PRIMER ON OBAMA AND MOTIVES BEHIND HIS ENERGY POLICY
“Responsibility to Protect” (R2P)
(Obama warns GOP of veto if they tack oil pipeline onto bill on tax cuts, unemployment -- Dec. 8, 2011) Why?
Benefits of Keystone XL Are Certain
TransCanada believes Keystone XL will ultimately be approved, as it is too important to the U.S. economy and its national interest. As well, Keystone XL remains the best option for producers to supply crude oil to U.S. Gulf Coast Refineries.
“Responsibility to Protect” (R2P)
(Obama warns GOP of veto if they tack oil pipeline onto bill on tax cuts, unemployment -- Dec. 8, 2011) Why?
Benefits of Keystone XL Are Certain
TransCanada believes Keystone XL will ultimately be approved, as it is too important to the U.S. economy and its national interest. As well, Keystone XL remains the best option for producers to supply crude oil to U.S. Gulf Coast Refineries.
The U.S. consumes 15 million barrels of oil each day and imports 10 to 11 million barrels per day. Industry forecasts predict oil consumption will continue at these levels for the next two to three decades, so a secure supply of crude oil is critical to U.S. energy security.
Keystone XL is shovel-ready.
TransCanada is poised to put 13,000 Americans to work to construct the pipeline - pipefitters, welders, mechanics, electricians, heavy equipment operators, among other jobs - in addition to 7,000 manufacturing jobs that would be created across the U.S. Additionally, local businesses along the pipeline route will benefit from the 118,000 spin-off jobs Keystone XL will create through increased business for local goods and service providers.
TransCanada looks forward to concluding the U.S. regulatory review process and beginning the important work of building Keystone XL. The safe and reliable operation of our pipelines and infrastructure has been TransCanada's priority for 60 years. This same commitment will drive us forward in the years ahead.
Project Overview
The U.S. $13 billion Keystone pipeline system will play an important role in linking a secure and growing supply of Canadian crude oil with the largest refining markets in the United States, significantly improving North American security supply.
In June 2010 TransCanada commenced commercial operation of the first phase of the Keystone Pipeline System. Keystone's first phase was highlighted by the conversion of natural gas pipeline to crude oil pipeline and construction of an innovative bullet line that brings the crude oil non-stop from Canada to market hubs in the U.S. Midwest.
Keystone Cushing (Phase II), an extension of the Keystone Pipeline from Steele City, Nebraska to Cushing, Oklahoma went into service in February 2011. The 36-inch pipeline connects to storage and distribution facilities at Cushing, a major crude oil marketing/refining and pipeline hub.
The proposed Keystone Gulf Coast Expansion Project is an approximate 2,673-kilometre (1,661-mile), 36-inch crude oil pipeline that would begin at Hardisty, Alberta and extend southeast through Saskatchewan, Montana, South Dakota and Nebraska. It would incorporate a portion of the Keystone Pipeline (Phase II) through Nebraska and Kansas to serve markets at Cushing, Oklahoma before continuing through Oklahoma to a delivery point near existing terminals in Nederland, Texas to serve the Port Arthur, Texas marketplace.
http://www.transcanada.com/keystone.html
Source: NATIONAL REVIEW ONLINE -- by Stanley Kurtz - April 5, 2011
Samantha Power: A member of the president’s National Security Council who shares Noam Chomsky’s foreign-policy goals? An influential presidential adviser whom 1960s revolutionary Tom Hayden treats as a fellow radical? A White House official who wrote a book aiming to turn an anti-American, anti-Israel, Marxist-inspired, world-government-loving United Nations bureaucrat into a popular hero? Samantha Power, senior director of multilateral affairs for the National Security Council and perhaps the principal architect of our current intervention in Libya, (Source: http://www.discoverthenetworks.org) (Why U.S. military in Uganda? Soros fingerprints all over it! Obama’s billionaire friend has interests in African country’s oil -- October 15, 2011 - By Aaron Klein) and Uganda is all of these things. Also Papua New Guinea and Brazil.
Samatha Power - special advisor on Human Rights
These scary-sounding tidbits might be dismissed as isolated “gotchas.” Unfortunately, when we view these radical outcroppings in the full sweep of her life’s work, Samantha Power emerges as a patriot’s nightmare — a woman determined to subordinate America’s national sovereignty to an international order largely controlled by leftist bureaucrats. Superficially, Power’s chief concern is to put a stop to genocide and “crimes against humanity.” More deeply, her goal is to use our shared horror at the worst that human beings can do in order to institute an ever-broadening regime of redistributive transnational governance.
Knowing what Samantha Power wants reveals a great deal about Barack Obama’s own ideological commitments. It’s not just a question of whether he shares Power’s long-term internationalist goals, although it’s highly likely that he does. Power’s thinking also represents a bridge of sorts between Obama’s domestic- and foreign-policy aspirations. Beyond that, Power embodies a style of pragmatic radicalism that Obama shares. Both Obama and Power are skilled at placing their ultimate ideological goals just out of sight, behind a screen of practical problem-solving.
THE MOTIVES BEHIND THE INTERVENTION
Critics of President Obama’s intervention in Libya — and there are many all across the political spectrum — have taken a variety of approaches to the novel characteristics of this military action. Some have lamented the president’s failure to establish a clear path to victory (i.e., the overthrow of Qaddafi), or indeed any unambiguous goal beyond the protection of civilian lives. By traditional war-fighting standards, the rationale given for Obama’s Libyan intervention amounts to incoherence and weakness.
Viewing the glass as half full, however, others have declared that the president secretly does want to oust Qaddafi and establish a democratic regime, or at least that the logic of events will inevitably force Obama in that direction. Still others have suggested that a quick overthrow of Qaddafi followed by withdrawal would establish a positive model for punitive expeditions, without the costly aftermath of nation-building. And some have simply christened Obama’s seemingly directionless strategy as an intentional program of pragmatic flexibility.
While there’s much to be said for each of these responses, more attention needs to be given to analyzing Obama’s intervention from the standpoint of his administration’s actual motives — which in this case, I believe, are largely coincidental with Samantha Power’s motives. Obama has told us that the action in Libya is a multilateral intervention, under United Nations auspices; that it is for fundamentally humanitarian purposes, but has strategic side benefits; and that it represents an opening for the United States to pursue its own goal of ousting Qaddafi, although via strictly non-military means. While Obama has in fact taken covert military steps against Qaddafi, and while our bombing campaign has been structured in such a way as to undermine Qaddafi when possible, we have indeed inhibited ourselves to a significant degree from pursuing regime change by military means.
Obama may not have been completely frank about the broader ideological goals behind this intervention, and yet the president’s address to the nation, as far as it went, was largely accurate. Fundamentally, our Libyan operation is a humanitarian action, with no clear or inevitable military-strategic purpose beyond that. There is enormous risk here, and no endgame. We might take strategic advantage of our restricted humanitarian action. But we might not, and, in any case, we are under no obligation to do so. For all we know, many of those we’re defending with American aircraft and missiles could be our dedicated terrorist enemies. From the standpoint of traditional calculations of national interest, this war is something akin to madness. Yet without fully articulating it (and that reticence is intentional), Obama and Power are attempting to accustom us to a whole new way of thinking about war, and about America’s place in the world.
Samantha Power has refused to give interviews of late, and the White House seems to be downplaying her influence on the intervention in Libya, and on the president generally. Yet numerous press reports indicate that Power “has Obama’s ear” and was in fact critical to his decision on Libya. Liberal foreign-policy expert Steve Clemons actually calls Power “the primary architect” of our Libyan intervention. The New York Times has gone so far as to characterize our humanitarian action as “something of a personal triumph” for Power.
If anything, these reports may underplay Power’s influence on Obama. The two met in 2005, when Obama contacted Power after reading her Pulitzer Prize–winning book on genocide, A Problem from Hell. Power quickly became then-senator Obama’s senior foreign-policy adviser, and so has a longer history with the president than do many others on his foreign-policy team.
A survey of Power’s writings indicates her long preoccupation with a series of issues now associated with Obama’s most controversial foreign-policy moves. In a 2003 piece for the New York Times, for example, Power bemoaned the reluctance of American policymakers to apologize to other countries for our supposed past mistakes. While Obama’s controversial (and so far unproductive) willingness to engage with the leaders of rogue states was initially attributed to a novice error during a 2007 debate with Hillary Clinton, the need to deal directly with even the worst rogue states is a major theme of Power’s second book, Chasing the Flame. That book was written in 2007, while Power was advising Obama’s presidential campaign. A 2007 piece by Power in The New York Times Book Review attacked the phrase “War on Terror,” which of course the Obama administration has since dropped.
In an appearance at Columbia University, just hours before the president’s Libya address, Power herself identified the protection of the citizens of Benghazi as the core purpose of our current intervention. Yet it should not be thought that Power’s shaping of Obama’s reasons and actions ends there. Almost a decade ago, Power laid out a series of secondary, interest-based justifications for humanitarian interventions — e.g., avoiding the creation of militarized refugees who might undermine regional stability, and flashing a discouraging signal to regional dictators — all of which were featured in Obama’s speech to the nation. To be sure, these “interest-based” justifications were largely rationalizations for an intervention driven overwhelmingly by humanitarian considerations. Yet Power’s broader and longstanding framing of the issue has been adopted wholesale by Obama.
In Power’s view, to be credible, humanitarian interventions must respond to immediate danger (thus Obama’s waiting until the militarily unpropitious moment when Benghazi itself was under imminent threat), must be supported by multilateral bodies (thus the resort to the U.N., NATO, and the Arab League in preference to the U.S. Congress), “must forswear up front . . . commercial or strategic interests in the region” (thus the disavowal of regime change as a goal of our multilateral action), and must “commit to remaining for a finite period” (as Obama has pledged to do in Libya). Even NATO’s threat to bomb the rebels if they kill civilians (which struck many as unrealistic, and at cross-purposes with our supposed military goals) is foreshadowed in Power’s writings, which highlight the need to police both sides in any humanitarian action.
PRAGMATIC RADICAL
The evident tension here is between Power’s desire to act, and to be seen to act, on strictly disinterested humanitarian grounds, and her need to sell humanitarian intervention to the public on grounds of national interest, conventionally defined. This leads to continual contradiction and dissembling in Power’s writings, as the ideology driving the action can neither fully disguise itself, nor fully announce itself either. So, too, with Barack Obama’s policies (and not just on Libya).
Nowhere is this pattern of disguise and contradiction more evident than on the topic of “American exceptionalism.” Supposedly, Obama’s address on Libya, with its invocation of America’s distinctive tradition of shouldering moral burdens throughout the world, gave the lie to those who have described the president as a critic of the concept. And Power’s work is filled with invocations of America’s unique leadership role in the world. But read carefully, her hymns of praise to American leadership all turn out to be calls for the United States to slowly devolve its power to international bodies. After all, the world’s foremost state would have to assume leadership of any process whereby its own power was gradually dismantled and handed off to others. This is essentially what Power is calling for, even as she frames the diminishment of America in superficially patriotic terms. Is Obama doing the same? I believe he is.
Power once promised that the stringent conditions she set out for intervention would make humanitarian military actions exceedingly rare. She has long admitted that, given that rarity, precisely what such interventions might achieve, as well as what they might cost, remains unclear. Now each day teaches us something new about the costs of her policies.
Arguments that Power developed to support past interventions are proving a poor fit for our Libyan operation. She dismissed claims that the Rwandan genocide was merely a case of “civil war” or “tribal violence.” Now her critics argue that Libya is not a Rwanda-style genocide, and that Power’s eagerness for a humanitarian showcase has led us to intervene in what really is a tribal civil war.
And what of her stringent conditions? In practice, she seems to have stretched her own standards of “large-scale crimes against humanity” to produce a specimen case, in an effort to entrench her favored doctrines in international law. Who knows if more people will now be casualties in the extended civil war enabled by our intervention than would have been killed in Benghazi last month?
Power worried just after 9/11 that an America soon to be militarily overstretched might give up on humanitarian interventions. Now she has helped to entangle us in an expensive and open-ended adventure at a time when we truly are at our limits — and at a time when dangers continue to spread in countries far more strategically significant than Libya. Power has long warned us that policies that alienate the rest of the world, such as detention at Guantanamo, make it tougher to assemble the multilateral coalitions that ultimately lighten our own security burdens. Yet now we find ourselves prevented from attacking our enemy Qaddafi, so as not to alienate our coalition partners (while Obama admits in practice that Guantanamo was in our interest all along).
Power might best be characterized as a pragmatic radical. Her outlook is “post-American,” an excellent example of what John Fonte has called “transnational progressivism.” Power means to slowly dismantle American sovereignty in favor of a constraining and ultimately redistributive regime of international law. It’s an odd position for a member of the president’s National Security Council, but then Power is no ordinary NSC staffer.
Power’s New York Times review of Noam Chomsky’s book Hegemony or Survival is an excellent example of what she’s about. Power is critical of Chomsky’s caustic tone, his failure to adequately back up his preaching-to-the-choir assertions, and his disregard of the complex tradeoffs inherent in foreign policy. But for all that, Power makes it clear that she largely shares Chomsky’s policy goals, above all the curbing of American power via the building up of international law and related doctrines of “human rights.” In other words, Power sees herself as the clever sort of radical who works from within established institutions, without ever really sacrificing her rebellious ideals.
FROM INTERVENTION TO WORLD GOVERNMENT
A long conversation with Power in 2003 convinced 1960s revolutionary Tom Hayden that she was a fellow-traveler of sorts, even if Power was not as systematically suspicious of American military force as a true Sixties-vintage radical would be. In Hayden’s assessment, Power’s originality was “to see war as an instrument to achieving her liberal, even radical, values.” Hayden was right. The important thing about Power is not that she favors humanitarian intervention, but that she seeks to use such military actions to transform America by undoing its sovereignty and immobilizing it, Gulliver-style, in an unfriendly international system.
Power’s aforementioned second book, Chasing the Flame, celebrates the life of a United Nations diplomat, Sergio Vieira de Mello, who died in a terrorist attack in Iraq in 2003. Vieira de Mello was a Sixties radical of international scope. Hailing from Brazil, he became a committed Marxist while studying at the Sorbonne. He was among the violent protesters arrested during the student uprising in Paris in 1968. His first published work was a defense of his actions.
Vieira de Mello went from student radicalism straight to a job with the U.N. in 1969, and brought his intense anti-Americanism and anti-capitalism with him. Later he became a bitter critic of Israel. A United Nations “patriot,” he carried around a well-worn copy of the U.N. Charter the way an American senator or Supreme Court justice might take a copy of the U.S. Constitution wherever he went. Vieira de Mello’s colleagues used to say that his blood ran U.N. blue. As the U.N.’s most charismatic and effective diplomat (said to be “a cross between James Bond and Bobby Kennedy”), Vieira de Mello is the hero around whom Power attempts to build a following for her ideals of global governance.
Power explains that Vieira de Mello never really surrendered his Sixties ideals, even as he transformed himself from a passionate ideologue into a “ruthless pragmatist.” The young America-hating Vieira de Mello grew into a mature diplomat who could charm Pres. George W. Bush, even while lecturing the commander-in-chief on the follies of Guantanamo Bay. In other words, Vieira de Mello learned to manage his public persona, appealing to American leaders with arguments (allegedly) based on American national interest.
This is clearly Power’s ideal for herself. In fact, she tells us in her acknowledgments that the point of the book is also “the point of my career.” Power even cites the uncanny resemblance between Vieira de Mello and Obama. Of course, Obama’s Alinskyite training stressed the need for community organizers to advance their quietly held leftist ideological goals through “pragmatic” appeals to the public’s “self-interest.” (For more on that, see my study of Obama.)
Samantha Power has a lot to teach us about Barack Obama. She herself draws analogies between the need to redistribute wealth via health-care coverage and the need to divide military and diplomatic power (and, implicitly, wealth) more evenly through the international system. Power regularly invokes arguments for international law derived from America’s Founders and the West’s great liberal thinkers, as if her goal were the founding of a government of the world. In truth, that is what Power is up to, even if she sees her project as a long-term collective effort necessarily extending beyond her own lifetime.
The novel doctrine of “responsibility to protect,” which Power means the Libyan action to enshrine in international law, could someday be used to justify military intervention to impose a “two-state solution” on Israel (apparently this is one of Power’s longstanding goals, although she now disavows it). The International Criminal Court, which Power has long defended, may someday enable the leftist Europeans who run it to place American soldiers and politicians on trial for supposed war crimes. The Obama administration’s troubling acquiescence in the development of sweeping international prohibitions on “aggression” may one day make virtually any use of force not pre-approved by the United Nations subject to international sanctions. These are the long-term goals of Power’s policies, although they are seldom confessed or discussed.
On rare occasions, Power comes straight out and admits that the sorts of interventions she favors constitute an almost pure cost to American national interest, traditionally defined. More often, she retreats into the language of “pragmatism” and “self-interest” to justify what she knows Americans will not support on its own terms. That is Samantha Power’s way and, not coincidentally, Barack Obama’s way as well.
At some point, after we’ve all done our best to fit the president’s puzzling Libyan adventure into our accustomed conceptual frameworks, we just might wake up and discover what has been going on behind the curtain. When we do, the answer will be found in the writings of Samantha Power.
Story above from: NATIONAL REVIEW ONLINE
http://www.nationalreview.com
— Stanley Kurtz is a senior fellow at the Ethics and Public Policy Center, and the author of Radical-in-Chief. For more Please Read National Review OnLine
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Source: http://www.discoverthenetworks.org
Samantha Power: Has a long record of antipathy toward Israel -- Said that America’s relationship with Israel “has often led foreign policy decision-makers to defer reflexively to Israeli security assessments, and to replicate Israeli tactics”
Was appointed as Director for Multilateral Affairs in the National Security Council by President Barack Obama in January 2009
Born in Ireland in September 1970, Samantha Power immigrated to the United States with her family in 1979. After graduating from Yale University, she worked as a journalist from 1993 to 1996, covering the Yugoslav wars for U.S. News & World Report, The Boston Globe, The Economist, and The New Republic.
Power then attended Harvard Law School, earning her Juris Doctorate in 1999. She is currently the Anna Lindh Professor of Practice of Global Leadership and Public Policy at Harvard's John F. Kennedy School of Government, where she is also affiliated with the Carr Center for Human Rights Policy.
Power has a long record of antipathy towards Israel. In 2001 she attended the United Nations' World Conference Against Racism (in Durban, South Africa), even after the U.S. had withdrawn most of its diplomatic participation once it became apparent that the gathering would give prominence to anti-American, anti-Israel, and anti-Semitic perspectives.
Just months later, during a 2002 interview with Harry Kreisler, director of the Institute for International Studies at UC Berkeley, Power said that even if it meant “alienating a domestic constituency of tremendous political and financial import” (i.e., Jewish Americans), the United States should stop investing “billions of dollars” in “servicing Israel’s military” and invest the money instead “in the new state of Palestine.” Moreover, she accused Israel of perpetrating "major human-rights abuses."
Power’s 2002 book, A Problem from Hell: America and the Age of Genocide, grew out of a paper she had written in law school and won the Pulitzer Prize for General Non-Fiction in 2003. This book examines the origin of the word “genocide,” the major genocides of the 20th century, and the reasons why governments -- most notably the U.S. -- have so often failed to collectively identify and forestall genocides before the crisis stage.
In her 2004 review of Noam Chomsky’s book Hegemony or Survival, Power agreed with many of Chomsky’s criticisms of U.S. foreign policy and expressed her own concerns about what she called the “sins of our allies in the war on terror,” lumping Israel together with Saudi Arabia, Turkey, Pakistan, Russia, and Uzbekistan. She called Chomsky’s work “sobering and instructive.”
In 2005–06, Power worked as a foreign policy fellow in the office of U.S. Senator Barack Obama. In this role, she helped to spark and inform Obama’s interest in the deadly ethnic and tribal conflict of Darfur, Sudan.
In a 2007 interview, Power said that America’s relationship with Israel “has often led foreign policy decision-makers to defer reflexively to Israeli security assessments, and to replicate Israeli tactics...” The United States, she explained, had brought terrorist attacks upon itself by aping Israel’s violations of human rights.
In the fall of 2007, Power began writing a regular column for Time magazine. That same year, she appeared in Charles Ferguson's documentary, No End in Sight, which criticized the Bush administration’s handling of the Iraq War.
In February 2008 Power released her second book, Chasing the Flame: Sergio Vieira de Mello and the Fight to Save the World. This book is about the eponymous United Nations High Commissioner for Human Rights, who was killed in a Baghdad hotel bombing on August 19, 2003.
In early 2008 Power served as a senior foreign-policy advisor to Barack Obama’s presidential campaign. She was forced to resign from the campaign in March, however, after it was learned that she had referred to Obama’s Democrat rival, Hillary Clinton, as “a monster” whose modus operandi was “deceit.”
On July 4, 2008, Power married law professor Cass Sunstein, whom she had met while working on the Obama campaign.
In January 2009 President Obama appointed Power to serve as Director for Multilateral Affairs in the National Security Council, a post where she would serve as one of Obama’s closest advisors on foreign policy.
In March 2011, Power was instrumental in persuading Obama to authorize military intervention in Libya, to prevent President Moammar Qaddafi's forces from killing the rebels who were rising up against his regime at that time. Power's counsel in this matter was consistent with her longstanding advocacy of the doctrine known as the "Responsibility to Protect" (R2P), which encourages the international community to intervene in a sovereign country's internal affairs -- with military force if necessary -- in order to thwart genocide, war crimes, crimes against humanity, or ethnic cleansing.
The Global Centre for the Responsibility to Protect, (GCRP), which is the world's leading advocate of this doctrine, is funded by George Soros's >Open Society Institute<. Power and GCRP advisory-board member Gareth Evans -- who is also also president emeritus of the International Crisis Group -- have been joint keynote speakers at a number of events where they have championed the R2P principle together.
Why U.S. military in Uganda?
Soros fingerprints all over it! Obama’s billionaire friend has interests in African country’s oil -- October 15, 2011 - By Aaron Klein TEL AVIV —
An influential “crisis management organization” that boasts billionaire George Soros as a member of its executive board recently recommended the U.S. deploy a special advisory military team to Uganda to help with operations and run an intelligence platform. The president-emeritus of that organization, the International Crisis Group, is the principal author of Responsibility to Protect, the military doctrine used by Obama to justify the U.S.-led NATO campaign in Libya. Soros’ own Open Society Institute is one of only three nongovernmental funders of the Global Centre for Responsibility to Protect, a doctrine that has been cited many times by activists urging intervention in Uganda.
Authors and advisers of the Responsibility to Protect doctrine, including a center founded and led by Samantha Power, the National Security Council special adviser to Obama on human rights, also helped to found the International Criminal Court. Several of the doctrine’s main founders also sit on boards with Soros, who is a major proponent of the doctrine. Soros himself maintains close ties to oil interests in Uganda. His organizations have been the leading efforts purportedly to facilitate more transparency in Uganda’s oil industry, which is being tightly controlled by the country’s leadership. U.S. troops to Uganda Obama on Friday notified House Speaker John Boehner, R-Ohio, that he plans to send about 100 military personnel, mostly Special Operations Forces, to central Africa.
The first troops reportedly arrived in Uganda on Wednesday. The U.S. mission will be to advise forces seeking to kill or capture Joseph Kony, the leader of the rebel Lord’s Resistance Army, or LRA. Kony is accused of major human rights atrocities. He is on the U.S. terrorist list and is wanted by the International Criminal Court. In a letter on Friday, Obama announced the initial team of U.S. military personnel “with appropriate combat equipment” deployed to Uganda on Wednesday. Other forces deploying include “a second combat-equipped team and associated headquarters, communications and logistics personnel.” “Our forces will provide information, advice and assistance to select partner nation forces,” he said.
Both conservatives and liberals have raised questions about whether military involvement in Uganda advances U.S. interests. Writing in The Atlantic yesterday, Max Fisher noted the Obama administration last year approved special forces bases and operations across the Middle East, the Horn of Africa and Central Asia. “But those operations, large and small, target terrorist groups and rogue states that threaten the U.S. — something the Lord’s Resistance Army could not possibly do,” he wrote. “It’s difficult to find a U.S. interest at stake in the Lord’s Resistance Army’s campaign of violence,” continued Fisher. “It’s possible that there’s some immediate U.S. interest at stake we can’t obviously see.” Bill Roggio, the managing editor of The Long War Journal, referred to the Obama administration’s stated rationale for sending troops “puzzling,” claiming the LRA does not present a national security threat to the U.S. — “despite what President Obama said.”
Tea Party-backed presidential candidate Michele Bachmann also questioned the wisdom of Obama’s move to send U.S. troops to Uganda. “When it comes to sending our brave men and women into foreign nations we have to first demonstrate a vital American national interest before we send our troops in,” she said at a campaign stop yesterday in Iowa.
Soros group: Send military advisors to Uganda
In April 2010 Soros’International Crisis Group, or ICG, released a report sent to the White House and key lawmakers advising the U.S. military to run special operations in Uganda to seek Kony’s capture. Read the report: “To the U.S. government: Deploy a team to the theatre of operations to run an intelligence platform that centralizes all operational information from the Ugandan and other armies, as well as the UN and civilian networks, and provides analysis to the Ugandans to better target military operations.”
Since 2008 the U.S. has been providing financial aid in the form of military equipment to Uganda and the other regional countries to fight Kony’s LRA, but Obama’s new deployment escalates the direct U.S. involvement. Soros sits in the ICG’s executive board along with Samuel Berger, Bill Clinton’s former national security advisor; George J. Mitchell, former U.S. Senate Majority Leader who served as a Mideast envoy to both Obama and President Bush; and Javier Solana, a socialist activist who is NATO’s former Secretary-General as well as the former Foreign Affairs Minister of Spain. Jimmy Carter’s national security advisor, Zbigniew Brzezinski, is the ICG’s senior advisor.
The ICG’s president-emeritus is Gareth Evans, who, together with activist Ramesh Thakur, is the original founder of -- Responsibility to Protect doctrine, with the duo even coining the term “responsibility to protect.” Both Evans and Thakur serve as advisory board members of the Global Center for the Responsibility to Protect, the main group pushing the doctrine. Source: As World Net Daily.com (WND) first exposed, Soros is a primary funder and key proponent of the Global Centre for Responsibility to Protect. Soros’ Open Society is one of only three non-governmental funders of the Global Centre for the Responsibility to Protect. Government sponsors include Australia, Belgium, Canada, the Netherlands, Norway, Rwanda and the U.K.
Soros’ hand in Ugandan oil industry Oil exploration began in Uganda’s northwestern Lake Albert basin nearly a decade ago, with initial strikes being made in 2006. Uganda’s Energy Ministry estimates the country has over 2 billion barrels of oil, with some estimates going as high as 6 billion barrels. Production is set to begin in 2015, delayed from 2013 in part because the country has not put in place a regulatory framework for the oil industry.
A 2008 National Oil and Gas Policy, proposed with aid from a Soros-funded group, was supposed to be a general road map for the handling and use of the oil. However, the polcy’s recommendations have been largely ignored, with critics accusing Ugandan President Yoweri Museveni of corruption and of tightening his grip on the African country’s emerging oil sector. Soros himself has been closely tied to oil and other interests in Uganda.
In 2008, the Soros-funded Revenue Watch Institute brought together stakeholders from Uganda and other East African countries to discuss critical governance issues, including the formation of what became Uganda’s National Oil and Gas Policy. Also in 2008, the Africa Institute for Energy Governance, a grantee of the Soros-funded Revenue Watch, helped established the Publish What You Pay Coalition of Uganda, or PWYP, which was purportedly launched to coordinate and streamline the efforts of the government in promoting transparency and accountability in the oil sector.
Also, a steering committee was formed for PWYP Uganda to develop an agenda for implementing the oil advocacy initiatives and a constitution to guide PWYP’s oil work. PWYP has since 2006 hosted a number of training workshops in Uganda purportedly to promote contract transparency in Uganda’s oil sector. PWYP is directly funded by Soros’ Open Society as well as the Soros-funded Revenue Watch Institute. PWYP international is actually hosted by the Open Society Foundation in London. The billionaire’s Open Society Institute, meanwhile, runs numerous offices in Uganda. It maintains a country manager in Uganda, as well as the Open Society Initiative for East Africa, which supports work in Kenya, Tanzania, and Uganda.
The Open Society Institute runs a Ugandan Youth Action Fund, which states its mission is to “identify, inspire, and support small groups of dedicated young people who can mobilize and influence large numbers of their peers to promote open society ideals.”
Samantha Power, Arafat deputy Meanwhile, a closer look at the Soros-funded Global Center for the Responsibility to Protect is telling.Board members of the group include former U.N. Secretary-General Kofi Annan, former Ireland President Mary Robinson and South African activist Desmond Tutu. Robinson and Tutu have recently made solidarity visits to the Hamas-controlled Gaza Strip as members of a group called The Elders, which includes former President Jimmy Carter.
WND was first to report the committee that devised the Responsibility to Protect doctrine included Arab League Secretary General Amre Moussa as well as Palestinian legislator Hanan Ashrawi, a staunch denier of the Holocaust who long served as the deputy of late Palestinian Liberation Organization leader Yasser Arafat.
Also, the Carr Center for Human Rights Policy has a seat on the advisory board of the 2001 commission that originally founded Responsibility to Protect. The commission is called the International Commission on Intervention and State Sovereignty. It invented the term “responsibility to protect” while defining its guidelines.
The Carr Center is a research center concerned with human rights located at the Kennedy School of Government at Harvard University.
Samantha Power, the National Security Council special adviser to Obama on human rights, was Carr’s founding executive director and headed the institute at the time it advised in the founding of Responsibility to Protect.
With Power’s center on the advisory board, the International Commission on Intervention and State Sovereignty first defined the Responsibility to Protect doctrine.
Power reportedly heavily influenced Obama in consultations leading to the decision to bomb Libya. The Libya bombings have been widely regarded as a test of a military doctrine called “Responsibility to Protect.”
In his address to the nation in April explaining the NATO campaign in Libya, Obama cited the doctrine as the main justification for U.S. and international airstrikes against Libya.
Responsibility to Protect, or Responsibility to Act, as cited by Obama, is a set of principles, now backed by the United Nations; based on the idea that sovereignty is not a privilege but a responsibility that can be revoked if a country is accused of “war crimes,” “genocide,” “crimes against humanity” or “ethnic cleansing.”
The term “war crimes” has at times been indiscriminately used by various United Nations-backed international bodies, including the International Criminal Court, or ICC, which applied it to Israeli anti-terror operations in the Gaza Strip. There has been fear the ICC could be used to prosecute U.S. troops who commit alleged “war crimes” overseas.
Soros: Right to ‘penetrate nation-states’
Soros himself outlined the fundamentals of Responsibility to Protect in a 2004 Foreign Policy magazine article titled “The People’s Sovereignty: How a New Twist on an Old Idea Can Protect the World’s Most Vulnerable Populations.”
In the article Soros said, “True sovereignty belongs to the people, who in turn delegate it to their governments.”
“If governments abuse the authority entrusted to them and citizens have no opportunity to correct such abuses, outside interference is justified,” Soros wrote. “By specifying that sovereignty is based on the people, the international community can penetrate nation-states’ borders to protect the rights of citizens.
“In particular,” he continued, “the principle of the people’s sovereignty can help solve two modern challenges: the obstacles to delivering aid effectively to sovereign states, and the obstacles to global collective action dealing with states experiencing internal conflict.”
The Global Center for the Responsibility to Protect, meanwhile, works in partnership with the World Federalist Movement, a group that promotes democratized global institutions with plenary constitutional power. The Movement is a main coordinator and member of Responsibility to Protect Center.
WND reported that Responsibility doctrine founder Thakur recently advocated for a “global rebalancing” and international redistribution to create a “New World Order.” In a piece last March in the Ottawa Citizen newspaper, “Toward a new world order,” Thakur wrote, “Westerners must change lifestyles and support international redistribution.”
He was referring to a United Nations-brokered international climate treaty in which he argued, “Developing countries must reorient growth in cleaner and greener directions.”
In the opinion piece, Thakur then discussed recent military engagements and how the financial crisis has impacted the U.S. “The West’s bullying approach to developing nations won’t work anymore – global power is shifting to Asia,” he wrote.
“A much-needed global moral rebalancing is in train,” he added.
Thakur continued: “Westerners have lost their previous capacity to set standards and rules of behavior for the world. Unless they recognize this reality, there is little prospect of making significant progress in deadlocked international negotiations.”
Thakur contended “the demonstration of the limits to U.S. and NATO power in Iraq and Afghanistan has left many less fearful of ‘superior’ Western power.”
Source: World Net Daily.com
http://www.wnd.com/index.php?fa=PAGE.view&pageId=356321">http://www.wnd.com/index.php?fa=PAGE.view&pageId=356321
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October 18, 2011
Obama's Uganda Gambit to serve Soros
By Ed Lasky is news editor of American Thinker
Journalist Aaron Klein has an interesting take on Barack Obama's surprising decision to send troops into Uganda to battle a rebel army. The genesis of the idea may have begun at the George Soros-funded International Crisis Group, one of the "think tanks" that Soros uses to promote policies that benefit him. In this case, the ICG recommended last year that America deploy military forces to Uganda. This move prompted questions since the rebel group did not pose a threat to American interests. But whose interests might be served by defeating the rebel group? George Soros -- a major Obama backer.
Klein writes: Soros himself has been closely tied to oil and other interests in Uganda.
In 2008, the Soros-funded Revenue Watch Institute brought together stakeholders from Uganda and other East African countries to discuss critical governance issues, including the formation of what became Uganda's National Oil and Gas Policy.
Also in 2008, the Africa Institute for Energy Governance, a grantee of the Soros-funded Revenue Watch, helped established the Publish What You Pay Coalition of Uganda, or PWYP, which was purportedly launched to coordinate and streamline the efforts of the government in promoting transparency and accountability in the oil sector.
Also, a steering committee was formed for PWYP Uganda to develop an agenda for implementing the oil advocacy initiatives and a constitution to guide PWYP's oil work.
PWYP has since 2006 hosted a number of training workshops in Uganda purportedly to promote contract transparency in Uganda's oil sector.
PWYP is directly funded by Soros' Open Society as well as the Soros-funded Revenue Watch Institute. PWYP international is actually hosted by the Open Society Foundation in London.
The billionaire's Open Society Institute, meanwhile, runs numerous offices in Uganda. It maintains a country manager in Uganda, as well as the Open Society Initiative for East Africa, which supports work in Kenya, Tanzania, and Uganda.
Soros seems to have his hand in trying to guide the development of the oil and gas industry in Uganda. The Ugandan government would naturally be beholden to Soros if he could show he had enough influence with the White House to bring in American troops to take out a rebel group. Also, the defeat of the rebel group would make development of the energy industry that much more viable since operations would be much more secure.
This strategy bears similarity with the story of InterOil, a major holding of George Soros, that has been granted concessions for reportedly major natural gas reserves in Papua New Guinea. The government there has recently been arguing with InterOil regarding that company's ability to develop these reserves and build and operate a Liquefied Natural Gas port to export the gas.
What could friends of George Soros in the American government do to help him soothe the deal with the Papua New Guinea government? What the Obama administration did in fact do was send government experts all the way from here to there to help the nation develop its reserves. This was especially surprising since the Department of Interior has blamed its delay in issuing permits to develop our own domestic reserves on lack of manpower and funding -- yet the administration found the manpower and money to export our experts do help develop New Guinea's reserves. Or rather the reserves that InterOil and its major shareholder, George Soros, want developed courtesy of the American taxpayer.
Anyone see a pattern here?
(1) In one case, Obama sends military forces to Uganda -- a nation where Soros has been active in trying to help it formulate a policy to tap its oil wealth. But before the policies could be put in place, a rebel group needs to be vanquished.
(2) In the other case, Obama sends American government experts to help another nation to develop its natural gas wealth when the one company ideally positioned to benefit from this taxpayer-funded development has as its major shareholder none other than George Soros.
Soros declared his own modus operandi when he said in a 2004 New Yorker profile that there are "symbiotic moments between political and business interests." He is a master at finding these moments and promoting the political careers of those who will do his bidding.
Source: http://www.americanthinker.com/blog/2011/10/obamas_uganda_gambit_to_serve_soros.html
http://www.crisisgroup.org/en/regions/africa/horn-of-africa/uganda/157-lra-a-regional-strategy-beyond-killing-kony.aspx
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March 28, 2011
Soros Wins Under Obama's Energy Policies
By Ed Lasky
Are Barack Obama's energy policies influenced by hedge fund billionaire and political patron, George Soros?
Abby Wisse Schacter, in the New York Post, notes that the Obama administration is clamping down on oil and gas development in America (both onshore and offshore) but is hell-bent on helping other nation's tap their resources and points out that such help is being showered specifically in New Guinea, of all places.
It is starting to look obvious that the administration doesn't want oil exploration and extraction at home while it is promoting the same exploration and extraction elsewhere -- specifically Brazil and New Guinea. "The Bureau of Ocean Management, Regulation, and Enforcement (BOEMRE) has assigned only six drilling engineers to process all permit applications pending in the Gulf of Mexico. While Michael Bromwich bemoans a lack of the staff necessary to speed up the process, he's sending his staffers to Papua New Guinea to advise its officials on ways to develop the country's offshore drilling infrastructure. A significant portion of the agency's budget is covered by fees, royalties, taxes, and rents from energy production, so curtailing drilling closes off cash flow too.
Others have commented on Obama's generosity regarding Brazil's oil wealth and how those actions might help George Soros.
But focus should now turn towards the exotic land of New Guinea.
New Guinea? Why there? Why is he using our taxpayer dollars to help energy development in New Guinea? Hasn't Secretary of the Interior Salazar bemoaned that his budget is just not large enough to process all the drilling permits submitted for tapping America's oil and gas wealth? Why are he and the President devoting staff and money to help that undeveloped island nation?
Perhaps, he just wants to pay back George Soros, who was so instrumental in helping his election and the election of fellow Democrats across America. George Soros is the Patron Saint of the Democratic Party and was a very early and generous supporter of Barack Obama's. Soros even used a loophole in Federal campaign laws that allowed him and his family to give outsized donations to Barack Obama; he also fielded his army of so-called 527 groups (such as MoveOn.Org) to help Obama win the Oval Office.
Soros also stands to massively benefit if New Guinea becomes an energy power, especially if the American taxpayer subsidizes this development.
As I have written before (see Cheap Natural Gas and Its Enemies; Cheap Natural Gas and its Democratic Enemies) George Soros, through his hedge fund, has a huge ownership interest in a company called InterOil (stock symbol IOC), whose one major asset is reportedly a huge reservoir of natural gas in New Guinea. He has been increasing his ownership stake in recent months and, as of last November, showed an 11.9% ownership stake. His InterOil holding is the third-largest stock holding in his hedge fund.
InterOil has been subject to some controversy -- there are some investors who are shorting the stock, thinking that the reserves may not be as large as claimed and that it will be very difficult to develop them given the problems with developing energy resources in such an undeveloped nation and the heavy expenses overcoming those problems entail.
The stock has been soaring upward, along with the rise in energy prices. The move may also be related to the prospect that Japan will rely more on liquefied natural gas (LNG) imports (from Asian nations such as New Guinea) to power its economy in the wake of its nuclear energy problems.
But there may also be a short squeeze propelling the stock upwards. This occurs when people sell the stock short. Shorting happens when investors think a stock will fall in price. They borrow the stock from others and then sell it. They hope to be able to replace the stock they borrowed by buying it back in the market after the stock price has declined. They profit if the price they pay to buy it back (and return it to the people they borrowed it from is lower than the price they sold it at).
The nightmare for short-sellers is when the price of the stock moves contrary to what they hoped, and it moves up. Then the pain and bloodletting starts. They may face margin calls. They have to see their shorts decline in value as the stock price moves up. They may eventually be forced to buy back the stock at ever high prices. Sometimes, if there is a large short position in terms of the percentage of the stock float, serious pain ensues as the stock shoots upwards when they are compelled to meet margin calls and cut their losses. Being caught on the wrong side of a short squeeze is akin to being subject to the Wall Street equivalent of water-boarding.
Meanwhile, those who own the stock (are "long" the stock) are happily counting their riches as the value of their stock soars. They laugh all the way to the bank, as the shorts lie bloodied, bruised, and defeated, all but begging for mercy.
How can one help engineer a short squeeze? One proven way is to foster a positive news flow that boosts the prospects for the stock and send its shares upwards. Sometimes, public relations firms are involved as they spin out a series of "news" items that promise untold riches to come from a company and its shareholders (a new product, new customers and contracts, the possible sale of the company).
However, the hype can go into overdrive if you partner up with a more powerful and richer partner -- say, the United States of America.
In the case of InterOil, one big positive development has been Barack Obama's decision to invest taxpayer dollars in stoking the development of energy resources in New Guinea. InterOil disproportionally benefits from the steps Barack Obama has taken in New Guinea since InterOil's assets are dominated by its New Guinea operations. InterOil will not have to spend its own money to develop (basically, build from the ground up) the infrastructure that is needed to fully tap the wealth that lies under the leases that InterOil has in New Guinea.
Instead, the American taxpayer picks up the tab. Sweet deal. We pay the costs and InterOil (along with its major shareholder, George Soros) picks up the profits.
The market sees what is going on, even if the American taxpayers do not. The American government is picking favorites and InterOil is one of them.
Has Barack Obama made American taxpayers complicit in engineering a short squeeze in InterOil stock by deciding to help build up the nascent energy industry in, of all places, New Guinea?
This is far from the first time that political patrons of Barack Obama have minted money from his energy policies (for a partial list of the members of Barack Obama's "Friends and Family Program" who have benefited from his waste of taxpayer dollars on green schemes see Obama's Edifice Complex).
To compound the insult to American taxpayers, much of government spending comes from borrowing money from other nations, such as China. That nation is a huge energy importer. The Chinese would be among the first beneficiaries of the development of New Guinea energy resources. Why aren't the Chinese paying to develop New Guinea's energy wealth?
We won't be the beneficiaries from the spending of tax dollars in New Guinea? We may actually be the losers from all that spending.
We have an abundance of natural gas (due to the tapping of our own shale gas reserves); we don't need LNG. We have such vast amounts of natural gas that ports that were built to import LNG are being reconfigured to export LNG. Why is Obama spending our tax dollars to help a foreign competitor while increasing taxes exponentially on American oil and gas companies? Why encourage New Guinea to develop its LNG capability to export to China, Japan, and other nations when we can and should export our own LNG to them?
But helping America's oil and gas industry (and helping lower the energy bills for Americans) is not and never has been on the agenda of Barack Obama.
Obama's rewarding his friends and donors, who no doubt will reciprocate by supporting him in 2012, is Cook County Politics writ large. That modus operandi has always guided him.
Does his agenda include helping further enrich George Soros, sugar daddy of the Democratic Party?
Ed Lasky is news editor of American Thinker.
on "Soros Wins Under Obama's Energy Policies"
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PETROBRAS -- Brazilian Oil Company owned by George Soros
Obama got deep water drill permits, but no US corp WHY?
Source: by gosheven83 » Tue Mar 22, 2011
Petrobras got a 2 billion $ loan to deep drill compliments of Obama recently. Now they get to drill in OUR WATERS, while our companies don't and we will be buying oil from them. Who is president of Brazil right now? A communist revolutionary who did time for her involvement in the Communist movement in Brazil.
Mexico also got a 2 billion $ Loan to deep drill in the Gulf. Not sure of the ins and outs, but that's oil we should be drilling.
We are also just sitting by while China drills off Florida using Cuban permits, taking oil thats closer to the US waters than Cuban. The Chinese are unaccountable to our environmental standards. More chance of spill, no oil in US control which would bring down prices.
How clear does it have to be? We are being sold out. We are being deliberately torn down by an enemy from within.
Doesn't matter if you're a Republican, Democrat, or Independent. If you plan to live in this country you should be very concerned.
Also you should be concerned about the media covering this up. I mean politics is one thing, but to cover up a big sell out like this? Something may be rotten in Denmark, and it probably is, but there is no doubt something is stinking to high heaven right here at home.
If we don't pull our heads out our country will be sold out from under us while we squabble over issues that seem to be planted to smoke screen what is really doing our country grave damage.
If the Republicans were really on the people's side, they would be yelling bloody murder about this and shutting things down. I was hoping there was someone on our side, but sadly, I don't think there is. Maybe just the Tea Party, maybe not even all of those.
It's up to we the people, our government officials are selling us out.
http://www.grantmoneyadvisor.com/petrobras-brazilian-oil-company-owned-by-george-soros-obama-got-deep-water-drill-permits-but-no-us-corp-why-t92754.html
Check out this link: Lists Players and How the US shows its cards while the rest of the world holds their economic information to themselves.
http://www.chathamhouse.org/sites/default/.../Africa/250810summary.pdf
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Organization helped to place Salazar in office…
Founded in 1962 by the Hungarian nuclear physicist Leo Szilard (who was also a longtime socialist activist and an alleged Soviet agent) and other scientists who likewise had pioneered the development of atomic weapons?but who now worried that such agents of destruction posed a grave threat to all humanity?the Council for a Livable World (CLW) is a nonprofit advocacy organization whose mission is “to advocate for sensible national-security policies and to help elect congressional candidates who support them.” Toward that end, CLW lobbies legislators, holds seminars, and uses the media to push for a dramatic downsizing?and the eventual elimination?of America's nuclear-weapons cache. In CLW's calculus, it is “short-sighted and counter-productive to continue relying on Cold War measures such as [the stockpiling of] overwhelming nuclear arsenals … for our nation's security.”
CLW reviled President Ronald Reagan, whose administration, the organization warned, was guilty of "launching a massive escalation of the nuclear arms race." CLW sought not only to derail Reagan's planned deployments of the MX missile and the B-1 bomber, but also called for across-the-board defense-budget cuts during his presidency. On May 2, 1982, CLW and Physicians for Social Responsibility co-sponsored a Washington, DC conference on the potentially catastrophic medical consequences of a nuclear war. During that same period, CLW used its tax-exempt Education Fund to accept and process financial contributions to the Randall Forsberg-founded Nuclear Weapons Freeze Campaign, which had not yet secured its own tax-exempt status.
In 1997, CLW was one of more than 100 leftist organizations that co-sponsored and launched the so-called “Progressive Challenge,” in an effort to unite their activities and talking points under a “multi-issue progressive agenda.” To view a list of many of these co-sponsors, which worked closely with the Congressional Progressive Caucus, click here.
CLW has established a Candidate Fund to accept donations earmarked for political candidates who promote the organization's main agendas. Though the organization identifies itself as “non-partisan,” the vast majority of the candidates whom it supports are Democrats. CLW's political action committee, PeacePAC, plays a key role determining which candidates are worthy of the organization's backing.
Over the course of its history, CLW has lent its tactical and financial support to hundreds of congressional candidates, including Tammy Baldwin, Joseph Biden, Barbara Boxer, Carol Moseley Braun, Sherrod Brown, Robert Byrd, Jon Corzine, Peter DeFazio, Rosa DeLauro, Chris Dodd, Dick Durbin, Robert Edgar, Lane Evans, Sam Farr, Dianne Feinstein, Bob Filner, Barney Frank, Al Franken, Al Gore, Raul Grijalva, Tom Harkin, Maurice Hinchey, Edward Kennedy, John Kerry, Dennis Kucinich, Patrick Leahy, Barbara Lee, George McGovern, Jim McGovern, Barack Obama, Nancy Pelosi, Harry Reid, Bernie Sanders, Jan Schakowsky, Patricia Schroeder, Joe Sestak, Maxine Waters, Mel Watt, and Lynn Woolsey.
CLW is led by an 18-member board of directors and a 14-member national advisory board, both of which are composed of individuals known for their achievements in such varied fields as academia, jurisprudence, business, politics, economics, and philanthropy. Among the more notable national advisory board members are Julian Bond, Margaret Gage, and Patricia Schroeder.
CLW's current chairman is Ira Lechner, who succeeded former U.S. Senator Gary Hart in that position. A labor attorney by profession, Lechner, a Democrat, served in the Virginia State Legislature from 1973-77. In later years, he ran for lieutenant governor of Virginia and for a seat in the U.S. House of Representatives. In the run-up to the 2008 elections, he was the original organizer of the "Obama for President" campaign in San Diego and later served as a fundraiser for Barack Obama.
The executive director of CLW is John Isaacs, who has represented the Council on Capitol Hill since 1978. Isaacs previously served as a legislative assistant to New York congressman Stephen Solarz, and as a legislative representative with Americans for Democratic Action.
CLW has staked out clear positions on a number of major political issues:
- Wars in Iraq and Afghanistan: CLW strongly opposed the U.S. invasion of Iraq in 2003. Asserting that the war was both “unjustified” and based on “purposefully distorted intelligence,” the organization maintains that American military actions of any kind should be “pursued in concert with U.S. allies” rather than unilaterally.
- Iran: "[T]he main factor driving Iran's interest in nuclear technology," says CLW, "... is national pride. Unfortunately, United States policy has been to publicly threaten and insult Iran while taking provocative actions such as adopting a policy of regime change, attempting to increase unilateral sanctions, [and] deploying additional military assets in the region.... Such policies are counterproductive.... Iran does not pose an imminent threat to the U.S. and is unlikely to do so for years ...”
- Defense Spending: “[T]here are many parts of the [American] defense budget which consume massive ... resources but provide little return in terms of security.”
- North Korea: “[T]he United States must engage North Korea diplomatically to negotiate a verifiable and irreversible disarmament process and a halt to its nuclear weapons program. Sanctions alone are not a viable solution.”
- Nuclear Weapons: CLW exhorts the U.S. to “oppos[e] the development of new nuclear weapons”; “commi[t] to a 'no first use' of nuclear weapons pledge”; “tak[e] nuclear weapons off hair-trigger alert”; “ratif[y] the Comprehensive Nuclear Test Ban Treaty”; and make “deep cuts in the U.S. nuclear arsenal.”
Each year since 2006, CLW, in conjunction with the Center for Arms Control and Non-Proliferation, has presented its Father Robert F. Drinan National Peace and Human Rights Award to individuals who exemplify a “commitment to peace and human justice.” Named after an avidly antiwar Catholic priest who served five terms in Congress during the 1970s, this award focuses broadly on U.S. politics, physical science, biology, peace studies, and peace and human-rights activism. Past recipients include such notables as Senators Ted Kennedy and Dianne Feinstein, and Congressional Representatives Barney Frank, David Bonior, and Jim McGovern.
In 2005 Ken Salazar co-sponsored the Vehicle and Fuel Choices for American Security Act, which would have required the federal government to develop a strategy to cut U.S. oil consumption by 10 million barrels per day by the year 2031.
In 2007 Salazar co-sponsored a bill calling for more research into the possibility that America's arid Western states might be prone to "experience the effects of climate change sooner and more intensely than most other regions."
In November 2007 Salazar stressed the need for the U.S. to move away from fossil fuels in order to “improve our energy security and reduce our dependence on foreign oil”; reduce the likelihood that “we will continue to be entrenched in conflicts over resources in every corner of the world”; and “triumph in our fight against oil-funded extremists and terrorists.”
Throughout his tenure in the U.S. Senate, Salazar strongly opposed the George W. Bush administration's efforts to open land in Colorado and other Western states to oil-shale development, citing concerns about “whether the [oil-shale] technology is commercially viable,... how much carbon would be emitted,... [and] what the effects would be on Western landscapes.”
Similarly, in 2008 Salazar vowed to reject all new offshore oil-drilling ventures—even if gasoline prices were to reach $10 per gallon.
For an overview of Salazar's voting record on key legislative items during his years in the Senate, as well as the performance ratings he received from various special-interest groups, click here.
In December 2008, President-elect Barack Obama asked Salazar to head the Interior Department of his forthcoming administration. The Senate confirmed Salazar for the post on Obama's inauguration day, January 20, 2009.
As Secretary of the Interior, Salazar has continued to aggressively block efforts to lease oil-shale rights in the Western United States, as well as efforts to initiate offshore oil- and gas-drilling projects -- a position that hardened after the 2010 BP/Deepwater Horizon oil leak into the Gulf of Mexico. In a report which he issued on May 27, 2010, Salazar recommended a six-month moratorium on all deepwater drilling—notwithstanding the fact that five out of seven consulting engineers had stated that such drilling had a strong safety record, and that targeted inspections would be more sensible than a blanket moratorium.
In June 2010, federal judge Martin Feldman of Louisiana ordered Salazar and the Obama administration to lift their “arbitrary and capricious, and therefore, unlawful” ban on offshore drilling in the Gulf. The following month, when a U.S. Court of Appeals denied Salazar's bid to put a hold on Feldman's order, the Interior Secretary promptly concocted a second, “revised” moratorium to replace the one Feldman had nullified. Though Salazar officially “lifted” this second ban three months thereafter, he issued no additional drilling permits that year. Rather, in 2010 he actually rescinded 77 oil-lease contracts that had previously been granted—after seven full years of rigorous study and debate—during the final days of the Bush administration. Federal courts repeatedly scolded Salazar and the White House for their “determined disregard” of judicial orders and their “increasingly inexcusable” action on stalled deepwater drilling projects, to no effect.
In February 2011, Judge Feldman—complaining that the Obama administration’s “time delays at issue here are unreasonable”—ordered Salazar and the President to decide within a month whether they would grant a set of five permits for deepwater drilling projects in the Gulf of Mexico. Obama and Salazar chose not to comply for several weeks, and instead issued yet another request to the 5th Circuit Court of Appeals for a stay of Feldman's order. Finally, in March 2011 Salazar gave the Shell Offshore Company permission to apply for drilling permits for three new exploratory wells off the Louisiana coast.
In mid-March 2011, Salazar angered many environmentalists when he characterized coal as "a critical component of America’s comprehensive energy portfolio," and announced that nearly 758 million tons of Wyoming coal would go up for sale in the coming months. Soon after Salazar's announcement, three environmental groups—WildEarth Guardians, the Sierra Club, and Defenders of Wildlife—issued a joint statement criticizing the decision.
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Source: REPORT_-_Rising_Energy_Costs_An_Intentional_Result_of_Government_Action.pdf
U.S. House of Representatives
Committee on Oversight and Government Reform
Darrell Issa (CA-49), Chairman
RISING ENERGY COSTS: AN INTENTIONAL RESULT OF GOVERNMENT ACTION
STAFF REPORT U.S. HOUSE OF REPRESENTATIVES 112TH CONGRESS MAY 23, 2011
Findings
1. Key Obama Administration figures have expressed a belief that Americans should pay more for energy – a pattern of actions shows the Administration is, in fact, pursuing an agenda to raise the price Americans pay for energy.
President Obama, Energy Secretary Chu and others have stated that American
consumers should pay more for energy, including electricity and gasoline. From a
political perspective, increasing the price of energy (by whatever means) helps them
make the case for “green” energy. Even beyond the effort to raise energy prices through “cap and trade” legislation that Congress rejected, a pattern of increased enforcement, regulatory delay and new hurdles can be seen across numerous agencies and approval processes. The result of this government action is less production, higher costs for producers, and more expensive energy.
2. While the Administration touts nascent “green” energy technologies, U.S. domestic
energy resources are currently the largest on earth—greater than Saudi Arabia, China and Canada combined. New developments in drilling and extraction technology have dramatically expanded the amount of total recoverable reserves of oil and natural gas. Much of this, however, may be put off-limits by the government.
3. Still trying to capitalize on domestic energy resources, U.S. firms are nevertheless investing billions of dollars to tap newly recoverable resources in California, Texas, Colorado and North Dakota, among others.
By 2015, fields in these areas could yield more daily oil than the Gulf of Mexico produces today, boosting domestic production by 20-40 percent and increasing our energy independence if government action does not severely restrict development and yields.
4. Recent Administration action has already led to significant cost and regulatory barriers that have limited domestic production of oil.
Even before the Gulf oil spill, the Department of the Interior had undertaken significant steps to restrict access to much of the energy resources located in the outer continental shelf: Alaska, the Gulf of Mexico, and along the Atlantic and Pacific coasts.
5. Other agencies have stepped up their efforts to indirectly curtail energy production through environmental regulations.
The U.S. Fish and Wildlife Service has proposed placing the dunes sagebrush lizard that lives in New Mexico and Texas on the Endangered Species list—designation that would severely restrict production activity in a resource-rich part of Texas.
6. EPA has collaborated with environmental groups to target independent energy producers for environmental concerns not related to their operations.
In an email message reviewed by the Committee, environmental advocates and EPA’s
Texas-based regional director exchanged celebratory accolades for efforts that create barriers to energy production. One exchange concluded: “Yee haw! Hats off to the new Sheriff and his deputies!”
7. President Obama’s proposal to increase taxes on the energy industry will cost American jobs and hamper economic recovery.
Independent operators are responsible for 95 percent of domestic oil and gas wells and they currently invest 150% of their domestic cash flow back into future projects
development. Tax increases proposed by President Obama, some of which would be
transferred to “green” energy producers, would cost energy producing firms a combined $12 billion in the first year.
8. Some green energy sources the Administration is promoting at the expense of expanded domestic oil, gas, and coal supplies create unintended environmental, security and economic consequences.
Green energy technology like batteries, turbines, hybrid power systems and similar
technologies require “rare earth” commodities. China has a “near monopoly” on this
market controlling between 95-100 percent of the market. Further, China derives 71
percent of its own energy needs from coal. Ethanol, for example, also requires large
amounts of corn to deliver fuel. “[T]he entire U.S. corn crop would supply only 3.7
percent of our auto and truck transport needs while using 300 million acres of U.S.
cropland.”
INTRODUCTION
In his 2010 State of the Union address, President Obama declared, “the nation that leads the clean energy economy will be the nation that leads the global economy…America must be that nation.”1 Yet today, more than 80% of the United States’ primary energy comes from carbon-based resources that cannot easily, cheaply, or quickly be replaced.2 Even so, the Administration is aggressively suppressing the use of carbon-based energy sources in the United States. To do so, it is pursuing a broad array of measures to block carbon-based energy extraction, to tax, and to otherwise increase the costs of its use, and to subsidize wherever possible the development and use of so-called “clean energy.” The economic and geopolitical
implications of such a policy, if it is successful, are not good for the United States. It will make the United States poorer and more susceptible to the pressures of countries that now control a large share of the world’s oil—countries, which for the most part, do not share America’s goals or ideals.
1 President Barack Obama, Remarks by the President in the State of the Union Address (Jan. 27, 2010) available at http://www.whitehouse.gov/the-press-office/remarks-president-state-union-address.
2 Energy Information Administration, Energy in Brief, “What are the major sources and users of energy in the United States?” (Updated: Oct. 28, 2010) available at
http://www.eia.doe.gov/energy_in_brief/major_energy_sources_and_users.cfm
3 Deroy Murdock, Obama Declares War on Coal, NAT’L REVIEW (Nov. 3, 2008) Original source: audio/video of Obama’s appearance before the San Francisco Chronicle’s editorial board in Jan. 2008.
The Obama Administration has advanced an agenda that discourages development of
domestic carbon-based energy resources. Administration actions include the threat of new federal regulation of hydraulic fracturing, withdrawal of federal lands, both on and offshore, from energy production, increasingly burdensome requirements for oil shale research and development leases, and a de facto moratorium on drilling permits. This strategy has added to permitting delays, created additional layers of review, and prolonged study periods. In addition, other laws such as the Endangered Species Act and the Clean Air Act have been used to further suppress domestic oil and gas production, leading to higher gasoline prices and growing dependence on foreign oil. The Administration has also proposed a series of discriminatory tax
increases targeting oil and gas producers in order to subsidize its favorite industry: so-called “clean energy” (primarily wind and solar).
The Administration’s bias against carbon-based fuels should come as no surprise. The
President ran on an agenda that anticipated higher energy costs:
Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.… Coal-powered plants, you know, natural gas, you name it, whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money.
3 Some of his key cabinet officials have expressed similar views. Prior to his confirmation as Secretary of Energy, Steven Chu, then director of the Department of Energy's Lawrence Berkeley National Lab, advocated raising gas taxes--and therefore prices--to encourage the sale of more-efficient cars: “[s]omehow we have to figure out how to boost the price of gasoline to the levels in Europe."4
4 Neil King Jr. and Stephen Power, Times Tough for Energy Overhaul, WALL STREET J. (Dec. 12, 2008), available at http://online.wsj.com/article/SB122904040307499791.html.
5 President Barack Obama, Remarks by the President in the State of the Union Address (Jan. 25, 2011), available at http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-president-state-union-address.
This report will examine specific Obama Administration policies targeting oil and gas
production from both a regional and national perspective. Additionally, it will take a close look at the regional and local impacts of the growing web of laws, regulations, policies and tactics aimed at suppressing the development and production of domestic, carbon-based energy reserves that the President has labeled “yesterday’s energy.”5
President Obama’s policy bias against fossil fuels
The Obama Administration is promoting a clean energy agenda at the expense of
domestic oil and gas production. Administration officials, including the President, have publicly stated that increasing domestic oil and gas production is important to stabilize gasoline prices. However, a review of their actions reveals a systemic effort to prevent, obstruct, stall, and discourage development of carbon-based resources. This strategy is articulated by Secretary Geithner and is observable in actions by Administrator Jackson and Secretary Salazar. Unfortunately for Americans struggling with higher gas prices, Administration rhetoric will provide no relief. However, the Administration’s actions can inflict more pain.
In March 2009, Treasury Secretary Timothy Geithner explained to Senator John Cornyn
(R-Texas) that the Obama Administration planned to increase taxes on domestic oil and gas producers even though this policy will decrease domestic oil production and increase America’s dependence on foreign oil and gas:
Senator, as you know, and I think it's clear in the proposal, we don't believe it makes sense to significantly subsidize the production and use of sources of energy that are dramatically going to add to our climate change imperative.
. . . But as I said, the overall objective is not to be providing ongoing subsidies to forms of energy production that are going to add to this critical long-term imperative of climate change.(emphasis added)
…And I think this is a reasonable policy, given the overall objective of again making sure we're not providing artificial
6 incentives, to produce and use energy that's going to make our broader climate-change imperatives worse.6 (emphasis added) Translation: in order to achieve the President’s vision of a carbon free economy, the productionand development of fossil fuels would be punished.
Phase One: Cap-and-Trade
Since his first day in office President Obama has worked to advance his “green energy
agenda.” This agenda was originally manifested in the Presidents cap-and-trade scheme, which was summarily rejected by Congress. Cap-and-trade legislation, “a combination of energy taxes and carbon controls”7 failed to garner enough support to pass both houses of Congress. “Realistically, the cap-and-trade bills in the House and the Senate are going nowhere,” said Senator Lindsey Graham (R-SC), who was trying to fashion a bipartisan package of climate and energy measures. “They’re not business-friendly enough, and they don’t lead to meaningful energy independence. . . . What is dead is some massive cap-and-trade system that regulates
carbon in a fashion that drives up energy costs.”8 Some view the massive failure of cap-and trade as the impetus for the President’s renewed focus on clean energy: “cap and trade by another name.”9
Before EPA issued the Endangerment Finding for Greenhouse Gasses under the Clean
Air Act (CAA), the White House and the agency had been warned by economists, legislators, and their own advisors that the GHG regulations would impose a high cost on the economy via higher energy prices and increased uncertainty. Former Energy and Commerce Chairman Dingell famously stated in April 2008 that regulating GHGs under the CAA would result in a “glorious mess”
Failing to pass cap-and-trade, the Administration turned to regulation to do what it
couldn’t via Congress. Namely, EPA issued the controversial endangerment finding for CO2 and other greenhouse gases (GHGs). This finding put in motion the onerous mechanisms of the Clean Air Act which imposes enormous costs on consumers of carbon-based fuel.
10 that would wreak havoc on the economy. In March 2009, then-Ranking Member Issa
warned EPA that, . . . the immediate result of issuing an endangerment finding is that thousands of American small businesses, already struggling in one of the toughest economic [climates] our generation has ever seen, will be thrown into a sea of legal uncertainty, further depressing their ability to stay viable.11
6 The President’s Fiscal Year 2010 Budget Proposal, Part One: Hearing Before S. Comm. on Finance, 111th Cong. (2009).
Bottom line: the Administration knew that the implementation of EPA’s GHG regulations would have a large economic impact. During consideration of cap-and-trade legislation, a top White House economic official warned that, “if you don’t pass this [cap-andtrade] legislation then…the EPA is going to have to regulate in this area. And it is not going to
7 Iain Murray and William Yeatman,Cap and Trade, NAT’L REVIEW ONLINE, March 12, 2010.
8 John M. Broder and Clifford Krauss, Advocates of Climate Bills Scale Down Their Goals, NEW YORK TIMES, Jan. 26, 2010.
9 Kimberley A. Strassel, Cap and Trade Returns from the Grave, WALL STREET J. ONLINE, Jan. 28, 2011, available at http://online.wsj.com/article_email/SB10001424052748703893104576108501552298070-lMyQjAxMTAxMDIwODEyNDgyWj.html.
10 A Glorious Mess, WALL STREET J. (Apr. 12, 2008).
11 Letter from the Hon. Darrell E. Issa, Ranking Member, Oversight Committee to the Hon. Lisa P. Jackson, Administrator, U.S. EPA (Jan. 13, 2010).7 be able to regulate in a market-based way, so it’s going to have to regulate in a command-andcontrol way, which will probably generate even more uncertainty.”
12 Phase Two: Promote “New Energy;” Discourage “Yesterday’s Energy”
The Administration remains steadfast in its efforts to force a shift from oil and gas to socalled “clean energy.” In its recent report on energy policy, 13 the Administration pays lip service to the proposition that America needs to expand domestic oil and gas production, but offers no serious plan to accomplish the expansion. Instead, it promotes “clean energy” policies that would decrease domestic oil and gas production, ignoring the evidence that such policies would contribute to higher gasoline prices and increase America’s dependence on foreign oil, as well as
contribute to the further loss of American jobs. In his 2011 State of the Union address,the President stated “none of us can predict with certainty what the next big industry will be or where the new jobs will come from,” yet only a few moments later he predicted that the next big industry will be clean energy: “. . . clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling.
So tonight, I challenge you to join me in setting a new goal: By 2035, 80 percent of America’s electricity will come from clean energy sources.” 14 The President’s push for clean energy tomorrow comes at the expense of affordable energy today. The United States has an abundance of carbon-based fuels; yet, restricted use will artificially and unnecessarily raise the cost of energy for U.S. consumers. America’s combined energy resources are the largest on earth. They eclipse Saudi Arabia (3rd), China (4th) and Canada (6th) combined – and that’s without including America’s shale oil deposits.15 U.S. proven reserves of oil total 19.1 billion barrels, reserves of natural gas total 244.7 trillion cubic feet, and natural gas liquids reserves of 9.3 billion barrels. 16“That’s enough oil to maintain America’s current rates of production and replace imports from the Persian Gulf for more than 50 years.” 17 Undiscovered technically recoverable oil in the United States is 145.5 billion barrels, and undiscovered technically recoverable natural gas is 1,162.7 trillion cubic feet. 18 Alternative Energy: Is it Really Green? Converting from a carbon-based economy towards “greener” energy would be costly in more ways than one. “In its headlong rush to go ‘green,’ the United States may simply be trading reliance on one type of import for reliance on another.”19
12 Jonah Goldberg, Dirty Moves Behind Pitch for Cleaner Air, BOSTON HERALD (Dec. 13, 2009).
13 Blueprint for a Secure Energy Future (Mar. 30, 2011), available at
http://www.whitehouse.gov/sites/default/files/blueprint_secure_energy_future.pdf.
14 President Barack Obama, Remarks by the President in the State of the Union Address (Jan. 25, 2011) available at http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-president-state-union-address.
15 Peter C. Glover, U.S. Has Earth’s Largest Energy Resources, ENERGY TRIBUNE (Mar. 24, 2011), available at http://www.energytribune.com/articles.cfm/6933/US-Has-Earths-Largest-Energy-Resources.
16 Gene Whitney, et al, U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary, CRS REPORT TO CONGRESS, Nov. 30, 2010.
17 Press Release, U.S. Senate Committee on Environment and Public Works, Government Report: America’s Combined Energy Resources Largest on Earth (Mar. 11, 2011).
18 Id.
19 Robert Bryce, POWER HUNGRY (Public Affairs) (2010).8 States “will need rare earth commodities produced by the Chinese as well as lithium mined by a handful of foreign countries.”
20 China has a near-monopoly on rare earths, controlling between 95-100 percent of the elements essential to most clean energy technologies including wind
turbines, hybrid cars, solar panels, computers, and batteries.
21 Instead of importing foreign oil from multiple countries, adopting clean energy technologies would require the United States to become reliant on the Chinese to provide these essential elements. Besides all the other problems with becoming dependent on China for the sole supply of rare earth elements necessary to increase America’s use of so-called clean energy, increasing the demand for these elements would only add to China’s coal and oil consumption. China is the world’s second largest energy consumer. Coal supplied the vast majority (71 percent) of China’s total energy consumption of 85 quadrillion British thermal units (Btu) in 2008. Oil is the secondlargest source, accounting for 19 percent of the country’s total energy consumption. While China has made an effort to diversify its energy supplies, new sources of renewable energy account for only 4.2 percent of China’s energy consumption.
22 EIA estimates that China’s absolute coal consumption should nearly double to 112 quadrillion Btu by 2020. 23 The logic of using more carbon-based fuels in China to create more clean energy in the United States is flawed. CO2 is highly diffuse in the atmosphere such that emissions in China impact the United States as much as emissions originating in California. It is also a fallacy that a conversion to clean energy would create new jobs in the United States. In addition to the jobs that will be lost in the oil and gas production industry to subsidize the Obama Aministration’s conversion to so-called clean energy, “China’s near-monopoly control of the green elements likely means that more of the new manufacturing jobs related to “green” energy products will be created in China, not the United States.” 24 In addition to solar and wind, biofuels intended to reduce or replace U.S. gasoline consumption are already costing taxpayers and are not a long-term practical solution
25 for replacing carbon-based fuels. Total agriculture-based biofuels production accounted for only about 5% of total U.S. transportation fuel consumption (on a gasoline-equivalent basis) in 2010. Federal biofuels policies have had costs, including unintended market and environmental consequences and large federal outlays (estimated at over $7 billion in 2010).26
In a 2010 study, the Congressional Budget Office estimated “taxpayers incur a cost of $1.78 for replacing 125,000 Btus of energy supplied by petroleum fuels with 125,000 Btus supplied by ethanol.” 27 20 Id. This year, the corn-ethanol sector will produce about 13.8 billion gallons of ethanol, the energy equivalent of about 9.1 billion gallons of gasoline . . . the domestic-drilling sector provides about 21 Id. 22 Energy Information Administration, Country Analysis Briefs: China (Nov. 2010), available at http://www.eia.doe.gov/EMEU/cabs/China/pdf.
23 Id.
24 Id.
25 James Jordan and James Powell, The False Hope of Biofuels, WASHINGTON POST, July 2, 2006.
26 Randy Schnepf, Agriculture-Based Biofuels: Overviews and Emerging Issues, CRS REPORT FOR CONGRESS, Jan. 11, 2011.
27 USING BIOFUEL TAX CREDITS TO ACHIEVE ENERGY AND ENVIRONMENTAL POLICY GOALS, A CBO Study (July 2010)
9
36 times as much energy to the U.S. economy.28 Thus the entire U.S. corn crop would supply only 3.7 percent of our auto and truck transport demands. Using the entire 300million acres of U.S. cropland for corn-based ethanol production would meet only about 15 percent of the demand.29 Tim Searchinger, a research scholar at Princeton University’s Woodrow Wilson School, says that biofuels don’t make much sense because it “takes a huge amount of land to produce a modest amount of energy.” The key issue, says Searchinger, is scale. He points out that even if we used “every piece of wood on the planet, every piece of grass eaten by livestock, and all food crops, that much biomass could only provide about 30 percent of the world’s total energy needs.”30
Regardless, the Obama Administration continues to emphasize unaffordable clean energy
policies at the expense of domestic carbon-based resources. A recent post on the White House blog summarizes the President’s position.31 The post and the accompanying graphic 32 demonstrate that the Obama Administration’s true position with domestic oil and gas production is to increase that industry’s taxes in order to provide subsidies for clean energy including electric cars and public transportation.33
28 Robert Bryce, Obama’s Happy Talk on Energy, NATL. REVIEW (May 10, 2011).
29 Id.
30 Robert Bryce, Biofuel Delusions, COUNTERPUNCH (Dec. 31, 2010).
31 The President on Jobs & Gas Prices, White House blog (May 6, 2011) available at http://www.whitehouse.gov/blog/2011/05/06/president-jobs-gas-prices-read-his-remarks-download-graphic.
32 http://www.whitehouse.gov/sites/default/files/gas_graphic_blogsize.jpg
33 The White House blogger encouraged everyone to “check it out below, or download it, print it, send it to your family, or hang it on your wall to add a splash of color.”
Source: The President on Jobs & Gas Prices, White House blog (May 6, 2011) available at http://www.whitehouse.gov/blog/2011/05/06/president-jobs-gas-prices-read-his-remarks-download-graphic.
Punitive Tax Increases
The Obama Administration wants to tax American oil and gas production to subsidize its clean energy agenda. Higher taxes will disproportionately and negatively impact American job creators in the independent oil and gas production market. Over the long run it will decrease domestic production and make the United States more vulnerable to world events.
In its FY2012 budget, the Obama Administration requests over $60 billion in direct tax and fee increases (over ten years) on American energy production. Some of the most substantial energy tax and fee proposals in the President’s FY 2012 budget include: 34
34 Press Release, U.S. House of Representatives, Committee on Natural Resources, Budget Watch (Feb. 14, 2011), available at http://naturalresources.house.gov/News/DocumentSingle.aspx?DocumentID=225077.
35 Jack Lew, Office of Management and Budget, White House Press Briefing, (Feb. 14, 2011) available at
http://www.whitehouse.gov/the-press-office/2011/02/14/press-briefing-omb-director-jack-lew-and-cea-chairman-austan-goolsbee-bu.
36 FY2012 federal budget request, Terminations, Reductions, and Savings, Dept. of Energy, p. 52.
37 Letter from President Barrack Obama to Rep. John Boehner, Rep. Nancy Pelosi, Senator Harry Reid, and Senator Mitch McConnell (April 26, 2011) (on file with author).
38 Press Release, White House, Weekly Address, Taxpayer Subsidies for Oil Companies are Neither Right, nor Smart, and They Should End (Apr. 30, 2011), available at http://www.whitehouse.gov/the-press-office/2011/04/30/weekly-address-taxpayer-subsidies-oil-companies-are-neither-right-nor-sm.
• Repeal Domestic Manufacturing Tax Deduction for oil and natural gas ($18.2 billion)
• Repeal expensing for intangible drilling costs ($12.4 billion)
• Repeal percentage depletion for oil and natural gas wells ($11.2 billion)
• Repeal percentage depletion tax on oil, gas and mineral properties ($4.9 billion for corporations, $890 million for individuals)
The Administration plans to use these tax increases to subsidize and promote the electric vehicle industry and other clean energy projects. Jack Lew, director of the Office of Management and Budget, describes the Obama Administration’s philosophy behind the tax increases requested in the FY2012 budget:
To invest in the industries and jobs of tomorrow, we invest $148 billion overall in research and development. And this supports our goal of putting a million electric vehicles on the road by 2015, doubling our share of electricity from clean energy by 2035, and reducing energy use in buildings by 20 percent by 2020. In part, we pay for this by eliminating 12 tax breaks that now go to oil, gas and coal companies, which will raise $46 billion over 10 years.35 (emphasis added)
The Administration characterizes the deductions and credits slated for elimination as “tax preferences,” or “oil and gas subsidies” that are costly to U.S. taxpayers and do little to either provide incentives for increased production or reduce prices to consumers.36 The President refers to them as “special” and “unwarranted”37“giveaways.”38 This characterization is inaccurate: the vast majority of these deductions and credits are widely available to all manufacturers. For example, the President’s proposal to eliminate the expensing of intangible drilling costs would
single out the oil and gas industry for discriminatory tax treatment. Intangible drilling costs
12 (IDCs) are non-salvageable items that can be expensed in the year that they were incurred.39 This tax treatment applies equally to shoe salesman as it applies to the oil and gas industry. For example, if a shoe salesman buys a shoe for $10 and sells it for $20, he doesn’t depreciate the shoe over 7 years, he expenses it. Similarly, there are a host of temporary, non-salvageable items called IDCs that some oil and gas companies can expense such as drilling services, mud, cement,testing services, things that are done before a well is completed and producing any oil or gas.40
Moreover, the oil and gas industry receives $2.8 billion in targeted tax incentives, less than 3 percent of all incentives, and far less than its smaller rivals in energy production, the renewable energy sector which receives $11.3 billion.41 The non-profit Tax Foundation questions why the Administration is penalizing the oil and gas industry by attempting to repeal tax deductions that are widely available to many other manufacturing sectors and warns that other manufacturing sectors may soon be penalized as well if they fall out of favor with the Administration:
Why, suddenly, should companies that produce t-shirts,hamburgers, toys, software, or rap music be qualified to receive the tax benefit but oil companies should not be? According to the explanation in Treasury’s Green Book, environmental politics
account for this distortion of sound tax and economic policy. The President promised during the G-20 Summit in Pittsburgh, to “phase out subsidies for fossil fuels so that the United States can transition to a 21st century energy economy.”42 (emphasis added) Former Democratic Congressman Harold Ford, Jr., also questions the need for tax increases and why the Administration wrongly labels tax credits as subsidies:
Why, when gas prices are climbing, would any elected official call for new taxes on energy? And characterizing legitimate tax credits as “subsidies” or “loopholes” only distracts from substantive treatment of these issues. Lawmakers misrepresent the facts when they call the manufacturing deduction known as Section 199—passed by Congress in 2004 to spur domestic job growth—a “subsidy” for oil and gas firms. The truth is that all U.S. manufacturers, from software producers to filmmakers and coffee roasters, are eligible for this deduction.43(emphasis added)39 Pathways to Energy Independence: Hydraulic Fracturing and Other New Technologies: Field Hearing before H. Comm. on Oversight and Government Reform, 112th Cong. (2011) (statement of Rock Zierman, CEO, California Independent Petroleum Association , available at http://oversight.house.gov/images/stories/Testimony/5-6-11_Zierman_Testimony.pdf.
40 Id.
41 Sean A. Hodge, Putting Corporate Tax “Loopholes” in Perspective, TAX FOUNDATION SPECIAL REPORT (Aug.
2010) (No. 184).
42 Id.
43 Harold Ford, Jr., Washington vs. Energy Security, WALL STREET J., May 11, 2011.
Many of these proposed tax changes, including repealing the expensing of intangible
drilling costs, have the effect of removing incentives available only to non-integrated companies (also referred to as “independents”).
44 Independent oil producers—those who get oil and natural gas out of the ground and do not refine, transport, market, or have retail sales of petroleum products—develop 95 percent of domestic oil and gas wells.
45 Independents produce 68 percent of domestic oil and produce 82 percent of domestic natural gas.46 While integrated companies (i.e. Chevron, Shell, BP) with vastly more capital may survive these tax increases in the short run, the independents will essentially be killed47 and good jobs will be lost.
44 Robert Pirog, CONGRESSIONAL RESEARCH SERVICE, OIL AND NATURAL GAS INDUSTRY TAX ISSUES IN THE FY2012 BUDGET PROPOSAL (Mar. 3, 2011).
45 Independent Petroleum Association of America, Fact Sheet: Increasing Taxes on America’s Independent Natural Gas and Oil (2011), available at http://www.ipaa.org/news/docs/Tax_Issue_Talking_Points_02-2011.pdf.
46 Id.
47 Id.
48 Id.
49 IHS GLOBAL INSIGHT (USA) INC., THE ECONOMIC CONTRIBUTION OF THE ONSHORE INDEPENDENT OIL AND NATURAL GAS PRODUCERS TO THE U.S. ECONOMY (April 2011), available at http://www.ipaa.org/news/docs/IHSFinalReport.pdf.
50 Id.
51 Id.
52 Pathways to Energy Independence: Hydraulic Fracturing and Other New Technologies: Field Hearing before H. Comm. on Oversight and Government Reform, 112th Cong. (2011) (statement of Rock Zierman, Chief Executive Officer, California Independent Petroleum Association), available at http://oversight.house.gov/images/stories/Testimony/5-6-11_Zierman_Testimony.pdf.
53 Telephone Interview with Chip Minty, Devon Energy (May 11, 2011).
54 Pathways to Energy Independence: Hydraulic Fracturing and Other New Technologies: Field Hearing before H. Comm. on Oversight and Government Reform, 112th Cong. (2011) (statement of William A. Whitsitt, Executive Vice President, Devon Energy), available at http://oversight.house.gov/images/stories/Testimony/5-6-11_Whitsitt_Testimony_FINAL.pdf
For those lucky enough to survive, eliminating tax credits and deductions for independents will certainly decrease capital investment and thus domestic exploration and production. Independents currently invest 150% of their domestic cash flow back into development.48 In 2010, upstream independents are estimated to have spent $62.6 billion on capital expenditures (capex).49 This translates to the creation of six direct and 33 total upstream jobs for every $1 million dollars of capex. In value added terms, every $1 million dollars of capital expenditure results in $2.4 million of direct and $5.1 million of overall contribution to GDP.50 In terms of taxes, every $1 million dollars of capex results in $1.1 million of total tax revenue generated in the upstream sector.51 According to Rock Zierman of California Independent Petroleum Producers, “only independent producers can fully expense IDC on American production. Therefore, if you eliminate IDC expensing, there would be less capital available in the current year to reinvest in new drilling operations. This equals less production, period.”
52 Even though the entire domestic natural gas and oil sector claimed only $2 billion in deductions in 2010, independent producers could lose as much as $12 billion in the first year after this deduction was repealed.53 Devon Energy, an independent producer in Oklahoma, estimates that eliminating IDC expensing could cost it $1 billion in the first year. “That would equate to our complete drilling program in the Barnett Shale. . . . That looks to us like it's a totally wrongheaded policy that would penalize companies that are most efficient at producing resources that power the nation.”54 Higher taxes equal less investment and more dependence on
foreign sources of oil. Less capital investment will lead to more dependence on foreign oil.
Repealing these tax credits and deductions will not only decrease capital investment and domestic exploration and production, but it will also eliminate good-paying jobs. The exploration and production portion of the industry employs about 500,000 workers at a wage rate over 50 percent higher than the average of all manufacturing.55 With unemployment rising to 9% in April 2011,56 America needs to create more jobs, not eliminate existing jobs by increasing taxes to subsidize clean energy technologies that are not capable of filling the void:
55 Independent Petroleum Association of America, Fact Sheet: Increasing Taxes on America’s Independent Natural Gas and Oil (2011), available at http://www.ipaa.org/news/docs/Tax_Issue_Talking_Points_02-2011.pdf.
56 BUREAU OF LABOR STATISTICS, EMPLOYMENT SITUATION SUMMARY (May 6, 2011).
57 Press Release, American Petroleum Institute, Joint Committee study ignores harm of raising taxes (May 13, 2011), available at http://www.api.org/Newsroom/jcomm-ignores-harm.cfm.
Annually raising taxes on the industry by billions of dollars would reduce investment in American oil and natural gas development, cost thousands of U.S. jobs, and, over time, reduce both energy production and the taxes and royalties generated from it. It would also increase imports. We wouldn’t reduce the deficit, and necessary government investments could be adversely affected. Those advocating tax increases, therefore, would be cutting off their nose to spite their face. Those who want more revenue should work to increase access to available U.S. oil and natural gas reserves, which have a long-term government revenue potential approaching $2 trillion. That could reduce the deficit and help finance critical government programs without raising energy costs and reducing supplies.57
While removal of these tax credits and deductions may be appropriate in conjunction with broad-based tax reform that reduces net tax rates, eliminates unnecessary burdens on job creators, and simplifies tax compliance, simply removing these provisions without tax relief elsewhere would have the effect of discouraging oil and gas exploration and development even more.
Far from seeking tax code simplification, or even additional revenues to reduce our deficits, the Administration is quite openly seeking ways of paying for the subsidies it would like to provide to “green energy” while at the same time making carbon-based energy more expensive.
Unfair tax treatment is just one piece of evidence in a two-year pattern of Administration policies that discriminate against oil and gas development in the United States. This discrimination hurts not only the energy independence of the country but local economies across the nation. The remainder of this report will provide examples of some of those policies in each of five geographic regions most likely to feel the repercussions: Appalachia, the Rocky Mountains, the Gulf, Alaska, and Texas.
I. APPALACHIAN REGION
The shale gas reserves of Appalachia are a game changer for the future of American
energy security. The United States has 2,552 trillion cubic feet (TCf) of potential natural gas resources, enough to last 110 years at current usage rates. Almost one-third of these resources are from shale gas -- considered uneconomical to extract until just a few years ago.58
Newly recoverable shale reserves, both oil and gas, have revitalized the oil and gas industry in Appalachia and across the United States – from North Dakota to south Texas to California. The Marcellus Shale formation lies below many of the Appalachian states and extends up to New York. In 2002, the U.S. Geological Survey estimated the Marcellus held 1.9 TCF of natural gas.59 In 2009, the Department of Energy estimated the Marcellus holds 262 TCF of recoverable natural gas.60
58 Energy Information Administration, What is shale gas and why is it important? (Apr. 4, 2011), available at http://www.eia.doe.gov/energy_in_brief/about_shale_gas.cfm.
59 NATIONAL PARK SERVICE, POTENTIAL DEVELOPMENT OF THE NATURAL GAS RESOURCES IN THE MARCELLUS SHALE 2 (Dec. 2008).
60 DEPARTMENT OF ENERGY, MODERN SHALE GAS DEVELOPMENT IN THE UNITED STATES: A PRIMER (April 2009).
61 Id.
62 Press Release, America’s Natural Gas Alliance, Safe, Responsible Drilling, available at
http://www.anga.us/media/41084/safe%20responsible%20drilling.pdf.
63 Id.
64 Jonathan Fahey, New Drilling Method Opens vast oil fields in US, THE ASSOC. PRESS (Feb 9, 2011).
The key to unlocking these additional reserves is a new application of a proven
technology called hydraulic fracturing (“fracking”). Fracking has the potential to reposition America from a country beholden to the Middle East for energy to a nation that has used ingenuity to utilize domestic resource exhaustion, but the Administration is threatening to kill the technology with unnecessary federal regulation. Advancements in fracking, coupled with the ability to drill horizontally, allow producers to access more gas with fewer wells. After drilling
vertically downward to a shale formation, the producer can turn the drill bit and drill horizontally through the formation. After drilling, a mixture of water, sand, and chemicals can be injected into the well to open up small cracks within the shale formation to allow the gas to travel to the well. The Energy Information Administration says that “without horizontal drilling and hydraulic fracturing, shale gas production would not be economically feasible because the natural gas would not flow from the formation at high enough rates to justify the cost of
drilling.”61 Fracking and horizontal drilling also reduce the environmental footprint necessary to tap this natural gas.62
The combination of fracking with horizontal drilling is making shale oil recoverable as well, greatly increasing our recoverable oil reserves around the country. The Bakken Shale in North Dakota is a stunning example. As a result of horizontal drilling, coupled with fracking, Bakken production increased from less than 3,000 bbl/d in 2005 to over 230,000 bbl/d in 2010.
The Bakken's share of total North Dakota oil production rose from 3% to 75% over those five years.63 Thanks in part to fracking, unemployment in North Dakota is now the lowest in the country – just 3.8%.64
North Dakota is not alone. Companies are investing billions of dollars to tap into oil deposits in Colorado, Texas, California, Oklahoma, and Louisiana as well. By 2015, these fields 16 could yield as much as 2 million barrels of oil per day – more than the Gulf of Mexico produces today -- boosting domestic oil production by 20 to 40%.65 According to Credit Suisse, development of these fields could reduce oil imports by 60% by 2020.66 Despite the success of fracking, federal agencies appear to be in a race to see which one can regulate it first. The Department of Interior announced last November that it will consider regulating fracking on federal lands.67
The EPA, which concluded seven years ago that fracking "poses little or no threat" to drinking water supplies,68 is revisiting the issue. Having found no evidence that fracking chemicals reach drinking water, EPA now wants to study the entire lifecycle of the water used. In addition, DOE has convened a study group to review the fracking
process. In a written statement, DOE Secretary Steven Chu stated, “I am looking forward to hearing from this diverse, respected group of experts on best practices for safe and responsible natural gas production.”69 Although the study groups members are certainly highly respected, a survey of their biographies indicates none has recent industry experience with the advancements in the technology.70
As Chairman Fred Upton of the Energy and Commerce Committee pointed out,71 the
duplicative efforts of DOI, DOE, and EPA run contrary to the Administration’s pledge to eliminate government waste and streamline processes. It mirrors the President’s favorite example of the headache caused by agency jurisdiction, “The Interior Department is in charge of salmon while they're in fresh water, but the Commerce Department handles them when they're in saltwater. I hear it gets even more complicated once they're smoked."72
Additional regulation of fracking is unnecessary because, as EPA Administrator Lisa
Jackson pointed out, fracking is not an unregulated activity. Federal regulation by
EPA, DOE, and DOI would cause needless delay and uncertainty along with multiple additional layers of red tape. Ultimately, federal intervention will chill investment and decrease energy independence.73
65 Id. Quite the opposite - the states, not the federal government, have always regulated the process and have done so with a solid track record. Officials in state after state have gone on the record to say that fracking has not caused
66 Id.
67 Ben Geman, Interior mulls policy on disclosure of gas ‘fracking’ fluids, THE HILL E2WIRE (Nov. 30, 2010).68
ENVIRONMENTAL PROTECTION AGENCY, EVALUATION OF IMPACTS TO UNDERGROUND SOURCES OF DRINKING WATER BY HYDRAULIC FRACTURING OF COALBED METHANE RESERVOIRS STUDY (2004), available at http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_coalbedmethanestudy.cfm.
69 Press Release, Department of Energy, Secretary Chu Tasks Environmental, Industry and State Leaders to Recommend Best Practices for Safe, Responsible Development of America's Onshore Natural Gas Resources (May 5, 2011).
70 Id.
71 Press Release, House Energy and Commerce Committee, Administration’s Inefficiencies Exposed: Plans for
Yet Another Study on Fracking Wastes Federal Funds on Duplicative (May 5, 2011).
72 Colin Sullivan, STATE OF THE UNION: Obama quip on salmon oversight fails to amuse Earthjustice, E & E DAILY, Jan. 26, 2011.
73 Oversight Hearing on Public Health and Drinking Water Issues: Hearing before S. Comm. on Environment & Public Works, 112th Cong. (2011) (testimony of Lisa Jackson, Administrator, U.S. Environmental Protection Agency), available at: http://epw.senate.gov/public/index.cfm?FuseAction=Hearings.Testimony&Hearing_ID=c8713cf7-802a-23ad-4d51-
bd8e2c8a7bd3&Witness_ID=d9783076-0a81-4f6a-895a-c34d7f21cc4d. 17 any problems and any reports to the contrary are inaccurate.
74 • David Neslin, Director of the Colorado Oil and Gas Conservation Commission: “There has been no verified instance of harm to groundwater caused by hydraulic fracturing.” As evidence, consider the following examples:
75 • Jennifer Means, Pennsylvania Dept. of Environmental Protection: “So far it has not been our experience that the fracking process has caused any water-supply issues.”
76 • James Welsh, Commissioner of Conservation, Louisiana Dept. of Natural Resources:
“The Louisiana Office of Conservation is unaware of any instance of harm to
groundwater in the State of Louisiana caused by the practice of hydraulic fracturing.”
77 • Harold Fitch, Director of the Office of Geological Survey, Michigan Department of Environmental Quality: “Hydraulic fracturing has been utilized extensively for many years in Michigan, in both deep formations and in the relatively shallow Antrim Shale formation. There are about 9,900 Antrim
78 wells in Michigan producing natural gas at depths of 500 to 2000 feet. Hydraulic fracturing has been used in virtually every Antrim well. There is no indication that hydraulic fracturing has ever caused damage to ground water or other resources in Michigan.”
79 The Obama Administration itself has even conceded that it has no evidence of fracking ever contaminating groundwater.
80 Those opposed to fracking have twisted the results of recent scientific studies to support their argument. The most recent example is a study published by Duke University researchers entitled, “Research and Policy Recommendations for Hydraulic Fracturing and Shale-Gas Extraction” which supposedly “shows one downside of fracking.” Nevertheless, fracking has become a political football.
81 74 Lee Fuller, March Madness: Small Group in Congress Renews Efforts That Could Cost Jobs, Undercut American Energy Security, ENERGY IN DEPTH, Mar. 17, 2011.
A close examination of the 75 INTERSTATE OIL AND GAS COMPACT COMMISSION, REGULATORY STATEMENTS ON HYDRAULIC FRACTURING SUBMITTED BY THE STATES, June 2009, available at
http://www.iogcc.state.ok.us/Websites/iogcc/Images/2009StateRegulatoryStatementsonHydraulic%20Fracturing.pdf.
76 Dennis J. O’Malley, Gas drilling forum offers hope, dispels myths, TIMES TRIBUNE, Oct. 20, 2010, available at http://thetimes-tribune.com/news/gas-drilling-forum-offers-hope-dispels-myths-1.1051387.
77 INTERSTATE OIL AND GAS COMPACT COMMISSION, REGULATORY STATEMENTS ON HYDRAULIC FRACTURING SUBMITTED BY THE STATES (June 2009).
78 The Antrim Shale is a formation in the Michigan Basin.
79 Id.
80 Federal Drinking Water Programs: Hearing Before the Environment and Public Works Committee, 111th Cong (2009) (testimony of Peter Silva, Assist. Admin. For Water), see also, Press Release, U.S. Senate Committee on Environment and Public Works (Dec. 8, 2009), available at http://epw.senate.gov/public/index.cfm?FuseAction=Minority.PressReleases&ContentRecord_id=70289be8-802a-
23ad-479d-ca2d6f6b36cd&Region_id=&Issue_id=.
81 Robert B. Jackson et al, Research and Policy Recommendations for Hydraulic Fracturing and Shale-Gas Extraction, Duke University Center on Global Change (May 2011) available at
http://nicholasinstitute.duke.edu/climate/policydesign/researchandpolicyrecommendationsforhydraulic-fracturingandshale2010gasextraction/at_download/paper.
82 Id.
83 GLOBAL SHALE GAS INITIATIVE, U.S. DEPARTMENT OF STATE, (last visited May 20, 2011) available at http://www.state.gov/s/ciea/gsgi/index.htm
84 43 U.S.C. § 1331 et seq.
85 CURRY L. HAGERTY, OUTER CONTINENTAL SHELF MORATORIUM ON OIL AND GAS DEVELOPMENT 7 (CRS 2011).
86 Press Release, U.S. House of Representatives Committee on Natural Resources, The New Obama Plan Has Americans Seeing Red, (Dec. 1, 2010) research, however, reveals that the study does not in any way support the conclusion that fracking is responsible for the contamination of the ground water tested by the researchers. In
fact, the author concedes that, “the study found no evidence of contamination from hydraulic fracturing fluids or saline produced waters.”82 Moreover, in an interview with Bloomberg TV Today on May 10, 2011, Robert Jackson, one of the primary authors of the study, stated clearly that the study “should not be taken as proof that the process [hydraulic fracturing] is dangerous.”
Interestingly, despite the Administration’s concerns about the safety of fracking here in the United States, it promotes the technology abroad. The State Department has a program called the Global Shale Gas Initiative which started “in April 2010 in order to help countries seeking to utilize their unconventional natural gas resources to identify and develop them safely and economically.”83 While threatening to make production of the resources here at home uneconomical, the Administration hypocritically encourages others to seize the fracking revolution as a path to energy independence.
II. GULF OF MEXICO
Regulations relating to Outer Continental Shelf (OCS) drilling are promulgated under the Outer Continental Shelf Lands Act (OCSLA). It is the basis for most federal regulation affecting exploration and drilling in the waters off the U.S. coast.84 OCSLA establishes broad five-year planning periods for offshore leasing across the OCS, as well as other processes for leasing, development, and production of natural resources. The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE), formerly known as the Minerals Management Service(MMS), administers this Act.
For nearly 30 years, the vast majority of U.S. waters were under a federal moratorium, which prohibited exploration and development of much of the OCS. In the summer of 2008, gas prices rose to over $150 a barrel, and the price at the pump exceeded $4 a gallon, creating immense pressure to open up new domestic sources of oil. In response, President Bush and a Democratically controlled Congress allowed a legislative moratorium to expire on September 30, 2008.85 This opened 500 million additional acres for new energy production that contain an estimated 14 billion barrels of oil and 55 trillion cubic feet of natural gas.86 However, the promise of expanded access to the OCS and the accompanying increase in domestic supplies of
energy was short lived.
Source: Press Release, U.S. House of Representatives Committee on Natural Resources, The New Obama Plan Has Americans Seeing Red, (Dec. 1, 2010)
On March 31, 2010, President Obama announced a revised plan for the exploration and
development of oil reserves in U.S. waters.87 While White House officials framed the changes as a way to reduce U.S. reliance on foreign oil and create jobs, in reality, it was a significant retraction from the 2008 decision to lift the moratorium. Under the Obama plan, the majority of the areas open for drilling were once again closed, cutting off access to all of the Pacific Coast, the Northeastern Atlantic and Bristol Bay in Alaska, which put 13.14 billion barrels of oil and 41.49 trillion cubic feet of natural gas back under lock and key.88
87 Id.
88 Id.
http://naturalresources.house.gov/UploadedPhotos/HighResolution/5fab58bc-5c22-4b2f-b063-6313a3caa525.jpg
http://naturalresources.house.gov/UploadedPhotos/HighResolution/a406e6c3-94ea-4e93-87ef-713f1bbffad0.jpg
Source: Press Release, U.S. House of Representatives Committee on Natural Resources, The New Obama Plan Has Americans Seeing Red, (Dec. 1, 2010)
Tragedy in the Gulf
Within weeks of the President’s announcement, an explosion aboard the Deepwater Horizon on April 20, 2010, further changed the course of events for offshore development. A series of human and system failures on the part of BP p.l.c. and their subcontractors made the created a devastating reality for the people on the Gulf Coast.89 As the post incident investigations revealed, a series of avoidable errors, sometimes as basic as changing the batteries on a back up device, or observing red flags, such as the unsafe escalation of pressure readings, could have prevented the ecologic disaster and the spilling of 4.1 million barrels of oil into the Gulf of Mexico.90
89 NATIONAL COMMISSION ON BP DEEPWATER HORIZON OIL SPILL AND OFFSHORE DRILLING REPORT TO THE PRESIDENT: THE GULF OIL DISASTER AND THE FUTURE OF OFFSHORE DRILLING 155-22 (Jan. 2011), available at http://www.oilspillcommission.gov/sites/default/files/documents/FinalReportChapter4.pdf.
90 DEEPWATER HORIZON ACCIDENT INVESTIGATION REPORT 21-29 (2010), available at
http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/incident_response/STAGING/local_assets/
downloads_pdfs/Deepwater_Horizon_Accident_Investigation_Report.pdf.
91 Costing American Jobs, Increasing Energy Prices, U.S. House Committee on Natural Resources, available at http://naturalresources.house.gov/Issues/Issue/?IssueID=15410.
92 RANKING MEMBER DARRELL ISSA, OVERSIGHT & GOV’T REFORM COMM., HOW THE WHITE HOUSE PUBLIC RELATIONS CAMPAIGN ON THE OIL SPILL IS HARMING THE ACTUAL CLEANUP 12-14 (2010), available at http://oversight.house.gov/images/stories/Reports/7-1-10_OGR_Report
93 The Economic Effects of the Offshore Drilling Moratorium, S. Comm. On Small Business, 111th Cong (2010)(testimony of the Honorable Rebecca M. Blank, Under Secretary for U.S. Economic Affairs, Department of Commerce).
94 Remarks by the President to the Nation on the BP Oil Spill, June 15, 2010, available at http://www.whitehouse.gov/the-press-office/remarks-president-nation-bp-oil-spill.
Gulf Moratorium
In the aftermath of the explosion aboard the Deepwater Horizon, Department of Interior Secretary Ken Salazar twice ordered a six month moratorium on deepwater drilling in U.S. waters.91 The Secretary’s orders effectively banned much of the economic activity that sustains the Gulf states, particularly Louisiana. At that time, many residents of Louisiana expressed their fear that the moratorium had the potential to inflict more pain on the region than the spill itself, and it was imposed over the vehement objections of local leaders and their constituents.92
Moreover, Department of Interior executed this sweeping decision without consulting with safety experts on the wisdom of imposing an outright ban on all drilling activity in the Gulf, and without conducting an economic analysis of the impact his decision would have on the economy and the nation.93
First Moratorium
On June 15, 2010, President Obama announced a far reaching six-month moratorium on
nearly all drilling in the Gulf.94 The moratorium applied to new drilling in water depths greater21 than 500 feet, and suspended drilling on 33 wells currently under construction.95 The President’s action is based on a recommendation from Secretary Salazar, contained in a May 27, 2010, report on “Increased Safety Measures for Energy Development on the Outer Continental Shelf.”96 According to a report issued by the Inspector General for the Department of Interior, the Secretary’s recommendation to impose a moratorium was not peer reviewed and was not supported by the scientists and industry experts who had otherwise been cooperating with the
Administration.97
The moratorium was immediately challenged by providers of support services to offshore oil and gas operations, who argued the decision to impose a moratorium was arbitrary and capricious.98 On June 22, 2010, a federal court ruled that the plaintiffs were likely to succeed on their claim and preliminarily enjoined enforcement of the suspension.99 This decision was affirmed by the 5th Circuit Court of Appeals.100
In the order blocking the Department of Interior from enforcing the moratorium, Judge
Feldman specifically cited his belief that the Department actively sought to distort the opinions and advice of “five of the National Academy experts and three of the other experts,” which publically stated that they do not agree with the six month moratorium on drilling, because the moratorium actually increases the risk of an oil spill once drilling is resumed.101
Moreover, the Judge pointed to the adverse economic impact of a broad based moratorium, stating that:
“It is only a matter of time before more business and jobs and livelihoods will be lost. The defendants trivialize such losses by characterizing them as merely a small percentage of the drilling rigs affected, but it does not follow that this will somehow reduce the convincing harm suffered. The effect on employment, jobs, loss of domestic energy supplies caused by the moratorium as the plaintiffs (and other suppliers, and the rigs themselves) lose business, and the movement of the rigs to other sites around the world will clearly ripple throughout the economy in this region.”102
Second Moratorium
Despite the judicial decision to invalidate the original moratorium, Secretary Salazar announced a nearly identical moratorium on July 12, 2010. Billed as “a temporary pause on deepwater drilling to provide time to implement safety reforms,”
103
95 Memorandum from Upstream Insight on Moratorium Halts US Deepwater Drilling For Six Months (June 3, 2010). the second moratorium
96 DEPT. OF INTERIOR, INCREASED SAFETY MEASURES FOR ENERGY DEVELOPMENT ON THE OUTER CONTINENTAL SHELF, May 27, 2010.
97 OFFICE OF THE INSPECTOR GENERAL, DEPT. OF INTERIOR, FEDERAL MORATORIUM ON DEEPWATER DRILLING (2010).
98 Hornbeck Offshore Services v. Salazar, No. 10-1663 (E.D.La, 2010).
99 Id.
100 Hornbeck Offshore Services v. Salazar, No. 10-30585 (5th Cir., 2011).
101 Hornbeck Offshore Services v. Salazar, No. 10-1663 (E.D.La, 2010).
102 Id. at 22.
103 Press Release, Department of the Interior, Sec. Salazar Issues New Suspensions to Guide Safe Pause on Deepwater Drilling (July 12, 2010), available at http://www.doi.gov/news/doinews/Secretary-Salazar-Issues-New-Suspensions-to-Guide-Safe-Pause-on-Deepwater-Drilling.cfm.22
appears to merely be a post hoc rationalization of the original moratorium. The new moratorium did nothing to address the economic concerns of the community or the safety concerns raised by experts. In fact, a New York Times editorial stated that the second ban is “as strong as the first ban.”104 According to Dan Juneau, President of the Louisiana Association of Business andIndustry:
“[The new moratorium] seems to be geared toward rigs with blowout preventers which
everyone in the deep waters have and many in the shallow waters do as well. It is a
reaffirmation that the Obama administration is going to keep things shut down, in spite of the 5th Circuit’s ruling.”105
It appears that the economic impact of the moratorium was never considered by the
Administration. A decision memorandum authored by BOEMRE Director Michael Bromwich to
Secretary Salazar states that “economic effects may be considered in determining the scope of any suspension of drilling activity.”106 However, according to testimony of Rebecca M. Blank, Under Secretary for U.S. Economic Affairs at the Department of Commerce, the Administration never once conducted a study of the economic impact the moratorium would have on the Gulf Coast economy and on oil production.107 Charlotte Randolph, President of Lafourche Parish in Thibodaux, Louisiana, expressed her concern to Committee staff that “nine out of her top ten” taxpayers are employed in the oil and gas industry, which will be directly impacted by the moratorium.108
In Louisiana coastal communities such as Houma, Morgan City and Lafayette, one out of every three jobs is related to the oil and gas industry; these jobs are now in jeopardy along with the $12.7 billion in total wages earned by employees working in the Gulf Coast oil and gas industry. Their unemployment would result in decreased tax receipts and additional budget restrictions for a Parish that is already experiencing a very lean year.109
According to an analysis performed by the Gulf Economic Survival Team, Louisiana and its Parishes stand to lose $150 million to $700 million in state and local sales tax revenue due to the moratorium, thereby negatively impacting all government services, from police and fire protection, to schools and hospitals.110
Former Democratic Senator Bob Graham and William K. Reilly, who were appointed to
head the President’s Commission to investigate the BP oil spill, have expressed criticism over the nature and duration of the moratorium. After hearing testimony from a variety of local 104 Editorial, A New, and Necessary, Moratorium, NY TIMES, July 13, 2010, available at http://www.nytimes.com/2010/07/14/opinion/14wed1.html.
105 Email from Dan Juneau, President, La Assoc. of Bus. & Indus. to Committee Staff (July 15, 2010).
106 Memorandum from Director Bromwich on Options Regarding the Suspension of Certain Offshore Permitting and Drilling Activities on the Outer Continental Shelf (July 10, 2010).
107 The Economic Effects of the Offshore Drilling Moratorium, S. Comm. On Small Business, 111th Cong (2010)(testimony of the Honorable Rebecca M. Blank, Under Secretary for U.S. Economic Affairs, Department of Commerce).
108 Interview with Charlotte Randolph, President, Lafourche Parish, in Thibodaux, LA (June 15, 2010).
109 Id.
110 Louisiana Mid-Continent Oil & Gas Association, Impacts of President Obama’s Order Halting Work on 33
Exploratory Wells in the Deepwater Gulf of Mexico (May 28, 2010) available at
http://www.gulfeconomicsurvival.org/facts-and-figures.
23
officials, Mr. Reilly stated that, “It’s not clear to me why it should take so long.”111 Former Senator Graham echoed these concerns, reportedly saying that the moratorium was a burden on the economic life of the Gulf Coast.112 He said the federal government has had nearly three months to inspect the rigs in the Gulf and wondered why it was taking so long to determine whether they can safely restart operations.113
The Permitorium
Secretary Salazar announced the end of the moratorium on October 13, 2010. According
to many in the industry, this declaration provided little relief. The moratorium in the Gulf of Mexico was replaced by a “permitorium” – whereby drilling activity remained at a standstill not by operation of law – but because of inaction on the part of BOEMRE. Prior to the disaster, Mineral Management Service (MMS) processed and issued permits to drill in two weeks.114
However, not a single deepwater permit was issued by BOEMRE until U.S. District Judge
Martin Feldman ordered the agency to take action on five permits by March 19, 2011, and by March 31, 2011, on two additional permits.115
On February 28, 2011, BOEMRE finally issued the first deepwater drilling permit since
the explosion aboard the Deepwater Horizon.116 The permit was issued to Noble Energy, and allows them to resume drilling which they had started before April 20, 2010. Specifically, the permit allows Noble Energy to drill a by-pass well in Mississippi Canyon Block 519, approximately 70 miles south east of Venice, La. An operator drills a bypass well in order to drill around a mechanical problem in the original hole to the original target from the existing wellbore. In this case, Noble Energy will be drilling around the plugs set in the original well when drilling was suspended in order to complete the long delayed project.
Since February, BOEMRE has approved 13 additional deepwater permits – 11 of which
simply allow operations to resume on a previously approved well. Only one permit has been issued for a well that had not been previously approved.117 On May 10, 2011, Judge Feldman issued an additional order requiring BOEMRE to act on six additional applications within 30 days. In his decision, Judge Feldman determined that, “the government has presented no credible assurances that the permitting process will return to one marked by predictability and certainty.”118
111 John M. Broder, Offshore Drilling: To Pause or Not to Pause, NYTIMES, July 13, 2010, available athttp://green.blogs.nytimes.com/2010/07/13/offshore-drilling-to-pause-or-not-to-pause/. (emphasis added) He went on to say that “Processing a scant few applications is at
112 Id.
113 Id.
114 Mary Romano, Peter Blumberg, U.S. Appeals for Delay in 30-Day Order on Drill Permits, BLOOMBERG
BUSINESS WEEK, March 13, 2011.
115 Ensco Offshore Co., et. al. v Kenneth Lee “Ken” Salazar, 2011 WL 692029 (E.D. La. 2011).
116 Press Release, Bureau of Ocean Energy Management, Regulation and Enforcement, BOEMRE Approves First
Deepwater Drilling Permit To Meet Important New Safety Standards in Gulf of Mexico (Feb. 28, 2011), available at http://www.boemre.gov/ooc/press/2011/press0228.htm.
117 Status of Drilling Permits & Plans Subject to Enhanced Safety and Environmental Requirements in the Gulf of Mexico, Bureau of Ocean Energy Management, Regulation and Enforcement (last visited May 19, 2011), available at http://www.gomr.boemre.gov/homepg/offshore/safety/well_permits.html.
118 Ensco Offshore Co., et. al. v Kenneth Lee “Ken” Salazar, 2011 WL 692029 (E.D. La. 2011).
24
best a tactical ploy in a real world setting.”119 Moreover, it has severe implications for the future productivity of the region. It generally takes five to ten years once a permit is issued to bring the oil to market.120
In addition to the immediate impact on the residents of the Gulf Coast, the year long
pause in drilling operations will probably mean a decline in domestic output of crude oil according to analysts.121 Deep-water drilling in the Gulf accounts for about 1.25 million barrels of oil a day – or about one-quarter of America's domestic crude oil production. The Gulf contribution is expected to drop by about 180,000 barrels a day, in 2011, according to the U.S. Energy Information Administration.122
Regulations Following the Spill.
As a result of the BP Oil Spill, BOEMRE promulgated a series of regulations that coincided with the entire reorganization of the agency from the former MMS. These reforms are some of the most aggressive changes to offshore oil and gas production in U.S. history and range from new rules covering safety, oversight, and environmental protection for permitting, drilling, and development processes for oil and gas operations. In some cases, these new regulations apply to both offshore operations themselves as well as the businesses that deal directly with offshore rigs – many of which are small businesses. The regulated community, state officials, and even BOEMRE staff have raised concerns about the feasibility and practicality of these new regulations.
After Deepwater Horizon, it is clear that a new, safer system is necessary for drilling in the Gulf of Mexico; however, the focus of any regulatory changes must be on continuing safe drilling in the Gulf. The latest regulations promulgated by BOEMRE do not appear to promote this goal of drilling and instead create a significant amount of uncertainty and confusion within the offshore oil and gas community.
Archaeological Requirements on Operators One of the most perplexing regulations promulgated by BOEMRE is the requirement that operators perform an Archaeological Assessment Report as part of National Environmental Policy Act analysis and in conjunction with the National Historic Preservation Act.123 Under this new rule, any permitting applications that will propose bottom-disturbing activities require
analysis of data and information about the potential existence of archaeological resources and the affect that proposed operations will have on these shipwrecks.124
119 Id.
120 Ayesha Rascoe, U.S. Set to ‘Reopen’ Offshore Drilling Sector; ‘Significant Permits’; Upward Pressure on Oil
Prices the Impetus, National Post’s Financial Post & FP Investing, March 3, 2011, available at http://www.nationalpost.com/todays-paper/setto+reopen+offshore+drilling+sector/4375547/story.html.
121 Mark Guarino, Stricter Deep-Water Drilling Regulations Mean Gulf Coast Waters Are Likely to Yield Less Oil this Year; Energy Firms May Shift Attention Abroad, CHRISTIAN SCIENCE MONITOR (Jan. 11, 2011).
122 Id.
123 Gulf of Mexico Archaeological Information, Bureau of Ocean Energy Management, Regulation and Enforcement (last visited May 20, 2011), available at
http://www.gomr.boemre.gov/homepg/regulate/environ/archaeological/introduction.html.
124 Id.
25
The application of this rule requires that operators literally become underwater
archaeologists, entering a field where they have little experience. Operators must conduct ocean floor analyses with specialized equipment to determine if anomalies are shipwrecks with the potential to be impacted by exploration or drilling.125 Furthermore, operators will be required to employ an underwater archaeologist to assist in the analysis of this data and to provide BOEMRE with survey data. When asked about how to implement this new rule, and more specifically if operators would need to hire an underwater archaeologist, BOEMRE representatives responded that they would have to make this hire and that the profession was not uncommon.126
“Should-to-Must” Requirements
The archaeological assessment requirements are a prime example of the
seemingly absurd and arbitrary nature of the new regulations placed on offshore drilling operations.
A new Workplace Safety Rule is another BOEMRE regulation intended to improve
safety practices for offshore drilling operations. Unfortunately, its implementation has proven to be challenging in practice. This regulation requires that operators develop and maintain a Safety and Environmental Management System (SEMS).127 A SEMS is a “comprehensive management program for indentifying, addressing and managing operational safety hazards and impacts, with the goal of promoting both human safety and environmental protection.”128 In addition, the Workplace Safety Rule makes mandatory the practices in the American Petroleum Institute’s (API) Recommended Practice 75 (API RP 75).129
After industry and affected states voiced strong objections based on the purpose and
feasibility of the regulations, BOEMRE initiated a guidance document entitled “Supplemental Information Regarding Approval Requirements for Activities that Involve the Use of a Subsea Blowout Preventer (BOP) or a Surface BOP on a Floating Facility,” with the goal of displacing fear of the careless “should-to-must” change. In the guidance document, BOEMRE recognized that the incorporation of the API documents required that any “should” would be interpreted as “must” for purposes of the Code of Federal Regulations.
The API RP 75 is a collection of best practices created by API as suggestions for operators to implement. BOEMRE issued a direct final rule,without the public’s input, making all aspects of the API guidance mandatory. The recommendations vary depending on the type of operation. They were not designed to be mandatory directives, and certainly not designed to be executed simultaneously. This fact was seemingly lost on BOEMRE, as the agency carelessly changed all “should” instructions to “must.”
130
125 Id.
BOEMRE has indicated that it recognizes that some degree of flexibility is important for the feasible implementation of the API 126 Bureau of Ocean Energy Management, Regulation and Enforcement Industry Workshop (March 23, 2011).
127 Bureau of Ocean Energy Management, Regulation and Enforcement, Fact Sheet on the Workplace Safety Rule On Safety and Environmental Management Systems (SEMS), available at http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=45791.
128 Id.
129 Id.
130 Supplemental Information Regarding Approval Requirements for Activities that Involve the Use of a Subsea Blowout Preventer (BOP) or a Surface BOP on a Floating Facility, Bureau of Ocean Energy, Management, Regulation and Enforcement (last visited May 20, 2011), available at http://www.boemre.gov/ooc/pdfs/DeepwaterGuidanceSupplement.pdf.
26
incorporated documents.131 To this end, BOEMRE is willing to consider, based on agency approval, other practices that may accomplish similar goals as those contained in the API document.132
A concern of small business involves the implementation of SEMS Workplace Rules.
BOEMRE recognizes in its Workplace Safety Rule Fact Sheet that many large operators have already established SEMS programs; however, it does not mention the smaller operators or those businesses who work closely with operators. Small businesses that have contact with operators’ rigs will also be required to establish their own SEMS programs at the request of the large operators.
Despite these changes, uncertainty remains regarding the “should” to “must”
regulations because the guidance document does not go far enough in relieving the burden of implementing regulations whose original intentions were merely industry-wide best practices. Due to the vague nature of the guidance document, the drilling community’s uncertainty is augmented because of concerns about whether in application BOEMRE will actually back off the “should-to-must” requirement.
133 Small businesses are not situated to perform the same level of SEMS analysis that
large-multinational corporations can – many of these small businesses that service large operators may be forced out of business if they cannot implement a SEMS program.134
Industry Strives to Make Drilling Safer
BOEMRE has not addressed the concerns of small business owners who work closely with large operators on the SEMS issue. The explosion aboard the Deepwater Horizon and the confusion in the subsequent days and months clearly demonstrated that MMS and BP had failed to adhere to rigorous safety standards. Moreover, there is agreement that changes needed to be made to the flawed system that allowed the disaster to occur. However, evidence suggests the regulations promulgated by BOEMRE do not promote the revitalization of a safe oil and gas industry in the Gulf; instead, they hinder production even when operators have made significant strides to become safer. For
example, the oil industry made a substantial investment in safety by creating a rapid-response system to prevent another disaster like the BP Oil Spill.135
In July 2010, in order to quell concerns regarding the safety of deepwater drilling, four of the largest oil companies, Exxon-Mobil, Shell, Chevron, and Conoco Philips, committed $1 billion to create a rapid-response system to deal with future potential oil spills. BOEMRE’s regulations do not appear to take this into account.
136 This rapid response system includes the creation of modular containment equipment that would be available for use and could contain spills as deep as 10,000 feet and capture up to 100,000 barrels of oil a day.137
131 Id.
A nonprofit organization known as the Marine Well Containment Company operates and
maintains the emergency capability mechanism. Industry executives feel that this measure is
132 Id.
133 The Workplace Safety Rule on Safety and Environmental Management Systems (SEMS), Bureau of Ocean
Energy Management, Regulation and Enforcement, available at http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=45791.
134 Interview with Lori Davis, President, Rig Chem (March 24, 2011).
135 Jad Mouawad, 3 Oil Firms Commit $1 Billion for Gulf Rapid-Response Plan, N.Y. TIMES, Jul. 21, 2010.
136 Id.
137 Id.
27
sufficient to respond to the impact of any future blowout or spill that may affect the Gulf region, and it will restore the government and the citizens’ confidence in the oil industry to operate with the proper safety precautions in place.138 This unsolicited action demonstrates the industry’s commitment to operate responsibly. However, BOEMRE’s policies do not recognize the necessary and important contributions that industry has made.
III. ALASKA
Alaska holds enormous oil and gas resources for the United States and development of
those resources is critical for U.S. energy independence. A National Energy Technology Laboratory study estimates that this region has the potential for the exploration and development of as much as 28 billion barrels of economically recoverable oil and 125 trillion cubic feet of economically recoverable gas through 2050.139 An independent assessment of the potential for development of Alaska’s Beaufort and Chukchi Sea OCS found that sufficient oil could be produced to completely eliminate the need for imports from one of the United States’ largest foreign suppliers.140 Average production from the OCS for the next 40 years could be 700,000 barrels per day, with a maximum of 1.45 million per day in 2030. In perspective, 700,000 barrels is more than the amount of oil the United States
imported from Iraq (506,000 bbl/day) and Russia (137,000 bbl/day) combined in 2010.141 Saudi Arabia, Mexico, Venezuela, and Nigeria each exported approximately one million barrels or less to the United States.142
Despite the enormous oil and gas potential, production in Alaska has steeply declined
over the past few decades. In 1988, oil and natural gas liquid from Alaska’s North Slope constituted 25 percent of total domestic production, 2.2 million barrels per day.143 By 2007, production had dropped to 720,000 barrels per day, representing only 14 percent of domestic production.144 The current Administration is largely to blame for Alaska’s continued stagnation.
Alaska Democratic Senator Mark Begich described the situation as “regulatory ‘whack a mole’for developers in Alaska” as he introduced a bill intended to streamline offshore oil and gas development. “Each time we have one mole beat down, another one pops up and derails the progress. But this isn’t a game. It’s about the future of Alaska and the energy security of our country.”145
138 Id.
139 Id.
140 The American Energy Initiative: Jobs and Energy Permitting Act: Hearing before the H. Comm. On Energy and Commerce, 112th Cong. (2011) (statement of David Lawrence, Executive Vice President, Shell), available at
http://republicans.energycommerce.house.gov/Media/file/Hearings/Energy/041311/Lawrence.pdf.
141 Id.
142 Id.
143 Id.
144 Id.
145 S. 843, 112th Cong. § (2011).
Moratorium Confusion
The BP spill in the Gulf of Mexico has created great uncertainty for companies seeking to drill thousands of miles away in Alaska. Prior to the spill, the Administration made statements
supportive of further exploitation of oil and gas resources in the Arctic Outer Continental Shelf as well as elsewhere offshore.146 After the spill, however, Secretary Salazar announced a 30-day review of offshore safety and put a hold on new permits until the review was completed. Soon after that, Interior announced a six-month moratorium on all deepwater drilling and suspended hell’s proposed drilling in the Beaufort and Chukchi seas, and imposed additional other restrictions on drilling and leasing in other regions.147 All of these policy changes have created new uncertainties.
146 President Obama, Remarks on Energy Security at Andrews Air Force Base (Mar. 31, 2010).
147 Eric Lidji, Alaska Offshore Special Report, PETROLEUM NEWS (January 21, 2011).
148 Id.
149 Id.
150 Potential National-Level Benefits of Alaska OCS Development, Northern Economics (February 2011),
available at http://www.northerneconomics.com/pdfs/ShellOCS/National%20Effects%20Report%20FINAL.pdf.
151 Id.
152 Tim Bradner, Shell expands Arctic exploration plans, ALASKA J. OF COMMERCE, (May 6, 2011).
153 Id.
154 Id.
The moratorium on deepwater drilling, announced on June 15, 2010, and discussed in the previous section, did not specifically refer to Alaska. Yet this moratorium, and the subsequent moratorium, imposed on July 12, 2010, created significant uncertainty for companies attempting to drill in Alaskan waters. The second moratorium also did not mention Alaska, but a fair reading of the order appeared to prohibit the work Shell had planned for the Beaufort and Chukchi seas. The state of Alaska responded by suing Interior for violating the Outer Continental Shelf Lands Act and the Administrative Procedure Act.148 In late November 2010, after the July moratorium had been lifted, the Department filed a motion explaining that the original moratorium did not cover Alaska and attributing permitting delays to “cautious”
regulators.149
$3 billion and Still No Permit
The moratorium confusion following the BP oil spill was only the latest in a long series of delays for Shell’s Alaskan project. Shell has been ready to commence exploring for oil and gas in the Alaskan OCS for four years. The company expects to create 54,700 jobs per year, generating $145 billion in payroll income, and $193 billion in government revenue by 2057 – all while reducing U.S. dependence on foreign oil.150 Unfortunately for the American people, none of this has come to fruition because after five years, EPA still has not issued several of the 35
permits Shell needs to drill even a single exploratory well.151
Shell has spent more than $3 billion on leases, environmental analyses, and permitting so far with no return on their investment.152 The company holds 137 leases in the Beaufort Sea and 275 leases in the Chukchi Sea.153 The federal government received $2.2 billion in bonus bids for Shell’s leases in the Chukchi Sea alone.154 Initially, Shell planned to begin drilling in 2007 in the Beaufort Sea, just north and east of the North Slope and the Trans-Alaska Pipeline and associated infrastructure.155
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One of the principal obstacles to drilling is EPA’s failure to issue an air pollution permit for the project. Since most new offshore drilling has occurred in the Gulf of Mexico under Interior jurisdiction, EPA has little experience with offshore permitting. That inexperience seems to be amounting to incompetence. Alaska Senator Lisa Murkowski testified before the House Energy and Commerce Committee, “If EPA cannot demonstrate some competency … then EPA should not expect to keep its authority for long.” Because of regulatory and legal challenges, its schedule slipped to 2010, and then 2011, and now 2012.156
After years of studying the issue, EPA granted an air permit last summer only to have it remanded by the EPA’s Environmental Appeals Board in January for not adequately reviewing the potential health effects on people living on shore.157 The closest village, located 70 miles from the proposed drill site and occupying one square mile, is home to 245 people. EPA Administrator Lisa Jackson told the
Senate Energy Committee, “I believe that the analysis will clearly show that there is no public health concern here.”158
National Petroleum Reserve Goes Unused
Shell continues to wait for the rest of EPA to conclude what its Administrator already has. On May 14, 2011, during his Weekly Address, President Obama announced that he intended to direct Secretary Salazar to conduct annual lease sales in Alaska’s National Petroleum Reserve (NPR-A).159
Despite nearly three million acres of the NPR-A already under lease, no one has yet to drill a single commercial well. Given ConocoPhillips’ experience so far trying to utilize a lease it already has in the NPR-A, those new leases may be worthless.
160 ConocoPhillips is trying to be the first with a project it says will produce up to 18,000 barrels of oil per day.161 In February 2010, the Army Corps of Engineers rejected the company’s plan to access the NPR-A by building a bridge over the
Colville River, saying that drilling underneath the river and airlifting supplies would cause less environmental harm. The Corps finally decided to reconsider their earlier decision in December 2010, citing “additional evidence” not available at the time of the initial decision and talks with Native Alaskans.162
155 Id.
Conoco Phillips is still waiting on the Corps to issue a final decision.
156 The American Energy Initiative: Jobs and Energy Permitting Act: Hearing before the H. Comm. On Energy
and Commerce, 112th Cong. (2011) (statement of Senator Lisa Murkowski), available at
http://republicans.energycommerce.house.gov/Media/file/Hearings/Energy/041311/Murkowski.pdf.
157 Final Decision to Issue and OCS/PSD Permit to Shell Offshore Inc., for Exploration Drilling Operations in the
Beaufort Sea, (last visited May 20, 2011) available at http://yosemite.epa.gov/R10/airpage.nsf/Permits/beaufortap/.
158 Id.
159 Press Release, White House, Weekly Address: President Obama Announces New Plans to Increase Responsible Domestic Oil Production (May 14, 2011).
160 Phil Taylor, Alaska lawmakers seek swift U.S. reconsideration of petroleum reserve drilling, GREENWIRE (Dec.
14, 2010).
161 Phil Taylor, Alaska pols say petroleum reserve leases must be couples with permits, ENVIRONMENT & ENERGY DAILY (May 18, 2011).
162 Letter from David Hayes, Deputy Secretary, Department of the Interior, to Col. Reinhard Koenig, Army Corps of Engineers Alaska District (May 3, 2011). (on file with author)
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A “curious” twist in the quest to develop NPR-A is the related action of other agencies. EPA and the U.S. Fish and Wildlife Service both designated the Colville River Delta as an “Aquatic Resource of National Significance,” a decision they made without notice and comment, but one that potentially has great consequences.163 Sen. Murkowski’s spokesman called the move “capricious and done only to interfere with development.”164
Polar Bears
There may be an even greater obstacle to oil production ahead of Shell and the other
companies looking to produce oil and gas in Alaska. What the state and the industry reportedly fear the most is uncertainty related to the protection of the polar bear.165 The first concern is the reason for the polar bear’s inclusion on the list
In 2008, the U.S. Fish and Wildlife Service (FWS), within Interior, decided to list the polar bear as a threatened species under the Endangered Species Act. That decision could greatly impact the future of oil and gas extraction in Arctic waters because of its broad ramifications. 166
To protect the polar bears, in October 2009, FWS instead proposed a critical habitat for the polar bear covering more than 200,000 square miles of land and water.
– according to FWS, global climate change was causing a loss of sea ice, the polar bear’s habitat. On this basis, Interior could potentially have restricted any project, anywhere, by arguing that the project contributed to greenhouse gas emissions and, therefore, degraded the polar bear’s habitat. Fortunately, Interior did acknowledge this concern and modified regulations to specify that
projects’ greenhouse gas emissions could not be linked to endangered species.167
This was later reduced once FWS recognized that Air Force bases and a few other manmade structures and communities would not be an appropriate habitat to protect.168
All of this has provoked numerous lawsuits, from both sides of the issue. Alaska has
sued over the critical habitat designation because of the enormous economic impacts to the state, which it estimates to be in the hundreds of millions over just the next 15 years. The polar bear’s proposed critical habitat overlaps with a substantial part of the federal acreage already under lease in Alaska’s Arctic waters. FWS has yet to determine exactly how they will act to protect the “critical habitat area.”169
In its cost analysis, FWS only considered consultation costs and inaccurately concluded that the designation would only cost the state about $669,000 over 29 years.170 163 Andrew Jensen, Pebble next target for EPA Environmental Justice unit?, ALASKA J. OF COMMERCE (Feb.18, 2011). Some members of
164 Id.
165 Eric Lidji, Alaska Offshore Special Report, PETROLEUM NEWS, Jan. 21, 2011.
166 Endangered Species Program, U.S. Fish & Wildlife Service, (last visited May 20, 2011), available at http://www.fws.gov/endangered/index.html.
167 Id.
168 U.S. Fish & Wildlife Service Polar Bear Information (last visited May 18, 2011), available at http://www.fws.gov/home/feature/2008/polarbear012308/polarbearspromo.html.
169 Press Release, Office of Governor Sean Parnell, State Announces Intent to Sue, (Dec. 21, 2010), available at http://gov.alaska.gov/parnell/press-room/full-press-release.html?pr=5603.
170 Id.
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Congress have also tried to reverse the decision by proposing legislation that would delist the polar bear, but the bill would not prevent Interior from adding other Arctic species to the list.
171
IV. ROCKY MOUNTAIN REGION
The Rocky Mountain region has some of the richest resources in the entire country.
Domestic production in this region, primarily on federal public lands, accounts for 11 percent of the nation’s natural gas supply and five percent of its oil.172
Exploration and production in the Rocky Mountain Region is complicated by the vast
federal presence, primarily in the form of land ownership. The federal government owns roughly 650 million acres of land in the United States – which equates to more than a quarter of the country’s landmass.173 These lands are primarily located in 12 western states. In the west, the federal government owns more than 50% of the land area.174 By contrast, in the District of Columbia, established by the Constitution as a federal city, the federal government owns only 25% of the total acreage.175
171 H.R. 39, 112th Cong. § (2011).
172 Oil and Gas, U.S. Department of the Interior Bureau of Land Management (last visited May 16, 2011), available at http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas.html.
173 Carol Hardy Vincent, Federal Land Ownership: Current Acquisition and Disposal Authorities, CRS REPORT TO
CONGRESS (Dec. 16, 2010).
174 Id.
175 Ross W. Gorte et al, Federal Land Management Agencies: Background on Land Resources and Management, CRS REPORT TO CONGRESS (Feb. 9, 2009).
Source: Bureau of Land Management
Federal land is owned by taxpayers. Therefore, taxpayers must be compensated for its
use. Federal and state treasuries benefit from the development of resources on Western lands. Unfortunately for the American people, the Administration has all but refused this potential revenue stream. Between 2008 and 2010, revenue from onshore federal royalties, rents, and bonuses has decreased 33%, from $4.2 billion to $2.8 billion. In 2008, there were 2,416 new oil and natural gas leases issued176 on BLM land spanning 2.6 million acres. 177 In 2010, the number of new leases issued dropped nearly 50% to 1,308178 and acres leased dropped to 1.3 million. 179 Combined with 2009, these acreage numbers are the lowest in over two decades.
176 Bureau of Land Management (last visited May 19, 2011) available at
http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy/oil___gas_statistics.Par.32507.File.dat/chart_2009_03.pdf.
177 Bureau of Land Management (last visited May 19, 2011) available at
http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy/oil___gas_statistics.Par.24284.File.dat/chart_2009_04.pdf .
178 Id.
179 Id.
180 Expanding Safe and Responsible Energy Production, White House blog, March 8, 2011, available at http://www.whitehouse.gov/blog/2011/03/08/expanding-safe-and-responsible-energy-production
Taxpayers would never know about this policy shift based on White House rhetoric. In a blog post at whitehouse.gov, the Administration writes “oil production last year rose to its highest level since 2003.”180 The blog post fails to explain that the vast majority of increased production is occurring on private lands, not public. For example, North Dakota alone produced
33
almost 120 million barrels of oil in 2010, compared to just over 20 million in 2003.181 The majority of North Dakota’s production is on private land. A slew of Obama Administration policies are to blame for the decreased production on federal land. The Department of Interior or EPA cause delays at each stage of the process.
Deferred Leases In order to drill on federal land, the producer must first obtain a lease. Companies make significant investments just to determine which parcels of land they want to lease.182
The government then considers whether to lease those parcels that are nominated by the companies. Parcels may not be offered for lease for a variety of reasons, but this Administration is using some techniques of questionable legality. One of these techniques is the deferral of lease parcels. Established law dictates that leases be made available if authorized by resource management plans, which are developed with input from the public and the state.183 If BLM desired to change the policies on which the resource management plans were based, an amendment to the plan is required. Rather than follow the established process, giving the public an opportunity for notice and comment, BLM has unilaterally instituted an additional level of planning and an opportunity to prevent leasing.184
The result has been the deferral of lease parcels and the loss of jobs and revenue. Ewing Exploration, a small business with six employees, provides an example of how this policy hurts local communities.185 Ewing invested a total of $3.5 million to explore the leases it purchased between 2005 and 2010 and nominated the additional ten parcels of federal land it need to fill out its drilling block. The company planned to develop 24 wells. One day before the sale, those ten parcels were withdrawn from the sale because they had to be “reprocessed in conformance with
the new leasing reform process.”186
Unissued and Withdrawn Leases
Now, those parcels will not be available until February 2012,
a sixteen month delay. This delay has real economic consequences. Ewing’s investors are receiving no return on their $3.5 million investment – and may not be as willing to risk their money on public lands in the future. The deferral is also delaying payments of $2.7 million per month in federal royalties and $1.3 million per month in state taxes and royalties once the land is fully developed.
Having the lease actually be put up for sale and winning the bid is just the beginning. The Department of Interior holds hostage millions of dollars in unissued leases.187
181 North Dakota Industrial Commission Department of Mineral Resources (last visited May 20, 2011), available at https://www.dmr.nd.gov/oilgas/stats/stateoilchart.pdf .
When a company 182 Internal Revenue Service (last visited May 20, 2011) available at http://www.irs.gov/irm/part4/irm_04-041-001.html.
183 Adam Vann, Energy Projects on Federal Lands: Leasing and Authorization, CRS REPORT FOR CONGRESS (September 8, 2009).
184 Id.
185 Western Energy Alliance Washington D.C. Call-Up Briefing Book (April 2011), available at http://westernenergyalliance.org/wp-content/uploads/2011/04/Briefing-Book_Final.pdf.
186 Id.
187 Western Energy Alliance, Top Ten Ways the Federal Government Is Preventing Onshore Oil and Natural Gas Production (Mar. 30, 2011).
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wins a bid, it pays the federal government the amount it bid, which is called the bonus. Yet, the government does not necessarily issue the lease in return for the bonus, as the terms of the Mineral Leasing Act require it to do within sixty days. It is as if a new tenant signed a lease for an apartment, paid the owner a deposit, and was not given a key on the date designated for movein. A Government Accountability Office report found that the Bureau of Land Management (BLM) failed to issue leases within this allotted time over 91% of the time from FY2007 through
FY2009.188
Successful bidders also risk cancellation of their valid leases. In February 2009, the Interior Secretary withdrew 77 of the leases sold at the 2008 Utah lease sale because BLM had deviated "in important respects" from its normal oil and gas leasing procedures.189 Secretary Salazar told reporters at the time of the announcement, “The policy positions of the department over the last eight years have really been driven out of the White House, and we're looking at many of those decisions.”190 Yet the Secretary’s decision to withdraw 77 Utah leases was made
without any consultation with the Utah BLM office.
Neither an independent investigation nor the federal courts upheld the Secretary’s claims. The Department’s Inspector General concluded that “no evidence to support the allegation that undue pressure was exerted on BLM personnel to complete the RMPs before the December 2008 sale or to include previously deferred parcels in the lease sale prior to the change in Administration.”191 While the investigation noted that the BLM “contributed to the perception that the sale was rushed prior to a change in White House administration,” mere perception would not justify terminating contract rights. Over a year and a half later, a federal district judge issued a decision that confirmed that Secretary Salazar was outside of his legal authority to
withdraw the parcels.192
The Department of Interior later prevailed based on a technicality. The judge determined that the plaintiffs filed their complaint too late.193 In January 2011, the Department of Interior did it again. The Forest Service decided to withdraw leases it sold and issued, in 2005 and 2006, in the Bridger-Teton National Forest in
Wyoming.194 Relatively new legislation, the Wyoming Range Legacy Act of 2009, prohibits future lease sales in this region but explicitly protects the rights of those with existing leases. Likely recognizing its actions were on shaky legal ground, the Department of Interior has since decided to reconsider this decision.195
188 U.S. GOVERNMENT ACCOUNTABILITY OFFICE, ONSHORE OIL AND GAS: BLM’S MANAGEMENT OF PUBLIC PROTESTS TO ITS LEASE SALES NEEDS IMPROVEMENT (July 2010).
189 BLM Review of 77 Oil and Gas Lease Parcels Offered in BLM-Utah’s December 2008 Lease Sale (Oct. 7, 2009) available at http://www.doi.gov/documents/BLM_Utah77LeaseParcelReport.pdf.
190 Juliet Epstein, Salazar Voids Drilling Leases On Public Lands in Utah, WASHINGTON POST, Feb. 5, 2009.
191 U.S. DEPARTMENT OF THE INTERIOR OFFICE OF THE INSPECTOR GENERAL, INVESTIGATIVE REPORT: BLMUTAH LEASE Sale (2009).
192 Impact Energy Res., LLC v. Salazar, 2010 U.S. Dist. LEXIS 91095 (D. Utah 2010).
193 Id.
194 Press Release, U.S. Department of Agriculture Forest Service, Bridger-Teton Forest releases final Supplemental Environmental Impact Statement and Record of Decision on Wyoming Range Oil and Gas Leases (Jan. 25, 2011). 195 Press Release, U.S. Department of Agriculture Forest Service, Bridger-Teton Forest Supervisor Withdraws Decision on Wyoming Range Leases (May 5, 2011).
35
Even if the Department of Interior issues the lease, the successful bidder may not receivewhat it bargained for. In many cases, especially in Wyoming where BLM has actually issued leases, new restrictions are added to the leases that were not specified at the time of sale.196
NEPA Analyses and Project Approval Delays
The severity of these restrictions, also referred to as stipulations, vary. Some, such as preventing drilling during the breeding season of a certain species, are fairly standard in the industry. Others, such as “No Surface Occupancy” which prohibits any surface disturbance on the lease, are so severe that they may render the lease worthless to the producer.
Returning to the apartment analogy, these after-the-fact stipulations are akin to a tenant signing an apartment lease, carefully reading the contract to ensure there are no pet restrictions, paying a deposit, and then being told on move-in day that her dog will not be allowed in the building. The owner would essentially have changed the terms of the contract, just like the Department of Interior
does when it adds stipulations.
The Administration claims that oil and gas producers are hoarding leases on federal landscbecause they are using less than one-third of existing leases.197 This criticism is grossly misleading because the Administration itself is often preventing the leaseholder from drilling on currently leased land. After a company wins a bid, pays the bonus, and is issued the lease, it must submit a project proposal to the Department of Interior, and an environmental analysis in
accordance with the National Environmental Policy Act (NEPA) must be performed.
The government does not bear the burden of performing this analysis; rather, the project proposer pays an agreed upon third party contractor to perform it.198 Regardless, the NEPA analysis is taking years to complete, with some projects facing indefinite delays. Small Environmental Assessments regularly require four years, while the more involved Environmental Impact Statements easily take seven years.199 White House Council on Environmental Quality guidance states these analyses should not take more than three months and twelve months, respectively.
NEPA analyses often take more time than the guidance directs, but this Administration appears to be abusing the process. Environmental Impact Statements required just over three years to complete between 1994 and 2005; now the average EIS completion time is just under six years.200 Projects in the West, for a variety of excuses, face even longer delays with no end in sight.201
Wild Lands Policy
One of the most controversial techniques to delay project approval is the newly invented “wild lands” designation. Secretary Salazar issued an order last December directing BLM to 196 Press Release, Western Energy Alliance, Top Ten Ways the Federal Government is Preventing Onshore Oil and Natural Gas Production, (March 2011), available at http://westernenergyalliance.org/wpcontent/uploads/2011/03/Western-Energy-Alliance-IPAMS-Position-Paper-Top-10-Ways-Onshore-Production-is-
Being-Prevented.pdf.
197 Exploration and Production (Upstream), American Petroleum Institute, (last visited May 20, 2011), available at http://www.api.org/aboutoilgas/sectors/explore/index.cfm.
198 National Environmental Policy Act (last visited May 20, 2011), available at
http://www.epa.gov/compliance/nepa/index.html.
199 Id.
200 Id.
201 Id.
redo a recently completed inventory of federal lands that took years to complete the first time around, diverting BLM’s already limited resources.202 Under the Secretary’s new policy, the Department of Interior unilaterally determines that an area should be designated as wild lands and considered for wilderness protection. Under the 1964 Wilderness Act, “wilderness” is a designation that can only be made by Congress. To be considered “wilderness,” the law says the land (1) must be at least 5000 contiguous acres in size unless a smaller area can be practicably preserved and used in an unimpaired condition, (2) have an appearance of naturalness, and (3) have either outstanding opportunities for solitude or primitive and unconfined recreation.203
But under the new policy, BLM treats any land it decides to designate as “wild land” as “de facto wilderness,” preventing productive uses of the land such as grazing, oil and gas extraction, and motorized recreation – and sidestepping Congress. In some cases, environmentalists have attempted to convince Congress to designate certain lands as “wilderness” for decades, but Congress has consistently and repeatedly declined.204
202 Press Release, U.S. Department of the Interior, Salazar, Abbey Restore Protections for America’s Wild Lands (Dec. 23, 2010), available at http://www.doi.gov/news/pressreleases/Salazar-Abbey-Restore-Protections-for-
Americas-Wild-Lands.cfm.
203 Wilderness Act of 1964 (16 U.S.C. 1131-1136, 78 Stat. 890)
204 H.R. 1925, 111th Cong. § (2009).
205 Letter from Public Lands Advocacy to Ken Salazar, Secretary, Department of the Interior (January 31, 2011)
(on file with author).
206 Federal Land Policy and Management Act, Bureau of Land Management (last visited May 20, 2011) available
at http://www.blm.gov/flpma/.
207 Id.
208 The Impact of the Administration’s Wild Lands Order on Jobs and Economic Growth: Hearing before the H. Comm. on Natural Resources, 112th Cong. (2011) Statement of Robert Abbey, Director, Bureau of Land Management)
209 Id.
Some of the lands already designated as “wild lands” may confuse the novice nature-
lover. It is not uncommon to find roads, active and inactive wells, agricultural improvements, and even air strips on proposed wild lands.205 If lands visibly subject to multiple uses in the past still possess wilderness characteristics, then it must not be necessary to lock those lands away entirely in order to maintain wilderness characteristics.
Locking away public lands is also in contradiction to the Federal Land Policy and Management Act of 1976.206 FLPMA directs the BLM to manage public lands “on the basis of multiple use and sustained yield.”207 The wild lands policy permits neither. BLM Director Robert Abbey told Congress that he “believe[s] in, and [is] dedicated to, the BLM’s multiple-use mission.”208 He also stated that any claims that the new wild lands policy has put a halt to new project and is preventing important economic activity in local communities is false.209
Companies facing indefinite delays after investing millions of dollars likely disagree. Now, with the stroke of a pen, Secretary Salazar has granted “wild land”
designations and effectively instituted an end-run around Congress.
EPA’s Contribution to NEPA Delays
EPA is also responsible for delays at the project approval stage. A couple of examples best illustrate the effect of EPA’s pressure on land managers conducting NEPA analyses. In one case, involving a large project of 1,250 wells in Wyoming, EPA inexplicably changed the type of air study it required.
The companies involved in the EIS for the large project had already spent $2.5 million based on prior guidance from EPA.210 In a second case, EPA asked a small business operating in Utah, Gasco Energy, to complete three rounds of air modeling for its 1,500 well project. EPA changed its request three times as to what type of air study it required, which resulted in years of delay and hundreds of thousands of dollars in unnecessary expenses.211 EPA made these requests despite Gasco Energy agreeing to controls and other mitigation measures above and beyond those the law requires.212
210 Id.
211 Id.
212 Id.
213 Energy Policy Act of 2005: Section by Section, Bureau of Land Management, (last visited May 20, 2011) available at http://www.blm.gov/wo/st/en/prog/energy/epca_chart.html.
214 Id.
215 Id.
216 Powder River Basin Resource Council (last visited May 20, 2011) available at
http://www.powderriverbasin.org/
217 U.S. Energy Information Administration, State Energy Data 2008: Production, available at
http://www.eia.doe.gov/emeu/states/sep_prod/P6/PDF/P6_TX.pdf.
218 U.S. Energy Information Administration, State Energy Data 2008: Production, available at
http://www.eia.doe.gov/emeu/states/sep_prod/P6/PDF/P6_ak.pdf.
Permitting Delays and Complications
The Department of Interior’s next opportunity to delay production on the land is the
permitting process. After receiving project approval, the producer may file an Application for Permit to Drill (APD).213 Under the Energy Policy Act of 2005, BLM has thirty days to process an APD.
However, by its own conservative estimate, BLM averages 206 days to process a permit.214 In some BLM field offices, permits can take over two years.215 Even after a permit is issued, the company that applied for it may not be able to use it. In
some cases there may be stipulation periods after the permit is issued. Some permits may be tied up in lawsuits. For others, the permit process might have taken so long that the land is now subject to new planning restrictions that prohibit development. One example of this occurred in the Powder River Basin. Years after applications were submitted, 2,400 permits were released at one time.
By then, many companies had abandoned their plans, in part because of changes in the cost of natural gas and in part because of new restrictions associated with sage grouse and produced water. The uncertainty in the process results in companies taking their business elsewhere.216
V. TEXAS
As oil and gas producers grow more and more frustrated with the obstacles to drilling on federal land out West, they look to private land in Texas. Texas leads the nation in the production of oil and natural gas. Texas produced 447,076 thousand barrels of crude oil217 and 7,403,720 million cubic feet of natural gas in 2008. In comparison, Alaska produced 249,874 thousand barrels of crude oil and 398,442 million cubic feet of natural gas in the same year. 218
Texas also has more proved oil reserves (5,496,000 thousand barrels compared to 4,007,000 thousand in the Gulf, and 3,556,000 thousand in Alaska in 2009) and more wet natural gas
38
proven reserves (85,034 billion cubic feet compared to 12,116 billion cubic feet in the Gulf and 9,183 cubic feet in Alaska) than either the Gulf or Alaska.219 Texas has weathered the recession better than most states,220 Last June, the EPA decided to strike down the “flex permit” system Texas has used since 1996, rejecting Texas-issued air-quality permits for refiners and other industrial plants.
Due in no small part to a booming oil and gas production, and the state is fighting to keep EPA from interfering with its success. Under Obama, EPA put a spotlight on the state, seemingly assuming that a profitable oil and gas industry is an indication of insufficient regulation.221
Then, in December, EPA sent Texas regulators a letter saying it had "no choice" but to seize control of permitting in the state.222
EPA Oversteps Texas Regulator
Another high profile example of the EPA overstepping Texas regulators based on false
claims of urgency came last December. The issue began when a landowner filed a complaint with the Texas Railroad Commission (RRC), the state oil and gas regulator, on August 6, 2010, stating that methane had contaminated water wells.223 The RRC commenced a full investigation into the source of the methane within days of the complaint. Over the next several months, the RRC – with full cooperation from Range, the company that owned gas production wells nearby – collected samples, performed tests, and conducted interviews. The investigation found that homeowners in the area had reported gas in their water for decades.
Chemical fingerprinting of the gas in the well indicated that it did not come from Range’s wells but from a shallow gas formation where wells were drilled in the early 1980s.224 After finishing its investigation in March 2011, the RRC officially concluded that Range did not cause the water well contamination and that it likely came from the shallow gas formation.225
EPA, on the other hand, raced to issue an emergency order in December 2010, assuming
the culpability of Range without the benefit of all the facts. EPA did not allow the RRC to finish its investigation,226
219 U.S. Energy Information Administration, U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Proved Reserves, 2009, available at http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/crude_oil_natural_gas_reserves/cr.html.
did not discuss the results of independent EPA sampling with the RRC as the 220 Texas Economy at Glance, Bureau of Labor Statistics, available at http://www.bls.gov/eag/eag.tx.htm. 221 Press Release, U.S. Environmental Protection Agency, EPA Disapproves Texas Flexible Air Permit Program (June 30, 2010).
222 A Focus on Texas’ Economy, Energy Prices and Jobs: Field Hearing before the H. Comm. on Energy and Commerce, Subcomm. on Energy and Power, 112th Cong. (2011) (statement of Greg Abbott, Attorney General, State of Texas)223 Press Release, Railroad Commission of Texas, Railroad Commission’s Active, Ongoing Investigation of Parker County Water Well Complaint (Dec. 7, 2010), available at
http://www.rrc.state.tx.us/pressreleases/2010/120810.php.
224 Id.
225 Press Release, Railroad Commission of Texas, Railroad Commissioners Find Range Resources’ Natural Gas Not Source in Parker County Water Wells (March 22, 2011), available at http://www.rrc.state.tx.us/pressreleases/2011/032211.php.
226 Press Release, Environmental Protection Agency, EPA Issues an Imminent and Substantial Endangerment Order to Protect Drinking Water in Southern Parker County (Dec. 7, 2010), available at
http://yosemite.epa.gov/opa/admpress.nsf/e8f4ff7f7970934e8525735900400c2e/713f73b4bdceb126852577f3002cb6fb!OpenDocument.
227 In late October, EPA collected samples as well. EPA shared these results with RRC staff in late November and requested a meeting to discuss them, but on Dec. 1, 2010, the meeting was postponed. See Press Release, Environmental Protection Agency, EPA Issues an Imminent and Substantial Endangerment Order to Protect Drinking Water in Southern Parker County (December 7, 2010).
228 Environmental Protection Agency, Findings and Emergency Order, Docket No. SDWA-06-2011-1208 (Dec. 7, 2010).
229 Jack Z. Smith, Range Resources calls EPA conclusions ‘sheer guesswork,’ STAR-TELEGRAM, May 2, 2010.
230 Mike Soraghan, Texas EPA Official’s E-Mails Show Federal-State Tension Over Sanctions on Natural Gas Drilling, NEW YORK TIMES (Feb. 11, 2011), available at http://www.nytimes.com/gwire/2011/02/11/11greenwire-texas-epa-officials-e-mails-show-federal-state-63373.html. (e-mails available at http://www.eenews.net/assets/2011/02/11/document_gw_03.pdf).
231 Id.
232 Randy Lee Loftis, EPA: 2 Parker County homes at risk of explosion after gas from 'fracked' well contaminates
aquifer, DALLAS MORNING NEWS, Dec. 9, 2010.
233 Id.
234 Letter from Mark D. Whitley, Senior Vice President, Range Resources Corp. to Dr. Alfredo Armendariz, EPA Regional Administrator (Dec. 27, 2010).
organizations had planned,227 and did not give Range an opportunity to present important objective facts.228 The Order directed Range to provide drinking water to the residents and to begin taking actions to correct the problem within 48 hours. The Order imposed costly requirements on Range, yet EPA has been unable to provide data indicating Range production activities contributed to the contamination of the wells. In addition to the cost of its voluntary cooperation with the Texas RRC, Range is incurring significant expenses defending itself – between $1.5 million to $1.75 million so far.229 Such an act was unprecedented in Texas.
The Committee has reviewed documents indicating that this action was coordinated with
local environmental activists. EPA Regional Administrator Al Armendariz wrote in an email to his friends at the Environmental Defense Fund and Public Citizen just before issuing the press release, “We’re about to make a lot of news […] [T]ime to Tivo Channel 8.”230 He went on, “Thank you both for helping to educate me on the public's perspective of these issues.” “Yee haw! Hats off to the new Sheriff and his deputies!” one activist replied.231
After issuing the emergency order, EPA shifted rapidly into spin mode, exaggerating the circumstances and misrepresenting the work already conducted by the RRC. “I believe we’ve got two people whose houses could explode. So we’ve got to move,” the Administrator told the Dallas Morning News,232 attempting to justify his declaration of an “imminent and substantial endangerment to a public drinking water aquifer through methane contamination” from Range’s “fracked” production well.233 In reality, the emergency basis was false. As the findings of fact attached to the order stated, the threat to the homes had already been evaluated, and one of the
water wells had been disconnected from the home months earlier.
EPA also played into environmental rhetoric by highlighting that Range utilized
hydraulic fracturing to produce natural gas. The Order did not allege the gas was a consequence of hydraulic fracturing, and EPA technical staff admitted that hydraulic fracturing in the Barnett Shale deep below the well could not be the cause of the gas occurring in the water wells.234
Despite the well contamination having no connection to hydraulic fracturing, EPA included in their press release announcing the emergency order, “EPA believes that natural gas plays a key
40
role in our nation’s clean energy future and the process known as hydraulic fracturing is one way of accessing that vital resource. However, we want to make sure natural gas development is safe.”235
EPA has refused to cooperate with either the Range or the RRC to resolve the dispute. In January, the RRC held an open hearing to receive expert testimony on the issue. Several experts explained flaws in EPA’s methodology, explaining that deep Barnett Shale had very low levels of nitrogen compared to the shallow Strawn formation. Possibly not so coincidentally, Range is also a very active driller in the Marcellus Shale of Pennsylvania.236
Nitrogen, therefore, was the distinguishing fingerprint. If the well had high levels of nitrogen, then the contamination was not coming from the Barnett Shale where Range had drilled. EPA had failed to conduct this analysis, but RRC took the time to do it. EPA declined to participate in the open hearing. Some critics joked that “EPA had better things to do – like asking the Department of Justice to impose
a $16,500-a-day fine on the company for failing to comply with an order that EPA itself has neither the interest nor ability to defend or explain in an open forum.”237
One Texas Railroad Commissioner called EPA’s action “Washington politics of the worst kind. The EPA’s act is nothing more than grandstanding in an effort to interject the federal government into Texas business. The Railroad Commission has been on top of this issue from Day 1.
We will continue to take all necessary action to protect Texas lakes, rivers and aquifers. Texans have no interest in Washington doing for Texas what it did for Louisiana fishermen.”238
DOI Threatens Texas with “Endangered” Lizard
The Fish and Wildlife Service (part of the Department of the Interior) has also found the Texas oil and gas industry to be an imminent threat, not to people but to lizards. The Fish and Wildlife Service has proposed placing the dunes sagebrush lizard that lives in New Mexico and west Texas on the Endangered Species List.239 Endangered Species status would allow the Fish and Wildlife Service to limit oil and gas production in the Permian Basin of west Texas – which currently produces nearly 20% of the country’s crude oil.240
Thousands of acres could potentially be taken out of production as a result of the rule, without an economic analysis ever being performed.241 How the Fish and Wildlife Service would use the lizard to stop oil and gas production is not a secret. According to the official notice in the Federal Register: “We believe the following actions may jeopardize this species, and therefore [the Fish and Wildlife Service] would seek to conference with [the Bureau for Land Management] and [NRCS] on these actions: The lease of land for oil and gas drilling, Applications to drill, Applications for infrastructure through dunes (including, but not limited to pipelines and power lines), [Off-Highway Vehicle] activities,
235 Id.
236 EPA MIA in Austin, ENERGY IN DEPTH (Jan. 20, 2011), available at
http://www.energyindepth.org/2011/01/epa-mia-in-austin/.
237 Id.
238 Id.
239 Dunes Sagebrush Lizard, U.S. Fish & Wildlife Services (last visited May 20, 2011) available at http://www.fws.gov/southwest/es/DSL.html.
240 Susan Montoya Bryan, Small lizard sparks big debate in NM, Texas, BLOOMBERG BUSINESSWEEK, Apr. 28, 2011.
241 Id.
41
Seismic exploration, Continued oil and gas operations (release of pollution and routine maintenance)….”242
The Fish and Wildlife Service would devastate the local oil and gas industry based on
limited data. Locals say the government used a flawed methodology when it estimated the lizard population – it did not spend enough time looking for the lizards and did not know how to find them.243 Regardless, the Fish and Wildlife Service has alternatives to declaring the lizard endangered. For example, voluntary conservation agreements between the federal government and landowners, like those successfully implemented in New Mexico, would help preserve the lizard’s habitat while allowing production to continue.244 According to the president of the Permian Basin Petroleum Association,“The best way [to protect the lizard] is for land owners and industry actually on the ground where the lizards are, who know how to protect the lizard, to
be in charge instead of the feds putting up ‘Do Not Enter’ signs on every gatepost.”245
The public comment period closed on May 16, accordingly, the rule will most likely be issued by the end of the year.
CONCLUSION
In his 2010 State of the Union address, President Obama declared: “the nation that leads the clean energy economy will be the nation that leads the global economy…America must be that nation.”246 Despite the fact that more than 80 percent of U.S. energy needs are met with carbon-based fuels that cannot be easily, cheaply or quickly replaced, the Obama Administration has been aggressively suppressing the utilization of these carbon-based fuels.
A pattern of evidence, as well as statements from before President Obama and Secretary of Energy Chu took office about the need for Americans to pay higher energy costs, raise alarming concerns about the existence of a campaign, across government agencies. This campaign aims to block carbon-based energy extraction, to tax it, and to otherwise increase its cost of use. The effort is occurring simultaneously with calls to heavily subsidize the development and use of “green energy.”
While some may argue that there are benefits of having Americans pay more for
gasoline, more for electricity, and more for home heating, the surreptitious implementation of such an agenda without public discussion or announcement appears highly inappropriate and contrary to the Administration’s promises of transparency.
242 Endangered and Threatened Wildlife and Plants; 12-Month Finding on a Petition To List the Sonoran Population of the Desert Tortoise as Endangered or Threatened, 75 Fed. Reg. 78094 (proposed Dec. 14, 2010).
243 Id.
244 Press Release, U.S. Department of the Interior, New Conservation Effort Benefits Rare Species in Southeastern New Mexico (Dec. 8, 2008), available at http://www.doi.gov/archive/news/08_News_Releases/120808.html.
245 Mella McEwen, Could a Three-inch Lizard Collapse the West Texas Oil Industry?, Midland Reporter-Telegram (April 23, 2011) available at http://www.mywesttexas.com/mobile/article_e7f32d45-fab8-5025-afa9-26a00d768910.html.
246 Id.
What President Obama failed to accomplish through the so-called “cap and trade”
program, his administration is attempting to accomplish through regulatory roadblocks, energy tax increases, and other targeted efforts to prohibit development of domestic energy resources.
This includes actions at the Bureau of Ocean Energy Management, Bureau of Land
Management, and U.S. Fish and Wildlife Service that have raised barriers to limit exploration and development of domestic energy resources. This includes moratoriums on offshore oil drilling, blockage/delay of onshore oil and gas leases, and even efforts to list certain lizard species on the endangered list at the expense of 20 percent of the Texas crude oil market, alone.
Thanks to advances in new technology, the U.S. energy industry has the opportunity to
experience a renaissance by extracting resource deposits not even known to exist a generation ago. The opportunity to increase domestic oil production by as much as 40%in the next five years is at hand. Congress and the Obama Administration should herald this development, reducing barriers and streamlining processes so these firms can ramp up activity and production in an effort to achieve energy independence.
Doing so would stabilize our sources of energy, create well-paying job opportunities for American workers, and improve our standing in the global marketplace by removing the volatile supply chains that currently impact our energy prices and availability.
The ability to utilize our nation’s rich natural resources may, however, be out of reach if the Obama Administration continues efforts to hinder domestic development of carbon based energy sources in an attempt to ignite a green energy revolution.
While there are clearly needs and opportunities for green energy development, premature implementation of such technologies will come at the price of a premium over more affordable sources of energy. An effort to intentionally raise the costs of traditional energy sources is a dangerous strategy that will harm economic recovery and job growth. If past statements of key administration officials are indeed reflections of the policies they are pursuing, this strategy is playing a quiet but significant role in the higher energy prices Americans are currently paying.
About the Committee
The Committee on Oversight and Government Reform is the main investigative committee in the U.S. House of Representatives. It has authority to investigate the subjects within the Committee’s legislative jurisdiction as well as “any matter” within the jurisdiction of the other standing House Committees. The Committee’s mandate is to investigate and expose waste, fraud and abuse.
Contacting the Committee
For press inquiries:
Frederick R. Hill, Director of Communications
(202) 225-0037
For general inquires or to report waste, fraud or abuse:
Phone: (202) 225-5074
Fax: (202) 225-3974
http://republicans.oversight.house.gov
Committee on Oversight and Government Reform
Chairman, Darrell Issa (CA-49)
2157 Rayburn House Office Building
Washington, DC 20515
Dept. of Interior Held In Contempt over Drilling Moratorium
Barton S. Norfleet1
Last year’s drilling moratorium, issued in the wake of the Deepwater Horizon oil spill, has been the subject of ongoing litigation between the Department of Interior (DOI) and various owners and operators of offshore drilling support services (collectively Hornbeck Offshore Services). In the latest development, Hornbeck Offshore Services brought a civil contempt action against the DOI.2 Hornbeck Offshore Services argued that the DOI violated an earlier court order, and therefore, Hornbeck was entitled to an award of attorney fees. In February, a Louisiana federal district court agreed with Hornbeck Offshore Services and ordered DOI to pay Hornbeck’s attorney’s fees.
Background
After the April 2010 explosion on BP’s Deepwater Horizon rig and the resulting oil spill, President Obama ordered the DOI to conduct a review of the incident. On May 27, 2010, the DOI released a review which suggested that all blowout preventer equipment and emergency systems be recertified, new design and testing procedures be implemented, and increased safety measures be required on all rigs.3 Although the review was said to have been peer reviewed by a team of scientists, some of these identified scientists later denied participating in the review.4 On May 28th, the DOI, exercising its authority under the Outer Continental Shelf Lands Act (OCSLA), placed a moratorium on all drilling operations in the Gulf of Mexico which were drilling at depths greater than 500 feet for the purpose of implementing improved safety measures. The OCSLA gives the DOI power to issue a moratorium if “there is a threat of serious, irreparable, or immediate harm or damage to life, to property, to any mineral deposits, or to the marine, coastal, or human environment.”5
Hornbeck Offshore Services and others challenged the moratorium in court, and sought an injunction to prevent possible negative effects on individual business, local economies, and the economy at large.6 On June 22, 2010, the court granted the injunction finding the DOI’s decision arbitrary and capricious. According to the court, the moratorium of May 28, 2010 made no reference to any “irreparable harm,” did not contain any predictions as to the length of time necessary to introduce proposed safety measures, and suggested that operations conducted at depths greater than 1,000 ft., not 500 ft., carried more complex risks than shallower operations.7
During the two weeks following the lifting of the moratorium, the DOI repeatedly announced that a new moratorium would be issued soon and therefore no new drilling commenced. On July 12th, the DOI rescinded the first moratorium and immediately enacted a second which eliminated the “drilling at 500 ft. standard” and imposed a ban on rigs which used “subsea blowout preventers or surface blowout preventers on a floating facility.”8 According to the court, this new moratorium, although textually different, was essentially identical to the first as all of the rigs drilling at 500 ft. used the blowout preventers at issue.
The second moratorium also upheld the same expiration date of November 30, 2010. The new moratorium was lifted on October 12, 2010, and in November it was revealed that a White House official had made adjustments to the Safety Report before it was released which had created the misleading appearance of the Report being scientifically peer reviewed.9 The plaintiffs then initiated a suit against the DOI under a civil contempt and bad faith claim in hopes of recovering their attorney fees.
Civil Contempt
Hornbeck Offshore Services chose to make a civil contempt claim because it wanted compensation of attorney’s fees, and a contempt claim can offer monetary compensation to parties who have suffered “unnecessary injuries or costs because of contemptuous conduct.”10 To prove a civil contempt claim, the aggrieved party must show “by clear and convincing evidence: 1) that a court order was in effect, 2) that the order required certain conduct by the [government], and 3) that the [government] failed to comply with the court’s order.”11 The party must also show that the evidence in relation to the contempt charge is “so clear, direct and weighty, and convincing as to enable the fact finder to come to a clear conviction, without hesitancy, of the truth of the precise facts of the case.”12
In this case, the court found that the first two requirements were clearly met. It became Hornbeck Offshore Services’ burden to prove the third element (that the government failed to comply with the court’s order) by producing evidence meeting the clear and convincing standard. Hornbeck Offshore Services argued that the DOI “showcased its defiance” of the first injunction by failing to seek a remand, continually expressing an intention of resolving and reapplying the moratorium, and notifying the operators that a new moratorium would soon be issued. On February 2, 2011, the court ruled in favor of Hornbeck Offshore Services stating that the “showcase of defiance” elements along with the issuance of a second essentially identical moratorium so soon after the first injunction constituted enough clear and convincing evidence to establish that the DOI was in fact in contempt of court.13
Conclusion
Although the DOI was ordered to pay Hornbeck Offshore Services’ attorney’s fees, no dollar amount has been set. The case was handed over to another magistrate judge to decide how much compensation is warranted. The DOI has currently appealed the case to the U.S. Fifth Circuit Court of Appeals (New Orleans), and a hearing has been slated for the week of June 6th, to be presided over by a panel of three federal judges.14
In a related matter, the same court, on February 17, 2011, issued an order requiring the DOI to respond to seven drilling permit applications within thirty days of the ruling.15 However, the DOI was relieved of this obligation when the Fifth Circuit, responding to the DOI’s appeal, stayed the lower court’s order until the outcome of the DOI’s appeal is determined. Currently there have been only two new deepwater (OCS) drilling permits issued since the lifting of the second moratorium.
Endnotes
1. 2012 J.D. Candidate, University of Mississippi School of Law.
2. Hornbeck Offshore Services, LLC v. Salazar, No. 10-1663, 2011 WL 454802 (E.D.La. Feb. 2, 2011).
3. Dept. of Interior, Increased Safety Measures for Energy Development on the Outer Continental Shelf, May 27, 2010, http://www.doi.gov/deepwaterhorizon/loader.cfm?csModule=security/getfile&PageID=33598.
4. Hornbeck Offshore Services, 2011 WL 454802, at *1.
5. 43 U.S.C. § 1334(a)(1).
6. Hornbeck Offshore Services, L.L.C. v. Salazar, 696 F.Supp.2d 627, 631 (E.D.La. 2010).
7. Id. at 632.
8. Hornbeck Offshore Services, 2011 WL 454802, at *1.
9. Id. at 2.
10. Id.
11. Id. (citing Am. Airlines, Inc. v. Allied Pilots Ass’n, 228 F.3d 574, 581 (5th Cir.2000)).
12. Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 582 (5th Cir.2005).
13. Hornbeck Offshore Services, 2011 WL 454802, at *3.
14. Laurel Brubaker Calkins & Allen Johnson Jr., Appeals Court to Hear Arguments on Gulf Drilling Permit Delay, Bloomberg, April 8, 2011, http://www.bloomberg.com/news/2011-04-08/oil-industry-s-gulf-drill-ban-appeal-to-get-june-hearing-in-new-orleans.html.
15. Appeals Court Issues a Stay on Drilling Ruling, Associated Press, March 15, 2011, available at http://www.nola.com/ news/gulf-oil-spill/index.ssf/2011/03/appeals_court_ issues_a_stay_on.html.
http://masglp.olemiss.edu/Water%20Log/WL31/31.2doiheldincomtempt.htm
---------------------------------------------
UNITED STATES DISTRICT COURT -- EASTERN DISTRICT OF LOUISIANA
HORNBECK OFFSHORE SERVICES, * CIVIL ACTION NO.: 10-1663
VS KENNETH LEE “KEN” SALAZAR, in, his official capacity as Secretary, United States Department of the Interior
* * * * * * * * * * * * * * * * * * * * * **
AMICUS BRIEF ON BEHALF OF BOBBY JINDAL, GOVERNOR OF THE STATE OF LOUISIANA, IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
The Governor and State of Louisiana. through the Louisiana Attorney General, James D.
“Buddy” Caidwell, present this amicus brief in support of the Petitioner’s request that this honorable Court order removal of the moratorium on deepwater drilling on the Outer Continental Shelf (OCS) off the coast of Louisiana. Offshore oil and gas exploration and production are critical components of Louisiana’s economy, which was afready weakened by Katrina and is now crippled by the Deepwater Horizon disaster. With each passing day, the MMS moratorium further threatens the economic livelihood of the State and its citizens. The State of Louisiana, therefore, has a real interest in the outcome of this litigation.
THE STATE’S INTEREST IN THIS LITIGATION
The Governor and Attorney General, in their respective capacities as chief executive
officer and chief legal officer of the State of Louisiana have a duty to protect the interests of the
1
State and its citizens. Implicit in that duty is the obligation to protect the economic wellbeing of the State and its citizens, as well as the environment and natural resources of the State. At the same time, especially in view of the ongoing harm the State is suffering from the Deepwater Horizon disaster, the State has an interest in making sure that offshore drilling is conducted with the utmost safety and regulatory oversight, and to ensure that the environment and natural resources of the State are protected.
The State believes, however, that these objectives can be achieved with a balanced
approach to deepwater drilling that includes inspection, detection, and correction of any threats, without the necessity of shutting down an entire industry segment. As demonstrated below, a moratorium on deepwater drilling will have a severe impact on the economy of the State of Louisiana in both the short term and long term, which has been completely ignored in Defendants’ decision-making process.
STATEMENT OF TILE CASE
The oil and gas industry is one of the leading industries in Louisiana in terms of
economic impact, taxes paid, and people employed. Louisiana is the third leading producer of natural gas and the fourth leading producer of crude oil in the country. When OCS production is included, Louisiana ranks second in natural gas and third in crude oil production. There are 19 active refineries in Louisiana which rely significantly on offshore production in the Gulf of Mexico for their raw materials.
The offshore oil and gas industry, operating in the Gulf of Mexico outside of the
territorial boundaries of Louisiana, has a tremendous economic impact on the State, estimated to be approximately $3 billion per year. This comes not only from salaries and wages of workers on the rigs, but also from the myriad of Louisiana companies doing business with the offshore
2
industry, including contract employment companies, boat companies, tool rental companies, equipment servicing companies, and offshore food service companies, among many others. Because of the pervasiveness of the oil and gas industry in Louisiana, the entire economy is affected, from grocery stores and restaurants to banks and schools.
Effective May 30, 2010, the U.S. Department of the Interior, through the Minerals
Management Service (MMS), issued a “six-month suspension of all pending, current, or
approved offshore drilling operations of new deepwater wells in the Gulf of Mexico” in water depths exceeding 500 feet.’ According to the Louisiana Mid-Continent Oil and Gas Association, the moratorium will take 33 floating rigs out of commission for at least six m2onths. The attached map prepared by the LSU Center for Energy Studies identifies and shows the location of 31 of the affected rigs, all off the Louisiana coast. Each of those rigs employs Louisiana workers and is supplied and serviced by Louisiana companies.
The impact of the moratorium is neither speculative nor remote. According to the LSU
Center for Energy Studies, within only five months the moratorium will result in the direct layoff of 3,339 Louisiana workers and the loss of an additional 7,656 jobs indirectly in the State. The Louisiana Department of Economic Development estimates that the State risks losing more than 20,000 existing and potential new jobs over the next 12 to 18 months as a result of this moratorium.
In the long run, this moratorium will have an even more devastating effect on Louisiana’s Salazar Memorandum dated March 28, 2010, and accompanying Notice to Lessees and Operators (Nil), (DOC #5-1, P. 2-4)
2 See Louisiana Mid-Continent Oil and Gas Assn. fact sheet, at http://www.crt.state.Ia.us/GESTlFactsFinures.asnx
See map at http://www.crtstate.la.us/GESTIDocumentsIIMPACTED RIG LOCATIONS 06-04-2010.pdf.
See charts prepared by the LSU Center for Energy Studies, estimating job losses assuming three different recovery scenarios, at http://www.crt.state.la.us/GEST!DocumentsIFORECASTED ACTIVITY 11 .pdf
3
economy. The owners of these rigs will not let them sit idle for six months or more. Anadarko Petroleum Company and Cobalt International Energy have already invoked force majeure clauses in their contracts with drillers in the deepwater OCS, allowing the drillers to move as many as four rigs out of the Gulf of Mexico. 5 Once these companies move their rigs there is little chance for their immediate return at the end of the moratorium, as they will have made long-term commitments at their new locations in Brazil, Africa, or the Middle East. By the end of the six month moratorium (which is scheduled but by no means certain), there will likely be no deepwater rigs available to resume drilling in the Gulf of Mexico. Having to wait an additional year or more for available rigs will turn the short-term adverse effects of the moratorium into a long-term economic disaster for Louisiana.
The Louisiana Workforce Commission (“LWC”) administers Louisiana’s unemployment
compensation system, its workers’ compensation system and its workforce programs, including job training and work search services. Because of the moratorium, many thousands of Louisiana workers have lost their employment and many more are at risk of losing it in the near future. All of the programs administered by the LWC have been and will continue to be heavily impacted by its effects. Every state agency has incurred and continues to incur costs from providing additional public services to the citizens of the state as a result of the Deepwater Horizon Event.
The moratorium will add additional strain to systems that are already overloaded by the ongoing crises, all while the federal government schedules more meetings.
In addition, Louisiana stands to lose substantial tax revenues as a result of the
moratorium. Income taxes will be lost from laid-off workers and closed businesses. Sales tax
See news reports at: http://www.reuters.comlarticle/1dUSNO32217342O1006O3; and
http://www.ogj .com/index/article-display/9 1 61423238/articles/oil-gas-journal/drilling-production-2/2010/O6/cobaltinternational.html
4
revenues will be lost from reduced sales of goods and services. In addition to having an impact on the State’s General Fund, the moratorium on drilling will also affect funding for the Budget Stabilization Fund, the Louisiana Investment Fund for Enhancement, and First Use Tax Trust Fund, to name just a few, which rely on oil and gas revenues for their funding. Compounding the impact of loss of revenue, the lack of these funds also threatens the State’s bond rating. If the State’s revenue stream for oil and gas, as well as sales and personal income tax revenues decline because of loss of jobs, the rating agencies will first put the State on negative credit watch and then begin the process of lowering its rating if the moratorium continues.
Most importantly, pursuant to the Gulf of Mexico Energy Security Act (GOMESA), the
State of Louisiana is presently entitled to receive 32% of all mineral revenues generated from eight million acres recently opened for drilling in the Gulf of Mexico. All of this area is now subject to the driffing moratorium. Louisiana stands to lose enormous revenue-sharing income into the foreseeable future which, as set forth below, are dedicated for use in natural resource mitigation and protection.
LEGAL ISSUES
Many of the legal issues have already been put before the Court by Plaintiffs and
Defendants and will not be repeated here. Some, however, have not. OCSLA, 43 U.S.C. § 1332 states that it is “declared to be the policy of the United States”
that:
(4) since exploration, development, and production of the minerals of the outer
Continental Shelf will have significant impacts on coastal and non-coastal areas
of the coastal States, and on other affected States, and, in recognition of the
national interest in the effective management of the marine, coastal, and human
environments
5 (C) such States, and through such States, affected local governments, are
entitled to an opportunity to participate, to the extent consistent with the
national interest, in the policy and planning decisions made by the Federal
Government relating to exploration for, and development and production of,
minerals of the outer Continental Shelf.
In view of that stated policy, 43 U.S.C. § 1334(a) reads, in pertinent part, as follows: “In the enforcement of safety, environmental, and conservation laws and regulations, the Secretary shall cooperate with the relevant departments and agencies of the Federal Government and of the affected States.” (emphasis added) Inasmuch as the State of Louisiana was completely ignored by Defendants in the establishment of this moratorium for alleged safety reasons, the question arises whether that failure renders Defendants’ action invalid.
The Gulf of Mexico Energy Security Act (GOMESA), P.L. 109-432, provides for
Federal/State revenue sharing of mineral royalties in areas of the Gulf of Mexico covered by the drilling moratorium. Section 105(d) of GOMESA restricts the use of a state’s revenue share exclusively to one of the following:
(A) Projects and activities for the purpose of coastal protection, including
conservation, coastal restoration, hurricane protection, and infrastructure
directly affected by coastal wetland losses.
(B) Mitigation of damages to fish, wildlife, or natural resources.
(C) Implementation of a federally-approved marine, coastal, or comprehensive
conservation management plan.
(D) Mitigation of the impact of outer Continental Shelf activities through the
funding of onshore infrastructure projects. and
(E) Planning assistance and the administrative costs of complying with this section.
Given that a stated justification for the Defendants’ drilling moratorium is “an unacceptable
threat of serious and irreparable harm to wildlife and the marine, coastal, and human
6
environment,” 6 and given that the moratorium has and will deprive the State of Louisiana of revenues which would be dedicated to the protection of the very same natural resources the moratorium purports to protect, the question arises as to the legality and legitimacy of Defendants’ action in light of GOMESA. Nothing in the report relied upon by the Department of the Interior appears to have taken these statutes into account or taken the effects of the moratorium on the State into account at all.
As discussed above, this moratorium has and will have a significant adverse effect on
thousands of small businesses in the State of Louisiana. The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) requires Defendants to have considered the effect of its actions on these small businesses.
In Section 202 of SBREFA, Congress made specific findings that:
(1) a vibrant and growing small business sector is critical to creating jobs in a
dynamic economy;
(2) small businesses bear a disproportionate share of regulatory costs and burdens;
(3) fundamental changes that are needed in the regulatory and enforcement
culture of Federal agencies to make agencies more responsive to small business
can be made without compromising the statutory missions of the agencies;
(4) three of the top recommendations of the 1995 White House Conference on
Small Business involve reforms to the way government regulations are developed
and enforced, and reductions in government paperwork requirements;
(5) the requirements of chapter 6 of title 5, United States Code, have too often
been ignored by government agencies, resulting in greater regulatory burdens on
small entities than necessitated by statute; and
(6) small entities should be given the opportunity to seek judicial review of
agency actions required by chapter 6 of title 5, United States Code.
6 Salazar Memorandum, Attachment 1 to Plaintiffs’ First Supplemental and Amended Complaint for Declaratory
and Injunctive relief. (DOC #5-1, p. 2)
7
In keeping with those findings, Congress said in Section 203 of SBREFA that the purpose of the Act was:
(1) to implement certain recommendations of the 1995 White House Conference on Small
Business regarding the development and enforcement of Federal regulations;
(2) to provide for judicial review of chapter 6 of title 5, United States Code;
(3) to encourage the effective participation of small businesses in the Federal regulatory
process;
(4) to simplify the language of Federal regulations affecting small businesses;
(5) to develop more accessible sources of information on regulatory and reporting requirements
for small businesses;
(6) to create a more cooperative regulatory environment among agencies and small
businesses that is less punitive and more solution- oriented; and
(7) to make Federal regulators more accountable for their enforcement actions by
providing small entities with a meaningful opportunity for redress of excessive enforcement activities. (emphasis added) Under SBREFA, Defendants were required to conduct regulatory flexibility analyses to determine the adverse effect of its moratorium on small businesses and to insure that their actions had the least adverse economic impact on them. Defendants’ suspension documents neither mentions SBREFA, nor attempts to comply with the Act. Once again, the question arises
as to the legality and legitimacy of Defendants’ action in light of SBREFA.
ARGUMENT ON TIlE ISSUES
1. No rational reason for defendants’ action.
Defendants justify the moratorium on the ground that it gives the Department of the
Interior “time to step back and investigate both the root causes of the Deepwater Horizon disaster and to implement additional safety measures to ensure that we don’t fall victim to another disastrous oil spill.” 7
8
The prevention of future oil spills requires (1) a detailed set of rules and regulations designed to require drilling operations be conducted in accordance with the strictest safety standards, (2) oil and drilling companies truly dedicated to following those rules and regulations, gj (3) a watchdog Federal agency intent on policing the industry to make sure the rules and regulations are followed.
It is clear from the testimony in the joint MMS/Coast Guard hearings, and the recent
hearings before Congress, that the Deepwater Horizon disaster was the result of the abject failureof (2) (3) above. More studies and investigation will not make the Deepwater Horizon disaster go away; Louisiana will have to suffer with that for decades to come. Nor will more studies and investigation insure that the MMS will enforce the rules and regulations that have been in place long before the Mississippi Canyon was even put out to lease.
The existing rules and regulations required these studies before leases were let and
before drffling started in the Mississippi Canyon. These existing regulations require that:
exploration plans must be prepared and approved (30 C.F.R. § 250.211-118); development and production plans must be prepared and approved (30 C.F.R. § 250.241-262); deepwater operations plans must be prepared and approved (30 C.F.R. § 250.286-295); well drilling design criteria must be prepared and approved (30 C.F.R. § 250.4 13); a detailed drilling prognosis must be prepared and approved (30 C.F.R. § 250.414); a casing and cementing program must be prepared and approved (30 C.F.R. § 250.415); diverter and BOP systems must be approved (30 C.F.R. § 250.416); an application for a permit for drilling must be prepared and approved (30 C.F.R. § 250.4 18); if a MODU is used, it must meet rigorous inspection requirements (30 C.F.R. § 250.417); reservoir testing must be submitted and approved. (30 C.F.R. §250.407). A drilling Defendants’ Opposition to Plaintiffs’ Motion for Preliminary injunction at p. 24 (DOC # 28)
9
moratorium simply is not necessary to enforce the extensive rules and regulations already in place.
The State’s Gulf Economic Survival Team (GEST) was formed at the request of
Governor Jindal to specifically address alternatives to the drilling moratorium. GEST
recommends that the moratorium could be reduced to thirty days through a more efficient procedure. GEST’s recommendations include:
• Minerals Management Service inspectors maintain a full-time presence on all ongoing
deepwater drilling locations, with all MMS inspection reports reviewed by the U.S.
Coast Guard;
• strict compliance with American Petroleum Institute (API) standards on all equipment used in well construction;
• implement all of the prescriptive safety recommendations as set forth in the DOl safety report which can be implemented within 30 days;
• Re-certify all BOP equipment used in floating drilling operations and ensure their
suitability for the rig and well design;
• Ensure rig personnel are trained to industry- and government-accepted standards for well control procedures;
• Review operator well plans, with particular emphasis on casing and cementing designs to ensure sufficient pressure barriers and that designs are fit for purpose;
• After confirming the correctness and preparedness of each rig and well design, these deepwater rigs should be permitted to resume work, and the DOl should resume issuing permits for new deepwater work. Meanwhile, industry and government can work through additional recommendations outlined in DOl’s Safety Report.
In essence, the State of Louisiana believes that with strict enforcement of the rules and regulations already in place and by immediately implementing the recommendations in the DOl’s Safety Report which can be implemented within 30 days, deepwater drilling may promptly resume in a reasonably safe manner.
The Director of GEST, Louisiana’s Lt. Governor Scott Angelle, has obtained 144,586
signatures on a petition asking Defendants to lift the moratorium. Many of these are the owners of the small businesses affected by the moratorium, who Defendants failed to consider as
10
required by SBREFA. Many of these individuals are the very individuals who should have been heard before the Department of the Interior issued a hasty and self-serving edict to shut down an entire segment of an industry.
2. No rationale for a six month period. The Defendants have articulated no reason at all why this moratorium should last six months, other that the vague statement that they need “time to step back and investigate both the
root causes of the Deepwater Horizon disaster and to implement additional safety m8easures.” Louisiana in a state of environmental and economic crisis, and time is the enemy.
Defendants have had two months to investigate this disaster. The MMS/Coast Guard
hearings are over; the evidence has been taken. There is no reasonable basis for needing more time to “investigate the root causes” of the Deepwater Horizon disaster, and enforcing a moratorium while the investigation persists.
As set forth in the preceding section, most of the recommendations of the DOT Report
can be implemented immediately. Strict enforcement of existing regulations, immediate
implementation of DOl Report recommendations, together with adoption of the GEST
recommendations, will allow reasonably safe drilling, while Defendants conduct studies and investigate improved safety regulations. This approach strikes the correct balance of preserving economic livelihoods and ensuring safe operations.
Furthermore, there is no guarantee that six months would be an outside limit on
Defendants’ moratorium. The Defendants have not identified any specific objectives other than conducting further studies and having more meetings. In fact, under the regulations, Defendants could conceivably extend this drilling suspension up to five years. Given the glacial pace of the federal government’s decision-making in the Deepwater Horizon disaster so far, one cannot draw 8 Defendants’ Opposition, p. 24.
11
much comfort from Defendants’ assurance “that the chaiienged suspensions do not last any longer than necessary to implement the safety protocols recommended in the 30-day Report or in the National Commission’s six-month report.”
In addition, several of the Defendants’ own “peer review panel” have repudiated the
DOT’s conclusion that a six month moratorium was necessary to implement the recommendation those same industry experts agreed would be beneficial. Even after the catastrophic events of September 11, the government only shut down the airlines for three days. There simply is no precedent for the government’s action and no justification for it.
3. Agency decision was arbitrary and capricious. Defendants contend that “temporary harm to Plaintiffs’ short-term financial interests is far outweighed by the potential for harm to the people and public lands of the United States if the
challenged suspensions are prematurely lifted” and that Plaintiffs’ losses “cannot compare to the potential costs and lost opportunity of failing to prevent another Deepwater Horizon disaster sometime in the next six months.”
Any estimation of “potential for harm” in deciding to take action should always include a risk benefit analysis, weighing the potential for harm against actual harm that may result from not taking the action. Defendants clearly failed to do this when deciding to impose the moratorium without considering the actual harm that will befall Louisiana and its citizens.
Nowhere in the Defendants’ documents or in any of the papers filed with this Court, is there any mention, much less consideration, of the potential adverse economic impact this drilling moratorium may have on the State of Louisiana and its citizens.
Recitation of regulations
and platitudes in briefs, do not raise the quality of Defendants’ analysis beyond the level of pure speculation.
Id. p. 10. 10 Defendants’ Opposition to Plaintiffs’ Motion for Preliminary Injunction at p. 24, 25 (DOC # 28)
12
If, as conceded by Defendants, an agency’s action may be overturned if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” then the moratorium must be lifted immediately. The Court’s role in that regard is to determine if the agency considered the “relevant factors” and “articulates a rational relationship between the facts found and the choice m2ade.” The Defendants certainly knew that Louisiana was the state most affected, both positively and negatively, by this moratorium. They had a legal obligation under
OCSLA to consult with the State. Yet they never contacted the State about the moratorium, nor did they seek any information about the potential negative effects of the moratorium on the State.
In other words, Defendants never considered the most relevant factor of all, namely, how will this action affect the State of Louisiana and its citizens.
4. Agency decision did not comply with the law.
The clear Congressional intent of OCSLA was to encourage participation of adjacent
coastal states in the management of production of minerals on the OCS. 43 U.S.C. § 1334(a) specifically requires Defendants to cooperate with affected states in the enforcement of its safety laws and regulations. Defendants failed in this requirement by not even communicating with the State of Louisiana on this important regulatory matter, until after the fact.
Furthermore, Defendants were required by SBREFA to consider the adverse impact of its
action on the thousands of small businesses adversely affected by the moratorium. They did not do so.
Id., p. 6-7.
12 Id. p. 7, and cases cited therein.
13
5. An alternative remedy.
The parties appear to be locked in an “all or nothing” battle, asking the Court to either lift the moratorium immediately without restriction, or leave it in place for at least six months as directed by the MMS. Faced with only those two choices, the State believes that lifting the moratorium is the proper option. However, there may be rational alternatives the Court could employ to enable deepwater drilling in a much shorter period of time.
Pursuant to the APA [5 U.S.C. § 706(1)1, the Court shall “compel agency action
unlawfully withheld or unreasonably delayed;” (emphasis added) At the very least the Court should fmd that six plus months is an unreasonable delay, and order that the moratorium be lifted in 30 days from the date of its imposition, absent a clear showing by MMS why the moratorium should not be extended. During that time, the DOl Report and the GEST recommendations may be implemented, and safe drilling resumed in a more reasonable timeframe.
CONCLUSION
The State of Louisiana, more than any other public or private entity, has been most
adversely affected by the Deepwater Horizon disaster. The drilling moratorium imposed by Defendants will only compound the State’s problems, effectively turning an environmental disaster into an economic catastrophe for the State. Every day that the moratorium is in effect costs the State untold millions of dollars.
The Federal Government’s failures in allowing the Deepwater Horizon disaster to occur
cannot be used as an excuse for compounding the problems by carte blanche suspending all deepwater drilling pending studies and investigations into those failures. Extensive regulations already exist which, if properly administered, would allow deepwater drilling with reasonable assurances of safety. Additional recommendations of the DOl’s Safety Report may be immediately implemented to bolster drilling safety in deep water off the coast of Louisiana. The State of Louisiana encourages Defendants to undertake a comprehensive analysis of
14
what went wrong on the Deepwater Horizon rig in order to ensure the future safety of OCS activity. However, the implementation of the current moratorium is overly broad and not properly tailored to the stated goal. Indeed, had Defendants conducted a proper risk-benefit analysis and afforded the affected states an opportunity to comment on its proposed actions, Louisiana could have aided Defendants in the creation of a more narrowly tailored limitation on activity to achieve a better balance between the risks associated with OCS activity and the benefits of that same activity.
Therefore, the State of Louisiana supports the Petitioner’s request for relief and requests that this Court issue the requested preliminary injunction, immediately lifting the moratorium on deepwater drilling in the Gulf of Mexico. Alternatively, the Court should order the lifting of the moratorium within 30 days from the date of its inception, absent a clear showing by Defendants why the moratorium should not be extended.
Respectfully submitted,
James D. “Buddy” Caidwell
Louisiana Attorney General
James Trey Phillips
First Assistant Attorney General
Megan K. Terrell
Assistant Attorney General
Section Chief — Environmental
State of Louisiana
P.O. Box 94005
Baton Rouge, Louisiana 70804-9005
Tel: (225) 326- 6708
Fax: (225) 326-6797
15
Special Counsel to the Attorney General
And Elizabeth Baker Murrill
Elizabeth Baker Murrill
Deputy Executive Counsel
Governor Bobby Jindal
Lousiana State Capitol, 4th Fl
600 N. Third Street
Baton Rouge, Lousiana 70802
(225) 342-2884
Bar Roll No. 20685
And Allan Kanner
Allan Kanner, Esq.
Elizabeth B. Petersen, Esq.
Rebecca 3. Davis, Esq.
Kanner & Whiteley, L.L.C.
701 Camp Street
New Orleans, Louisiana 70130
Tel: (504) 524-5777
Fax: (504) 524-5763
Special Counsel to the Attorney General
And Bradley M. Marten
Bradley M. Marten, Esq.
Linda R. Larson, Esq.
Marten Law PLLC
1191 Second Avenue, Suite 2200
Seattle, WA 98101
Tel: (206) 292-2600
Fax: (206) 292-2601
Of Counsel, Pro Hac Vice Pending
And T. Allen Usry
T. Allen Usry, Esq.
Usry, Weeks, & Matthews, APLC
16
Special Counsel to the Attorney General
And E. Wade Shows E. Wade Shows, Esq.
Shows, Cali, Berthelot & Walsh LLP
628 St. Louis Street
Baton Rouge, LA 70802
Tel: (225) 346-1461
Fax: (225) 346-1467
CERTIFICATE OF SERVICE
This is to certify that the undersigned has this 20th day of June, 2010 served the
foregoing AMICUS BRIEF ON BEHALF OF BOBBY JINDAL. GOVERNOR OF THE STATE OF LOUISIANA. AND THE STATE OF LOUISIANA IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION on the Court’s electronic docketing system. Therefore, the undersigned upon information and belief certifies that all counsel of record as noted below, will receive a copy of these papers through the Court’s
electronic notice system:
Carl D. Rosenbium
Jones, Walker, Waechter,
Poitevent, Carrere, & Denegre, L.L.P.
201 St. Charles Avenue, t4h9 Floor
New Orleans, LA. 70170
crosenblum@joneswalker.com
Counsel for Plaintiffs
Guillermo A. Montero
U.S. Department of Justice
Environmental and Natural Resources Division
Natural Resources Section
P.O. Box 663
Washington, D.C. 20016
Guillermo.montero@usdoj.gov
Counsel for Defendants
Henry T. Dart
17
Case 2:10-cv-01663-MLCF-JCW Document 68 Filed 06/22/10 Page 1 of 3
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
HORNBECK OFFSHORE SERVICES, CIVIL ACTION
L.L.C ET AL. VERSUS NO. 10—1663
KENNETH LEE “KEN” SALAZAR SECTION “F”
ET AL.
ORDER
This Court having considered the Motion for Preliminary
Injunction of Hornbeck Offshore Services, L.L.C., Bee Mar—Worker
Bee LLC, North American Fabricators, L.L.C., Bee Mar LLC, Offshore
Support Services, L.L.C., Martin Holdings, LLC, Bollinger Algiers,
L.L.C., Sea Fluids, L.L.C., Bollinger Marine Fabricators, Inc., CPort
2 LLC, Bee Mar—Bayou Bee LLC, Bollinger Amelia Repair, LLC, CPort
LLC, Fourchon Heavy Lift, L.L.C., C-Innovation, Bee Mar-Bee
Hive LLC, Bee Mar-Queen Bee LLC, Bollinger Shipyards, Inc., Clean
Tank, LLC, Bee-Mar-Honey Bee LLC, Tampa Ship, L.L.C., Bee Mar-Busy
Bee LLC, Bee Mar Crews LLC, Bee Mar-Bumble Bee LLC, Bollinger Texas
City, LP, Bollinger Calcasieu, LLC, Bollinger Shipyards Lockport,
L.L.C., Bollinger Quick Repair, L.L.C., Bollinger Morgan City,
L.L.C., Bollinger Gretna, L.L.C., Bee Mar-Bee Sting LLC, North
American Shipbuilding, L.L.C., Bollinger Fourchon, L.L.C., Gulf
Ship, L.L.C., Alpha Marine Services, L.L.C., Nautical Solutions
LLC, Nautical Ventures, L.L.C., Reel Pipe LLC, as well as the
verified Supplemental and Amended Complaint for Declaratory and
1
Case 2:10-cv-01663-MLCF-JCW Document 68 Filed 06/22/10 Page 2 of 3
Injunctive Relief, Memorandum of Law in Support of Motion for
Preliminary Injunction and after receiving evidence at a hearing on
June 21, 2010, hereby finds: (1) that plaintiffs are substantially
likely to prevail on the merits of their claim for the government
defendants’ violations of the Outer Continental Shelf Lands Act and
its implementing regulations; (2) that, in the absence of the
relief requested, plaintiffs will incur immediate and irreparable
harm to business including the irretrievable loss of vessels’
useful life, loss of crews that have long been associated with
their particular vessels, loss of shore—side teams and disruption
of longstanding contractual relationships with offshore service
vendors and other satellite services for the operation of its
fleet, all of which is not subject to calculation; (3) that the
irreparable harm to plaintiffs should the Court decline to grant
the application for the relief requested outweighs the harm which
the granting of such relief may cause to any legitimate interests
of defendants; and (4) that the entry of this Order will serve the
interests of justice and the public interest. Accordingly,
IT IS ORDERED that Honorable Kenneth Lee “Ken” Salazar, in his
official capacity as Secretary, United States Department of the
Interior; United States Department of the Interior; Honorable
Robert “Bob” Abbey, in his official capacity as Acting Director,
Minerals Management Service; and the Minerals Management Service,
their servants, agents, successor agencies, and employees, and all
2
Case 2:10-cv-01663-MLCF-JCW Document 68 Filed 06/22/10 Page 3 of 3
persons in active concert or participation with them, who receive
actual Notice of this Preliminary Injunction (collectively
“defendants”), and until a full trial on the merits is had, are
hereby immediately prohibited from enforcing the Moratorium,
entitled “Suspension of Outer Continental Shelf (OCS) Drilling of
New Deepwater Wells,” dated May 28, 2010, and NTL No. 2010-N04
seeking implementation of the Moratorium, as applied to all
drilling on the OCS in water at depths greater than 500 feet;
IT IS FURTHER ORDERED that defendants shall file with this
Court and serve on plaintiffs within 21 days from the date of entry
of this Preliminary Injunction a report in writing setting forth in
detail the manner and form in which defendants have complied with
the terms of this Preliminary Injunction.
New Orleans, Louisiana, June 22, 2010.
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Source: NATIONAL REVIEW ONLINE -- by Stanley Kurtz - April 5, 2011
Samantha Power: A member of the president’s National Security Council who shares Noam Chomsky’s foreign-policy goals? An influential presidential adviser whom 1960s revolutionary Tom Hayden treats as a fellow radical? A White House official who wrote a book aiming to turn an anti-American, anti-Israel, Marxist-inspired, world-government-loving United Nations bureaucrat into a popular hero? Samantha Power, senior director of multilateral affairs for the National Security Council and perhaps the principal architect of our current intervention in Libya, (Source: http://www.discoverthenetworks.org) (Why U.S. military in Uganda? Soros fingerprints all over it! Obama’s billionaire friend has interests in African country’s oil -- October 15, 2011 - By Aaron Klein) and Uganda is all of these things. Also Papua New Guinea and Brazil.
Samatha Power - special advisor on Human Rights
These scary-sounding tidbits might be dismissed as isolated “gotchas.” Unfortunately, when we view these radical outcroppings in the full sweep of her life’s work, Samantha Power emerges as a patriot’s nightmare — a woman determined to subordinate America’s national sovereignty to an international order largely controlled by leftist bureaucrats. Superficially, Power’s chief concern is to put a stop to genocide and “crimes against humanity.” More deeply, her goal is to use our shared horror at the worst that human beings can do in order to institute an ever-broadening regime of redistributive transnational governance.
Knowing what Samantha Power wants reveals a great deal about Barack Obama’s own ideological commitments. It’s not just a question of whether he shares Power’s long-term internationalist goals, although it’s highly likely that he does. Power’s thinking also represents a bridge of sorts between Obama’s domestic- and foreign-policy aspirations. Beyond that, Power embodies a style of pragmatic radicalism that Obama shares. Both Obama and Power are skilled at placing their ultimate ideological goals just out of sight, behind a screen of practical problem-solving.
THE MOTIVES BEHIND THE INTERVENTION
Critics of President Obama’s intervention in Libya — and there are many all across the political spectrum — have taken a variety of approaches to the novel characteristics of this military action. Some have lamented the president’s failure to establish a clear path to victory (i.e., the overthrow of Qaddafi), or indeed any unambiguous goal beyond the protection of civilian lives. By traditional war-fighting standards, the rationale given for Obama’s Libyan intervention amounts to incoherence and weakness.
Viewing the glass as half full, however, others have declared that the president secretly does want to oust Qaddafi and establish a democratic regime, or at least that the logic of events will inevitably force Obama in that direction. Still others have suggested that a quick overthrow of Qaddafi followed by withdrawal would establish a positive model for punitive expeditions, without the costly aftermath of nation-building. And some have simply christened Obama’s seemingly directionless strategy as an intentional program of pragmatic flexibility.
While there’s much to be said for each of these responses, more attention needs to be given to analyzing Obama’s intervention from the standpoint of his administration’s actual motives — which in this case, I believe, are largely coincidental with Samantha Power’s motives. Obama has told us that the action in Libya is a multilateral intervention, under United Nations auspices; that it is for fundamentally humanitarian purposes, but has strategic side benefits; and that it represents an opening for the United States to pursue its own goal of ousting Qaddafi, although via strictly non-military means. While Obama has in fact taken covert military steps against Qaddafi, and while our bombing campaign has been structured in such a way as to undermine Qaddafi when possible, we have indeed inhibited ourselves to a significant degree from pursuing regime change by military means.
Obama may not have been completely frank about the broader ideological goals behind this intervention, and yet the president’s address to the nation, as far as it went, was largely accurate. Fundamentally, our Libyan operation is a humanitarian action, with no clear or inevitable military-strategic purpose beyond that. There is enormous risk here, and no endgame. We might take strategic advantage of our restricted humanitarian action. But we might not, and, in any case, we are under no obligation to do so. For all we know, many of those we’re defending with American aircraft and missiles could be our dedicated terrorist enemies. From the standpoint of traditional calculations of national interest, this war is something akin to madness. Yet without fully articulating it (and that reticence is intentional), Obama and Power are attempting to accustom us to a whole new way of thinking about war, and about America’s place in the world.
Samantha Power has refused to give interviews of late, and the White House seems to be downplaying her influence on the intervention in Libya, and on the president generally. Yet numerous press reports indicate that Power “has Obama’s ear” and was in fact critical to his decision on Libya. Liberal foreign-policy expert Steve Clemons actually calls Power “the primary architect” of our Libyan intervention. The New York Times has gone so far as to characterize our humanitarian action as “something of a personal triumph” for Power.
If anything, these reports may underplay Power’s influence on Obama. The two met in 2005, when Obama contacted Power after reading her Pulitzer Prize–winning book on genocide, A Problem from Hell. Power quickly became then-senator Obama’s senior foreign-policy adviser, and so has a longer history with the president than do many others on his foreign-policy team.
A survey of Power’s writings indicates her long preoccupation with a series of issues now associated with Obama’s most controversial foreign-policy moves. In a 2003 piece for the New York Times, for example, Power bemoaned the reluctance of American policymakers to apologize to other countries for our supposed past mistakes. While Obama’s controversial (and so far unproductive) willingness to engage with the leaders of rogue states was initially attributed to a novice error during a 2007 debate with Hillary Clinton, the need to deal directly with even the worst rogue states is a major theme of Power’s second book, Chasing the Flame. That book was written in 2007, while Power was advising Obama’s presidential campaign. A 2007 piece by Power in The New York Times Book Review attacked the phrase “War on Terror,” which of course the Obama administration has since dropped.
In an appearance at Columbia University, just hours before the president’s Libya address, Power herself identified the protection of the citizens of Benghazi as the core purpose of our current intervention. Yet it should not be thought that Power’s shaping of Obama’s reasons and actions ends there. Almost a decade ago, Power laid out a series of secondary, interest-based justifications for humanitarian interventions — e.g., avoiding the creation of militarized refugees who might undermine regional stability, and flashing a discouraging signal to regional dictators — all of which were featured in Obama’s speech to the nation. To be sure, these “interest-based” justifications were largely rationalizations for an intervention driven overwhelmingly by humanitarian considerations. Yet Power’s broader and longstanding framing of the issue has been adopted wholesale by Obama.
In Power’s view, to be credible, humanitarian interventions must respond to immediate danger (thus Obama’s waiting until the militarily unpropitious moment when Benghazi itself was under imminent threat), must be supported by multilateral bodies (thus the resort to the U.N., NATO, and the Arab League in preference to the U.S. Congress), “must forswear up front . . . commercial or strategic interests in the region” (thus the disavowal of regime change as a goal of our multilateral action), and must “commit to remaining for a finite period” (as Obama has pledged to do in Libya). Even NATO’s threat to bomb the rebels if they kill civilians (which struck many as unrealistic, and at cross-purposes with our supposed military goals) is foreshadowed in Power’s writings, which highlight the need to police both sides in any humanitarian action.
PRAGMATIC RADICAL
The evident tension here is between Power’s desire to act, and to be seen to act, on strictly disinterested humanitarian grounds, and her need to sell humanitarian intervention to the public on grounds of national interest, conventionally defined. This leads to continual contradiction and dissembling in Power’s writings, as the ideology driving the action can neither fully disguise itself, nor fully announce itself either. So, too, with Barack Obama’s policies (and not just on Libya).
Nowhere is this pattern of disguise and contradiction more evident than on the topic of “American exceptionalism.” Supposedly, Obama’s address on Libya, with its invocation of America’s distinctive tradition of shouldering moral burdens throughout the world, gave the lie to those who have described the president as a critic of the concept. And Power’s work is filled with invocations of America’s unique leadership role in the world. But read carefully, her hymns of praise to American leadership all turn out to be calls for the United States to slowly devolve its power to international bodies. After all, the world’s foremost state would have to assume leadership of any process whereby its own power was gradually dismantled and handed off to others. This is essentially what Power is calling for, even as she frames the diminishment of America in superficially patriotic terms. Is Obama doing the same? I believe he is.
Power once promised that the stringent conditions she set out for intervention would make humanitarian military actions exceedingly rare. She has long admitted that, given that rarity, precisely what such interventions might achieve, as well as what they might cost, remains unclear. Now each day teaches us something new about the costs of her policies.
Arguments that Power developed to support past interventions are proving a poor fit for our Libyan operation. She dismissed claims that the Rwandan genocide was merely a case of “civil war” or “tribal violence.” Now her critics argue that Libya is not a Rwanda-style genocide, and that Power’s eagerness for a humanitarian showcase has led us to intervene in what really is a tribal civil war.
And what of her stringent conditions? In practice, she seems to have stretched her own standards of “large-scale crimes against humanity” to produce a specimen case, in an effort to entrench her favored doctrines in international law. Who knows if more people will now be casualties in the extended civil war enabled by our intervention than would have been killed in Benghazi last month?
Power worried just after 9/11 that an America soon to be militarily overstretched might give up on humanitarian interventions. Now she has helped to entangle us in an expensive and open-ended adventure at a time when we truly are at our limits — and at a time when dangers continue to spread in countries far more strategically significant than Libya. Power has long warned us that policies that alienate the rest of the world, such as detention at Guantanamo, make it tougher to assemble the multilateral coalitions that ultimately lighten our own security burdens. Yet now we find ourselves prevented from attacking our enemy Qaddafi, so as not to alienate our coalition partners (while Obama admits in practice that Guantanamo was in our interest all along).
Power might best be characterized as a pragmatic radical. Her outlook is “post-American,” an excellent example of what John Fonte has called “transnational progressivism.” Power means to slowly dismantle American sovereignty in favor of a constraining and ultimately redistributive regime of international law. It’s an odd position for a member of the president’s National Security Council, but then Power is no ordinary NSC staffer.
Power’s New York Times review of Noam Chomsky’s book Hegemony or Survival is an excellent example of what she’s about. Power is critical of Chomsky’s caustic tone, his failure to adequately back up his preaching-to-the-choir assertions, and his disregard of the complex tradeoffs inherent in foreign policy. But for all that, Power makes it clear that she largely shares Chomsky’s policy goals, above all the curbing of American power via the building up of international law and related doctrines of “human rights.” In other words, Power sees herself as the clever sort of radical who works from within established institutions, without ever really sacrificing her rebellious ideals.
FROM INTERVENTION TO WORLD GOVERNMENT
A long conversation with Power in 2003 convinced 1960s revolutionary Tom Hayden that she was a fellow-traveler of sorts, even if Power was not as systematically suspicious of American military force as a true Sixties-vintage radical would be. In Hayden’s assessment, Power’s originality was “to see war as an instrument to achieving her liberal, even radical, values.” Hayden was right. The important thing about Power is not that she favors humanitarian intervention, but that she seeks to use such military actions to transform America by undoing its sovereignty and immobilizing it, Gulliver-style, in an unfriendly international system.
Power’s aforementioned second book, Chasing the Flame, celebrates the life of a United Nations diplomat, Sergio Vieira de Mello, who died in a terrorist attack in Iraq in 2003. Vieira de Mello was a Sixties radical of international scope. Hailing from Brazil, he became a committed Marxist while studying at the Sorbonne. He was among the violent protesters arrested during the student uprising in Paris in 1968. His first published work was a defense of his actions.
Vieira de Mello went from student radicalism straight to a job with the U.N. in 1969, and brought his intense anti-Americanism and anti-capitalism with him. Later he became a bitter critic of Israel. A United Nations “patriot,” he carried around a well-worn copy of the U.N. Charter the way an American senator or Supreme Court justice might take a copy of the U.S. Constitution wherever he went. Vieira de Mello’s colleagues used to say that his blood ran U.N. blue. As the U.N.’s most charismatic and effective diplomat (said to be “a cross between James Bond and Bobby Kennedy”), Vieira de Mello is the hero around whom Power attempts to build a following for her ideals of global governance.
Power explains that Vieira de Mello never really surrendered his Sixties ideals, even as he transformed himself from a passionate ideologue into a “ruthless pragmatist.” The young America-hating Vieira de Mello grew into a mature diplomat who could charm Pres. George W. Bush, even while lecturing the commander-in-chief on the follies of Guantanamo Bay. In other words, Vieira de Mello learned to manage his public persona, appealing to American leaders with arguments (allegedly) based on American national interest.
This is clearly Power’s ideal for herself. In fact, she tells us in her acknowledgments that the point of the book is also “the point of my career.” Power even cites the uncanny resemblance between Vieira de Mello and Obama. Of course, Obama’s Alinskyite training stressed the need for community organizers to advance their quietly held leftist ideological goals through “pragmatic” appeals to the public’s “self-interest.” (For more on that, see my study of Obama.)
Samantha Power has a lot to teach us about Barack Obama. She herself draws analogies between the need to redistribute wealth via health-care coverage and the need to divide military and diplomatic power (and, implicitly, wealth) more evenly through the international system. Power regularly invokes arguments for international law derived from America’s Founders and the West’s great liberal thinkers, as if her goal were the founding of a government of the world. In truth, that is what Power is up to, even if she sees her project as a long-term collective effort necessarily extending beyond her own lifetime.
The novel doctrine of “responsibility to protect,” which Power means the Libyan action to enshrine in international law, could someday be used to justify military intervention to impose a “two-state solution” on Israel (apparently this is one of Power’s longstanding goals, although she now disavows it). The International Criminal Court, which Power has long defended, may someday enable the leftist Europeans who run it to place American soldiers and politicians on trial for supposed war crimes. The Obama administration’s troubling acquiescence in the development of sweeping international prohibitions on “aggression” may one day make virtually any use of force not pre-approved by the United Nations subject to international sanctions. These are the long-term goals of Power’s policies, although they are seldom confessed or discussed.
On rare occasions, Power comes straight out and admits that the sorts of interventions she favors constitute an almost pure cost to American national interest, traditionally defined. More often, she retreats into the language of “pragmatism” and “self-interest” to justify what she knows Americans will not support on its own terms. That is Samantha Power’s way and, not coincidentally, Barack Obama’s way as well.
At some point, after we’ve all done our best to fit the president’s puzzling Libyan adventure into our accustomed conceptual frameworks, we just might wake up and discover what has been going on behind the curtain. When we do, the answer will be found in the writings of Samantha Power.
Story above from: NATIONAL REVIEW ONLINE
http://www.nationalreview.com
— Stanley Kurtz is a senior fellow at the Ethics and Public Policy Center, and the author of Radical-in-Chief. For more Please Read National Review OnLine
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Source: http://www.discoverthenetworks.org
Samantha Power: Has a long record of antipathy toward Israel -- Said that America’s relationship with Israel “has often led foreign policy decision-makers to defer reflexively to Israeli security assessments, and to replicate Israeli tactics”
Was appointed as Director for Multilateral Affairs in the National Security Council by President Barack Obama in January 2009
Born in Ireland in September 1970, Samantha Power immigrated to the United States with her family in 1979. After graduating from Yale University, she worked as a journalist from 1993 to 1996, covering the Yugoslav wars for U.S. News & World Report, The Boston Globe, The Economist, and The New Republic.
Power then attended Harvard Law School, earning her Juris Doctorate in 1999. She is currently the Anna Lindh Professor of Practice of Global Leadership and Public Policy at Harvard's John F. Kennedy School of Government, where she is also affiliated with the Carr Center for Human Rights Policy.
Power has a long record of antipathy towards Israel. In 2001 she attended the United Nations' World Conference Against Racism (in Durban, South Africa), even after the U.S. had withdrawn most of its diplomatic participation once it became apparent that the gathering would give prominence to anti-American, anti-Israel, and anti-Semitic perspectives.
Just months later, during a 2002 interview with Harry Kreisler, director of the Institute for International Studies at UC Berkeley, Power said that even if it meant “alienating a domestic constituency of tremendous political and financial import” (i.e., Jewish Americans), the United States should stop investing “billions of dollars” in “servicing Israel’s military” and invest the money instead “in the new state of Palestine.” Moreover, she accused Israel of perpetrating "major human-rights abuses."
Power’s 2002 book, A Problem from Hell: America and the Age of Genocide, grew out of a paper she had written in law school and won the Pulitzer Prize for General Non-Fiction in 2003. This book examines the origin of the word “genocide,” the major genocides of the 20th century, and the reasons why governments -- most notably the U.S. -- have so often failed to collectively identify and forestall genocides before the crisis stage.
In her 2004 review of Noam Chomsky’s book Hegemony or Survival, Power agreed with many of Chomsky’s criticisms of U.S. foreign policy and expressed her own concerns about what she called the “sins of our allies in the war on terror,” lumping Israel together with Saudi Arabia, Turkey, Pakistan, Russia, and Uzbekistan. She called Chomsky’s work “sobering and instructive.”
In 2005–06, Power worked as a foreign policy fellow in the office of U.S. Senator Barack Obama. In this role, she helped to spark and inform Obama’s interest in the deadly ethnic and tribal conflict of Darfur, Sudan.
In a 2007 interview, Power said that America’s relationship with Israel “has often led foreign policy decision-makers to defer reflexively to Israeli security assessments, and to replicate Israeli tactics...” The United States, she explained, had brought terrorist attacks upon itself by aping Israel’s violations of human rights.
In the fall of 2007, Power began writing a regular column for Time magazine. That same year, she appeared in Charles Ferguson's documentary, No End in Sight, which criticized the Bush administration’s handling of the Iraq War.
In February 2008 Power released her second book, Chasing the Flame: Sergio Vieira de Mello and the Fight to Save the World. This book is about the eponymous United Nations High Commissioner for Human Rights, who was killed in a Baghdad hotel bombing on August 19, 2003.
In early 2008 Power served as a senior foreign-policy advisor to Barack Obama’s presidential campaign. She was forced to resign from the campaign in March, however, after it was learned that she had referred to Obama’s Democrat rival, Hillary Clinton, as “a monster” whose modus operandi was “deceit.”
On July 4, 2008, Power married law professor Cass Sunstein, whom she had met while working on the Obama campaign.
In January 2009 President Obama appointed Power to serve as Director for Multilateral Affairs in the National Security Council, a post where she would serve as one of Obama’s closest advisors on foreign policy.
In March 2011, Power was instrumental in persuading Obama to authorize military intervention in Libya, to prevent President Moammar Qaddafi's forces from killing the rebels who were rising up against his regime at that time. Power's counsel in this matter was consistent with her longstanding advocacy of the doctrine known as the "Responsibility to Protect" (R2P), which encourages the international community to intervene in a sovereign country's internal affairs -- with military force if necessary -- in order to thwart genocide, war crimes, crimes against humanity, or ethnic cleansing.
The Global Centre for the Responsibility to Protect, (GCRP), which is the world's leading advocate of this doctrine, is funded by George Soros's >Open Society Institute<. Power and GCRP advisory-board member Gareth Evans -- who is also also president emeritus of the International Crisis Group -- have been joint keynote speakers at a number of events where they have championed the R2P principle together.
Why U.S. military in Uganda?
Soros fingerprints all over it! Obama’s billionaire friend has interests in African country’s oil -- October 15, 2011 - By Aaron Klein TEL AVIV —
An influential “crisis management organization” that boasts billionaire George Soros as a member of its executive board recently recommended the U.S. deploy a special advisory military team to Uganda to help with operations and run an intelligence platform. The president-emeritus of that organization, the International Crisis Group, is the principal author of Responsibility to Protect, the military doctrine used by Obama to justify the U.S.-led NATO campaign in Libya. Soros’ own Open Society Institute is one of only three nongovernmental funders of the Global Centre for Responsibility to Protect, a doctrine that has been cited many times by activists urging intervention in Uganda.
Authors and advisers of the Responsibility to Protect doctrine, including a center founded and led by Samantha Power, the National Security Council special adviser to Obama on human rights, also helped to found the International Criminal Court. Several of the doctrine’s main founders also sit on boards with Soros, who is a major proponent of the doctrine. Soros himself maintains close ties to oil interests in Uganda. His organizations have been the leading efforts purportedly to facilitate more transparency in Uganda’s oil industry, which is being tightly controlled by the country’s leadership. U.S. troops to Uganda Obama on Friday notified House Speaker John Boehner, R-Ohio, that he plans to send about 100 military personnel, mostly Special Operations Forces, to central Africa.
The first troops reportedly arrived in Uganda on Wednesday. The U.S. mission will be to advise forces seeking to kill or capture Joseph Kony, the leader of the rebel Lord’s Resistance Army, or LRA. Kony is accused of major human rights atrocities. He is on the U.S. terrorist list and is wanted by the International Criminal Court. In a letter on Friday, Obama announced the initial team of U.S. military personnel “with appropriate combat equipment” deployed to Uganda on Wednesday. Other forces deploying include “a second combat-equipped team and associated headquarters, communications and logistics personnel.” “Our forces will provide information, advice and assistance to select partner nation forces,” he said.
Both conservatives and liberals have raised questions about whether military involvement in Uganda advances U.S. interests. Writing in The Atlantic yesterday, Max Fisher noted the Obama administration last year approved special forces bases and operations across the Middle East, the Horn of Africa and Central Asia. “But those operations, large and small, target terrorist groups and rogue states that threaten the U.S. — something the Lord’s Resistance Army could not possibly do,” he wrote. “It’s difficult to find a U.S. interest at stake in the Lord’s Resistance Army’s campaign of violence,” continued Fisher. “It’s possible that there’s some immediate U.S. interest at stake we can’t obviously see.” Bill Roggio, the managing editor of The Long War Journal, referred to the Obama administration’s stated rationale for sending troops “puzzling,” claiming the LRA does not present a national security threat to the U.S. — “despite what President Obama said.”
Tea Party-backed presidential candidate Michele Bachmann also questioned the wisdom of Obama’s move to send U.S. troops to Uganda. “When it comes to sending our brave men and women into foreign nations we have to first demonstrate a vital American national interest before we send our troops in,” she said at a campaign stop yesterday in Iowa.
Soros group: Send military advisors to Uganda
In April 2010 Soros’International Crisis Group, or ICG, released a report sent to the White House and key lawmakers advising the U.S. military to run special operations in Uganda to seek Kony’s capture. Read the report: “To the U.S. government: Deploy a team to the theatre of operations to run an intelligence platform that centralizes all operational information from the Ugandan and other armies, as well as the UN and civilian networks, and provides analysis to the Ugandans to better target military operations.”
Since 2008 the U.S. has been providing financial aid in the form of military equipment to Uganda and the other regional countries to fight Kony’s LRA, but Obama’s new deployment escalates the direct U.S. involvement. Soros sits in the ICG’s executive board along with Samuel Berger, Bill Clinton’s former national security advisor; George J. Mitchell, former U.S. Senate Majority Leader who served as a Mideast envoy to both Obama and President Bush; and Javier Solana, a socialist activist who is NATO’s former Secretary-General as well as the former Foreign Affairs Minister of Spain. Jimmy Carter’s national security advisor, Zbigniew Brzezinski, is the ICG’s senior advisor.
The ICG’s president-emeritus is Gareth Evans, who, together with activist Ramesh Thakur, is the original founder of -- Responsibility to Protect doctrine, with the duo even coining the term “responsibility to protect.” Both Evans and Thakur serve as advisory board members of the Global Center for the Responsibility to Protect, the main group pushing the doctrine. Source: As World Net Daily.com (WND) first exposed, Soros is a primary funder and key proponent of the Global Centre for Responsibility to Protect. Soros’ Open Society is one of only three non-governmental funders of the Global Centre for the Responsibility to Protect. Government sponsors include Australia, Belgium, Canada, the Netherlands, Norway, Rwanda and the U.K.
Soros’ hand in Ugandan oil industry Oil exploration began in Uganda’s northwestern Lake Albert basin nearly a decade ago, with initial strikes being made in 2006. Uganda’s Energy Ministry estimates the country has over 2 billion barrels of oil, with some estimates going as high as 6 billion barrels. Production is set to begin in 2015, delayed from 2013 in part because the country has not put in place a regulatory framework for the oil industry.
A 2008 National Oil and Gas Policy, proposed with aid from a Soros-funded group, was supposed to be a general road map for the handling and use of the oil. However, the polcy’s recommendations have been largely ignored, with critics accusing Ugandan President Yoweri Museveni of corruption and of tightening his grip on the African country’s emerging oil sector. Soros himself has been closely tied to oil and other interests in Uganda.
In 2008, the Soros-funded Revenue Watch Institute brought together stakeholders from Uganda and other East African countries to discuss critical governance issues, including the formation of what became Uganda’s National Oil and Gas Policy. Also in 2008, the Africa Institute for Energy Governance, a grantee of the Soros-funded Revenue Watch, helped established the Publish What You Pay Coalition of Uganda, or PWYP, which was purportedly launched to coordinate and streamline the efforts of the government in promoting transparency and accountability in the oil sector.
Also, a steering committee was formed for PWYP Uganda to develop an agenda for implementing the oil advocacy initiatives and a constitution to guide PWYP’s oil work. PWYP has since 2006 hosted a number of training workshops in Uganda purportedly to promote contract transparency in Uganda’s oil sector. PWYP is directly funded by Soros’ Open Society as well as the Soros-funded Revenue Watch Institute. PWYP international is actually hosted by the Open Society Foundation in London. The billionaire’s Open Society Institute, meanwhile, runs numerous offices in Uganda. It maintains a country manager in Uganda, as well as the Open Society Initiative for East Africa, which supports work in Kenya, Tanzania, and Uganda.
The Open Society Institute runs a Ugandan Youth Action Fund, which states its mission is to “identify, inspire, and support small groups of dedicated young people who can mobilize and influence large numbers of their peers to promote open society ideals.”
Samantha Power, Arafat deputy Meanwhile, a closer look at the Soros-funded Global Center for the Responsibility to Protect is telling.Board members of the group include former U.N. Secretary-General Kofi Annan, former Ireland President Mary Robinson and South African activist Desmond Tutu. Robinson and Tutu have recently made solidarity visits to the Hamas-controlled Gaza Strip as members of a group called The Elders, which includes former President Jimmy Carter.
WND was first to report the committee that devised the Responsibility to Protect doctrine included Arab League Secretary General Amre Moussa as well as Palestinian legislator Hanan Ashrawi, a staunch denier of the Holocaust who long served as the deputy of late Palestinian Liberation Organization leader Yasser Arafat.
Also, the Carr Center for Human Rights Policy has a seat on the advisory board of the 2001 commission that originally founded Responsibility to Protect. The commission is called the International Commission on Intervention and State Sovereignty. It invented the term “responsibility to protect” while defining its guidelines.
The Carr Center is a research center concerned with human rights located at the Kennedy School of Government at Harvard University.
Samantha Power, the National Security Council special adviser to Obama on human rights, was Carr’s founding executive director and headed the institute at the time it advised in the founding of Responsibility to Protect.
With Power’s center on the advisory board, the International Commission on Intervention and State Sovereignty first defined the Responsibility to Protect doctrine.
Power reportedly heavily influenced Obama in consultations leading to the decision to bomb Libya. The Libya bombings have been widely regarded as a test of a military doctrine called “Responsibility to Protect.”
In his address to the nation in April explaining the NATO campaign in Libya, Obama cited the doctrine as the main justification for U.S. and international airstrikes against Libya.
Responsibility to Protect, or Responsibility to Act, as cited by Obama, is a set of principles, now backed by the United Nations; based on the idea that sovereignty is not a privilege but a responsibility that can be revoked if a country is accused of “war crimes,” “genocide,” “crimes against humanity” or “ethnic cleansing.”
The term “war crimes” has at times been indiscriminately used by various United Nations-backed international bodies, including the International Criminal Court, or ICC, which applied it to Israeli anti-terror operations in the Gaza Strip. There has been fear the ICC could be used to prosecute U.S. troops who commit alleged “war crimes” overseas.
Soros: Right to ‘penetrate nation-states’
Soros himself outlined the fundamentals of Responsibility to Protect in a 2004 Foreign Policy magazine article titled “The People’s Sovereignty: How a New Twist on an Old Idea Can Protect the World’s Most Vulnerable Populations.”
In the article Soros said, “True sovereignty belongs to the people, who in turn delegate it to their governments.”
“If governments abuse the authority entrusted to them and citizens have no opportunity to correct such abuses, outside interference is justified,” Soros wrote. “By specifying that sovereignty is based on the people, the international community can penetrate nation-states’ borders to protect the rights of citizens.
“In particular,” he continued, “the principle of the people’s sovereignty can help solve two modern challenges: the obstacles to delivering aid effectively to sovereign states, and the obstacles to global collective action dealing with states experiencing internal conflict.”
The Global Center for the Responsibility to Protect, meanwhile, works in partnership with the World Federalist Movement, a group that promotes democratized global institutions with plenary constitutional power. The Movement is a main coordinator and member of Responsibility to Protect Center.
WND reported that Responsibility doctrine founder Thakur recently advocated for a “global rebalancing” and international redistribution to create a “New World Order.” In a piece last March in the Ottawa Citizen newspaper, “Toward a new world order,” Thakur wrote, “Westerners must change lifestyles and support international redistribution.”
He was referring to a United Nations-brokered international climate treaty in which he argued, “Developing countries must reorient growth in cleaner and greener directions.”
In the opinion piece, Thakur then discussed recent military engagements and how the financial crisis has impacted the U.S. “The West’s bullying approach to developing nations won’t work anymore – global power is shifting to Asia,” he wrote.
“A much-needed global moral rebalancing is in train,” he added.
Thakur continued: “Westerners have lost their previous capacity to set standards and rules of behavior for the world. Unless they recognize this reality, there is little prospect of making significant progress in deadlocked international negotiations.”
Thakur contended “the demonstration of the limits to U.S. and NATO power in Iraq and Afghanistan has left many less fearful of ‘superior’ Western power.”
Source: World Net Daily.com
http://www.wnd.com/index.php?fa=PAGE.view&pageId=356321">http://www.wnd.com/index.php?fa=PAGE.view&pageId=356321
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October 18, 2011
Obama's Uganda Gambit to serve Soros
By Ed Lasky is news editor of American Thinker
Journalist Aaron Klein has an interesting take on Barack Obama's surprising decision to send troops into Uganda to battle a rebel army. The genesis of the idea may have begun at the George Soros-funded International Crisis Group, one of the "think tanks" that Soros uses to promote policies that benefit him. In this case, the ICG recommended last year that America deploy military forces to Uganda. This move prompted questions since the rebel group did not pose a threat to American interests. But whose interests might be served by defeating the rebel group? George Soros -- a major Obama backer.
Klein writes: Soros himself has been closely tied to oil and other interests in Uganda.
In 2008, the Soros-funded Revenue Watch Institute brought together stakeholders from Uganda and other East African countries to discuss critical governance issues, including the formation of what became Uganda's National Oil and Gas Policy.
Also in 2008, the Africa Institute for Energy Governance, a grantee of the Soros-funded Revenue Watch, helped established the Publish What You Pay Coalition of Uganda, or PWYP, which was purportedly launched to coordinate and streamline the efforts of the government in promoting transparency and accountability in the oil sector.
Also, a steering committee was formed for PWYP Uganda to develop an agenda for implementing the oil advocacy initiatives and a constitution to guide PWYP's oil work.
PWYP has since 2006 hosted a number of training workshops in Uganda purportedly to promote contract transparency in Uganda's oil sector.
PWYP is directly funded by Soros' Open Society as well as the Soros-funded Revenue Watch Institute. PWYP international is actually hosted by the Open Society Foundation in London.
The billionaire's Open Society Institute, meanwhile, runs numerous offices in Uganda. It maintains a country manager in Uganda, as well as the Open Society Initiative for East Africa, which supports work in Kenya, Tanzania, and Uganda.
Soros seems to have his hand in trying to guide the development of the oil and gas industry in Uganda. The Ugandan government would naturally be beholden to Soros if he could show he had enough influence with the White House to bring in American troops to take out a rebel group. Also, the defeat of the rebel group would make development of the energy industry that much more viable since operations would be much more secure.
This strategy bears similarity with the story of InterOil, a major holding of George Soros, that has been granted concessions for reportedly major natural gas reserves in Papua New Guinea. The government there has recently been arguing with InterOil regarding that company's ability to develop these reserves and build and operate a Liquefied Natural Gas port to export the gas.
What could friends of George Soros in the American government do to help him soothe the deal with the Papua New Guinea government? What the Obama administration did in fact do was send government experts all the way from here to there to help the nation develop its reserves. This was especially surprising since the Department of Interior has blamed its delay in issuing permits to develop our own domestic reserves on lack of manpower and funding -- yet the administration found the manpower and money to export our experts do help develop New Guinea's reserves. Or rather the reserves that InterOil and its major shareholder, George Soros, want developed courtesy of the American taxpayer.
Anyone see a pattern here?
(1) In one case, Obama sends military forces to Uganda -- a nation where Soros has been active in trying to help it formulate a policy to tap its oil wealth. But before the policies could be put in place, a rebel group needs to be vanquished.
(2) In the other case, Obama sends American government experts to help another nation to develop its natural gas wealth when the one company ideally positioned to benefit from this taxpayer-funded development has as its major shareholder none other than George Soros.
Soros declared his own modus operandi when he said in a 2004 New Yorker profile that there are "symbiotic moments between political and business interests." He is a master at finding these moments and promoting the political careers of those who will do his bidding.
Source: http://www.americanthinker.com/blog/2011/10/obamas_uganda_gambit_to_serve_soros.html
http://www.crisisgroup.org/en/regions/africa/horn-of-africa/uganda/157-lra-a-regional-strategy-beyond-killing-kony.aspx
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March 28, 2011
Soros Wins Under Obama's Energy Policies
By Ed Lasky
Are Barack Obama's energy policies influenced by hedge fund billionaire and political patron, George Soros?
Abby Wisse Schacter, in the New York Post, notes that the Obama administration is clamping down on oil and gas development in America (both onshore and offshore) but is hell-bent on helping other nation's tap their resources and points out that such help is being showered specifically in New Guinea, of all places.
It is starting to look obvious that the administration doesn't want oil exploration and extraction at home while it is promoting the same exploration and extraction elsewhere -- specifically Brazil and New Guinea. "The Bureau of Ocean Management, Regulation, and Enforcement (BOEMRE) has assigned only six drilling engineers to process all permit applications pending in the Gulf of Mexico. While Michael Bromwich bemoans a lack of the staff necessary to speed up the process, he's sending his staffers to Papua New Guinea to advise its officials on ways to develop the country's offshore drilling infrastructure. A significant portion of the agency's budget is covered by fees, royalties, taxes, and rents from energy production, so curtailing drilling closes off cash flow too.
Others have commented on Obama's generosity regarding Brazil's oil wealth and how those actions might help George Soros.
But focus should now turn towards the exotic land of New Guinea.
New Guinea? Why there? Why is he using our taxpayer dollars to help energy development in New Guinea? Hasn't Secretary of the Interior Salazar bemoaned that his budget is just not large enough to process all the drilling permits submitted for tapping America's oil and gas wealth? Why are he and the President devoting staff and money to help that undeveloped island nation?
Perhaps, he just wants to pay back George Soros, who was so instrumental in helping his election and the election of fellow Democrats across America. George Soros is the Patron Saint of the Democratic Party and was a very early and generous supporter of Barack Obama's. Soros even used a loophole in Federal campaign laws that allowed him and his family to give outsized donations to Barack Obama; he also fielded his army of so-called 527 groups (such as MoveOn.Org) to help Obama win the Oval Office.
Soros also stands to massively benefit if New Guinea becomes an energy power, especially if the American taxpayer subsidizes this development.
As I have written before (see Cheap Natural Gas and Its Enemies; Cheap Natural Gas and its Democratic Enemies) George Soros, through his hedge fund, has a huge ownership interest in a company called InterOil (stock symbol IOC), whose one major asset is reportedly a huge reservoir of natural gas in New Guinea. He has been increasing his ownership stake in recent months and, as of last November, showed an 11.9% ownership stake. His InterOil holding is the third-largest stock holding in his hedge fund.
InterOil has been subject to some controversy -- there are some investors who are shorting the stock, thinking that the reserves may not be as large as claimed and that it will be very difficult to develop them given the problems with developing energy resources in such an undeveloped nation and the heavy expenses overcoming those problems entail.
The stock has been soaring upward, along with the rise in energy prices. The move may also be related to the prospect that Japan will rely more on liquefied natural gas (LNG) imports (from Asian nations such as New Guinea) to power its economy in the wake of its nuclear energy problems.
But there may also be a short squeeze propelling the stock upwards. This occurs when people sell the stock short. Shorting happens when investors think a stock will fall in price. They borrow the stock from others and then sell it. They hope to be able to replace the stock they borrowed by buying it back in the market after the stock price has declined. They profit if the price they pay to buy it back (and return it to the people they borrowed it from is lower than the price they sold it at).
The nightmare for short-sellers is when the price of the stock moves contrary to what they hoped, and it moves up. Then the pain and bloodletting starts. They may face margin calls. They have to see their shorts decline in value as the stock price moves up. They may eventually be forced to buy back the stock at ever high prices. Sometimes, if there is a large short position in terms of the percentage of the stock float, serious pain ensues as the stock shoots upwards when they are compelled to meet margin calls and cut their losses. Being caught on the wrong side of a short squeeze is akin to being subject to the Wall Street equivalent of water-boarding.
Meanwhile, those who own the stock (are "long" the stock) are happily counting their riches as the value of their stock soars. They laugh all the way to the bank, as the shorts lie bloodied, bruised, and defeated, all but begging for mercy.
How can one help engineer a short squeeze? One proven way is to foster a positive news flow that boosts the prospects for the stock and send its shares upwards. Sometimes, public relations firms are involved as they spin out a series of "news" items that promise untold riches to come from a company and its shareholders (a new product, new customers and contracts, the possible sale of the company).
However, the hype can go into overdrive if you partner up with a more powerful and richer partner -- say, the United States of America.
In the case of InterOil, one big positive development has been Barack Obama's decision to invest taxpayer dollars in stoking the development of energy resources in New Guinea. InterOil disproportionally benefits from the steps Barack Obama has taken in New Guinea since InterOil's assets are dominated by its New Guinea operations. InterOil will not have to spend its own money to develop (basically, build from the ground up) the infrastructure that is needed to fully tap the wealth that lies under the leases that InterOil has in New Guinea.
Instead, the American taxpayer picks up the tab. Sweet deal. We pay the costs and InterOil (along with its major shareholder, George Soros) picks up the profits.
The market sees what is going on, even if the American taxpayers do not. The American government is picking favorites and InterOil is one of them.
Has Barack Obama made American taxpayers complicit in engineering a short squeeze in InterOil stock by deciding to help build up the nascent energy industry in, of all places, New Guinea?
This is far from the first time that political patrons of Barack Obama have minted money from his energy policies (for a partial list of the members of Barack Obama's "Friends and Family Program" who have benefited from his waste of taxpayer dollars on green schemes see Obama's Edifice Complex).
To compound the insult to American taxpayers, much of government spending comes from borrowing money from other nations, such as China. That nation is a huge energy importer. The Chinese would be among the first beneficiaries of the development of New Guinea energy resources. Why aren't the Chinese paying to develop New Guinea's energy wealth?
We won't be the beneficiaries from the spending of tax dollars in New Guinea? We may actually be the losers from all that spending.
We have an abundance of natural gas (due to the tapping of our own shale gas reserves); we don't need LNG. We have such vast amounts of natural gas that ports that were built to import LNG are being reconfigured to export LNG. Why is Obama spending our tax dollars to help a foreign competitor while increasing taxes exponentially on American oil and gas companies? Why encourage New Guinea to develop its LNG capability to export to China, Japan, and other nations when we can and should export our own LNG to them?
But helping America's oil and gas industry (and helping lower the energy bills for Americans) is not and never has been on the agenda of Barack Obama.
Obama's rewarding his friends and donors, who no doubt will reciprocate by supporting him in 2012, is Cook County Politics writ large. That modus operandi has always guided him.
Does his agenda include helping further enrich George Soros, sugar daddy of the Democratic Party?
Ed Lasky is news editor of American Thinker.
on "Soros Wins Under Obama's Energy Policies"
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PETROBRAS -- Brazilian Oil Company owned by George Soros
Obama got deep water drill permits, but no US corp WHY?
Source: by gosheven83 » Tue Mar 22, 2011
Petrobras got a 2 billion $ loan to deep drill compliments of Obama recently. Now they get to drill in OUR WATERS, while our companies don't and we will be buying oil from them. Who is president of Brazil right now? A communist revolutionary who did time for her involvement in the Communist movement in Brazil.
Mexico also got a 2 billion $ Loan to deep drill in the Gulf. Not sure of the ins and outs, but that's oil we should be drilling.
We are also just sitting by while China drills off Florida using Cuban permits, taking oil thats closer to the US waters than Cuban. The Chinese are unaccountable to our environmental standards. More chance of spill, no oil in US control which would bring down prices.
How clear does it have to be? We are being sold out. We are being deliberately torn down by an enemy from within.
Doesn't matter if you're a Republican, Democrat, or Independent. If you plan to live in this country you should be very concerned.
Also you should be concerned about the media covering this up. I mean politics is one thing, but to cover up a big sell out like this? Something may be rotten in Denmark, and it probably is, but there is no doubt something is stinking to high heaven right here at home.
If we don't pull our heads out our country will be sold out from under us while we squabble over issues that seem to be planted to smoke screen what is really doing our country grave damage.
If the Republicans were really on the people's side, they would be yelling bloody murder about this and shutting things down. I was hoping there was someone on our side, but sadly, I don't think there is. Maybe just the Tea Party, maybe not even all of those.
It's up to we the people, our government officials are selling us out.
http://www.grantmoneyadvisor.com/petrobras-brazilian-oil-company-owned-by-george-soros-obama-got-deep-water-drill-permits-but-no-us-corp-why-t92754.html
Check out this link: Lists Players and How the US shows its cards while the rest of the world holds their economic information to themselves.
http://www.chathamhouse.org/sites/default/.../Africa/250810summary.pdf
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Organization helped to place Salazar in office…
Founded in 1962 by the Hungarian nuclear physicist Leo Szilard (who was also a longtime socialist activist and an alleged Soviet agent) and other scientists who likewise had pioneered the development of atomic weapons?but who now worried that such agents of destruction posed a grave threat to all humanity?the Council for a Livable World (CLW) is a nonprofit advocacy organization whose mission is “to advocate for sensible national-security policies and to help elect congressional candidates who support them.” Toward that end, CLW lobbies legislators, holds seminars, and uses the media to push for a dramatic downsizing?and the eventual elimination?of America's nuclear-weapons cache. In CLW's calculus, it is “short-sighted and counter-productive to continue relying on Cold War measures such as [the stockpiling of] overwhelming nuclear arsenals … for our nation's security.”
CLW reviled President Ronald Reagan, whose administration, the organization warned, was guilty of "launching a massive escalation of the nuclear arms race." CLW sought not only to derail Reagan's planned deployments of the MX missile and the B-1 bomber, but also called for across-the-board defense-budget cuts during his presidency. On May 2, 1982, CLW and Physicians for Social Responsibility co-sponsored a Washington, DC conference on the potentially catastrophic medical consequences of a nuclear war. During that same period, CLW used its tax-exempt Education Fund to accept and process financial contributions to the Randall Forsberg-founded Nuclear Weapons Freeze Campaign, which had not yet secured its own tax-exempt status.
In 1997, CLW was one of more than 100 leftist organizations that co-sponsored and launched the so-called “Progressive Challenge,” in an effort to unite their activities and talking points under a “multi-issue progressive agenda.” To view a list of many of these co-sponsors, which worked closely with the Congressional Progressive Caucus, click here.
CLW has established a Candidate Fund to accept donations earmarked for political candidates who promote the organization's main agendas. Though the organization identifies itself as “non-partisan,” the vast majority of the candidates whom it supports are Democrats. CLW's political action committee, PeacePAC, plays a key role determining which candidates are worthy of the organization's backing.
Over the course of its history, CLW has lent its tactical and financial support to hundreds of congressional candidates, including Tammy Baldwin, Joseph Biden, Barbara Boxer, Carol Moseley Braun, Sherrod Brown, Robert Byrd, Jon Corzine, Peter DeFazio, Rosa DeLauro, Chris Dodd, Dick Durbin, Robert Edgar, Lane Evans, Sam Farr, Dianne Feinstein, Bob Filner, Barney Frank, Al Franken, Al Gore, Raul Grijalva, Tom Harkin, Maurice Hinchey, Edward Kennedy, John Kerry, Dennis Kucinich, Patrick Leahy, Barbara Lee, George McGovern, Jim McGovern, Barack Obama, Nancy Pelosi, Harry Reid, Bernie Sanders, Jan Schakowsky, Patricia Schroeder, Joe Sestak, Maxine Waters, Mel Watt, and Lynn Woolsey.
CLW is led by an 18-member board of directors and a 14-member national advisory board, both of which are composed of individuals known for their achievements in such varied fields as academia, jurisprudence, business, politics, economics, and philanthropy. Among the more notable national advisory board members are Julian Bond, Margaret Gage, and Patricia Schroeder.
CLW's current chairman is Ira Lechner, who succeeded former U.S. Senator Gary Hart in that position. A labor attorney by profession, Lechner, a Democrat, served in the Virginia State Legislature from 1973-77. In later years, he ran for lieutenant governor of Virginia and for a seat in the U.S. House of Representatives. In the run-up to the 2008 elections, he was the original organizer of the "Obama for President" campaign in San Diego and later served as a fundraiser for Barack Obama.
The executive director of CLW is John Isaacs, who has represented the Council on Capitol Hill since 1978. Isaacs previously served as a legislative assistant to New York congressman Stephen Solarz, and as a legislative representative with Americans for Democratic Action.
CLW has staked out clear positions on a number of major political issues:
- Wars in Iraq and Afghanistan: CLW strongly opposed the U.S. invasion of Iraq in 2003. Asserting that the war was both “unjustified” and based on “purposefully distorted intelligence,” the organization maintains that American military actions of any kind should be “pursued in concert with U.S. allies” rather than unilaterally.
- Iran: "[T]he main factor driving Iran's interest in nuclear technology," says CLW, "... is national pride. Unfortunately, United States policy has been to publicly threaten and insult Iran while taking provocative actions such as adopting a policy of regime change, attempting to increase unilateral sanctions, [and] deploying additional military assets in the region.... Such policies are counterproductive.... Iran does not pose an imminent threat to the U.S. and is unlikely to do so for years ...”
- Defense Spending: “[T]here are many parts of the [American] defense budget which consume massive ... resources but provide little return in terms of security.”
- North Korea: “[T]he United States must engage North Korea diplomatically to negotiate a verifiable and irreversible disarmament process and a halt to its nuclear weapons program. Sanctions alone are not a viable solution.”
- Nuclear Weapons: CLW exhorts the U.S. to “oppos[e] the development of new nuclear weapons”; “commi[t] to a 'no first use' of nuclear weapons pledge”; “tak[e] nuclear weapons off hair-trigger alert”; “ratif[y] the Comprehensive Nuclear Test Ban Treaty”; and make “deep cuts in the U.S. nuclear arsenal.”
Each year since 2006, CLW, in conjunction with the Center for Arms Control and Non-Proliferation, has presented its Father Robert F. Drinan National Peace and Human Rights Award to individuals who exemplify a “commitment to peace and human justice.” Named after an avidly antiwar Catholic priest who served five terms in Congress during the 1970s, this award focuses broadly on U.S. politics, physical science, biology, peace studies, and peace and human-rights activism. Past recipients include such notables as Senators Ted Kennedy and Dianne Feinstein, and Congressional Representatives Barney Frank, David Bonior, and Jim McGovern.
In 2005 Ken Salazar co-sponsored the Vehicle and Fuel Choices for American Security Act, which would have required the federal government to develop a strategy to cut U.S. oil consumption by 10 million barrels per day by the year 2031.
In 2007 Salazar co-sponsored a bill calling for more research into the possibility that America's arid Western states might be prone to "experience the effects of climate change sooner and more intensely than most other regions."
In November 2007 Salazar stressed the need for the U.S. to move away from fossil fuels in order to “improve our energy security and reduce our dependence on foreign oil”; reduce the likelihood that “we will continue to be entrenched in conflicts over resources in every corner of the world”; and “triumph in our fight against oil-funded extremists and terrorists.”
Throughout his tenure in the U.S. Senate, Salazar strongly opposed the George W. Bush administration's efforts to open land in Colorado and other Western states to oil-shale development, citing concerns about “whether the [oil-shale] technology is commercially viable,... how much carbon would be emitted,... [and] what the effects would be on Western landscapes.”
Similarly, in 2008 Salazar vowed to reject all new offshore oil-drilling ventures—even if gasoline prices were to reach $10 per gallon.
For an overview of Salazar's voting record on key legislative items during his years in the Senate, as well as the performance ratings he received from various special-interest groups, click here.
In December 2008, President-elect Barack Obama asked Salazar to head the Interior Department of his forthcoming administration. The Senate confirmed Salazar for the post on Obama's inauguration day, January 20, 2009.
As Secretary of the Interior, Salazar has continued to aggressively block efforts to lease oil-shale rights in the Western United States, as well as efforts to initiate offshore oil- and gas-drilling projects -- a position that hardened after the 2010 BP/Deepwater Horizon oil leak into the Gulf of Mexico. In a report which he issued on May 27, 2010, Salazar recommended a six-month moratorium on all deepwater drilling—notwithstanding the fact that five out of seven consulting engineers had stated that such drilling had a strong safety record, and that targeted inspections would be more sensible than a blanket moratorium.
In June 2010, federal judge Martin Feldman of Louisiana ordered Salazar and the Obama administration to lift their “arbitrary and capricious, and therefore, unlawful” ban on offshore drilling in the Gulf. The following month, when a U.S. Court of Appeals denied Salazar's bid to put a hold on Feldman's order, the Interior Secretary promptly concocted a second, “revised” moratorium to replace the one Feldman had nullified. Though Salazar officially “lifted” this second ban three months thereafter, he issued no additional drilling permits that year. Rather, in 2010 he actually rescinded 77 oil-lease contracts that had previously been granted—after seven full years of rigorous study and debate—during the final days of the Bush administration. Federal courts repeatedly scolded Salazar and the White House for their “determined disregard” of judicial orders and their “increasingly inexcusable” action on stalled deepwater drilling projects, to no effect.
In February 2011, Judge Feldman—complaining that the Obama administration’s “time delays at issue here are unreasonable”—ordered Salazar and the President to decide within a month whether they would grant a set of five permits for deepwater drilling projects in the Gulf of Mexico. Obama and Salazar chose not to comply for several weeks, and instead issued yet another request to the 5th Circuit Court of Appeals for a stay of Feldman's order. Finally, in March 2011 Salazar gave the Shell Offshore Company permission to apply for drilling permits for three new exploratory wells off the Louisiana coast.
In mid-March 2011, Salazar angered many environmentalists when he characterized coal as "a critical component of America’s comprehensive energy portfolio," and announced that nearly 758 million tons of Wyoming coal would go up for sale in the coming months. Soon after Salazar's announcement, three environmental groups—WildEarth Guardians, the Sierra Club, and Defenders of Wildlife—issued a joint statement criticizing the decision.
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Source: REPORT_-_Rising_Energy_Costs_An_Intentional_Result_of_Government_Action.pdf
U.S. House of Representatives
Committee on Oversight and Government Reform
Darrell Issa (CA-49), Chairman
RISING ENERGY COSTS: AN INTENTIONAL RESULT OF GOVERNMENT ACTION
STAFF REPORT U.S. HOUSE OF REPRESENTATIVES 112TH CONGRESS MAY 23, 2011
Findings
1. Key Obama Administration figures have expressed a belief that Americans should pay more for energy – a pattern of actions shows the Administration is, in fact, pursuing an agenda to raise the price Americans pay for energy.
President Obama, Energy Secretary Chu and others have stated that American
consumers should pay more for energy, including electricity and gasoline. From a
political perspective, increasing the price of energy (by whatever means) helps them
make the case for “green” energy. Even beyond the effort to raise energy prices through “cap and trade” legislation that Congress rejected, a pattern of increased enforcement, regulatory delay and new hurdles can be seen across numerous agencies and approval processes. The result of this government action is less production, higher costs for producers, and more expensive energy.
2. While the Administration touts nascent “green” energy technologies, U.S. domestic
energy resources are currently the largest on earth—greater than Saudi Arabia, China and Canada combined. New developments in drilling and extraction technology have dramatically expanded the amount of total recoverable reserves of oil and natural gas. Much of this, however, may be put off-limits by the government.
3. Still trying to capitalize on domestic energy resources, U.S. firms are nevertheless investing billions of dollars to tap newly recoverable resources in California, Texas, Colorado and North Dakota, among others.
By 2015, fields in these areas could yield more daily oil than the Gulf of Mexico produces today, boosting domestic production by 20-40 percent and increasing our energy independence if government action does not severely restrict development and yields.
4. Recent Administration action has already led to significant cost and regulatory barriers that have limited domestic production of oil.
Even before the Gulf oil spill, the Department of the Interior had undertaken significant steps to restrict access to much of the energy resources located in the outer continental shelf: Alaska, the Gulf of Mexico, and along the Atlantic and Pacific coasts.
5. Other agencies have stepped up their efforts to indirectly curtail energy production through environmental regulations.
The U.S. Fish and Wildlife Service has proposed placing the dunes sagebrush lizard that lives in New Mexico and Texas on the Endangered Species list—designation that would severely restrict production activity in a resource-rich part of Texas.
6. EPA has collaborated with environmental groups to target independent energy producers for environmental concerns not related to their operations.
In an email message reviewed by the Committee, environmental advocates and EPA’s
Texas-based regional director exchanged celebratory accolades for efforts that create barriers to energy production. One exchange concluded: “Yee haw! Hats off to the new Sheriff and his deputies!”
7. President Obama’s proposal to increase taxes on the energy industry will cost American jobs and hamper economic recovery.
Independent operators are responsible for 95 percent of domestic oil and gas wells and they currently invest 150% of their domestic cash flow back into future projects
development. Tax increases proposed by President Obama, some of which would be
transferred to “green” energy producers, would cost energy producing firms a combined $12 billion in the first year.
8. Some green energy sources the Administration is promoting at the expense of expanded domestic oil, gas, and coal supplies create unintended environmental, security and economic consequences.
Green energy technology like batteries, turbines, hybrid power systems and similar
technologies require “rare earth” commodities. China has a “near monopoly” on this
market controlling between 95-100 percent of the market. Further, China derives 71
percent of its own energy needs from coal. Ethanol, for example, also requires large
amounts of corn to deliver fuel. “[T]he entire U.S. corn crop would supply only 3.7
percent of our auto and truck transport needs while using 300 million acres of U.S.
cropland.”
INTRODUCTION
In his 2010 State of the Union address, President Obama declared, “the nation that leads the clean energy economy will be the nation that leads the global economy…America must be that nation.”1 Yet today, more than 80% of the United States’ primary energy comes from carbon-based resources that cannot easily, cheaply, or quickly be replaced.2 Even so, the Administration is aggressively suppressing the use of carbon-based energy sources in the United States. To do so, it is pursuing a broad array of measures to block carbon-based energy extraction, to tax, and to otherwise increase the costs of its use, and to subsidize wherever possible the development and use of so-called “clean energy.” The economic and geopolitical
implications of such a policy, if it is successful, are not good for the United States. It will make the United States poorer and more susceptible to the pressures of countries that now control a large share of the world’s oil—countries, which for the most part, do not share America’s goals or ideals.
1 President Barack Obama, Remarks by the President in the State of the Union Address (Jan. 27, 2010) available at http://www.whitehouse.gov/the-press-office/remarks-president-state-union-address.
2 Energy Information Administration, Energy in Brief, “What are the major sources and users of energy in the United States?” (Updated: Oct. 28, 2010) available at
http://www.eia.doe.gov/energy_in_brief/major_energy_sources_and_users.cfm
3 Deroy Murdock, Obama Declares War on Coal, NAT’L REVIEW (Nov. 3, 2008) Original source: audio/video of Obama’s appearance before the San Francisco Chronicle’s editorial board in Jan. 2008.
The Obama Administration has advanced an agenda that discourages development of
domestic carbon-based energy resources. Administration actions include the threat of new federal regulation of hydraulic fracturing, withdrawal of federal lands, both on and offshore, from energy production, increasingly burdensome requirements for oil shale research and development leases, and a de facto moratorium on drilling permits. This strategy has added to permitting delays, created additional layers of review, and prolonged study periods. In addition, other laws such as the Endangered Species Act and the Clean Air Act have been used to further suppress domestic oil and gas production, leading to higher gasoline prices and growing dependence on foreign oil. The Administration has also proposed a series of discriminatory tax
increases targeting oil and gas producers in order to subsidize its favorite industry: so-called “clean energy” (primarily wind and solar).
The Administration’s bias against carbon-based fuels should come as no surprise. The
President ran on an agenda that anticipated higher energy costs:
Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.… Coal-powered plants, you know, natural gas, you name it, whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money.
3 Some of his key cabinet officials have expressed similar views. Prior to his confirmation as Secretary of Energy, Steven Chu, then director of the Department of Energy's Lawrence Berkeley National Lab, advocated raising gas taxes--and therefore prices--to encourage the sale of more-efficient cars: “[s]omehow we have to figure out how to boost the price of gasoline to the levels in Europe."4
4 Neil King Jr. and Stephen Power, Times Tough for Energy Overhaul, WALL STREET J. (Dec. 12, 2008), available at http://online.wsj.com/article/SB122904040307499791.html.
5 President Barack Obama, Remarks by the President in the State of the Union Address (Jan. 25, 2011), available at http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-president-state-union-address.
This report will examine specific Obama Administration policies targeting oil and gas
production from both a regional and national perspective. Additionally, it will take a close look at the regional and local impacts of the growing web of laws, regulations, policies and tactics aimed at suppressing the development and production of domestic, carbon-based energy reserves that the President has labeled “yesterday’s energy.”5
President Obama’s policy bias against fossil fuels
The Obama Administration is promoting a clean energy agenda at the expense of
domestic oil and gas production. Administration officials, including the President, have publicly stated that increasing domestic oil and gas production is important to stabilize gasoline prices. However, a review of their actions reveals a systemic effort to prevent, obstruct, stall, and discourage development of carbon-based resources. This strategy is articulated by Secretary Geithner and is observable in actions by Administrator Jackson and Secretary Salazar. Unfortunately for Americans struggling with higher gas prices, Administration rhetoric will provide no relief. However, the Administration’s actions can inflict more pain.
In March 2009, Treasury Secretary Timothy Geithner explained to Senator John Cornyn
(R-Texas) that the Obama Administration planned to increase taxes on domestic oil and gas producers even though this policy will decrease domestic oil production and increase America’s dependence on foreign oil and gas:
Senator, as you know, and I think it's clear in the proposal, we don't believe it makes sense to significantly subsidize the production and use of sources of energy that are dramatically going to add to our climate change imperative.
. . . But as I said, the overall objective is not to be providing ongoing subsidies to forms of energy production that are going to add to this critical long-term imperative of climate change.(emphasis added)
…And I think this is a reasonable policy, given the overall objective of again making sure we're not providing artificial
6 incentives, to produce and use energy that's going to make our broader climate-change imperatives worse.6 (emphasis added) Translation: in order to achieve the President’s vision of a carbon free economy, the productionand development of fossil fuels would be punished.
Phase One: Cap-and-Trade
Since his first day in office President Obama has worked to advance his “green energy
agenda.” This agenda was originally manifested in the Presidents cap-and-trade scheme, which was summarily rejected by Congress. Cap-and-trade legislation, “a combination of energy taxes and carbon controls”7 failed to garner enough support to pass both houses of Congress. “Realistically, the cap-and-trade bills in the House and the Senate are going nowhere,” said Senator Lindsey Graham (R-SC), who was trying to fashion a bipartisan package of climate and energy measures. “They’re not business-friendly enough, and they don’t lead to meaningful energy independence. . . . What is dead is some massive cap-and-trade system that regulates
carbon in a fashion that drives up energy costs.”8 Some view the massive failure of cap-and trade as the impetus for the President’s renewed focus on clean energy: “cap and trade by another name.”9
Before EPA issued the Endangerment Finding for Greenhouse Gasses under the Clean
Air Act (CAA), the White House and the agency had been warned by economists, legislators, and their own advisors that the GHG regulations would impose a high cost on the economy via higher energy prices and increased uncertainty. Former Energy and Commerce Chairman Dingell famously stated in April 2008 that regulating GHGs under the CAA would result in a “glorious mess”
Failing to pass cap-and-trade, the Administration turned to regulation to do what it
couldn’t via Congress. Namely, EPA issued the controversial endangerment finding for CO2 and other greenhouse gases (GHGs). This finding put in motion the onerous mechanisms of the Clean Air Act which imposes enormous costs on consumers of carbon-based fuel.
10 that would wreak havoc on the economy. In March 2009, then-Ranking Member Issa
warned EPA that, . . . the immediate result of issuing an endangerment finding is that thousands of American small businesses, already struggling in one of the toughest economic [climates] our generation has ever seen, will be thrown into a sea of legal uncertainty, further depressing their ability to stay viable.11
6 The President’s Fiscal Year 2010 Budget Proposal, Part One: Hearing Before S. Comm. on Finance, 111th Cong. (2009).
Bottom line: the Administration knew that the implementation of EPA’s GHG regulations would have a large economic impact. During consideration of cap-and-trade legislation, a top White House economic official warned that, “if you don’t pass this [cap-andtrade] legislation then…the EPA is going to have to regulate in this area. And it is not going to
7 Iain Murray and William Yeatman,Cap and Trade, NAT’L REVIEW ONLINE, March 12, 2010.
8 John M. Broder and Clifford Krauss, Advocates of Climate Bills Scale Down Their Goals, NEW YORK TIMES, Jan. 26, 2010.
9 Kimberley A. Strassel, Cap and Trade Returns from the Grave, WALL STREET J. ONLINE, Jan. 28, 2011, available at http://online.wsj.com/article_email/SB10001424052748703893104576108501552298070-lMyQjAxMTAxMDIwODEyNDgyWj.html.
10 A Glorious Mess, WALL STREET J. (Apr. 12, 2008).
11 Letter from the Hon. Darrell E. Issa, Ranking Member, Oversight Committee to the Hon. Lisa P. Jackson, Administrator, U.S. EPA (Jan. 13, 2010).7 be able to regulate in a market-based way, so it’s going to have to regulate in a command-andcontrol way, which will probably generate even more uncertainty.”
12 Phase Two: Promote “New Energy;” Discourage “Yesterday’s Energy”
The Administration remains steadfast in its efforts to force a shift from oil and gas to socalled “clean energy.” In its recent report on energy policy, 13 the Administration pays lip service to the proposition that America needs to expand domestic oil and gas production, but offers no serious plan to accomplish the expansion. Instead, it promotes “clean energy” policies that would decrease domestic oil and gas production, ignoring the evidence that such policies would contribute to higher gasoline prices and increase America’s dependence on foreign oil, as well as
contribute to the further loss of American jobs. In his 2011 State of the Union address,the President stated “none of us can predict with certainty what the next big industry will be or where the new jobs will come from,” yet only a few moments later he predicted that the next big industry will be clean energy: “. . . clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling.
So tonight, I challenge you to join me in setting a new goal: By 2035, 80 percent of America’s electricity will come from clean energy sources.” 14 The President’s push for clean energy tomorrow comes at the expense of affordable energy today. The United States has an abundance of carbon-based fuels; yet, restricted use will artificially and unnecessarily raise the cost of energy for U.S. consumers. America’s combined energy resources are the largest on earth. They eclipse Saudi Arabia (3rd), China (4th) and Canada (6th) combined – and that’s without including America’s shale oil deposits.15 U.S. proven reserves of oil total 19.1 billion barrels, reserves of natural gas total 244.7 trillion cubic feet, and natural gas liquids reserves of 9.3 billion barrels. 16“That’s enough oil to maintain America’s current rates of production and replace imports from the Persian Gulf for more than 50 years.” 17 Undiscovered technically recoverable oil in the United States is 145.5 billion barrels, and undiscovered technically recoverable natural gas is 1,162.7 trillion cubic feet. 18 Alternative Energy: Is it Really Green? Converting from a carbon-based economy towards “greener” energy would be costly in more ways than one. “In its headlong rush to go ‘green,’ the United States may simply be trading reliance on one type of import for reliance on another.”19
12 Jonah Goldberg, Dirty Moves Behind Pitch for Cleaner Air, BOSTON HERALD (Dec. 13, 2009).
13 Blueprint for a Secure Energy Future (Mar. 30, 2011), available at
http://www.whitehouse.gov/sites/default/files/blueprint_secure_energy_future.pdf.
14 President Barack Obama, Remarks by the President in the State of the Union Address (Jan. 25, 2011) available at http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-president-state-union-address.
15 Peter C. Glover, U.S. Has Earth’s Largest Energy Resources, ENERGY TRIBUNE (Mar. 24, 2011), available at http://www.energytribune.com/articles.cfm/6933/US-Has-Earths-Largest-Energy-Resources.
16 Gene Whitney, et al, U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary, CRS REPORT TO CONGRESS, Nov. 30, 2010.
17 Press Release, U.S. Senate Committee on Environment and Public Works, Government Report: America’s Combined Energy Resources Largest on Earth (Mar. 11, 2011).
18 Id.
19 Robert Bryce, POWER HUNGRY (Public Affairs) (2010).8 States “will need rare earth commodities produced by the Chinese as well as lithium mined by a handful of foreign countries.”
20 China has a near-monopoly on rare earths, controlling between 95-100 percent of the elements essential to most clean energy technologies including wind
turbines, hybrid cars, solar panels, computers, and batteries.
21 Instead of importing foreign oil from multiple countries, adopting clean energy technologies would require the United States to become reliant on the Chinese to provide these essential elements. Besides all the other problems with becoming dependent on China for the sole supply of rare earth elements necessary to increase America’s use of so-called clean energy, increasing the demand for these elements would only add to China’s coal and oil consumption. China is the world’s second largest energy consumer. Coal supplied the vast majority (71 percent) of China’s total energy consumption of 85 quadrillion British thermal units (Btu) in 2008. Oil is the secondlargest source, accounting for 19 percent of the country’s total energy consumption. While China has made an effort to diversify its energy supplies, new sources of renewable energy account for only 4.2 percent of China’s energy consumption.
22 EIA estimates that China’s absolute coal consumption should nearly double to 112 quadrillion Btu by 2020. 23 The logic of using more carbon-based fuels in China to create more clean energy in the United States is flawed. CO2 is highly diffuse in the atmosphere such that emissions in China impact the United States as much as emissions originating in California. It is also a fallacy that a conversion to clean energy would create new jobs in the United States. In addition to the jobs that will be lost in the oil and gas production industry to subsidize the Obama Aministration’s conversion to so-called clean energy, “China’s near-monopoly control of the green elements likely means that more of the new manufacturing jobs related to “green” energy products will be created in China, not the United States.” 24 In addition to solar and wind, biofuels intended to reduce or replace U.S. gasoline consumption are already costing taxpayers and are not a long-term practical solution
25 for replacing carbon-based fuels. Total agriculture-based biofuels production accounted for only about 5% of total U.S. transportation fuel consumption (on a gasoline-equivalent basis) in 2010. Federal biofuels policies have had costs, including unintended market and environmental consequences and large federal outlays (estimated at over $7 billion in 2010).26
In a 2010 study, the Congressional Budget Office estimated “taxpayers incur a cost of $1.78 for replacing 125,000 Btus of energy supplied by petroleum fuels with 125,000 Btus supplied by ethanol.” 27 20 Id. This year, the corn-ethanol sector will produce about 13.8 billion gallons of ethanol, the energy equivalent of about 9.1 billion gallons of gasoline . . . the domestic-drilling sector provides about 21 Id. 22 Energy Information Administration, Country Analysis Briefs: China (Nov. 2010), available at http://www.eia.doe.gov/EMEU/cabs/China/pdf.
23 Id.
24 Id.
25 James Jordan and James Powell, The False Hope of Biofuels, WASHINGTON POST, July 2, 2006.
26 Randy Schnepf, Agriculture-Based Biofuels: Overviews and Emerging Issues, CRS REPORT FOR CONGRESS, Jan. 11, 2011.
27 USING BIOFUEL TAX CREDITS TO ACHIEVE ENERGY AND ENVIRONMENTAL POLICY GOALS, A CBO Study (July 2010)
9
36 times as much energy to the U.S. economy.28 Thus the entire U.S. corn crop would supply only 3.7 percent of our auto and truck transport demands. Using the entire 300million acres of U.S. cropland for corn-based ethanol production would meet only about 15 percent of the demand.29 Tim Searchinger, a research scholar at Princeton University’s Woodrow Wilson School, says that biofuels don’t make much sense because it “takes a huge amount of land to produce a modest amount of energy.” The key issue, says Searchinger, is scale. He points out that even if we used “every piece of wood on the planet, every piece of grass eaten by livestock, and all food crops, that much biomass could only provide about 30 percent of the world’s total energy needs.”30
Regardless, the Obama Administration continues to emphasize unaffordable clean energy
policies at the expense of domestic carbon-based resources. A recent post on the White House blog summarizes the President’s position.31 The post and the accompanying graphic 32 demonstrate that the Obama Administration’s true position with domestic oil and gas production is to increase that industry’s taxes in order to provide subsidies for clean energy including electric cars and public transportation.33
28 Robert Bryce, Obama’s Happy Talk on Energy, NATL. REVIEW (May 10, 2011).
29 Id.
30 Robert Bryce, Biofuel Delusions, COUNTERPUNCH (Dec. 31, 2010).
31 The President on Jobs & Gas Prices, White House blog (May 6, 2011) available at http://www.whitehouse.gov/blog/2011/05/06/president-jobs-gas-prices-read-his-remarks-download-graphic.
32 http://www.whitehouse.gov/sites/default/files/gas_graphic_blogsize.jpg
33 The White House blogger encouraged everyone to “check it out below, or download it, print it, send it to your family, or hang it on your wall to add a splash of color.”
Source: The President on Jobs & Gas Prices, White House blog (May 6, 2011) available at http://www.whitehouse.gov/blog/2011/05/06/president-jobs-gas-prices-read-his-remarks-download-graphic.
Punitive Tax Increases
The Obama Administration wants to tax American oil and gas production to subsidize its clean energy agenda. Higher taxes will disproportionately and negatively impact American job creators in the independent oil and gas production market. Over the long run it will decrease domestic production and make the United States more vulnerable to world events.
In its FY2012 budget, the Obama Administration requests over $60 billion in direct tax and fee increases (over ten years) on American energy production. Some of the most substantial energy tax and fee proposals in the President’s FY 2012 budget include: 34
34 Press Release, U.S. House of Representatives, Committee on Natural Resources, Budget Watch (Feb. 14, 2011), available at http://naturalresources.house.gov/News/DocumentSingle.aspx?DocumentID=225077.
35 Jack Lew, Office of Management and Budget, White House Press Briefing, (Feb. 14, 2011) available at
http://www.whitehouse.gov/the-press-office/2011/02/14/press-briefing-omb-director-jack-lew-and-cea-chairman-austan-goolsbee-bu.
36 FY2012 federal budget request, Terminations, Reductions, and Savings, Dept. of Energy, p. 52.
37 Letter from President Barrack Obama to Rep. John Boehner, Rep. Nancy Pelosi, Senator Harry Reid, and Senator Mitch McConnell (April 26, 2011) (on file with author).
38 Press Release, White House, Weekly Address, Taxpayer Subsidies for Oil Companies are Neither Right, nor Smart, and They Should End (Apr. 30, 2011), available at http://www.whitehouse.gov/the-press-office/2011/04/30/weekly-address-taxpayer-subsidies-oil-companies-are-neither-right-nor-sm.
• Repeal Domestic Manufacturing Tax Deduction for oil and natural gas ($18.2 billion)
• Repeal expensing for intangible drilling costs ($12.4 billion)
• Repeal percentage depletion for oil and natural gas wells ($11.2 billion)
• Repeal percentage depletion tax on oil, gas and mineral properties ($4.9 billion for corporations, $890 million for individuals)
The Administration plans to use these tax increases to subsidize and promote the electric vehicle industry and other clean energy projects. Jack Lew, director of the Office of Management and Budget, describes the Obama Administration’s philosophy behind the tax increases requested in the FY2012 budget:
To invest in the industries and jobs of tomorrow, we invest $148 billion overall in research and development. And this supports our goal of putting a million electric vehicles on the road by 2015, doubling our share of electricity from clean energy by 2035, and reducing energy use in buildings by 20 percent by 2020. In part, we pay for this by eliminating 12 tax breaks that now go to oil, gas and coal companies, which will raise $46 billion over 10 years.35 (emphasis added)
The Administration characterizes the deductions and credits slated for elimination as “tax preferences,” or “oil and gas subsidies” that are costly to U.S. taxpayers and do little to either provide incentives for increased production or reduce prices to consumers.36 The President refers to them as “special” and “unwarranted”37“giveaways.”38 This characterization is inaccurate: the vast majority of these deductions and credits are widely available to all manufacturers. For example, the President’s proposal to eliminate the expensing of intangible drilling costs would
single out the oil and gas industry for discriminatory tax treatment. Intangible drilling costs
12 (IDCs) are non-salvageable items that can be expensed in the year that they were incurred.39 This tax treatment applies equally to shoe salesman as it applies to the oil and gas industry. For example, if a shoe salesman buys a shoe for $10 and sells it for $20, he doesn’t depreciate the shoe over 7 years, he expenses it. Similarly, there are a host of temporary, non-salvageable items called IDCs that some oil and gas companies can expense such as drilling services, mud, cement,testing services, things that are done before a well is completed and producing any oil or gas.40
Moreover, the oil and gas industry receives $2.8 billion in targeted tax incentives, less than 3 percent of all incentives, and far less than its smaller rivals in energy production, the renewable energy sector which receives $11.3 billion.41 The non-profit Tax Foundation questions why the Administration is penalizing the oil and gas industry by attempting to repeal tax deductions that are widely available to many other manufacturing sectors and warns that other manufacturing sectors may soon be penalized as well if they fall out of favor with the Administration:
Why, suddenly, should companies that produce t-shirts,hamburgers, toys, software, or rap music be qualified to receive the tax benefit but oil companies should not be? According to the explanation in Treasury’s Green Book, environmental politics
account for this distortion of sound tax and economic policy. The President promised during the G-20 Summit in Pittsburgh, to “phase out subsidies for fossil fuels so that the United States can transition to a 21st century energy economy.”42 (emphasis added) Former Democratic Congressman Harold Ford, Jr., also questions the need for tax increases and why the Administration wrongly labels tax credits as subsidies:
Why, when gas prices are climbing, would any elected official call for new taxes on energy? And characterizing legitimate tax credits as “subsidies” or “loopholes” only distracts from substantive treatment of these issues. Lawmakers misrepresent the facts when they call the manufacturing deduction known as Section 199—passed by Congress in 2004 to spur domestic job growth—a “subsidy” for oil and gas firms. The truth is that all U.S. manufacturers, from software producers to filmmakers and coffee roasters, are eligible for this deduction.43(emphasis added)39 Pathways to Energy Independence: Hydraulic Fracturing and Other New Technologies: Field Hearing before H. Comm. on Oversight and Government Reform, 112th Cong. (2011) (statement of Rock Zierman, CEO, California Independent Petroleum Association , available at http://oversight.house.gov/images/stories/Testimony/5-6-11_Zierman_Testimony.pdf.
40 Id.
41 Sean A. Hodge, Putting Corporate Tax “Loopholes” in Perspective, TAX FOUNDATION SPECIAL REPORT (Aug.
2010) (No. 184).
42 Id.
43 Harold Ford, Jr., Washington vs. Energy Security, WALL STREET J., May 11, 2011.
Many of these proposed tax changes, including repealing the expensing of intangible
drilling costs, have the effect of removing incentives available only to non-integrated companies (also referred to as “independents”).
44 Independent oil producers—those who get oil and natural gas out of the ground and do not refine, transport, market, or have retail sales of petroleum products—develop 95 percent of domestic oil and gas wells.
45 Independents produce 68 percent of domestic oil and produce 82 percent of domestic natural gas.46 While integrated companies (i.e. Chevron, Shell, BP) with vastly more capital may survive these tax increases in the short run, the independents will essentially be killed47 and good jobs will be lost.
44 Robert Pirog, CONGRESSIONAL RESEARCH SERVICE, OIL AND NATURAL GAS INDUSTRY TAX ISSUES IN THE FY2012 BUDGET PROPOSAL (Mar. 3, 2011).
45 Independent Petroleum Association of America, Fact Sheet: Increasing Taxes on America’s Independent Natural Gas and Oil (2011), available at http://www.ipaa.org/news/docs/Tax_Issue_Talking_Points_02-2011.pdf.
46 Id.
47 Id.
48 Id.
49 IHS GLOBAL INSIGHT (USA) INC., THE ECONOMIC CONTRIBUTION OF THE ONSHORE INDEPENDENT OIL AND NATURAL GAS PRODUCERS TO THE U.S. ECONOMY (April 2011), available at http://www.ipaa.org/news/docs/IHSFinalReport.pdf.
50 Id.
51 Id.
52 Pathways to Energy Independence: Hydraulic Fracturing and Other New Technologies: Field Hearing before H. Comm. on Oversight and Government Reform, 112th Cong. (2011) (statement of Rock Zierman, Chief Executive Officer, California Independent Petroleum Association), available at http://oversight.house.gov/images/stories/Testimony/5-6-11_Zierman_Testimony.pdf.
53 Telephone Interview with Chip Minty, Devon Energy (May 11, 2011).
54 Pathways to Energy Independence: Hydraulic Fracturing and Other New Technologies: Field Hearing before H. Comm. on Oversight and Government Reform, 112th Cong. (2011) (statement of William A. Whitsitt, Executive Vice President, Devon Energy), available at http://oversight.house.gov/images/stories/Testimony/5-6-11_Whitsitt_Testimony_FINAL.pdf
For those lucky enough to survive, eliminating tax credits and deductions for independents will certainly decrease capital investment and thus domestic exploration and production. Independents currently invest 150% of their domestic cash flow back into development.48 In 2010, upstream independents are estimated to have spent $62.6 billion on capital expenditures (capex).49 This translates to the creation of six direct and 33 total upstream jobs for every $1 million dollars of capex. In value added terms, every $1 million dollars of capital expenditure results in $2.4 million of direct and $5.1 million of overall contribution to GDP.50 In terms of taxes, every $1 million dollars of capex results in $1.1 million of total tax revenue generated in the upstream sector.51 According to Rock Zierman of California Independent Petroleum Producers, “only independent producers can fully expense IDC on American production. Therefore, if you eliminate IDC expensing, there would be less capital available in the current year to reinvest in new drilling operations. This equals less production, period.”
52 Even though the entire domestic natural gas and oil sector claimed only $2 billion in deductions in 2010, independent producers could lose as much as $12 billion in the first year after this deduction was repealed.53 Devon Energy, an independent producer in Oklahoma, estimates that eliminating IDC expensing could cost it $1 billion in the first year. “That would equate to our complete drilling program in the Barnett Shale. . . . That looks to us like it's a totally wrongheaded policy that would penalize companies that are most efficient at producing resources that power the nation.”54 Higher taxes equal less investment and more dependence on
foreign sources of oil. Less capital investment will lead to more dependence on foreign oil.
Repealing these tax credits and deductions will not only decrease capital investment and domestic exploration and production, but it will also eliminate good-paying jobs. The exploration and production portion of the industry employs about 500,000 workers at a wage rate over 50 percent higher than the average of all manufacturing.55 With unemployment rising to 9% in April 2011,56 America needs to create more jobs, not eliminate existing jobs by increasing taxes to subsidize clean energy technologies that are not capable of filling the void:
55 Independent Petroleum Association of America, Fact Sheet: Increasing Taxes on America’s Independent Natural Gas and Oil (2011), available at http://www.ipaa.org/news/docs/Tax_Issue_Talking_Points_02-2011.pdf.
56 BUREAU OF LABOR STATISTICS, EMPLOYMENT SITUATION SUMMARY (May 6, 2011).
57 Press Release, American Petroleum Institute, Joint Committee study ignores harm of raising taxes (May 13, 2011), available at http://www.api.org/Newsroom/jcomm-ignores-harm.cfm.
Annually raising taxes on the industry by billions of dollars would reduce investment in American oil and natural gas development, cost thousands of U.S. jobs, and, over time, reduce both energy production and the taxes and royalties generated from it. It would also increase imports. We wouldn’t reduce the deficit, and necessary government investments could be adversely affected. Those advocating tax increases, therefore, would be cutting off their nose to spite their face. Those who want more revenue should work to increase access to available U.S. oil and natural gas reserves, which have a long-term government revenue potential approaching $2 trillion. That could reduce the deficit and help finance critical government programs without raising energy costs and reducing supplies.57
While removal of these tax credits and deductions may be appropriate in conjunction with broad-based tax reform that reduces net tax rates, eliminates unnecessary burdens on job creators, and simplifies tax compliance, simply removing these provisions without tax relief elsewhere would have the effect of discouraging oil and gas exploration and development even more.
Far from seeking tax code simplification, or even additional revenues to reduce our deficits, the Administration is quite openly seeking ways of paying for the subsidies it would like to provide to “green energy” while at the same time making carbon-based energy more expensive.
Unfair tax treatment is just one piece of evidence in a two-year pattern of Administration policies that discriminate against oil and gas development in the United States. This discrimination hurts not only the energy independence of the country but local economies across the nation. The remainder of this report will provide examples of some of those policies in each of five geographic regions most likely to feel the repercussions: Appalachia, the Rocky Mountains, the Gulf, Alaska, and Texas.
I. APPALACHIAN REGION
The shale gas reserves of Appalachia are a game changer for the future of American
energy security. The United States has 2,552 trillion cubic feet (TCf) of potential natural gas resources, enough to last 110 years at current usage rates. Almost one-third of these resources are from shale gas -- considered uneconomical to extract until just a few years ago.58
Newly recoverable shale reserves, both oil and gas, have revitalized the oil and gas industry in Appalachia and across the United States – from North Dakota to south Texas to California. The Marcellus Shale formation lies below many of the Appalachian states and extends up to New York. In 2002, the U.S. Geological Survey estimated the Marcellus held 1.9 TCF of natural gas.59 In 2009, the Department of Energy estimated the Marcellus holds 262 TCF of recoverable natural gas.60
58 Energy Information Administration, What is shale gas and why is it important? (Apr. 4, 2011), available at http://www.eia.doe.gov/energy_in_brief/about_shale_gas.cfm.
59 NATIONAL PARK SERVICE, POTENTIAL DEVELOPMENT OF THE NATURAL GAS RESOURCES IN THE MARCELLUS SHALE 2 (Dec. 2008).
60 DEPARTMENT OF ENERGY, MODERN SHALE GAS DEVELOPMENT IN THE UNITED STATES: A PRIMER (April 2009).
61 Id.
62 Press Release, America’s Natural Gas Alliance, Safe, Responsible Drilling, available at
http://www.anga.us/media/41084/safe%20responsible%20drilling.pdf.
63 Id.
64 Jonathan Fahey, New Drilling Method Opens vast oil fields in US, THE ASSOC. PRESS (Feb 9, 2011).
The key to unlocking these additional reserves is a new application of a proven
technology called hydraulic fracturing (“fracking”). Fracking has the potential to reposition America from a country beholden to the Middle East for energy to a nation that has used ingenuity to utilize domestic resource exhaustion, but the Administration is threatening to kill the technology with unnecessary federal regulation. Advancements in fracking, coupled with the ability to drill horizontally, allow producers to access more gas with fewer wells. After drilling
vertically downward to a shale formation, the producer can turn the drill bit and drill horizontally through the formation. After drilling, a mixture of water, sand, and chemicals can be injected into the well to open up small cracks within the shale formation to allow the gas to travel to the well. The Energy Information Administration says that “without horizontal drilling and hydraulic fracturing, shale gas production would not be economically feasible because the natural gas would not flow from the formation at high enough rates to justify the cost of
drilling.”61 Fracking and horizontal drilling also reduce the environmental footprint necessary to tap this natural gas.62
The combination of fracking with horizontal drilling is making shale oil recoverable as well, greatly increasing our recoverable oil reserves around the country. The Bakken Shale in North Dakota is a stunning example. As a result of horizontal drilling, coupled with fracking, Bakken production increased from less than 3,000 bbl/d in 2005 to over 230,000 bbl/d in 2010.
The Bakken's share of total North Dakota oil production rose from 3% to 75% over those five years.63 Thanks in part to fracking, unemployment in North Dakota is now the lowest in the country – just 3.8%.64
North Dakota is not alone. Companies are investing billions of dollars to tap into oil deposits in Colorado, Texas, California, Oklahoma, and Louisiana as well. By 2015, these fields 16 could yield as much as 2 million barrels of oil per day – more than the Gulf of Mexico produces today -- boosting domestic oil production by 20 to 40%.65 According to Credit Suisse, development of these fields could reduce oil imports by 60% by 2020.66 Despite the success of fracking, federal agencies appear to be in a race to see which one can regulate it first. The Department of Interior announced last November that it will consider regulating fracking on federal lands.67
The EPA, which concluded seven years ago that fracking "poses little or no threat" to drinking water supplies,68 is revisiting the issue. Having found no evidence that fracking chemicals reach drinking water, EPA now wants to study the entire lifecycle of the water used. In addition, DOE has convened a study group to review the fracking
process. In a written statement, DOE Secretary Steven Chu stated, “I am looking forward to hearing from this diverse, respected group of experts on best practices for safe and responsible natural gas production.”69 Although the study groups members are certainly highly respected, a survey of their biographies indicates none has recent industry experience with the advancements in the technology.70
As Chairman Fred Upton of the Energy and Commerce Committee pointed out,71 the
duplicative efforts of DOI, DOE, and EPA run contrary to the Administration’s pledge to eliminate government waste and streamline processes. It mirrors the President’s favorite example of the headache caused by agency jurisdiction, “The Interior Department is in charge of salmon while they're in fresh water, but the Commerce Department handles them when they're in saltwater. I hear it gets even more complicated once they're smoked."72
Additional regulation of fracking is unnecessary because, as EPA Administrator Lisa
Jackson pointed out, fracking is not an unregulated activity. Federal regulation by
EPA, DOE, and DOI would cause needless delay and uncertainty along with multiple additional layers of red tape. Ultimately, federal intervention will chill investment and decrease energy independence.73
65 Id. Quite the opposite - the states, not the federal government, have always regulated the process and have done so with a solid track record. Officials in state after state have gone on the record to say that fracking has not caused
66 Id.
67 Ben Geman, Interior mulls policy on disclosure of gas ‘fracking’ fluids, THE HILL E2WIRE (Nov. 30, 2010).68
ENVIRONMENTAL PROTECTION AGENCY, EVALUATION OF IMPACTS TO UNDERGROUND SOURCES OF DRINKING WATER BY HYDRAULIC FRACTURING OF COALBED METHANE RESERVOIRS STUDY (2004), available at http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_coalbedmethanestudy.cfm.
69 Press Release, Department of Energy, Secretary Chu Tasks Environmental, Industry and State Leaders to Recommend Best Practices for Safe, Responsible Development of America's Onshore Natural Gas Resources (May 5, 2011).
70 Id.
71 Press Release, House Energy and Commerce Committee, Administration’s Inefficiencies Exposed: Plans for
Yet Another Study on Fracking Wastes Federal Funds on Duplicative (May 5, 2011).
72 Colin Sullivan, STATE OF THE UNION: Obama quip on salmon oversight fails to amuse Earthjustice, E & E DAILY, Jan. 26, 2011.
73 Oversight Hearing on Public Health and Drinking Water Issues: Hearing before S. Comm. on Environment & Public Works, 112th Cong. (2011) (testimony of Lisa Jackson, Administrator, U.S. Environmental Protection Agency), available at: http://epw.senate.gov/public/index.cfm?FuseAction=Hearings.Testimony&Hearing_ID=c8713cf7-802a-23ad-4d51-
bd8e2c8a7bd3&Witness_ID=d9783076-0a81-4f6a-895a-c34d7f21cc4d. 17 any problems and any reports to the contrary are inaccurate.
74 • David Neslin, Director of the Colorado Oil and Gas Conservation Commission: “There has been no verified instance of harm to groundwater caused by hydraulic fracturing.” As evidence, consider the following examples:
75 • Jennifer Means, Pennsylvania Dept. of Environmental Protection: “So far it has not been our experience that the fracking process has caused any water-supply issues.”
76 • James Welsh, Commissioner of Conservation, Louisiana Dept. of Natural Resources:
“The Louisiana Office of Conservation is unaware of any instance of harm to
groundwater in the State of Louisiana caused by the practice of hydraulic fracturing.”
77 • Harold Fitch, Director of the Office of Geological Survey, Michigan Department of Environmental Quality: “Hydraulic fracturing has been utilized extensively for many years in Michigan, in both deep formations and in the relatively shallow Antrim Shale formation. There are about 9,900 Antrim
78 wells in Michigan producing natural gas at depths of 500 to 2000 feet. Hydraulic fracturing has been used in virtually every Antrim well. There is no indication that hydraulic fracturing has ever caused damage to ground water or other resources in Michigan.”
79 The Obama Administration itself has even conceded that it has no evidence of fracking ever contaminating groundwater.
80 Those opposed to fracking have twisted the results of recent scientific studies to support their argument. The most recent example is a study published by Duke University researchers entitled, “Research and Policy Recommendations for Hydraulic Fracturing and Shale-Gas Extraction” which supposedly “shows one downside of fracking.” Nevertheless, fracking has become a political football.
81 74 Lee Fuller, March Madness: Small Group in Congress Renews Efforts That Could Cost Jobs, Undercut American Energy Security, ENERGY IN DEPTH, Mar. 17, 2011.
A close examination of the 75 INTERSTATE OIL AND GAS COMPACT COMMISSION, REGULATORY STATEMENTS ON HYDRAULIC FRACTURING SUBMITTED BY THE STATES, June 2009, available at
http://www.iogcc.state.ok.us/Websites/iogcc/Images/2009StateRegulatoryStatementsonHydraulic%20Fracturing.pdf.
76 Dennis J. O’Malley, Gas drilling forum offers hope, dispels myths, TIMES TRIBUNE, Oct. 20, 2010, available at http://thetimes-tribune.com/news/gas-drilling-forum-offers-hope-dispels-myths-1.1051387.
77 INTERSTATE OIL AND GAS COMPACT COMMISSION, REGULATORY STATEMENTS ON HYDRAULIC FRACTURING SUBMITTED BY THE STATES (June 2009).
78 The Antrim Shale is a formation in the Michigan Basin.
79 Id.
80 Federal Drinking Water Programs: Hearing Before the Environment and Public Works Committee, 111th Cong (2009) (testimony of Peter Silva, Assist. Admin. For Water), see also, Press Release, U.S. Senate Committee on Environment and Public Works (Dec. 8, 2009), available at http://epw.senate.gov/public/index.cfm?FuseAction=Minority.PressReleases&ContentRecord_id=70289be8-802a-
23ad-479d-ca2d6f6b36cd&Region_id=&Issue_id=.
81 Robert B. Jackson et al, Research and Policy Recommendations for Hydraulic Fracturing and Shale-Gas Extraction, Duke University Center on Global Change (May 2011) available at
http://nicholasinstitute.duke.edu/climate/policydesign/researchandpolicyrecommendationsforhydraulic-fracturingandshale2010gasextraction/at_download/paper.
82 Id.
83 GLOBAL SHALE GAS INITIATIVE, U.S. DEPARTMENT OF STATE, (last visited May 20, 2011) available at http://www.state.gov/s/ciea/gsgi/index.htm
84 43 U.S.C. § 1331 et seq.
85 CURRY L. HAGERTY, OUTER CONTINENTAL SHELF MORATORIUM ON OIL AND GAS DEVELOPMENT 7 (CRS 2011).
86 Press Release, U.S. House of Representatives Committee on Natural Resources, The New Obama Plan Has Americans Seeing Red, (Dec. 1, 2010) research, however, reveals that the study does not in any way support the conclusion that fracking is responsible for the contamination of the ground water tested by the researchers. In
fact, the author concedes that, “the study found no evidence of contamination from hydraulic fracturing fluids or saline produced waters.”82 Moreover, in an interview with Bloomberg TV Today on May 10, 2011, Robert Jackson, one of the primary authors of the study, stated clearly that the study “should not be taken as proof that the process [hydraulic fracturing] is dangerous.”
Interestingly, despite the Administration’s concerns about the safety of fracking here in the United States, it promotes the technology abroad. The State Department has a program called the Global Shale Gas Initiative which started “in April 2010 in order to help countries seeking to utilize their unconventional natural gas resources to identify and develop them safely and economically.”83 While threatening to make production of the resources here at home uneconomical, the Administration hypocritically encourages others to seize the fracking revolution as a path to energy independence.
II. GULF OF MEXICO
Regulations relating to Outer Continental Shelf (OCS) drilling are promulgated under the Outer Continental Shelf Lands Act (OCSLA). It is the basis for most federal regulation affecting exploration and drilling in the waters off the U.S. coast.84 OCSLA establishes broad five-year planning periods for offshore leasing across the OCS, as well as other processes for leasing, development, and production of natural resources. The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE), formerly known as the Minerals Management Service(MMS), administers this Act.
For nearly 30 years, the vast majority of U.S. waters were under a federal moratorium, which prohibited exploration and development of much of the OCS. In the summer of 2008, gas prices rose to over $150 a barrel, and the price at the pump exceeded $4 a gallon, creating immense pressure to open up new domestic sources of oil. In response, President Bush and a Democratically controlled Congress allowed a legislative moratorium to expire on September 30, 2008.85 This opened 500 million additional acres for new energy production that contain an estimated 14 billion barrels of oil and 55 trillion cubic feet of natural gas.86 However, the promise of expanded access to the OCS and the accompanying increase in domestic supplies of
energy was short lived.
Source: Press Release, U.S. House of Representatives Committee on Natural Resources, The New Obama Plan Has Americans Seeing Red, (Dec. 1, 2010)
On March 31, 2010, President Obama announced a revised plan for the exploration and
development of oil reserves in U.S. waters.87 While White House officials framed the changes as a way to reduce U.S. reliance on foreign oil and create jobs, in reality, it was a significant retraction from the 2008 decision to lift the moratorium. Under the Obama plan, the majority of the areas open for drilling were once again closed, cutting off access to all of the Pacific Coast, the Northeastern Atlantic and Bristol Bay in Alaska, which put 13.14 billion barrels of oil and 41.49 trillion cubic feet of natural gas back under lock and key.88
87 Id.
88 Id.
http://naturalresources.house.gov/UploadedPhotos/HighResolution/5fab58bc-5c22-4b2f-b063-6313a3caa525.jpg
http://naturalresources.house.gov/UploadedPhotos/HighResolution/a406e6c3-94ea-4e93-87ef-713f1bbffad0.jpg
Source: Press Release, U.S. House of Representatives Committee on Natural Resources, The New Obama Plan Has Americans Seeing Red, (Dec. 1, 2010)
Tragedy in the Gulf
Within weeks of the President’s announcement, an explosion aboard the Deepwater Horizon on April 20, 2010, further changed the course of events for offshore development. A series of human and system failures on the part of BP p.l.c. and their subcontractors made the created a devastating reality for the people on the Gulf Coast.89 As the post incident investigations revealed, a series of avoidable errors, sometimes as basic as changing the batteries on a back up device, or observing red flags, such as the unsafe escalation of pressure readings, could have prevented the ecologic disaster and the spilling of 4.1 million barrels of oil into the Gulf of Mexico.90
89 NATIONAL COMMISSION ON BP DEEPWATER HORIZON OIL SPILL AND OFFSHORE DRILLING REPORT TO THE PRESIDENT: THE GULF OIL DISASTER AND THE FUTURE OF OFFSHORE DRILLING 155-22 (Jan. 2011), available at http://www.oilspillcommission.gov/sites/default/files/documents/FinalReportChapter4.pdf.
90 DEEPWATER HORIZON ACCIDENT INVESTIGATION REPORT 21-29 (2010), available at
http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/incident_response/STAGING/local_assets/
downloads_pdfs/Deepwater_Horizon_Accident_Investigation_Report.pdf.
91 Costing American Jobs, Increasing Energy Prices, U.S. House Committee on Natural Resources, available at http://naturalresources.house.gov/Issues/Issue/?IssueID=15410.
92 RANKING MEMBER DARRELL ISSA, OVERSIGHT & GOV’T REFORM COMM., HOW THE WHITE HOUSE PUBLIC RELATIONS CAMPAIGN ON THE OIL SPILL IS HARMING THE ACTUAL CLEANUP 12-14 (2010), available at http://oversight.house.gov/images/stories/Reports/7-1-10_OGR_Report
93 The Economic Effects of the Offshore Drilling Moratorium, S. Comm. On Small Business, 111th Cong (2010)(testimony of the Honorable Rebecca M. Blank, Under Secretary for U.S. Economic Affairs, Department of Commerce).
94 Remarks by the President to the Nation on the BP Oil Spill, June 15, 2010, available at http://www.whitehouse.gov/the-press-office/remarks-president-nation-bp-oil-spill.
Gulf Moratorium
In the aftermath of the explosion aboard the Deepwater Horizon, Department of Interior Secretary Ken Salazar twice ordered a six month moratorium on deepwater drilling in U.S. waters.91 The Secretary’s orders effectively banned much of the economic activity that sustains the Gulf states, particularly Louisiana. At that time, many residents of Louisiana expressed their fear that the moratorium had the potential to inflict more pain on the region than the spill itself, and it was imposed over the vehement objections of local leaders and their constituents.92
Moreover, Department of Interior executed this sweeping decision without consulting with safety experts on the wisdom of imposing an outright ban on all drilling activity in the Gulf, and without conducting an economic analysis of the impact his decision would have on the economy and the nation.93
First Moratorium
On June 15, 2010, President Obama announced a far reaching six-month moratorium on
nearly all drilling in the Gulf.94 The moratorium applied to new drilling in water depths greater21 than 500 feet, and suspended drilling on 33 wells currently under construction.95 The President’s action is based on a recommendation from Secretary Salazar, contained in a May 27, 2010, report on “Increased Safety Measures for Energy Development on the Outer Continental Shelf.”96 According to a report issued by the Inspector General for the Department of Interior, the Secretary’s recommendation to impose a moratorium was not peer reviewed and was not supported by the scientists and industry experts who had otherwise been cooperating with the
Administration.97
The moratorium was immediately challenged by providers of support services to offshore oil and gas operations, who argued the decision to impose a moratorium was arbitrary and capricious.98 On June 22, 2010, a federal court ruled that the plaintiffs were likely to succeed on their claim and preliminarily enjoined enforcement of the suspension.99 This decision was affirmed by the 5th Circuit Court of Appeals.100
In the order blocking the Department of Interior from enforcing the moratorium, Judge
Feldman specifically cited his belief that the Department actively sought to distort the opinions and advice of “five of the National Academy experts and three of the other experts,” which publically stated that they do not agree with the six month moratorium on drilling, because the moratorium actually increases the risk of an oil spill once drilling is resumed.101
Moreover, the Judge pointed to the adverse economic impact of a broad based moratorium, stating that:
“It is only a matter of time before more business and jobs and livelihoods will be lost. The defendants trivialize such losses by characterizing them as merely a small percentage of the drilling rigs affected, but it does not follow that this will somehow reduce the convincing harm suffered. The effect on employment, jobs, loss of domestic energy supplies caused by the moratorium as the plaintiffs (and other suppliers, and the rigs themselves) lose business, and the movement of the rigs to other sites around the world will clearly ripple throughout the economy in this region.”102
Second Moratorium
Despite the judicial decision to invalidate the original moratorium, Secretary Salazar announced a nearly identical moratorium on July 12, 2010. Billed as “a temporary pause on deepwater drilling to provide time to implement safety reforms,”
103
95 Memorandum from Upstream Insight on Moratorium Halts US Deepwater Drilling For Six Months (June 3, 2010). the second moratorium
96 DEPT. OF INTERIOR, INCREASED SAFETY MEASURES FOR ENERGY DEVELOPMENT ON THE OUTER CONTINENTAL SHELF, May 27, 2010.
97 OFFICE OF THE INSPECTOR GENERAL, DEPT. OF INTERIOR, FEDERAL MORATORIUM ON DEEPWATER DRILLING (2010).
98 Hornbeck Offshore Services v. Salazar, No. 10-1663 (E.D.La, 2010).
99 Id.
100 Hornbeck Offshore Services v. Salazar, No. 10-30585 (5th Cir., 2011).
101 Hornbeck Offshore Services v. Salazar, No. 10-1663 (E.D.La, 2010).
102 Id. at 22.
103 Press Release, Department of the Interior, Sec. Salazar Issues New Suspensions to Guide Safe Pause on Deepwater Drilling (July 12, 2010), available at http://www.doi.gov/news/doinews/Secretary-Salazar-Issues-New-Suspensions-to-Guide-Safe-Pause-on-Deepwater-Drilling.cfm.22
appears to merely be a post hoc rationalization of the original moratorium. The new moratorium did nothing to address the economic concerns of the community or the safety concerns raised by experts. In fact, a New York Times editorial stated that the second ban is “as strong as the first ban.”104 According to Dan Juneau, President of the Louisiana Association of Business andIndustry:
“[The new moratorium] seems to be geared toward rigs with blowout preventers which
everyone in the deep waters have and many in the shallow waters do as well. It is a
reaffirmation that the Obama administration is going to keep things shut down, in spite of the 5th Circuit’s ruling.”105
It appears that the economic impact of the moratorium was never considered by the
Administration. A decision memorandum authored by BOEMRE Director Michael Bromwich to
Secretary Salazar states that “economic effects may be considered in determining the scope of any suspension of drilling activity.”106 However, according to testimony of Rebecca M. Blank, Under Secretary for U.S. Economic Affairs at the Department of Commerce, the Administration never once conducted a study of the economic impact the moratorium would have on the Gulf Coast economy and on oil production.107 Charlotte Randolph, President of Lafourche Parish in Thibodaux, Louisiana, expressed her concern to Committee staff that “nine out of her top ten” taxpayers are employed in the oil and gas industry, which will be directly impacted by the moratorium.108
In Louisiana coastal communities such as Houma, Morgan City and Lafayette, one out of every three jobs is related to the oil and gas industry; these jobs are now in jeopardy along with the $12.7 billion in total wages earned by employees working in the Gulf Coast oil and gas industry. Their unemployment would result in decreased tax receipts and additional budget restrictions for a Parish that is already experiencing a very lean year.109
According to an analysis performed by the Gulf Economic Survival Team, Louisiana and its Parishes stand to lose $150 million to $700 million in state and local sales tax revenue due to the moratorium, thereby negatively impacting all government services, from police and fire protection, to schools and hospitals.110
Former Democratic Senator Bob Graham and William K. Reilly, who were appointed to
head the President’s Commission to investigate the BP oil spill, have expressed criticism over the nature and duration of the moratorium. After hearing testimony from a variety of local 104 Editorial, A New, and Necessary, Moratorium, NY TIMES, July 13, 2010, available at http://www.nytimes.com/2010/07/14/opinion/14wed1.html.
105 Email from Dan Juneau, President, La Assoc. of Bus. & Indus. to Committee Staff (July 15, 2010).
106 Memorandum from Director Bromwich on Options Regarding the Suspension of Certain Offshore Permitting and Drilling Activities on the Outer Continental Shelf (July 10, 2010).
107 The Economic Effects of the Offshore Drilling Moratorium, S. Comm. On Small Business, 111th Cong (2010)(testimony of the Honorable Rebecca M. Blank, Under Secretary for U.S. Economic Affairs, Department of Commerce).
108 Interview with Charlotte Randolph, President, Lafourche Parish, in Thibodaux, LA (June 15, 2010).
109 Id.
110 Louisiana Mid-Continent Oil & Gas Association, Impacts of President Obama’s Order Halting Work on 33
Exploratory Wells in the Deepwater Gulf of Mexico (May 28, 2010) available at
http://www.gulfeconomicsurvival.org/facts-and-figures.
23
officials, Mr. Reilly stated that, “It’s not clear to me why it should take so long.”111 Former Senator Graham echoed these concerns, reportedly saying that the moratorium was a burden on the economic life of the Gulf Coast.112 He said the federal government has had nearly three months to inspect the rigs in the Gulf and wondered why it was taking so long to determine whether they can safely restart operations.113
The Permitorium
Secretary Salazar announced the end of the moratorium on October 13, 2010. According
to many in the industry, this declaration provided little relief. The moratorium in the Gulf of Mexico was replaced by a “permitorium” – whereby drilling activity remained at a standstill not by operation of law – but because of inaction on the part of BOEMRE. Prior to the disaster, Mineral Management Service (MMS) processed and issued permits to drill in two weeks.114
However, not a single deepwater permit was issued by BOEMRE until U.S. District Judge
Martin Feldman ordered the agency to take action on five permits by March 19, 2011, and by March 31, 2011, on two additional permits.115
On February 28, 2011, BOEMRE finally issued the first deepwater drilling permit since
the explosion aboard the Deepwater Horizon.116 The permit was issued to Noble Energy, and allows them to resume drilling which they had started before April 20, 2010. Specifically, the permit allows Noble Energy to drill a by-pass well in Mississippi Canyon Block 519, approximately 70 miles south east of Venice, La. An operator drills a bypass well in order to drill around a mechanical problem in the original hole to the original target from the existing wellbore. In this case, Noble Energy will be drilling around the plugs set in the original well when drilling was suspended in order to complete the long delayed project.
Since February, BOEMRE has approved 13 additional deepwater permits – 11 of which
simply allow operations to resume on a previously approved well. Only one permit has been issued for a well that had not been previously approved.117 On May 10, 2011, Judge Feldman issued an additional order requiring BOEMRE to act on six additional applications within 30 days. In his decision, Judge Feldman determined that, “the government has presented no credible assurances that the permitting process will return to one marked by predictability and certainty.”118
111 John M. Broder, Offshore Drilling: To Pause or Not to Pause, NYTIMES, July 13, 2010, available athttp://green.blogs.nytimes.com/2010/07/13/offshore-drilling-to-pause-or-not-to-pause/. (emphasis added) He went on to say that “Processing a scant few applications is at
112 Id.
113 Id.
114 Mary Romano, Peter Blumberg, U.S. Appeals for Delay in 30-Day Order on Drill Permits, BLOOMBERG
BUSINESS WEEK, March 13, 2011.
115 Ensco Offshore Co., et. al. v Kenneth Lee “Ken” Salazar, 2011 WL 692029 (E.D. La. 2011).
116 Press Release, Bureau of Ocean Energy Management, Regulation and Enforcement, BOEMRE Approves First
Deepwater Drilling Permit To Meet Important New Safety Standards in Gulf of Mexico (Feb. 28, 2011), available at http://www.boemre.gov/ooc/press/2011/press0228.htm.
117 Status of Drilling Permits & Plans Subject to Enhanced Safety and Environmental Requirements in the Gulf of Mexico, Bureau of Ocean Energy Management, Regulation and Enforcement (last visited May 19, 2011), available at http://www.gomr.boemre.gov/homepg/offshore/safety/well_permits.html.
118 Ensco Offshore Co., et. al. v Kenneth Lee “Ken” Salazar, 2011 WL 692029 (E.D. La. 2011).
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best a tactical ploy in a real world setting.”119 Moreover, it has severe implications for the future productivity of the region. It generally takes five to ten years once a permit is issued to bring the oil to market.120
In addition to the immediate impact on the residents of the Gulf Coast, the year long
pause in drilling operations will probably mean a decline in domestic output of crude oil according to analysts.121 Deep-water drilling in the Gulf accounts for about 1.25 million barrels of oil a day – or about one-quarter of America's domestic crude oil production. The Gulf contribution is expected to drop by about 180,000 barrels a day, in 2011, according to the U.S. Energy Information Administration.122
Regulations Following the Spill.
As a result of the BP Oil Spill, BOEMRE promulgated a series of regulations that coincided with the entire reorganization of the agency from the former MMS. These reforms are some of the most aggressive changes to offshore oil and gas production in U.S. history and range from new rules covering safety, oversight, and environmental protection for permitting, drilling, and development processes for oil and gas operations. In some cases, these new regulations apply to both offshore operations themselves as well as the businesses that deal directly with offshore rigs – many of which are small businesses. The regulated community, state officials, and even BOEMRE staff have raised concerns about the feasibility and practicality of these new regulations.
After Deepwater Horizon, it is clear that a new, safer system is necessary for drilling in the Gulf of Mexico; however, the focus of any regulatory changes must be on continuing safe drilling in the Gulf. The latest regulations promulgated by BOEMRE do not appear to promote this goal of drilling and instead create a significant amount of uncertainty and confusion within the offshore oil and gas community.
Archaeological Requirements on Operators One of the most perplexing regulations promulgated by BOEMRE is the requirement that operators perform an Archaeological Assessment Report as part of National Environmental Policy Act analysis and in conjunction with the National Historic Preservation Act.123 Under this new rule, any permitting applications that will propose bottom-disturbing activities require
analysis of data and information about the potential existence of archaeological resources and the affect that proposed operations will have on these shipwrecks.124
119 Id.
120 Ayesha Rascoe, U.S. Set to ‘Reopen’ Offshore Drilling Sector; ‘Significant Permits’; Upward Pressure on Oil
Prices the Impetus, National Post’s Financial Post & FP Investing, March 3, 2011, available at http://www.nationalpost.com/todays-paper/setto+reopen+offshore+drilling+sector/4375547/story.html.
121 Mark Guarino, Stricter Deep-Water Drilling Regulations Mean Gulf Coast Waters Are Likely to Yield Less Oil this Year; Energy Firms May Shift Attention Abroad, CHRISTIAN SCIENCE MONITOR (Jan. 11, 2011).
122 Id.
123 Gulf of Mexico Archaeological Information, Bureau of Ocean Energy Management, Regulation and Enforcement (last visited May 20, 2011), available at
http://www.gomr.boemre.gov/homepg/regulate/environ/archaeological/introduction.html.
124 Id.
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The application of this rule requires that operators literally become underwater
archaeologists, entering a field where they have little experience. Operators must conduct ocean floor analyses with specialized equipment to determine if anomalies are shipwrecks with the potential to be impacted by exploration or drilling.125 Furthermore, operators will be required to employ an underwater archaeologist to assist in the analysis of this data and to provide BOEMRE with survey data. When asked about how to implement this new rule, and more specifically if operators would need to hire an underwater archaeologist, BOEMRE representatives responded that they would have to make this hire and that the profession was not uncommon.126
“Should-to-Must” Requirements
The archaeological assessment requirements are a prime example of the
seemingly absurd and arbitrary nature of the new regulations placed on offshore drilling operations.
A new Workplace Safety Rule is another BOEMRE regulation intended to improve
safety practices for offshore drilling operations. Unfortunately, its implementation has proven to be challenging in practice. This regulation requires that operators develop and maintain a Safety and Environmental Management System (SEMS).127 A SEMS is a “comprehensive management program for indentifying, addressing and managing operational safety hazards and impacts, with the goal of promoting both human safety and environmental protection.”128 In addition, the Workplace Safety Rule makes mandatory the practices in the American Petroleum Institute’s (API) Recommended Practice 75 (API RP 75).129
After industry and affected states voiced strong objections based on the purpose and
feasibility of the regulations, BOEMRE initiated a guidance document entitled “Supplemental Information Regarding Approval Requirements for Activities that Involve the Use of a Subsea Blowout Preventer (BOP) or a Surface BOP on a Floating Facility,” with the goal of displacing fear of the careless “should-to-must” change. In the guidance document, BOEMRE recognized that the incorporation of the API documents required that any “should” would be interpreted as “must” for purposes of the Code of Federal Regulations.
The API RP 75 is a collection of best practices created by API as suggestions for operators to implement. BOEMRE issued a direct final rule,without the public’s input, making all aspects of the API guidance mandatory. The recommendations vary depending on the type of operation. They were not designed to be mandatory directives, and certainly not designed to be executed simultaneously. This fact was seemingly lost on BOEMRE, as the agency carelessly changed all “should” instructions to “must.”
130
125 Id.
BOEMRE has indicated that it recognizes that some degree of flexibility is important for the feasible implementation of the API 126 Bureau of Ocean Energy Management, Regulation and Enforcement Industry Workshop (March 23, 2011).
127 Bureau of Ocean Energy Management, Regulation and Enforcement, Fact Sheet on the Workplace Safety Rule On Safety and Environmental Management Systems (SEMS), available at http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=45791.
128 Id.
129 Id.
130 Supplemental Information Regarding Approval Requirements for Activities that Involve the Use of a Subsea Blowout Preventer (BOP) or a Surface BOP on a Floating Facility, Bureau of Ocean Energy, Management, Regulation and Enforcement (last visited May 20, 2011), available at http://www.boemre.gov/ooc/pdfs/DeepwaterGuidanceSupplement.pdf.
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incorporated documents.131 To this end, BOEMRE is willing to consider, based on agency approval, other practices that may accomplish similar goals as those contained in the API document.132
A concern of small business involves the implementation of SEMS Workplace Rules.
BOEMRE recognizes in its Workplace Safety Rule Fact Sheet that many large operators have already established SEMS programs; however, it does not mention the smaller operators or those businesses who work closely with operators. Small businesses that have contact with operators’ rigs will also be required to establish their own SEMS programs at the request of the large operators.
Despite these changes, uncertainty remains regarding the “should” to “must”
regulations because the guidance document does not go far enough in relieving the burden of implementing regulations whose original intentions were merely industry-wide best practices. Due to the vague nature of the guidance document, the drilling community’s uncertainty is augmented because of concerns about whether in application BOEMRE will actually back off the “should-to-must” requirement.
133 Small businesses are not situated to perform the same level of SEMS analysis that
large-multinational corporations can – many of these small businesses that service large operators may be forced out of business if they cannot implement a SEMS program.134
Industry Strives to Make Drilling Safer
BOEMRE has not addressed the concerns of small business owners who work closely with large operators on the SEMS issue. The explosion aboard the Deepwater Horizon and the confusion in the subsequent days and months clearly demonstrated that MMS and BP had failed to adhere to rigorous safety standards. Moreover, there is agreement that changes needed to be made to the flawed system that allowed the disaster to occur. However, evidence suggests the regulations promulgated by BOEMRE do not promote the revitalization of a safe oil and gas industry in the Gulf; instead, they hinder production even when operators have made significant strides to become safer. For
example, the oil industry made a substantial investment in safety by creating a rapid-response system to prevent another disaster like the BP Oil Spill.135
In July 2010, in order to quell concerns regarding the safety of deepwater drilling, four of the largest oil companies, Exxon-Mobil, Shell, Chevron, and Conoco Philips, committed $1 billion to create a rapid-response system to deal with future potential oil spills. BOEMRE’s regulations do not appear to take this into account.
136 This rapid response system includes the creation of modular containment equipment that would be available for use and could contain spills as deep as 10,000 feet and capture up to 100,000 barrels of oil a day.137
131 Id.
A nonprofit organization known as the Marine Well Containment Company operates and
maintains the emergency capability mechanism. Industry executives feel that this measure is
132 Id.
133 The Workplace Safety Rule on Safety and Environmental Management Systems (SEMS), Bureau of Ocean
Energy Management, Regulation and Enforcement, available at http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=45791.
134 Interview with Lori Davis, President, Rig Chem (March 24, 2011).
135 Jad Mouawad, 3 Oil Firms Commit $1 Billion for Gulf Rapid-Response Plan, N.Y. TIMES, Jul. 21, 2010.
136 Id.
137 Id.
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sufficient to respond to the impact of any future blowout or spill that may affect the Gulf region, and it will restore the government and the citizens’ confidence in the oil industry to operate with the proper safety precautions in place.138 This unsolicited action demonstrates the industry’s commitment to operate responsibly. However, BOEMRE’s policies do not recognize the necessary and important contributions that industry has made.
III. ALASKA
Alaska holds enormous oil and gas resources for the United States and development of
those resources is critical for U.S. energy independence. A National Energy Technology Laboratory study estimates that this region has the potential for the exploration and development of as much as 28 billion barrels of economically recoverable oil and 125 trillion cubic feet of economically recoverable gas through 2050.139 An independent assessment of the potential for development of Alaska’s Beaufort and Chukchi Sea OCS found that sufficient oil could be produced to completely eliminate the need for imports from one of the United States’ largest foreign suppliers.140 Average production from the OCS for the next 40 years could be 700,000 barrels per day, with a maximum of 1.45 million per day in 2030. In perspective, 700,000 barrels is more than the amount of oil the United States
imported from Iraq (506,000 bbl/day) and Russia (137,000 bbl/day) combined in 2010.141 Saudi Arabia, Mexico, Venezuela, and Nigeria each exported approximately one million barrels or less to the United States.142
Despite the enormous oil and gas potential, production in Alaska has steeply declined
over the past few decades. In 1988, oil and natural gas liquid from Alaska’s North Slope constituted 25 percent of total domestic production, 2.2 million barrels per day.143 By 2007, production had dropped to 720,000 barrels per day, representing only 14 percent of domestic production.144 The current Administration is largely to blame for Alaska’s continued stagnation.
Alaska Democratic Senator Mark Begich described the situation as “regulatory ‘whack a mole’for developers in Alaska” as he introduced a bill intended to streamline offshore oil and gas development. “Each time we have one mole beat down, another one pops up and derails the progress. But this isn’t a game. It’s about the future of Alaska and the energy security of our country.”145
138 Id.
139 Id.
140 The American Energy Initiative: Jobs and Energy Permitting Act: Hearing before the H. Comm. On Energy and Commerce, 112th Cong. (2011) (statement of David Lawrence, Executive Vice President, Shell), available at
http://republicans.energycommerce.house.gov/Media/file/Hearings/Energy/041311/Lawrence.pdf.
141 Id.
142 Id.
143 Id.
144 Id.
145 S. 843, 112th Cong. § (2011).
Moratorium Confusion
The BP spill in the Gulf of Mexico has created great uncertainty for companies seeking to drill thousands of miles away in Alaska. Prior to the spill, the Administration made statements
supportive of further exploitation of oil and gas resources in the Arctic Outer Continental Shelf as well as elsewhere offshore.146 After the spill, however, Secretary Salazar announced a 30-day review of offshore safety and put a hold on new permits until the review was completed. Soon after that, Interior announced a six-month moratorium on all deepwater drilling and suspended hell’s proposed drilling in the Beaufort and Chukchi seas, and imposed additional other restrictions on drilling and leasing in other regions.147 All of these policy changes have created new uncertainties.
146 President Obama, Remarks on Energy Security at Andrews Air Force Base (Mar. 31, 2010).
147 Eric Lidji, Alaska Offshore Special Report, PETROLEUM NEWS (January 21, 2011).
148 Id.
149 Id.
150 Potential National-Level Benefits of Alaska OCS Development, Northern Economics (February 2011),
available at http://www.northerneconomics.com/pdfs/ShellOCS/National%20Effects%20Report%20FINAL.pdf.
151 Id.
152 Tim Bradner, Shell expands Arctic exploration plans, ALASKA J. OF COMMERCE, (May 6, 2011).
153 Id.
154 Id.
The moratorium on deepwater drilling, announced on June 15, 2010, and discussed in the previous section, did not specifically refer to Alaska. Yet this moratorium, and the subsequent moratorium, imposed on July 12, 2010, created significant uncertainty for companies attempting to drill in Alaskan waters. The second moratorium also did not mention Alaska, but a fair reading of the order appeared to prohibit the work Shell had planned for the Beaufort and Chukchi seas. The state of Alaska responded by suing Interior for violating the Outer Continental Shelf Lands Act and the Administrative Procedure Act.148 In late November 2010, after the July moratorium had been lifted, the Department filed a motion explaining that the original moratorium did not cover Alaska and attributing permitting delays to “cautious”
regulators.149
$3 billion and Still No Permit
The moratorium confusion following the BP oil spill was only the latest in a long series of delays for Shell’s Alaskan project. Shell has been ready to commence exploring for oil and gas in the Alaskan OCS for four years. The company expects to create 54,700 jobs per year, generating $145 billion in payroll income, and $193 billion in government revenue by 2057 – all while reducing U.S. dependence on foreign oil.150 Unfortunately for the American people, none of this has come to fruition because after five years, EPA still has not issued several of the 35
permits Shell needs to drill even a single exploratory well.151
Shell has spent more than $3 billion on leases, environmental analyses, and permitting so far with no return on their investment.152 The company holds 137 leases in the Beaufort Sea and 275 leases in the Chukchi Sea.153 The federal government received $2.2 billion in bonus bids for Shell’s leases in the Chukchi Sea alone.154 Initially, Shell planned to begin drilling in 2007 in the Beaufort Sea, just north and east of the North Slope and the Trans-Alaska Pipeline and associated infrastructure.155
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One of the principal obstacles to drilling is EPA’s failure to issue an air pollution permit for the project. Since most new offshore drilling has occurred in the Gulf of Mexico under Interior jurisdiction, EPA has little experience with offshore permitting. That inexperience seems to be amounting to incompetence. Alaska Senator Lisa Murkowski testified before the House Energy and Commerce Committee, “If EPA cannot demonstrate some competency … then EPA should not expect to keep its authority for long.” Because of regulatory and legal challenges, its schedule slipped to 2010, and then 2011, and now 2012.156
After years of studying the issue, EPA granted an air permit last summer only to have it remanded by the EPA’s Environmental Appeals Board in January for not adequately reviewing the potential health effects on people living on shore.157 The closest village, located 70 miles from the proposed drill site and occupying one square mile, is home to 245 people. EPA Administrator Lisa Jackson told the
Senate Energy Committee, “I believe that the analysis will clearly show that there is no public health concern here.”158
National Petroleum Reserve Goes Unused
Shell continues to wait for the rest of EPA to conclude what its Administrator already has. On May 14, 2011, during his Weekly Address, President Obama announced that he intended to direct Secretary Salazar to conduct annual lease sales in Alaska’s National Petroleum Reserve (NPR-A).159
Despite nearly three million acres of the NPR-A already under lease, no one has yet to drill a single commercial well. Given ConocoPhillips’ experience so far trying to utilize a lease it already has in the NPR-A, those new leases may be worthless.
160 ConocoPhillips is trying to be the first with a project it says will produce up to 18,000 barrels of oil per day.161 In February 2010, the Army Corps of Engineers rejected the company’s plan to access the NPR-A by building a bridge over the
Colville River, saying that drilling underneath the river and airlifting supplies would cause less environmental harm. The Corps finally decided to reconsider their earlier decision in December 2010, citing “additional evidence” not available at the time of the initial decision and talks with Native Alaskans.162
155 Id.
Conoco Phillips is still waiting on the Corps to issue a final decision.
156 The American Energy Initiative: Jobs and Energy Permitting Act: Hearing before the H. Comm. On Energy
and Commerce, 112th Cong. (2011) (statement of Senator Lisa Murkowski), available at
http://republicans.energycommerce.house.gov/Media/file/Hearings/Energy/041311/Murkowski.pdf.
157 Final Decision to Issue and OCS/PSD Permit to Shell Offshore Inc., for Exploration Drilling Operations in the
Beaufort Sea, (last visited May 20, 2011) available at http://yosemite.epa.gov/R10/airpage.nsf/Permits/beaufortap/.
158 Id.
159 Press Release, White House, Weekly Address: President Obama Announces New Plans to Increase Responsible Domestic Oil Production (May 14, 2011).
160 Phil Taylor, Alaska lawmakers seek swift U.S. reconsideration of petroleum reserve drilling, GREENWIRE (Dec.
14, 2010).
161 Phil Taylor, Alaska pols say petroleum reserve leases must be couples with permits, ENVIRONMENT & ENERGY DAILY (May 18, 2011).
162 Letter from David Hayes, Deputy Secretary, Department of the Interior, to Col. Reinhard Koenig, Army Corps of Engineers Alaska District (May 3, 2011). (on file with author)
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A “curious” twist in the quest to develop NPR-A is the related action of other agencies. EPA and the U.S. Fish and Wildlife Service both designated the Colville River Delta as an “Aquatic Resource of National Significance,” a decision they made without notice and comment, but one that potentially has great consequences.163 Sen. Murkowski’s spokesman called the move “capricious and done only to interfere with development.”164
Polar Bears
There may be an even greater obstacle to oil production ahead of Shell and the other
companies looking to produce oil and gas in Alaska. What the state and the industry reportedly fear the most is uncertainty related to the protection of the polar bear.165 The first concern is the reason for the polar bear’s inclusion on the list
In 2008, the U.S. Fish and Wildlife Service (FWS), within Interior, decided to list the polar bear as a threatened species under the Endangered Species Act. That decision could greatly impact the future of oil and gas extraction in Arctic waters because of its broad ramifications. 166
To protect the polar bears, in October 2009, FWS instead proposed a critical habitat for the polar bear covering more than 200,000 square miles of land and water.
– according to FWS, global climate change was causing a loss of sea ice, the polar bear’s habitat. On this basis, Interior could potentially have restricted any project, anywhere, by arguing that the project contributed to greenhouse gas emissions and, therefore, degraded the polar bear’s habitat. Fortunately, Interior did acknowledge this concern and modified regulations to specify that
projects’ greenhouse gas emissions could not be linked to endangered species.167
This was later reduced once FWS recognized that Air Force bases and a few other manmade structures and communities would not be an appropriate habitat to protect.168
All of this has provoked numerous lawsuits, from both sides of the issue. Alaska has
sued over the critical habitat designation because of the enormous economic impacts to the state, which it estimates to be in the hundreds of millions over just the next 15 years. The polar bear’s proposed critical habitat overlaps with a substantial part of the federal acreage already under lease in Alaska’s Arctic waters. FWS has yet to determine exactly how they will act to protect the “critical habitat area.”169
In its cost analysis, FWS only considered consultation costs and inaccurately concluded that the designation would only cost the state about $669,000 over 29 years.170 163 Andrew Jensen, Pebble next target for EPA Environmental Justice unit?, ALASKA J. OF COMMERCE (Feb.18, 2011). Some members of
164 Id.
165 Eric Lidji, Alaska Offshore Special Report, PETROLEUM NEWS, Jan. 21, 2011.
166 Endangered Species Program, U.S. Fish & Wildlife Service, (last visited May 20, 2011), available at http://www.fws.gov/endangered/index.html.
167 Id.
168 U.S. Fish & Wildlife Service Polar Bear Information (last visited May 18, 2011), available at http://www.fws.gov/home/feature/2008/polarbear012308/polarbearspromo.html.
169 Press Release, Office of Governor Sean Parnell, State Announces Intent to Sue, (Dec. 21, 2010), available at http://gov.alaska.gov/parnell/press-room/full-press-release.html?pr=5603.
170 Id.
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Congress have also tried to reverse the decision by proposing legislation that would delist the polar bear, but the bill would not prevent Interior from adding other Arctic species to the list.
171
IV. ROCKY MOUNTAIN REGION
The Rocky Mountain region has some of the richest resources in the entire country.
Domestic production in this region, primarily on federal public lands, accounts for 11 percent of the nation’s natural gas supply and five percent of its oil.172
Exploration and production in the Rocky Mountain Region is complicated by the vast
federal presence, primarily in the form of land ownership. The federal government owns roughly 650 million acres of land in the United States – which equates to more than a quarter of the country’s landmass.173 These lands are primarily located in 12 western states. In the west, the federal government owns more than 50% of the land area.174 By contrast, in the District of Columbia, established by the Constitution as a federal city, the federal government owns only 25% of the total acreage.175
171 H.R. 39, 112th Cong. § (2011).
172 Oil and Gas, U.S. Department of the Interior Bureau of Land Management (last visited May 16, 2011), available at http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas.html.
173 Carol Hardy Vincent, Federal Land Ownership: Current Acquisition and Disposal Authorities, CRS REPORT TO
CONGRESS (Dec. 16, 2010).
174 Id.
175 Ross W. Gorte et al, Federal Land Management Agencies: Background on Land Resources and Management, CRS REPORT TO CONGRESS (Feb. 9, 2009).
Source: Bureau of Land Management
Federal land is owned by taxpayers. Therefore, taxpayers must be compensated for its
use. Federal and state treasuries benefit from the development of resources on Western lands. Unfortunately for the American people, the Administration has all but refused this potential revenue stream. Between 2008 and 2010, revenue from onshore federal royalties, rents, and bonuses has decreased 33%, from $4.2 billion to $2.8 billion. In 2008, there were 2,416 new oil and natural gas leases issued176 on BLM land spanning 2.6 million acres. 177 In 2010, the number of new leases issued dropped nearly 50% to 1,308178 and acres leased dropped to 1.3 million. 179 Combined with 2009, these acreage numbers are the lowest in over two decades.
176 Bureau of Land Management (last visited May 19, 2011) available at
http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy/oil___gas_statistics.Par.32507.File.dat/chart_2009_03.pdf.
177 Bureau of Land Management (last visited May 19, 2011) available at
http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy/oil___gas_statistics.Par.24284.File.dat/chart_2009_04.pdf .
178 Id.
179 Id.
180 Expanding Safe and Responsible Energy Production, White House blog, March 8, 2011, available at http://www.whitehouse.gov/blog/2011/03/08/expanding-safe-and-responsible-energy-production
Taxpayers would never know about this policy shift based on White House rhetoric. In a blog post at whitehouse.gov, the Administration writes “oil production last year rose to its highest level since 2003.”180 The blog post fails to explain that the vast majority of increased production is occurring on private lands, not public. For example, North Dakota alone produced
33
almost 120 million barrels of oil in 2010, compared to just over 20 million in 2003.181 The majority of North Dakota’s production is on private land. A slew of Obama Administration policies are to blame for the decreased production on federal land. The Department of Interior or EPA cause delays at each stage of the process.
Deferred Leases In order to drill on federal land, the producer must first obtain a lease. Companies make significant investments just to determine which parcels of land they want to lease.182
The government then considers whether to lease those parcels that are nominated by the companies. Parcels may not be offered for lease for a variety of reasons, but this Administration is using some techniques of questionable legality. One of these techniques is the deferral of lease parcels. Established law dictates that leases be made available if authorized by resource management plans, which are developed with input from the public and the state.183 If BLM desired to change the policies on which the resource management plans were based, an amendment to the plan is required. Rather than follow the established process, giving the public an opportunity for notice and comment, BLM has unilaterally instituted an additional level of planning and an opportunity to prevent leasing.184
The result has been the deferral of lease parcels and the loss of jobs and revenue. Ewing Exploration, a small business with six employees, provides an example of how this policy hurts local communities.185 Ewing invested a total of $3.5 million to explore the leases it purchased between 2005 and 2010 and nominated the additional ten parcels of federal land it need to fill out its drilling block. The company planned to develop 24 wells. One day before the sale, those ten parcels were withdrawn from the sale because they had to be “reprocessed in conformance with
the new leasing reform process.”186
Unissued and Withdrawn Leases
Now, those parcels will not be available until February 2012,
a sixteen month delay. This delay has real economic consequences. Ewing’s investors are receiving no return on their $3.5 million investment – and may not be as willing to risk their money on public lands in the future. The deferral is also delaying payments of $2.7 million per month in federal royalties and $1.3 million per month in state taxes and royalties once the land is fully developed.
Having the lease actually be put up for sale and winning the bid is just the beginning. The Department of Interior holds hostage millions of dollars in unissued leases.187
181 North Dakota Industrial Commission Department of Mineral Resources (last visited May 20, 2011), available at https://www.dmr.nd.gov/oilgas/stats/stateoilchart.pdf .
When a company 182 Internal Revenue Service (last visited May 20, 2011) available at http://www.irs.gov/irm/part4/irm_04-041-001.html.
183 Adam Vann, Energy Projects on Federal Lands: Leasing and Authorization, CRS REPORT FOR CONGRESS (September 8, 2009).
184 Id.
185 Western Energy Alliance Washington D.C. Call-Up Briefing Book (April 2011), available at http://westernenergyalliance.org/wp-content/uploads/2011/04/Briefing-Book_Final.pdf.
186 Id.
187 Western Energy Alliance, Top Ten Ways the Federal Government Is Preventing Onshore Oil and Natural Gas Production (Mar. 30, 2011).
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wins a bid, it pays the federal government the amount it bid, which is called the bonus. Yet, the government does not necessarily issue the lease in return for the bonus, as the terms of the Mineral Leasing Act require it to do within sixty days. It is as if a new tenant signed a lease for an apartment, paid the owner a deposit, and was not given a key on the date designated for movein. A Government Accountability Office report found that the Bureau of Land Management (BLM) failed to issue leases within this allotted time over 91% of the time from FY2007 through
FY2009.188
Successful bidders also risk cancellation of their valid leases. In February 2009, the Interior Secretary withdrew 77 of the leases sold at the 2008 Utah lease sale because BLM had deviated "in important respects" from its normal oil and gas leasing procedures.189 Secretary Salazar told reporters at the time of the announcement, “The policy positions of the department over the last eight years have really been driven out of the White House, and we're looking at many of those decisions.”190 Yet the Secretary’s decision to withdraw 77 Utah leases was made
without any consultation with the Utah BLM office.
Neither an independent investigation nor the federal courts upheld the Secretary’s claims. The Department’s Inspector General concluded that “no evidence to support the allegation that undue pressure was exerted on BLM personnel to complete the RMPs before the December 2008 sale or to include previously deferred parcels in the lease sale prior to the change in Administration.”191 While the investigation noted that the BLM “contributed to the perception that the sale was rushed prior to a change in White House administration,” mere perception would not justify terminating contract rights. Over a year and a half later, a federal district judge issued a decision that confirmed that Secretary Salazar was outside of his legal authority to
withdraw the parcels.192
The Department of Interior later prevailed based on a technicality. The judge determined that the plaintiffs filed their complaint too late.193 In January 2011, the Department of Interior did it again. The Forest Service decided to withdraw leases it sold and issued, in 2005 and 2006, in the Bridger-Teton National Forest in
Wyoming.194 Relatively new legislation, the Wyoming Range Legacy Act of 2009, prohibits future lease sales in this region but explicitly protects the rights of those with existing leases. Likely recognizing its actions were on shaky legal ground, the Department of Interior has since decided to reconsider this decision.195
188 U.S. GOVERNMENT ACCOUNTABILITY OFFICE, ONSHORE OIL AND GAS: BLM’S MANAGEMENT OF PUBLIC PROTESTS TO ITS LEASE SALES NEEDS IMPROVEMENT (July 2010).
189 BLM Review of 77 Oil and Gas Lease Parcels Offered in BLM-Utah’s December 2008 Lease Sale (Oct. 7, 2009) available at http://www.doi.gov/documents/BLM_Utah77LeaseParcelReport.pdf.
190 Juliet Epstein, Salazar Voids Drilling Leases On Public Lands in Utah, WASHINGTON POST, Feb. 5, 2009.
191 U.S. DEPARTMENT OF THE INTERIOR OFFICE OF THE INSPECTOR GENERAL, INVESTIGATIVE REPORT: BLMUTAH LEASE Sale (2009).
192 Impact Energy Res., LLC v. Salazar, 2010 U.S. Dist. LEXIS 91095 (D. Utah 2010).
193 Id.
194 Press Release, U.S. Department of Agriculture Forest Service, Bridger-Teton Forest releases final Supplemental Environmental Impact Statement and Record of Decision on Wyoming Range Oil and Gas Leases (Jan. 25, 2011). 195 Press Release, U.S. Department of Agriculture Forest Service, Bridger-Teton Forest Supervisor Withdraws Decision on Wyoming Range Leases (May 5, 2011).
35
Even if the Department of Interior issues the lease, the successful bidder may not receivewhat it bargained for. In many cases, especially in Wyoming where BLM has actually issued leases, new restrictions are added to the leases that were not specified at the time of sale.196
NEPA Analyses and Project Approval Delays
The severity of these restrictions, also referred to as stipulations, vary. Some, such as preventing drilling during the breeding season of a certain species, are fairly standard in the industry. Others, such as “No Surface Occupancy” which prohibits any surface disturbance on the lease, are so severe that they may render the lease worthless to the producer.
Returning to the apartment analogy, these after-the-fact stipulations are akin to a tenant signing an apartment lease, carefully reading the contract to ensure there are no pet restrictions, paying a deposit, and then being told on move-in day that her dog will not be allowed in the building. The owner would essentially have changed the terms of the contract, just like the Department of Interior
does when it adds stipulations.
The Administration claims that oil and gas producers are hoarding leases on federal landscbecause they are using less than one-third of existing leases.197 This criticism is grossly misleading because the Administration itself is often preventing the leaseholder from drilling on currently leased land. After a company wins a bid, pays the bonus, and is issued the lease, it must submit a project proposal to the Department of Interior, and an environmental analysis in
accordance with the National Environmental Policy Act (NEPA) must be performed.
The government does not bear the burden of performing this analysis; rather, the project proposer pays an agreed upon third party contractor to perform it.198 Regardless, the NEPA analysis is taking years to complete, with some projects facing indefinite delays. Small Environmental Assessments regularly require four years, while the more involved Environmental Impact Statements easily take seven years.199 White House Council on Environmental Quality guidance states these analyses should not take more than three months and twelve months, respectively.
NEPA analyses often take more time than the guidance directs, but this Administration appears to be abusing the process. Environmental Impact Statements required just over three years to complete between 1994 and 2005; now the average EIS completion time is just under six years.200 Projects in the West, for a variety of excuses, face even longer delays with no end in sight.201
Wild Lands Policy
One of the most controversial techniques to delay project approval is the newly invented “wild lands” designation. Secretary Salazar issued an order last December directing BLM to 196 Press Release, Western Energy Alliance, Top Ten Ways the Federal Government is Preventing Onshore Oil and Natural Gas Production, (March 2011), available at http://westernenergyalliance.org/wpcontent/uploads/2011/03/Western-Energy-Alliance-IPAMS-Position-Paper-Top-10-Ways-Onshore-Production-is-
Being-Prevented.pdf.
197 Exploration and Production (Upstream), American Petroleum Institute, (last visited May 20, 2011), available at http://www.api.org/aboutoilgas/sectors/explore/index.cfm.
198 National Environmental Policy Act (last visited May 20, 2011), available at
http://www.epa.gov/compliance/nepa/index.html.
199 Id.
200 Id.
201 Id.
redo a recently completed inventory of federal lands that took years to complete the first time around, diverting BLM’s already limited resources.202 Under the Secretary’s new policy, the Department of Interior unilaterally determines that an area should be designated as wild lands and considered for wilderness protection. Under the 1964 Wilderness Act, “wilderness” is a designation that can only be made by Congress. To be considered “wilderness,” the law says the land (1) must be at least 5000 contiguous acres in size unless a smaller area can be practicably preserved and used in an unimpaired condition, (2) have an appearance of naturalness, and (3) have either outstanding opportunities for solitude or primitive and unconfined recreation.203
But under the new policy, BLM treats any land it decides to designate as “wild land” as “de facto wilderness,” preventing productive uses of the land such as grazing, oil and gas extraction, and motorized recreation – and sidestepping Congress. In some cases, environmentalists have attempted to convince Congress to designate certain lands as “wilderness” for decades, but Congress has consistently and repeatedly declined.204
202 Press Release, U.S. Department of the Interior, Salazar, Abbey Restore Protections for America’s Wild Lands (Dec. 23, 2010), available at http://www.doi.gov/news/pressreleases/Salazar-Abbey-Restore-Protections-for-
Americas-Wild-Lands.cfm.
203 Wilderness Act of 1964 (16 U.S.C. 1131-1136, 78 Stat. 890)
204 H.R. 1925, 111th Cong. § (2009).
205 Letter from Public Lands Advocacy to Ken Salazar, Secretary, Department of the Interior (January 31, 2011)
(on file with author).
206 Federal Land Policy and Management Act, Bureau of Land Management (last visited May 20, 2011) available
at http://www.blm.gov/flpma/.
207 Id.
208 The Impact of the Administration’s Wild Lands Order on Jobs and Economic Growth: Hearing before the H. Comm. on Natural Resources, 112th Cong. (2011) Statement of Robert Abbey, Director, Bureau of Land Management)
209 Id.
Some of the lands already designated as “wild lands” may confuse the novice nature-
lover. It is not uncommon to find roads, active and inactive wells, agricultural improvements, and even air strips on proposed wild lands.205 If lands visibly subject to multiple uses in the past still possess wilderness characteristics, then it must not be necessary to lock those lands away entirely in order to maintain wilderness characteristics.
Locking away public lands is also in contradiction to the Federal Land Policy and Management Act of 1976.206 FLPMA directs the BLM to manage public lands “on the basis of multiple use and sustained yield.”207 The wild lands policy permits neither. BLM Director Robert Abbey told Congress that he “believe[s] in, and [is] dedicated to, the BLM’s multiple-use mission.”208 He also stated that any claims that the new wild lands policy has put a halt to new project and is preventing important economic activity in local communities is false.209
Companies facing indefinite delays after investing millions of dollars likely disagree. Now, with the stroke of a pen, Secretary Salazar has granted “wild land”
designations and effectively instituted an end-run around Congress.
EPA’s Contribution to NEPA Delays
EPA is also responsible for delays at the project approval stage. A couple of examples best illustrate the effect of EPA’s pressure on land managers conducting NEPA analyses. In one case, involving a large project of 1,250 wells in Wyoming, EPA inexplicably changed the type of air study it required.
The companies involved in the EIS for the large project had already spent $2.5 million based on prior guidance from EPA.210 In a second case, EPA asked a small business operating in Utah, Gasco Energy, to complete three rounds of air modeling for its 1,500 well project. EPA changed its request three times as to what type of air study it required, which resulted in years of delay and hundreds of thousands of dollars in unnecessary expenses.211 EPA made these requests despite Gasco Energy agreeing to controls and other mitigation measures above and beyond those the law requires.212
210 Id.
211 Id.
212 Id.
213 Energy Policy Act of 2005: Section by Section, Bureau of Land Management, (last visited May 20, 2011) available at http://www.blm.gov/wo/st/en/prog/energy/epca_chart.html.
214 Id.
215 Id.
216 Powder River Basin Resource Council (last visited May 20, 2011) available at
http://www.powderriverbasin.org/
217 U.S. Energy Information Administration, State Energy Data 2008: Production, available at
http://www.eia.doe.gov/emeu/states/sep_prod/P6/PDF/P6_TX.pdf.
218 U.S. Energy Information Administration, State Energy Data 2008: Production, available at
http://www.eia.doe.gov/emeu/states/sep_prod/P6/PDF/P6_ak.pdf.
Permitting Delays and Complications
The Department of Interior’s next opportunity to delay production on the land is the
permitting process. After receiving project approval, the producer may file an Application for Permit to Drill (APD).213 Under the Energy Policy Act of 2005, BLM has thirty days to process an APD.
However, by its own conservative estimate, BLM averages 206 days to process a permit.214 In some BLM field offices, permits can take over two years.215 Even after a permit is issued, the company that applied for it may not be able to use it. In
some cases there may be stipulation periods after the permit is issued. Some permits may be tied up in lawsuits. For others, the permit process might have taken so long that the land is now subject to new planning restrictions that prohibit development. One example of this occurred in the Powder River Basin. Years after applications were submitted, 2,400 permits were released at one time.
By then, many companies had abandoned their plans, in part because of changes in the cost of natural gas and in part because of new restrictions associated with sage grouse and produced water. The uncertainty in the process results in companies taking their business elsewhere.216
V. TEXAS
As oil and gas producers grow more and more frustrated with the obstacles to drilling on federal land out West, they look to private land in Texas. Texas leads the nation in the production of oil and natural gas. Texas produced 447,076 thousand barrels of crude oil217 and 7,403,720 million cubic feet of natural gas in 2008. In comparison, Alaska produced 249,874 thousand barrels of crude oil and 398,442 million cubic feet of natural gas in the same year. 218
Texas also has more proved oil reserves (5,496,000 thousand barrels compared to 4,007,000 thousand in the Gulf, and 3,556,000 thousand in Alaska in 2009) and more wet natural gas
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proven reserves (85,034 billion cubic feet compared to 12,116 billion cubic feet in the Gulf and 9,183 cubic feet in Alaska) than either the Gulf or Alaska.219 Texas has weathered the recession better than most states,220 Last June, the EPA decided to strike down the “flex permit” system Texas has used since 1996, rejecting Texas-issued air-quality permits for refiners and other industrial plants.
Due in no small part to a booming oil and gas production, and the state is fighting to keep EPA from interfering with its success. Under Obama, EPA put a spotlight on the state, seemingly assuming that a profitable oil and gas industry is an indication of insufficient regulation.221
Then, in December, EPA sent Texas regulators a letter saying it had "no choice" but to seize control of permitting in the state.222
EPA Oversteps Texas Regulator
Another high profile example of the EPA overstepping Texas regulators based on false
claims of urgency came last December. The issue began when a landowner filed a complaint with the Texas Railroad Commission (RRC), the state oil and gas regulator, on August 6, 2010, stating that methane had contaminated water wells.223 The RRC commenced a full investigation into the source of the methane within days of the complaint. Over the next several months, the RRC – with full cooperation from Range, the company that owned gas production wells nearby – collected samples, performed tests, and conducted interviews. The investigation found that homeowners in the area had reported gas in their water for decades.
Chemical fingerprinting of the gas in the well indicated that it did not come from Range’s wells but from a shallow gas formation where wells were drilled in the early 1980s.224 After finishing its investigation in March 2011, the RRC officially concluded that Range did not cause the water well contamination and that it likely came from the shallow gas formation.225
EPA, on the other hand, raced to issue an emergency order in December 2010, assuming
the culpability of Range without the benefit of all the facts. EPA did not allow the RRC to finish its investigation,226
219 U.S. Energy Information Administration, U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Proved Reserves, 2009, available at http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/crude_oil_natural_gas_reserves/cr.html.
did not discuss the results of independent EPA sampling with the RRC as the 220 Texas Economy at Glance, Bureau of Labor Statistics, available at http://www.bls.gov/eag/eag.tx.htm. 221 Press Release, U.S. Environmental Protection Agency, EPA Disapproves Texas Flexible Air Permit Program (June 30, 2010).
222 A Focus on Texas’ Economy, Energy Prices and Jobs: Field Hearing before the H. Comm. on Energy and Commerce, Subcomm. on Energy and Power, 112th Cong. (2011) (statement of Greg Abbott, Attorney General, State of Texas)223 Press Release, Railroad Commission of Texas, Railroad Commission’s Active, Ongoing Investigation of Parker County Water Well Complaint (Dec. 7, 2010), available at
http://www.rrc.state.tx.us/pressreleases/2010/120810.php.
224 Id.
225 Press Release, Railroad Commission of Texas, Railroad Commissioners Find Range Resources’ Natural Gas Not Source in Parker County Water Wells (March 22, 2011), available at http://www.rrc.state.tx.us/pressreleases/2011/032211.php.
226 Press Release, Environmental Protection Agency, EPA Issues an Imminent and Substantial Endangerment Order to Protect Drinking Water in Southern Parker County (Dec. 7, 2010), available at
http://yosemite.epa.gov/opa/admpress.nsf/e8f4ff7f7970934e8525735900400c2e/713f73b4bdceb126852577f3002cb6fb!OpenDocument.
227 In late October, EPA collected samples as well. EPA shared these results with RRC staff in late November and requested a meeting to discuss them, but on Dec. 1, 2010, the meeting was postponed. See Press Release, Environmental Protection Agency, EPA Issues an Imminent and Substantial Endangerment Order to Protect Drinking Water in Southern Parker County (December 7, 2010).
228 Environmental Protection Agency, Findings and Emergency Order, Docket No. SDWA-06-2011-1208 (Dec. 7, 2010).
229 Jack Z. Smith, Range Resources calls EPA conclusions ‘sheer guesswork,’ STAR-TELEGRAM, May 2, 2010.
230 Mike Soraghan, Texas EPA Official’s E-Mails Show Federal-State Tension Over Sanctions on Natural Gas Drilling, NEW YORK TIMES (Feb. 11, 2011), available at http://www.nytimes.com/gwire/2011/02/11/11greenwire-texas-epa-officials-e-mails-show-federal-state-63373.html. (e-mails available at http://www.eenews.net/assets/2011/02/11/document_gw_03.pdf).
231 Id.
232 Randy Lee Loftis, EPA: 2 Parker County homes at risk of explosion after gas from 'fracked' well contaminates
aquifer, DALLAS MORNING NEWS, Dec. 9, 2010.
233 Id.
234 Letter from Mark D. Whitley, Senior Vice President, Range Resources Corp. to Dr. Alfredo Armendariz, EPA Regional Administrator (Dec. 27, 2010).
organizations had planned,227 and did not give Range an opportunity to present important objective facts.228 The Order directed Range to provide drinking water to the residents and to begin taking actions to correct the problem within 48 hours. The Order imposed costly requirements on Range, yet EPA has been unable to provide data indicating Range production activities contributed to the contamination of the wells. In addition to the cost of its voluntary cooperation with the Texas RRC, Range is incurring significant expenses defending itself – between $1.5 million to $1.75 million so far.229 Such an act was unprecedented in Texas.
The Committee has reviewed documents indicating that this action was coordinated with
local environmental activists. EPA Regional Administrator Al Armendariz wrote in an email to his friends at the Environmental Defense Fund and Public Citizen just before issuing the press release, “We’re about to make a lot of news […] [T]ime to Tivo Channel 8.”230 He went on, “Thank you both for helping to educate me on the public's perspective of these issues.” “Yee haw! Hats off to the new Sheriff and his deputies!” one activist replied.231
After issuing the emergency order, EPA shifted rapidly into spin mode, exaggerating the circumstances and misrepresenting the work already conducted by the RRC. “I believe we’ve got two people whose houses could explode. So we’ve got to move,” the Administrator told the Dallas Morning News,232 attempting to justify his declaration of an “imminent and substantial endangerment to a public drinking water aquifer through methane contamination” from Range’s “fracked” production well.233 In reality, the emergency basis was false. As the findings of fact attached to the order stated, the threat to the homes had already been evaluated, and one of the
water wells had been disconnected from the home months earlier.
EPA also played into environmental rhetoric by highlighting that Range utilized
hydraulic fracturing to produce natural gas. The Order did not allege the gas was a consequence of hydraulic fracturing, and EPA technical staff admitted that hydraulic fracturing in the Barnett Shale deep below the well could not be the cause of the gas occurring in the water wells.234
Despite the well contamination having no connection to hydraulic fracturing, EPA included in their press release announcing the emergency order, “EPA believes that natural gas plays a key
40
role in our nation’s clean energy future and the process known as hydraulic fracturing is one way of accessing that vital resource. However, we want to make sure natural gas development is safe.”235
EPA has refused to cooperate with either the Range or the RRC to resolve the dispute. In January, the RRC held an open hearing to receive expert testimony on the issue. Several experts explained flaws in EPA’s methodology, explaining that deep Barnett Shale had very low levels of nitrogen compared to the shallow Strawn formation. Possibly not so coincidentally, Range is also a very active driller in the Marcellus Shale of Pennsylvania.236
Nitrogen, therefore, was the distinguishing fingerprint. If the well had high levels of nitrogen, then the contamination was not coming from the Barnett Shale where Range had drilled. EPA had failed to conduct this analysis, but RRC took the time to do it. EPA declined to participate in the open hearing. Some critics joked that “EPA had better things to do – like asking the Department of Justice to impose
a $16,500-a-day fine on the company for failing to comply with an order that EPA itself has neither the interest nor ability to defend or explain in an open forum.”237
One Texas Railroad Commissioner called EPA’s action “Washington politics of the worst kind. The EPA’s act is nothing more than grandstanding in an effort to interject the federal government into Texas business. The Railroad Commission has been on top of this issue from Day 1.
We will continue to take all necessary action to protect Texas lakes, rivers and aquifers. Texans have no interest in Washington doing for Texas what it did for Louisiana fishermen.”238
DOI Threatens Texas with “Endangered” Lizard
The Fish and Wildlife Service (part of the Department of the Interior) has also found the Texas oil and gas industry to be an imminent threat, not to people but to lizards. The Fish and Wildlife Service has proposed placing the dunes sagebrush lizard that lives in New Mexico and west Texas on the Endangered Species List.239 Endangered Species status would allow the Fish and Wildlife Service to limit oil and gas production in the Permian Basin of west Texas – which currently produces nearly 20% of the country’s crude oil.240
Thousands of acres could potentially be taken out of production as a result of the rule, without an economic analysis ever being performed.241 How the Fish and Wildlife Service would use the lizard to stop oil and gas production is not a secret. According to the official notice in the Federal Register: “We believe the following actions may jeopardize this species, and therefore [the Fish and Wildlife Service] would seek to conference with [the Bureau for Land Management] and [NRCS] on these actions: The lease of land for oil and gas drilling, Applications to drill, Applications for infrastructure through dunes (including, but not limited to pipelines and power lines), [Off-Highway Vehicle] activities,
235 Id.
236 EPA MIA in Austin, ENERGY IN DEPTH (Jan. 20, 2011), available at
http://www.energyindepth.org/2011/01/epa-mia-in-austin/.
237 Id.
238 Id.
239 Dunes Sagebrush Lizard, U.S. Fish & Wildlife Services (last visited May 20, 2011) available at http://www.fws.gov/southwest/es/DSL.html.
240 Susan Montoya Bryan, Small lizard sparks big debate in NM, Texas, BLOOMBERG BUSINESSWEEK, Apr. 28, 2011.
241 Id.
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Seismic exploration, Continued oil and gas operations (release of pollution and routine maintenance)….”242
The Fish and Wildlife Service would devastate the local oil and gas industry based on
limited data. Locals say the government used a flawed methodology when it estimated the lizard population – it did not spend enough time looking for the lizards and did not know how to find them.243 Regardless, the Fish and Wildlife Service has alternatives to declaring the lizard endangered. For example, voluntary conservation agreements between the federal government and landowners, like those successfully implemented in New Mexico, would help preserve the lizard’s habitat while allowing production to continue.244 According to the president of the Permian Basin Petroleum Association,“The best way [to protect the lizard] is for land owners and industry actually on the ground where the lizards are, who know how to protect the lizard, to
be in charge instead of the feds putting up ‘Do Not Enter’ signs on every gatepost.”245
The public comment period closed on May 16, accordingly, the rule will most likely be issued by the end of the year.
CONCLUSION
In his 2010 State of the Union address, President Obama declared: “the nation that leads the clean energy economy will be the nation that leads the global economy…America must be that nation.”246 Despite the fact that more than 80 percent of U.S. energy needs are met with carbon-based fuels that cannot be easily, cheaply or quickly replaced, the Obama Administration has been aggressively suppressing the utilization of these carbon-based fuels.
A pattern of evidence, as well as statements from before President Obama and Secretary of Energy Chu took office about the need for Americans to pay higher energy costs, raise alarming concerns about the existence of a campaign, across government agencies. This campaign aims to block carbon-based energy extraction, to tax it, and to otherwise increase its cost of use. The effort is occurring simultaneously with calls to heavily subsidize the development and use of “green energy.”
While some may argue that there are benefits of having Americans pay more for
gasoline, more for electricity, and more for home heating, the surreptitious implementation of such an agenda without public discussion or announcement appears highly inappropriate and contrary to the Administration’s promises of transparency.
242 Endangered and Threatened Wildlife and Plants; 12-Month Finding on a Petition To List the Sonoran Population of the Desert Tortoise as Endangered or Threatened, 75 Fed. Reg. 78094 (proposed Dec. 14, 2010).
243 Id.
244 Press Release, U.S. Department of the Interior, New Conservation Effort Benefits Rare Species in Southeastern New Mexico (Dec. 8, 2008), available at http://www.doi.gov/archive/news/08_News_Releases/120808.html.
245 Mella McEwen, Could a Three-inch Lizard Collapse the West Texas Oil Industry?, Midland Reporter-Telegram (April 23, 2011) available at http://www.mywesttexas.com/mobile/article_e7f32d45-fab8-5025-afa9-26a00d768910.html.
246 Id.
What President Obama failed to accomplish through the so-called “cap and trade”
program, his administration is attempting to accomplish through regulatory roadblocks, energy tax increases, and other targeted efforts to prohibit development of domestic energy resources.
This includes actions at the Bureau of Ocean Energy Management, Bureau of Land
Management, and U.S. Fish and Wildlife Service that have raised barriers to limit exploration and development of domestic energy resources. This includes moratoriums on offshore oil drilling, blockage/delay of onshore oil and gas leases, and even efforts to list certain lizard species on the endangered list at the expense of 20 percent of the Texas crude oil market, alone.
Thanks to advances in new technology, the U.S. energy industry has the opportunity to
experience a renaissance by extracting resource deposits not even known to exist a generation ago. The opportunity to increase domestic oil production by as much as 40%in the next five years is at hand. Congress and the Obama Administration should herald this development, reducing barriers and streamlining processes so these firms can ramp up activity and production in an effort to achieve energy independence.
Doing so would stabilize our sources of energy, create well-paying job opportunities for American workers, and improve our standing in the global marketplace by removing the volatile supply chains that currently impact our energy prices and availability.
The ability to utilize our nation’s rich natural resources may, however, be out of reach if the Obama Administration continues efforts to hinder domestic development of carbon based energy sources in an attempt to ignite a green energy revolution.
While there are clearly needs and opportunities for green energy development, premature implementation of such technologies will come at the price of a premium over more affordable sources of energy. An effort to intentionally raise the costs of traditional energy sources is a dangerous strategy that will harm economic recovery and job growth. If past statements of key administration officials are indeed reflections of the policies they are pursuing, this strategy is playing a quiet but significant role in the higher energy prices Americans are currently paying.
About the Committee
The Committee on Oversight and Government Reform is the main investigative committee in the U.S. House of Representatives. It has authority to investigate the subjects within the Committee’s legislative jurisdiction as well as “any matter” within the jurisdiction of the other standing House Committees. The Committee’s mandate is to investigate and expose waste, fraud and abuse.
Contacting the Committee
For press inquiries:
Frederick R. Hill, Director of Communications
(202) 225-0037
For general inquires or to report waste, fraud or abuse:
Phone: (202) 225-5074
Fax: (202) 225-3974
http://republicans.oversight.house.gov
Committee on Oversight and Government Reform
Chairman, Darrell Issa (CA-49)
2157 Rayburn House Office Building
Washington, DC 20515
Dept. of Interior Held In Contempt over Drilling Moratorium
Barton S. Norfleet1
Last year’s drilling moratorium, issued in the wake of the Deepwater Horizon oil spill, has been the subject of ongoing litigation between the Department of Interior (DOI) and various owners and operators of offshore drilling support services (collectively Hornbeck Offshore Services). In the latest development, Hornbeck Offshore Services brought a civil contempt action against the DOI.2 Hornbeck Offshore Services argued that the DOI violated an earlier court order, and therefore, Hornbeck was entitled to an award of attorney fees. In February, a Louisiana federal district court agreed with Hornbeck Offshore Services and ordered DOI to pay Hornbeck’s attorney’s fees.
Background
After the April 2010 explosion on BP’s Deepwater Horizon rig and the resulting oil spill, President Obama ordered the DOI to conduct a review of the incident. On May 27, 2010, the DOI released a review which suggested that all blowout preventer equipment and emergency systems be recertified, new design and testing procedures be implemented, and increased safety measures be required on all rigs.3 Although the review was said to have been peer reviewed by a team of scientists, some of these identified scientists later denied participating in the review.4 On May 28th, the DOI, exercising its authority under the Outer Continental Shelf Lands Act (OCSLA), placed a moratorium on all drilling operations in the Gulf of Mexico which were drilling at depths greater than 500 feet for the purpose of implementing improved safety measures. The OCSLA gives the DOI power to issue a moratorium if “there is a threat of serious, irreparable, or immediate harm or damage to life, to property, to any mineral deposits, or to the marine, coastal, or human environment.”5
Hornbeck Offshore Services and others challenged the moratorium in court, and sought an injunction to prevent possible negative effects on individual business, local economies, and the economy at large.6 On June 22, 2010, the court granted the injunction finding the DOI’s decision arbitrary and capricious. According to the court, the moratorium of May 28, 2010 made no reference to any “irreparable harm,” did not contain any predictions as to the length of time necessary to introduce proposed safety measures, and suggested that operations conducted at depths greater than 1,000 ft., not 500 ft., carried more complex risks than shallower operations.7
During the two weeks following the lifting of the moratorium, the DOI repeatedly announced that a new moratorium would be issued soon and therefore no new drilling commenced. On July 12th, the DOI rescinded the first moratorium and immediately enacted a second which eliminated the “drilling at 500 ft. standard” and imposed a ban on rigs which used “subsea blowout preventers or surface blowout preventers on a floating facility.”8 According to the court, this new moratorium, although textually different, was essentially identical to the first as all of the rigs drilling at 500 ft. used the blowout preventers at issue.
The second moratorium also upheld the same expiration date of November 30, 2010. The new moratorium was lifted on October 12, 2010, and in November it was revealed that a White House official had made adjustments to the Safety Report before it was released which had created the misleading appearance of the Report being scientifically peer reviewed.9 The plaintiffs then initiated a suit against the DOI under a civil contempt and bad faith claim in hopes of recovering their attorney fees.
Civil Contempt
Hornbeck Offshore Services chose to make a civil contempt claim because it wanted compensation of attorney’s fees, and a contempt claim can offer monetary compensation to parties who have suffered “unnecessary injuries or costs because of contemptuous conduct.”10 To prove a civil contempt claim, the aggrieved party must show “by clear and convincing evidence: 1) that a court order was in effect, 2) that the order required certain conduct by the [government], and 3) that the [government] failed to comply with the court’s order.”11 The party must also show that the evidence in relation to the contempt charge is “so clear, direct and weighty, and convincing as to enable the fact finder to come to a clear conviction, without hesitancy, of the truth of the precise facts of the case.”12
In this case, the court found that the first two requirements were clearly met. It became Hornbeck Offshore Services’ burden to prove the third element (that the government failed to comply with the court’s order) by producing evidence meeting the clear and convincing standard. Hornbeck Offshore Services argued that the DOI “showcased its defiance” of the first injunction by failing to seek a remand, continually expressing an intention of resolving and reapplying the moratorium, and notifying the operators that a new moratorium would soon be issued. On February 2, 2011, the court ruled in favor of Hornbeck Offshore Services stating that the “showcase of defiance” elements along with the issuance of a second essentially identical moratorium so soon after the first injunction constituted enough clear and convincing evidence to establish that the DOI was in fact in contempt of court.13
Conclusion
Although the DOI was ordered to pay Hornbeck Offshore Services’ attorney’s fees, no dollar amount has been set. The case was handed over to another magistrate judge to decide how much compensation is warranted. The DOI has currently appealed the case to the U.S. Fifth Circuit Court of Appeals (New Orleans), and a hearing has been slated for the week of June 6th, to be presided over by a panel of three federal judges.14
In a related matter, the same court, on February 17, 2011, issued an order requiring the DOI to respond to seven drilling permit applications within thirty days of the ruling.15 However, the DOI was relieved of this obligation when the Fifth Circuit, responding to the DOI’s appeal, stayed the lower court’s order until the outcome of the DOI’s appeal is determined. Currently there have been only two new deepwater (OCS) drilling permits issued since the lifting of the second moratorium.
Endnotes
1. 2012 J.D. Candidate, University of Mississippi School of Law.
2. Hornbeck Offshore Services, LLC v. Salazar, No. 10-1663, 2011 WL 454802 (E.D.La. Feb. 2, 2011).
3. Dept. of Interior, Increased Safety Measures for Energy Development on the Outer Continental Shelf, May 27, 2010, http://www.doi.gov/deepwaterhorizon/loader.cfm?csModule=security/getfile&PageID=33598.
4. Hornbeck Offshore Services, 2011 WL 454802, at *1.
5. 43 U.S.C. § 1334(a)(1).
6. Hornbeck Offshore Services, L.L.C. v. Salazar, 696 F.Supp.2d 627, 631 (E.D.La. 2010).
7. Id. at 632.
8. Hornbeck Offshore Services, 2011 WL 454802, at *1.
9. Id. at 2.
10. Id.
11. Id. (citing Am. Airlines, Inc. v. Allied Pilots Ass’n, 228 F.3d 574, 581 (5th Cir.2000)).
12. Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 582 (5th Cir.2005).
13. Hornbeck Offshore Services, 2011 WL 454802, at *3.
14. Laurel Brubaker Calkins & Allen Johnson Jr., Appeals Court to Hear Arguments on Gulf Drilling Permit Delay, Bloomberg, April 8, 2011, http://www.bloomberg.com/news/2011-04-08/oil-industry-s-gulf-drill-ban-appeal-to-get-june-hearing-in-new-orleans.html.
15. Appeals Court Issues a Stay on Drilling Ruling, Associated Press, March 15, 2011, available at http://www.nola.com/ news/gulf-oil-spill/index.ssf/2011/03/appeals_court_ issues_a_stay_on.html.
http://masglp.olemiss.edu/Water%20Log/WL31/31.2doiheldincomtempt.htm
---------------------------------------------
UNITED STATES DISTRICT COURT -- EASTERN DISTRICT OF LOUISIANA
HORNBECK OFFSHORE SERVICES, * CIVIL ACTION NO.: 10-1663
VS KENNETH LEE “KEN” SALAZAR, in, his official capacity as Secretary, United States Department of the Interior
* * * * * * * * * * * * * * * * * * * * * **
AMICUS BRIEF ON BEHALF OF BOBBY JINDAL, GOVERNOR OF THE STATE OF LOUISIANA, IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
The Governor and State of Louisiana. through the Louisiana Attorney General, James D.
“Buddy” Caidwell, present this amicus brief in support of the Petitioner’s request that this honorable Court order removal of the moratorium on deepwater drilling on the Outer Continental Shelf (OCS) off the coast of Louisiana. Offshore oil and gas exploration and production are critical components of Louisiana’s economy, which was afready weakened by Katrina and is now crippled by the Deepwater Horizon disaster. With each passing day, the MMS moratorium further threatens the economic livelihood of the State and its citizens. The State of Louisiana, therefore, has a real interest in the outcome of this litigation.
THE STATE’S INTEREST IN THIS LITIGATION
The Governor and Attorney General, in their respective capacities as chief executive
officer and chief legal officer of the State of Louisiana have a duty to protect the interests of the
1
State and its citizens. Implicit in that duty is the obligation to protect the economic wellbeing of the State and its citizens, as well as the environment and natural resources of the State. At the same time, especially in view of the ongoing harm the State is suffering from the Deepwater Horizon disaster, the State has an interest in making sure that offshore drilling is conducted with the utmost safety and regulatory oversight, and to ensure that the environment and natural resources of the State are protected.
The State believes, however, that these objectives can be achieved with a balanced
approach to deepwater drilling that includes inspection, detection, and correction of any threats, without the necessity of shutting down an entire industry segment. As demonstrated below, a moratorium on deepwater drilling will have a severe impact on the economy of the State of Louisiana in both the short term and long term, which has been completely ignored in Defendants’ decision-making process.
STATEMENT OF TILE CASE
The oil and gas industry is one of the leading industries in Louisiana in terms of
economic impact, taxes paid, and people employed. Louisiana is the third leading producer of natural gas and the fourth leading producer of crude oil in the country. When OCS production is included, Louisiana ranks second in natural gas and third in crude oil production. There are 19 active refineries in Louisiana which rely significantly on offshore production in the Gulf of Mexico for their raw materials.
The offshore oil and gas industry, operating in the Gulf of Mexico outside of the
territorial boundaries of Louisiana, has a tremendous economic impact on the State, estimated to be approximately $3 billion per year. This comes not only from salaries and wages of workers on the rigs, but also from the myriad of Louisiana companies doing business with the offshore
2
industry, including contract employment companies, boat companies, tool rental companies, equipment servicing companies, and offshore food service companies, among many others. Because of the pervasiveness of the oil and gas industry in Louisiana, the entire economy is affected, from grocery stores and restaurants to banks and schools.
Effective May 30, 2010, the U.S. Department of the Interior, through the Minerals
Management Service (MMS), issued a “six-month suspension of all pending, current, or
approved offshore drilling operations of new deepwater wells in the Gulf of Mexico” in water depths exceeding 500 feet.’ According to the Louisiana Mid-Continent Oil and Gas Association, the moratorium will take 33 floating rigs out of commission for at least six m2onths. The attached map prepared by the LSU Center for Energy Studies identifies and shows the location of 31 of the affected rigs, all off the Louisiana coast. Each of those rigs employs Louisiana workers and is supplied and serviced by Louisiana companies.
The impact of the moratorium is neither speculative nor remote. According to the LSU
Center for Energy Studies, within only five months the moratorium will result in the direct layoff of 3,339 Louisiana workers and the loss of an additional 7,656 jobs indirectly in the State. The Louisiana Department of Economic Development estimates that the State risks losing more than 20,000 existing and potential new jobs over the next 12 to 18 months as a result of this moratorium.
In the long run, this moratorium will have an even more devastating effect on Louisiana’s Salazar Memorandum dated March 28, 2010, and accompanying Notice to Lessees and Operators (Nil), (DOC #5-1, P. 2-4)
2 See Louisiana Mid-Continent Oil and Gas Assn. fact sheet, at http://www.crt.state.Ia.us/GESTlFactsFinures.asnx
See map at http://www.crtstate.la.us/GESTIDocumentsIIMPACTED RIG LOCATIONS 06-04-2010.pdf.
See charts prepared by the LSU Center for Energy Studies, estimating job losses assuming three different recovery scenarios, at http://www.crt.state.la.us/GEST!DocumentsIFORECASTED ACTIVITY 11 .pdf
3
economy. The owners of these rigs will not let them sit idle for six months or more. Anadarko Petroleum Company and Cobalt International Energy have already invoked force majeure clauses in their contracts with drillers in the deepwater OCS, allowing the drillers to move as many as four rigs out of the Gulf of Mexico. 5 Once these companies move their rigs there is little chance for their immediate return at the end of the moratorium, as they will have made long-term commitments at their new locations in Brazil, Africa, or the Middle East. By the end of the six month moratorium (which is scheduled but by no means certain), there will likely be no deepwater rigs available to resume drilling in the Gulf of Mexico. Having to wait an additional year or more for available rigs will turn the short-term adverse effects of the moratorium into a long-term economic disaster for Louisiana.
The Louisiana Workforce Commission (“LWC”) administers Louisiana’s unemployment
compensation system, its workers’ compensation system and its workforce programs, including job training and work search services. Because of the moratorium, many thousands of Louisiana workers have lost their employment and many more are at risk of losing it in the near future. All of the programs administered by the LWC have been and will continue to be heavily impacted by its effects. Every state agency has incurred and continues to incur costs from providing additional public services to the citizens of the state as a result of the Deepwater Horizon Event.
The moratorium will add additional strain to systems that are already overloaded by the ongoing crises, all while the federal government schedules more meetings.
In addition, Louisiana stands to lose substantial tax revenues as a result of the
moratorium. Income taxes will be lost from laid-off workers and closed businesses. Sales tax
See news reports at: http://www.reuters.comlarticle/1dUSNO32217342O1006O3; and
http://www.ogj .com/index/article-display/9 1 61423238/articles/oil-gas-journal/drilling-production-2/2010/O6/cobaltinternational.html
4
revenues will be lost from reduced sales of goods and services. In addition to having an impact on the State’s General Fund, the moratorium on drilling will also affect funding for the Budget Stabilization Fund, the Louisiana Investment Fund for Enhancement, and First Use Tax Trust Fund, to name just a few, which rely on oil and gas revenues for their funding. Compounding the impact of loss of revenue, the lack of these funds also threatens the State’s bond rating. If the State’s revenue stream for oil and gas, as well as sales and personal income tax revenues decline because of loss of jobs, the rating agencies will first put the State on negative credit watch and then begin the process of lowering its rating if the moratorium continues.
Most importantly, pursuant to the Gulf of Mexico Energy Security Act (GOMESA), the
State of Louisiana is presently entitled to receive 32% of all mineral revenues generated from eight million acres recently opened for drilling in the Gulf of Mexico. All of this area is now subject to the driffing moratorium. Louisiana stands to lose enormous revenue-sharing income into the foreseeable future which, as set forth below, are dedicated for use in natural resource mitigation and protection.
LEGAL ISSUES
Many of the legal issues have already been put before the Court by Plaintiffs and
Defendants and will not be repeated here. Some, however, have not. OCSLA, 43 U.S.C. § 1332 states that it is “declared to be the policy of the United States”
that:
(4) since exploration, development, and production of the minerals of the outer
Continental Shelf will have significant impacts on coastal and non-coastal areas
of the coastal States, and on other affected States, and, in recognition of the
national interest in the effective management of the marine, coastal, and human
environments
5 (C) such States, and through such States, affected local governments, are
entitled to an opportunity to participate, to the extent consistent with the
national interest, in the policy and planning decisions made by the Federal
Government relating to exploration for, and development and production of,
minerals of the outer Continental Shelf.
In view of that stated policy, 43 U.S.C. § 1334(a) reads, in pertinent part, as follows: “In the enforcement of safety, environmental, and conservation laws and regulations, the Secretary shall cooperate with the relevant departments and agencies of the Federal Government and of the affected States.” (emphasis added) Inasmuch as the State of Louisiana was completely ignored by Defendants in the establishment of this moratorium for alleged safety reasons, the question arises whether that failure renders Defendants’ action invalid.
The Gulf of Mexico Energy Security Act (GOMESA), P.L. 109-432, provides for
Federal/State revenue sharing of mineral royalties in areas of the Gulf of Mexico covered by the drilling moratorium. Section 105(d) of GOMESA restricts the use of a state’s revenue share exclusively to one of the following:
(A) Projects and activities for the purpose of coastal protection, including
conservation, coastal restoration, hurricane protection, and infrastructure
directly affected by coastal wetland losses.
(B) Mitigation of damages to fish, wildlife, or natural resources.
(C) Implementation of a federally-approved marine, coastal, or comprehensive
conservation management plan.
(D) Mitigation of the impact of outer Continental Shelf activities through the
funding of onshore infrastructure projects. and
(E) Planning assistance and the administrative costs of complying with this section.
Given that a stated justification for the Defendants’ drilling moratorium is “an unacceptable
threat of serious and irreparable harm to wildlife and the marine, coastal, and human
6
environment,” 6 and given that the moratorium has and will deprive the State of Louisiana of revenues which would be dedicated to the protection of the very same natural resources the moratorium purports to protect, the question arises as to the legality and legitimacy of Defendants’ action in light of GOMESA. Nothing in the report relied upon by the Department of the Interior appears to have taken these statutes into account or taken the effects of the moratorium on the State into account at all.
As discussed above, this moratorium has and will have a significant adverse effect on
thousands of small businesses in the State of Louisiana. The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) requires Defendants to have considered the effect of its actions on these small businesses.
In Section 202 of SBREFA, Congress made specific findings that:
(1) a vibrant and growing small business sector is critical to creating jobs in a
dynamic economy;
(2) small businesses bear a disproportionate share of regulatory costs and burdens;
(3) fundamental changes that are needed in the regulatory and enforcement
culture of Federal agencies to make agencies more responsive to small business
can be made without compromising the statutory missions of the agencies;
(4) three of the top recommendations of the 1995 White House Conference on
Small Business involve reforms to the way government regulations are developed
and enforced, and reductions in government paperwork requirements;
(5) the requirements of chapter 6 of title 5, United States Code, have too often
been ignored by government agencies, resulting in greater regulatory burdens on
small entities than necessitated by statute; and
(6) small entities should be given the opportunity to seek judicial review of
agency actions required by chapter 6 of title 5, United States Code.
6 Salazar Memorandum, Attachment 1 to Plaintiffs’ First Supplemental and Amended Complaint for Declaratory
and Injunctive relief. (DOC #5-1, p. 2)
7
In keeping with those findings, Congress said in Section 203 of SBREFA that the purpose of the Act was:
(1) to implement certain recommendations of the 1995 White House Conference on Small
Business regarding the development and enforcement of Federal regulations;
(2) to provide for judicial review of chapter 6 of title 5, United States Code;
(3) to encourage the effective participation of small businesses in the Federal regulatory
process;
(4) to simplify the language of Federal regulations affecting small businesses;
(5) to develop more accessible sources of information on regulatory and reporting requirements
for small businesses;
(6) to create a more cooperative regulatory environment among agencies and small
businesses that is less punitive and more solution- oriented; and
(7) to make Federal regulators more accountable for their enforcement actions by
providing small entities with a meaningful opportunity for redress of excessive enforcement activities. (emphasis added) Under SBREFA, Defendants were required to conduct regulatory flexibility analyses to determine the adverse effect of its moratorium on small businesses and to insure that their actions had the least adverse economic impact on them. Defendants’ suspension documents neither mentions SBREFA, nor attempts to comply with the Act. Once again, the question arises
as to the legality and legitimacy of Defendants’ action in light of SBREFA.
ARGUMENT ON TIlE ISSUES
1. No rational reason for defendants’ action.
Defendants justify the moratorium on the ground that it gives the Department of the
Interior “time to step back and investigate both the root causes of the Deepwater Horizon disaster and to implement additional safety measures to ensure that we don’t fall victim to another disastrous oil spill.” 7
8
The prevention of future oil spills requires (1) a detailed set of rules and regulations designed to require drilling operations be conducted in accordance with the strictest safety standards, (2) oil and drilling companies truly dedicated to following those rules and regulations, gj (3) a watchdog Federal agency intent on policing the industry to make sure the rules and regulations are followed.
It is clear from the testimony in the joint MMS/Coast Guard hearings, and the recent
hearings before Congress, that the Deepwater Horizon disaster was the result of the abject failureof (2) (3) above. More studies and investigation will not make the Deepwater Horizon disaster go away; Louisiana will have to suffer with that for decades to come. Nor will more studies and investigation insure that the MMS will enforce the rules and regulations that have been in place long before the Mississippi Canyon was even put out to lease.
The existing rules and regulations required these studies before leases were let and
before drffling started in the Mississippi Canyon. These existing regulations require that:
exploration plans must be prepared and approved (30 C.F.R. § 250.211-118); development and production plans must be prepared and approved (30 C.F.R. § 250.241-262); deepwater operations plans must be prepared and approved (30 C.F.R. § 250.286-295); well drilling design criteria must be prepared and approved (30 C.F.R. § 250.4 13); a detailed drilling prognosis must be prepared and approved (30 C.F.R. § 250.414); a casing and cementing program must be prepared and approved (30 C.F.R. § 250.415); diverter and BOP systems must be approved (30 C.F.R. § 250.416); an application for a permit for drilling must be prepared and approved (30 C.F.R. § 250.4 18); if a MODU is used, it must meet rigorous inspection requirements (30 C.F.R. § 250.417); reservoir testing must be submitted and approved. (30 C.F.R. §250.407). A drilling Defendants’ Opposition to Plaintiffs’ Motion for Preliminary injunction at p. 24 (DOC # 28)
9
moratorium simply is not necessary to enforce the extensive rules and regulations already in place.
The State’s Gulf Economic Survival Team (GEST) was formed at the request of
Governor Jindal to specifically address alternatives to the drilling moratorium. GEST
recommends that the moratorium could be reduced to thirty days through a more efficient procedure. GEST’s recommendations include:
• Minerals Management Service inspectors maintain a full-time presence on all ongoing
deepwater drilling locations, with all MMS inspection reports reviewed by the U.S.
Coast Guard;
• strict compliance with American Petroleum Institute (API) standards on all equipment used in well construction;
• implement all of the prescriptive safety recommendations as set forth in the DOl safety report which can be implemented within 30 days;
• Re-certify all BOP equipment used in floating drilling operations and ensure their
suitability for the rig and well design;
• Ensure rig personnel are trained to industry- and government-accepted standards for well control procedures;
• Review operator well plans, with particular emphasis on casing and cementing designs to ensure sufficient pressure barriers and that designs are fit for purpose;
• After confirming the correctness and preparedness of each rig and well design, these deepwater rigs should be permitted to resume work, and the DOl should resume issuing permits for new deepwater work. Meanwhile, industry and government can work through additional recommendations outlined in DOl’s Safety Report.
In essence, the State of Louisiana believes that with strict enforcement of the rules and regulations already in place and by immediately implementing the recommendations in the DOl’s Safety Report which can be implemented within 30 days, deepwater drilling may promptly resume in a reasonably safe manner.
The Director of GEST, Louisiana’s Lt. Governor Scott Angelle, has obtained 144,586
signatures on a petition asking Defendants to lift the moratorium. Many of these are the owners of the small businesses affected by the moratorium, who Defendants failed to consider as
10
required by SBREFA. Many of these individuals are the very individuals who should have been heard before the Department of the Interior issued a hasty and self-serving edict to shut down an entire segment of an industry.
2. No rationale for a six month period. The Defendants have articulated no reason at all why this moratorium should last six months, other that the vague statement that they need “time to step back and investigate both the
root causes of the Deepwater Horizon disaster and to implement additional safety m8easures.” Louisiana in a state of environmental and economic crisis, and time is the enemy.
Defendants have had two months to investigate this disaster. The MMS/Coast Guard
hearings are over; the evidence has been taken. There is no reasonable basis for needing more time to “investigate the root causes” of the Deepwater Horizon disaster, and enforcing a moratorium while the investigation persists.
As set forth in the preceding section, most of the recommendations of the DOT Report
can be implemented immediately. Strict enforcement of existing regulations, immediate
implementation of DOl Report recommendations, together with adoption of the GEST
recommendations, will allow reasonably safe drilling, while Defendants conduct studies and investigate improved safety regulations. This approach strikes the correct balance of preserving economic livelihoods and ensuring safe operations.
Furthermore, there is no guarantee that six months would be an outside limit on
Defendants’ moratorium. The Defendants have not identified any specific objectives other than conducting further studies and having more meetings. In fact, under the regulations, Defendants could conceivably extend this drilling suspension up to five years. Given the glacial pace of the federal government’s decision-making in the Deepwater Horizon disaster so far, one cannot draw 8 Defendants’ Opposition, p. 24.
11
much comfort from Defendants’ assurance “that the chaiienged suspensions do not last any longer than necessary to implement the safety protocols recommended in the 30-day Report or in the National Commission’s six-month report.”
In addition, several of the Defendants’ own “peer review panel” have repudiated the
DOT’s conclusion that a six month moratorium was necessary to implement the recommendation those same industry experts agreed would be beneficial. Even after the catastrophic events of September 11, the government only shut down the airlines for three days. There simply is no precedent for the government’s action and no justification for it.
3. Agency decision was arbitrary and capricious. Defendants contend that “temporary harm to Plaintiffs’ short-term financial interests is far outweighed by the potential for harm to the people and public lands of the United States if the
challenged suspensions are prematurely lifted” and that Plaintiffs’ losses “cannot compare to the potential costs and lost opportunity of failing to prevent another Deepwater Horizon disaster sometime in the next six months.”
Any estimation of “potential for harm” in deciding to take action should always include a risk benefit analysis, weighing the potential for harm against actual harm that may result from not taking the action. Defendants clearly failed to do this when deciding to impose the moratorium without considering the actual harm that will befall Louisiana and its citizens.
Nowhere in the Defendants’ documents or in any of the papers filed with this Court, is there any mention, much less consideration, of the potential adverse economic impact this drilling moratorium may have on the State of Louisiana and its citizens.
Recitation of regulations
and platitudes in briefs, do not raise the quality of Defendants’ analysis beyond the level of pure speculation.
Id. p. 10. 10 Defendants’ Opposition to Plaintiffs’ Motion for Preliminary Injunction at p. 24, 25 (DOC # 28)
12
If, as conceded by Defendants, an agency’s action may be overturned if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” then the moratorium must be lifted immediately. The Court’s role in that regard is to determine if the agency considered the “relevant factors” and “articulates a rational relationship between the facts found and the choice m2ade.” The Defendants certainly knew that Louisiana was the state most affected, both positively and negatively, by this moratorium. They had a legal obligation under
OCSLA to consult with the State. Yet they never contacted the State about the moratorium, nor did they seek any information about the potential negative effects of the moratorium on the State.
In other words, Defendants never considered the most relevant factor of all, namely, how will this action affect the State of Louisiana and its citizens.
4. Agency decision did not comply with the law.
The clear Congressional intent of OCSLA was to encourage participation of adjacent
coastal states in the management of production of minerals on the OCS. 43 U.S.C. § 1334(a) specifically requires Defendants to cooperate with affected states in the enforcement of its safety laws and regulations. Defendants failed in this requirement by not even communicating with the State of Louisiana on this important regulatory matter, until after the fact.
Furthermore, Defendants were required by SBREFA to consider the adverse impact of its
action on the thousands of small businesses adversely affected by the moratorium. They did not do so.
Id., p. 6-7.
12 Id. p. 7, and cases cited therein.
13
5. An alternative remedy.
The parties appear to be locked in an “all or nothing” battle, asking the Court to either lift the moratorium immediately without restriction, or leave it in place for at least six months as directed by the MMS. Faced with only those two choices, the State believes that lifting the moratorium is the proper option. However, there may be rational alternatives the Court could employ to enable deepwater drilling in a much shorter period of time.
Pursuant to the APA [5 U.S.C. § 706(1)1, the Court shall “compel agency action
unlawfully withheld or unreasonably delayed;” (emphasis added) At the very least the Court should fmd that six plus months is an unreasonable delay, and order that the moratorium be lifted in 30 days from the date of its imposition, absent a clear showing by MMS why the moratorium should not be extended. During that time, the DOl Report and the GEST recommendations may be implemented, and safe drilling resumed in a more reasonable timeframe.
CONCLUSION
The State of Louisiana, more than any other public or private entity, has been most
adversely affected by the Deepwater Horizon disaster. The drilling moratorium imposed by Defendants will only compound the State’s problems, effectively turning an environmental disaster into an economic catastrophe for the State. Every day that the moratorium is in effect costs the State untold millions of dollars.
The Federal Government’s failures in allowing the Deepwater Horizon disaster to occur
cannot be used as an excuse for compounding the problems by carte blanche suspending all deepwater drilling pending studies and investigations into those failures. Extensive regulations already exist which, if properly administered, would allow deepwater drilling with reasonable assurances of safety. Additional recommendations of the DOl’s Safety Report may be immediately implemented to bolster drilling safety in deep water off the coast of Louisiana. The State of Louisiana encourages Defendants to undertake a comprehensive analysis of
14
what went wrong on the Deepwater Horizon rig in order to ensure the future safety of OCS activity. However, the implementation of the current moratorium is overly broad and not properly tailored to the stated goal. Indeed, had Defendants conducted a proper risk-benefit analysis and afforded the affected states an opportunity to comment on its proposed actions, Louisiana could have aided Defendants in the creation of a more narrowly tailored limitation on activity to achieve a better balance between the risks associated with OCS activity and the benefits of that same activity.
Therefore, the State of Louisiana supports the Petitioner’s request for relief and requests that this Court issue the requested preliminary injunction, immediately lifting the moratorium on deepwater drilling in the Gulf of Mexico. Alternatively, the Court should order the lifting of the moratorium within 30 days from the date of its inception, absent a clear showing by Defendants why the moratorium should not be extended.
Respectfully submitted,
James D. “Buddy” Caidwell
Louisiana Attorney General
James Trey Phillips
First Assistant Attorney General
Megan K. Terrell
Assistant Attorney General
Section Chief — Environmental
State of Louisiana
P.O. Box 94005
Baton Rouge, Louisiana 70804-9005
Tel: (225) 326- 6708
Fax: (225) 326-6797
15
Special Counsel to the Attorney General
And Elizabeth Baker Murrill
Elizabeth Baker Murrill
Deputy Executive Counsel
Governor Bobby Jindal
Lousiana State Capitol, 4th Fl
600 N. Third Street
Baton Rouge, Lousiana 70802
(225) 342-2884
Bar Roll No. 20685
And Allan Kanner
Allan Kanner, Esq.
Elizabeth B. Petersen, Esq.
Rebecca 3. Davis, Esq.
Kanner & Whiteley, L.L.C.
701 Camp Street
New Orleans, Louisiana 70130
Tel: (504) 524-5777
Fax: (504) 524-5763
Special Counsel to the Attorney General
And Bradley M. Marten
Bradley M. Marten, Esq.
Linda R. Larson, Esq.
Marten Law PLLC
1191 Second Avenue, Suite 2200
Seattle, WA 98101
Tel: (206) 292-2600
Fax: (206) 292-2601
Of Counsel, Pro Hac Vice Pending
And T. Allen Usry
T. Allen Usry, Esq.
Usry, Weeks, & Matthews, APLC
16
Special Counsel to the Attorney General
And E. Wade Shows E. Wade Shows, Esq.
Shows, Cali, Berthelot & Walsh LLP
628 St. Louis Street
Baton Rouge, LA 70802
Tel: (225) 346-1461
Fax: (225) 346-1467
CERTIFICATE OF SERVICE
This is to certify that the undersigned has this 20th day of June, 2010 served the
foregoing AMICUS BRIEF ON BEHALF OF BOBBY JINDAL. GOVERNOR OF THE STATE OF LOUISIANA. AND THE STATE OF LOUISIANA IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION on the Court’s electronic docketing system. Therefore, the undersigned upon information and belief certifies that all counsel of record as noted below, will receive a copy of these papers through the Court’s
electronic notice system:
Carl D. Rosenbium
Jones, Walker, Waechter,
Poitevent, Carrere, & Denegre, L.L.P.
201 St. Charles Avenue, t4h9 Floor
New Orleans, LA. 70170
crosenblum@joneswalker.com
Counsel for Plaintiffs
Guillermo A. Montero
U.S. Department of Justice
Environmental and Natural Resources Division
Natural Resources Section
P.O. Box 663
Washington, D.C. 20016
Guillermo.montero@usdoj.gov
Counsel for Defendants
Henry T. Dart
17
Case 2:10-cv-01663-MLCF-JCW Document 68 Filed 06/22/10 Page 1 of 3
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
HORNBECK OFFSHORE SERVICES, CIVIL ACTION
L.L.C ET AL. VERSUS NO. 10—1663
KENNETH LEE “KEN” SALAZAR SECTION “F”
ET AL.
ORDER
This Court having considered the Motion for Preliminary
Injunction of Hornbeck Offshore Services, L.L.C., Bee Mar—Worker
Bee LLC, North American Fabricators, L.L.C., Bee Mar LLC, Offshore
Support Services, L.L.C., Martin Holdings, LLC, Bollinger Algiers,
L.L.C., Sea Fluids, L.L.C., Bollinger Marine Fabricators, Inc., CPort
2 LLC, Bee Mar—Bayou Bee LLC, Bollinger Amelia Repair, LLC, CPort
LLC, Fourchon Heavy Lift, L.L.C., C-Innovation, Bee Mar-Bee
Hive LLC, Bee Mar-Queen Bee LLC, Bollinger Shipyards, Inc., Clean
Tank, LLC, Bee-Mar-Honey Bee LLC, Tampa Ship, L.L.C., Bee Mar-Busy
Bee LLC, Bee Mar Crews LLC, Bee Mar-Bumble Bee LLC, Bollinger Texas
City, LP, Bollinger Calcasieu, LLC, Bollinger Shipyards Lockport,
L.L.C., Bollinger Quick Repair, L.L.C., Bollinger Morgan City,
L.L.C., Bollinger Gretna, L.L.C., Bee Mar-Bee Sting LLC, North
American Shipbuilding, L.L.C., Bollinger Fourchon, L.L.C., Gulf
Ship, L.L.C., Alpha Marine Services, L.L.C., Nautical Solutions
LLC, Nautical Ventures, L.L.C., Reel Pipe LLC, as well as the
verified Supplemental and Amended Complaint for Declaratory and
1
Case 2:10-cv-01663-MLCF-JCW Document 68 Filed 06/22/10 Page 2 of 3
Injunctive Relief, Memorandum of Law in Support of Motion for
Preliminary Injunction and after receiving evidence at a hearing on
June 21, 2010, hereby finds: (1) that plaintiffs are substantially
likely to prevail on the merits of their claim for the government
defendants’ violations of the Outer Continental Shelf Lands Act and
its implementing regulations; (2) that, in the absence of the
relief requested, plaintiffs will incur immediate and irreparable
harm to business including the irretrievable loss of vessels’
useful life, loss of crews that have long been associated with
their particular vessels, loss of shore—side teams and disruption
of longstanding contractual relationships with offshore service
vendors and other satellite services for the operation of its
fleet, all of which is not subject to calculation; (3) that the
irreparable harm to plaintiffs should the Court decline to grant
the application for the relief requested outweighs the harm which
the granting of such relief may cause to any legitimate interests
of defendants; and (4) that the entry of this Order will serve the
interests of justice and the public interest. Accordingly,
IT IS ORDERED that Honorable Kenneth Lee “Ken” Salazar, in his
official capacity as Secretary, United States Department of the
Interior; United States Department of the Interior; Honorable
Robert “Bob” Abbey, in his official capacity as Acting Director,
Minerals Management Service; and the Minerals Management Service,
their servants, agents, successor agencies, and employees, and all
2
Case 2:10-cv-01663-MLCF-JCW Document 68 Filed 06/22/10 Page 3 of 3
persons in active concert or participation with them, who receive
actual Notice of this Preliminary Injunction (collectively
“defendants”), and until a full trial on the merits is had, are
hereby immediately prohibited from enforcing the Moratorium,
entitled “Suspension of Outer Continental Shelf (OCS) Drilling of
New Deepwater Wells,” dated May 28, 2010, and NTL No. 2010-N04
seeking implementation of the Moratorium, as applied to all
drilling on the OCS in water at depths greater than 500 feet;
IT IS FURTHER ORDERED that defendants shall file with this
Court and serve on plaintiffs within 21 days from the date of entry
of this Preliminary Injunction a report in writing setting forth in
detail the manner and form in which defendants have complied with
the terms of this Preliminary Injunction.
New Orleans, Louisiana, June 22, 2010.
