft environmental impact statement within months. “That would all be put to the side,” he said.
The legislation also would slow a commercial leasing program for oil shale and tar sands on public lands, which could begin as early as 2008.
Bisson objected to that. He said the oil shale development program is reasonable and doesn’t require change.
The wind energy industry opposes the bill because it would require developers to address the effect of turbines on birds and wildlife.
The bill also would end the Minerals Management Service’s royalty-in-kind program, except for filling the Strategic Petroleum Reserve. That program allows the government to receive oil and gas instead of cash payments. The Interior inspector general found that the program has been subject to fraud and abuses.
The bill would require the MMS to boost the number of traditional audits it does instead of relying on compliance reviews.
Walter Cruickshank, deputy director of the MMS, said the agency has “serious concerns” with the part of the bill limiting the royalty-in-kind program.
“This provision fails to recognize the benefits of the royalty-in-kind program and will result in losses to the Treasury,” he said.
Cruickshank also defended the royalty auditing and compliance program, saying it has been successful.
The bill would require oil and gas operators who own minerals underneath a privately owned surface to notify owners well in advance of operations and secure a written agreement from them or make a good-faith effort to do so. BLM would have to update reclamation standards for oil and gas companies.
It also would require that Federal Power Marketing Administrations with transmission infrastructure offer a transmission contract to energy producers for renewable energy.
The bill also encourages hydroelectric and solar power sources and would establish a biomass utilization pilot program.
Simpson said the bill’s new definition of biomass is narrower and does not include byproducts of hazardous fuels treatments. She also said the proposed pilot program would duplicate efforts already under way.
The legislation would require the USGS to develop a peer-reviewed method and conduct a nationwide assessment of underground carbon dioxide storage capacity.
The Interior secretary would have to develop a national strategy to mitigate the effects of global warming on wildlife and authorize new funds for federal and state programs to do so.
By Noelle Straub
Lee Washington Bureau
24 May 2007
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