House Approves Scaled-back Version of Climate Bill (CLEAR Act) Which Mainstream Media is Calling 'Oil Spill Reform'Reuters
July 30, 2010
The House of Representatives on Friday approved the toughest reforms ever to offshore energy drilling practices, as Democrats narrowly pushed through an election-year response to BP's massive oil spill in the Gulf of Mexico.
Passing the bill as the House leaves for its six-week recess gives lawmakers the opportunity to return home boasting they reined in Big Oil and held BP responsible for the worst offshore oil disaster in U.S. history.
The vote was 209-193 on the bill supported by President Barack Obama.
But first, Gulf Coast Democrats won an amendment ending the federal moratorium on deepwater drilling for oil companies that met new safety requirements.
The Obama administration's moratorium would end in November. By the time the full Congress completes action on this offshore drilling bill -- and it is uncertain that it will -- it could be November or later.
A similar offshore drilling bill is pending in the Senate, without the House's new provision to end the drilling moratorium. But it was unlikely that measure would pass before that chamber begins its summer recess on August 6.
House Republicans warned the bill would slash U.S. oil and gas production in the Gulf of Mexico, a major supplier of domestic energy, and cut high-paying drilling jobs.
"The Obama moratorium on deepwater drilling has already costs thousands of jobs and this bill will eliminate even more American energy jobs, making it harder and more expensive to produce both energy on and offshore," said Republican Representative Pete Sessions.Democrats said the bill would make offshore drilling safer for workers, while also protecting the environment and Gulf Coast business from future oil spills like the one caused by BP that damaged wetlands and hurt the region's fishing and tourism industries.
"It will drive American companies out of the Gulf," said Republican Representative Kevin Brady. "This is a choice between American energy workers and foreign oil."
"This legislation is about safety, about establishing new safety standards, safety for the workers on the rigs," said House Speaker Nancy Pelosi.Before passing the bill, the House also approved an amendment to help smaller oil companies compete for Gulf of Mexico drilling projects under the proposed reforms. The amendment would let them pool their resources in demonstrating they have the financial resources to deal with potential oil spills.
"If you want to apologize for Big Oil, go right ahead, but the American people are not on your side on this one," Democratic Representative Jim McGovern told his Republican colleagues during a long day of debate.
The House vote on the bill was close, as several Democrats representing districts with strong oil industry interests joined Republicans in opposition.
Representative Gene Green, from the oil industry-dominated city of Houston, was one of those Democrats.
"There are a lot of things in there that have nothing to do with safety" of offshore drilling operations, Green told reporters.A sticking point in the Senate is opposition from Republicans and some moderate Democrats to removing all liability limits oil companies would face for economic damages stemming from the BP disaster and any future spills.
Current law requires companies to only cover up to $75 million for damages to local economies. The BP spill could end up costing billions of dollars in lost tourism, fishing and other Gulf Coast revenues.
BP has said it would pay for all costs related to the spill, but many lawmakers worry that the company could put victims through years of litigation.
The Senate energy bill has an added component: new incentives to encourage more natural gas-powered trucks and electric vehicles to clean up the environment. It also provides $5 billion to help improve home energy efficiency.
But Senate Democrats abandoned attempts to attach climate change provisions that would have set mandatory limits on some companies' carbon dioxide emissions.
Senate leaders plan to hold a test vote next Wednesday to gauge support for the bill, according to a Democratic aide. But Republicans, and possibly some moderate Democrats, might block a full debate, forcing senators to take it up in September.
The House also approved a separate bill on Friday to give whistle-blower protection to workers who report violations in offshore drilling rules.
July 30, 2010
The House approved a bill Friday to boost safety standards for offshore drilling, remove a federal cap on economic liability for oil spills, and impose new fees on oil and gas production.
Democratic leaders hailed the bill as a comprehensive response to the Gulf of Mexico oil spill and said it would increase drilling safety and crack down on oil companies such as BP. Companies with significant workplace safety or environmental violations over the preceding seven years would be banned from new offshore drilling permits.
Republicans and some-oil state Democrats opposed the measure, calling it a federal power grab that would raise energy prices and kill thousands of American jobs because of the new fees and liability provision.
Rep. Nick Rahall, D-W.Va., the bill's main sponsor, said the legislation would be a tribute to the 11 oil rig workers who were killed when the BP well exploded in April by creating strong new safety standards for offshore drilling, ending the revolving door between government regulators and industry and holding BP and other oil companies accountable for accidents.
"While we may not know the exact cause of the incident, we clearly know what contributed to it. A culture of cozy relationships that had regulators interviewing for jobs on the same rigs they were supposed to be inspecting," said Rahall, who is chairman of the House Natural Resources Committee.The legislation, which passed 209-193, has yet to be taken up in the Senate, where partisan disagreements will likely delay final consideration of a joint House-Senate bill until after the August congressional recess.
The House bill includes a provision sponsored by Rep. Charlie Melancon, D-La., that would modify a six-month moratorium on deepwater drilling, so that some drilling permits could be approved on a rig-by-rig basis if the Interior Department determines a rig meets new safety requirements. The drilling moratorium imposed by Interior Secretary Ken Salazar would remain in effect, and Salazar would retain power over whether to approve a permit.
The bill also would remove the current $75 million cap on economic damages to be paid by oil companies after major spills and increases to $300 million the financial responsibility offshore operators must demonstrate in most cases. And it would create new "conservation" fees on oil and natural gas extracted from land or water controlled by the federal government.
Those provisions prompted sharp criticism from Republicans.
"In typical Democrat fashion, this bill overtaxes, over-regulates, and costs American jobs," said Rep. John Mica, R-Fla.Rep. Doc Hastings of Washington state, the top Republican on the House Natural Resources Committee, said removing the liability cap could devastate small and medium-sized drillers.
Hastings called the new fees on oil and gas production a "$22 billion energy tax" that would cost jobs and raise energy prices. The Congressional Budget Office estimates that the $2 per barrel fee on oil and a similar fee on natural gas could bring in $22.5 billion over the next decade ...
The Carbon Limits and Energy for America's Renewal Act is a Senate climate bill S. 2877 introduced by Sen. Maria Cantwell (D-WA) and Sen. Susan Collins (R-ME) on December 11, 2009, which embodies a “cap-and-refund” approach to addressing climate change. The Act would create a nationwide limit on greenhouse gases by capping total emissions and requiring major polluters to buy “allowances” for each ton of greenhouse pollution produced: 75% of the revenue generated from the allowances would go to American households, and the remaining 25% of revenue is reserved for reducing greenhouse gas emissions, investments in renewable energy technology, climate adaptation, and other purposes.
According to Sen. Cantwell: "A growing number of researchers and consumer groups have been examining the relative benefits of a greenhouse gas reduction policy that focuses on safeguarding and empowering consumers. A properly structured climate policy will put cash in consumers’ pockets and provide the necessary capital to make America’s homes and communities more efficient and less polluting."
In promoting a cap and dividend policy without carbon offsets, stronger carbon limits that do not interfere with the Clean Air Act, and increased funding for renewables over fossil fuels, the bill differs from the financial market carbon trading plan promoted by the Clean Energy Jobs and American Power Act, introduced in May 2010 by Senators John Kerry and Joseph Lieberman.
H.R. 3534 incorporates H.R. 5629, the Oil Spill Accountability and Environmental Protection Act of 2010, which the Transportation & Infrastructure Committee reported on a bipartisan basis on July 1, 2010. It also incorporates key elements of H.R. 5626, the Blowout Prevention Act of 2010 reported by the Committee on Energy and Commerce by a bipartisan vote of 48 to 0, with one abstention, on July 15, 2010. [source: marinelog.com]
“Cutting Loose Energy and American Resources” Act: A Job-Killing Energy Tax
July 31, 2010
On Friday, July 30, 2010, the House is expected to consider H.R. 3534, the CLEAR Act. This legislation represents the latest installment in the Democrats’ campaign to increase the price of American energy and kill good-paying U.S. jobs in the energy sector and related industries that rely on it. Members may be concerned that the CLEAR Act will increase the cost of energy in the U.S., increase dependence on unstable sources of foreign oil, and kill thousands of jobs at home.
De Facto Drilling Moratorium: The bill would impose a de facto moratorium on offshore oil and gas production by increasing taxes and regulation, allowing the approval process for exploration plans to be extended indefinitely, adding layers of bureaucracy, and imposing unlimited liability caps. The Obama moratorium has already cost tens of thousands of jobs and now Democrats in Congress want to exacerbate the problem, especially on the Gulf coast.
New Tax on American Energy: The CLEAR Act includes a new tax on oil and natural gas produced on all existing and new federal onshore and offshore leases. The tax would be $2 per barrel of oil and 20 cents per million British thermal units of natural gas. This cost would eventually be passed on to American consumers of energy—small business, families, and farmers. It is estimated that this tax will total $22 billion in ten years, and the taxes will eventually climb to $3 billion per year. Of course, this new tax only applies to American energy, giving a distinct advantage to foreign oil and gas and jeopardizing American energy jobs.
Unlimited Liability Kills Jobs and Local Revenue: The CLEAR Act includes unlimited liability caps for offshore energy producers. This would effectively eliminate smaller and independent producers from operating if they cannot obtain insurance policies to cover their operations. According to a recent study, these producers account for more than half of offshore jobs—meaning a loss of 300,000 jobs and $147 billion in federal, state and local revenues. Members may be concerned that a liability increase is premature because under current law if a responsible party is found to be grossly negligent, engaged in willful misconduct or to have violated a federal safety, construction or operating regulation, it is responsible for all costs.
Protectionist “Build America” Provisions: The CLEAR Act includes a make-work provision for labor unions requiring all rigs to be U.S.-built, owned and operated. Currently, rigs are already built to U.S. standards, staffed by U.S. crews and inspected by U.S. governmental agencies. Drilling rigs are extremely complex platforms and the U.S. lacks the capacity to build one from scratch in our globalized economy. This provision would have the effect of driving rigs out of the U.S., thus raising energy costs for Americans. Estimates suggest that this provision would shut down 25 percent of today’s oil and gas production and make new U.S. offshore projects uneconomic by raising costs 30 to 100 percent.
Political Cover for the President: In the version of the CLEAR Act to be considered on the House floor, Democrat leadership has removed a provision authored by Rep. Bill Cassidy (R-LA) to establish a bipartisan, independent National Commission on Outer Continental Shelf Oil Spill Prevention. This commission would be comprised of technical experts to study the events leading up to the Deepwater Horizon disaster. Democrats are thus protecting the president’s own hand-picked, expert-deficient Commission. As Natural Resources Committee Ranking Member Doc Hastings (R-WA) noted, “There is widespread agreement that no member of the President’s Commission possesses technical expertise in oil drilling, and several are on the record in opposition to offshore drilling and support a moratorium that will cost thousands of jobs.”
Seizes States’ Authority: The bill would enable the federal government to encroach on states’ offshore leasing programs by taking over permitting and dictating the type of technology to be used on state wells, seemingly even in the event that technology is improved in the future. This would reduce incentives for advances in energy technology and possibly even the development of safer designs and procedures moving forward.
The oil spill is an ongoing tragedy for the Gulf region, its economy, the environment, and the families of those who lost their lives. The immediate focus now needs to be permanently stopping the leak, cleaning up the Gulf, protecting the livelihoods affected, and holding BP accountable. Congress should wait until the facts are known regarding this disaster before making a headlong anti-energy rush full of adverse consequences. Republicans support responsible, commonsense reforms to make American energy production safer, but the CLEAR Act CLEARLY falls well short of that standard on many counts.
The Waxman-Markey Climate bill is the common name for the American Clean Energy and Security Act of 2009 (H.R. 2454), introduced on May 15, 2009 and sponsored by Henry Waxman (Democrat of California) and Ed Markey (Democrat of Massachusetts). The wide-ranging energy and climate bill aims to create clean energy jobs, save consumer energy costs, increase America’s energy independence, and cut global warming pollution. On June 26, 2009, the U.S. House of Representatives voted 219-212 to pass the bill. Eight Republicans voted for the legislation, and 44 Democrats voted against it.
Senate Majority Leader Harry Reid said the Senate version of the bill, Clean Energy Jobs and American Power Act (S. 1733), introduced on September 30, 2009, would be considered in the Fall.
The legislation has four titles: Clean Energy, Energy Efficiency, Reducing Global Warming Pollution, and Transitioning to a Clean Energy Economy.
Major elements of the bill include:
- a requirement for 20 percent of electricity to come from renewable fuels by 2025;
- Carbon Capture and Storage incentives;
- smart grid and electrical car provisions;
- higher energy efficiency standards for buildings, lighting, and appliances;
- a Cap and Trade program;
- reduction of global warming gases by 83 percent by 2050;
- programs to compensate energy intensive industries for costs incurred under the bill,
- and green job creation.
At a Glance: Waxman-Markey and Kerry-Boxer
|House Bill (Waxman-Markey) |
American Clean Energy and Security Act
|Proposed Senate Bill (Kerry-Boxer) |
Clean Energy Jobs and American Power Act
|2020 Emissions Target||Cuts emissions by 17% (using a 2005 baseline)||Cuts emissions by 20% (using a 2005 baseline)|
|2030 Emissions Target||42%||42%|
|2050 Emissions Target||83%||83%|
|EPA’s authority to regulate greenhouse gas emissions ||EPA authority superceded ||EPA retained|
|Carbon offsets||Capped at 2 billion tons per year ||Capped at 2 billion tons per year |
|International carbon offsets ||Capped at 50% of total offsets allowed (except when there are insufficient domestic offsets in which case cap rises to 75% of total)||Capped at 25% of total offsets, with increased international oversight.|
|Carbon market: Oversight||Carbon markets overseen by the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission (CFTC)||Carbon markets overseen by CFTC only; regulators have more oversight|
|Carbon market: Cost stabilization||Sets a $10/ton carbon permit price floor ||Sets a $11/ton carbon permit price floor|
|Carbon market: Cost containment||Uses a “strategic reserve pool” to stabilize prices when they exceed 60% of the historical price. ||Uses a “strategic reserve pool” to stabilize prices when they reach a threshold price set at $28/ton in 2012 and increasing each year thereafter.|
|Trade protection||Employs border tariffs to compensate for international carbon inequities ||No mechanism yet to deal with non-carbon constrained economies|
|Treatment of indirect land use emissions in assessing carbon content of biofuels||Indirect land use emissions excluded from analysis (see my post on this) ||No language yet|
|Natural gas and nuclear energy ||Gives nuclear access to loan guarantees and clean energy investment funds as a clean energy technology ||Includes provisions to promote nuclear energy and natural gas|
|Transportation||Allows states to use carbon funds to support green transportation ||Requires states to use carbon funds to support green transportation|
|Methane emissions ||Regulates methane emissions from certain sources ||Methane reductions voluntary and can be used as offsets until 2020 when regulations kick in|