Prohibit ANWR Alaska Oil and Gas Leasing - H.R.1146

Drilling for oil and natural gas would again be barred in the entirety of the Arctic National Wildlife Refuge (ANWR) in Alaska under a modified version of H.R. 1146.

The bill would repeal provisions from the 2017 Republican tax overhaul (Public Law 115-97) requiring the Interior Department to conduct at least two oil and gas lease sales of at least 400,000 acres each in the 1.5 million-acre “1002 Area” of ANWR’s northern coastal plain. The law allows as much as 2,000 acres to be covered by production and support facilities.

Energy leasing and drilling was prohibited in ANWR, including the coastal plain, before the 2017 law was enacted.

“This bill reflects a simple proposition, and that is there are some places too wild, too important, too special to be spoiled by oil and gas development,” Rep. Jared Huffman (D-Calif.), the bill’s sponsor, said at the House Natural Resources Committee’s May 1 markup of the measure. “The Arctic Refuge Coastal Plain is one of those special places. It’s home to more than 200 different wildlife species, including bird species that migrate from the refuge to states and districts across America represented by many, if not all of us on this committee.”

Allowing for oil extraction in the coastal plain “could result in the development of 10.4 billion barrels of oil,” Reps. Don Young (R-Alaska) and Rob Bishop (R-Utah) wrote in a dissenting views section of the committee’s report on the bill. They said that technological developments like directional drilling would limit the environmental effects of drilling in the reserve.

Offshore Energy Inspection Fees

The bill also would set fees for oil rigs and other offshore energy facilities to offset the costs of safety inspections conducted by the Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE).

The fees have been set by annual spending laws. Under the bill, the fees would be set for fiscal 2020 and then adjusted annually for inflation.

The fiscal 2020 fees for facilities that are above the waterline at the start of the fiscal year, except for drilling rigs, would be:

• $23,000 for facilities with processing equipment and without wells, increased from $10,500 in fiscal 2019.
• $37,000 for facilities with one to 10 wells, regardless of whether they’re active, increased from $17,000 in fiscal 2019.
• $69,000 for facilities with more than 10 wells, increased from $31,500 in fiscal 2019.

For drilling rigs, inspection fees would be:

• $67,000 per inspection for rigs operating in depths of 500 feet or more, increased from $30,500 in fiscal 2019.
• $37,000 per inspection for rigs operating in shallower waters, increased from $16,700 in fiscal 2019.

The measure would establish new fees for each inspection of well operations conducted through “non-rig units":

• $26,520 for those operating in depths of 2,500 feet or more.
• $23,060 for those operating in water between 500 and 2,499 feet.
• $8,940 for those operating in water shallower than 500 feet.

The fees would be deposited into a new Ocean Energy Safety Fund in the U.S. Treasury, where they would be available, subject to appropriation, for BSEE inspection activities. The measure stipulates that the fees would be considered offsetting receipts, which are scored as reductions in mandatory spending.

The fee increases would be larger than under the Interior-Environment portion of a House-passed fiscal 2020 minibus spending package (H.R. 3055), which would apply only for fiscal 2020.

Two other bills (H.R. 205 and H.R. 1941) also contain inspection fee provisions, though they would set them at lower levels than H.R. 1146. Those bills would permanently bar energy leasing in the Gulf of Mexico near the coast of Florida and in the Atlantic and Pacific regions of the outer continental shelf.

Budget Effects

The committee-approved version, which didn’t include the BSEE inspection fee provisions, would have increased mandatory spending by $600 million from fiscal 2019 through 2024, due to forgone royalty payments and other offsetting receipts from oil development, according to a June 21 cost estimate. The total would increase to $905 million through 2029. Pay-as-you-go procedures would apply.

The bill wouldn’t affect discretionary spending or revenue, according to CBO.

Group Positions

Conservation groups including the Sierra Club, Alaska Wilderness League, and Natural Resources Defense Council (NRDC) have SUPPORTED the bill.

The legislation “reinstates key safeguards to one of America’s most prized wildlife refuges, protections that were stripped away in haste by the 2017 tax bill,” the groups said in a May 1 joint news release with Trustees for Alaska, The Wilderness Society, National Audubon Society, and Defenders of Wildlife.

Michael R. Bloomberg, the former mayor of New York City, is the majority owner of Bloomberg Government’s parent company. The Sierra Club and NRDC have received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg.

The Gwich’in Nation, which subsists on caribou that use the coastal plain as their calving grounds, has also SUPPORTED the bill, according to the testimony of Bernadette Demientieff, executive director of the Gwich’in Steering Committee, at a March 26 House Natural Resources Energy and Mineral Resources Subcommittee hearing.

Kaktovik, an Alaska Native village in the coastal plain that could benefit from jobs related to drilling operations, has OPPOSED the measure, according to the testimony of Matthew Rexford, the village’s administrator, at the hearing. The bill “literally guarantees us a fate of no economy, no jobs, reduced subsistence, and no hope for the future of our people,” he said.

A coalition of 22 groups representing energy industry companies and workers OPPOSED the bill in a Sept. 5 letter.

“Americans deserve clean, safe, reliable, abundant and affordable energy so that our families, communities and businesses can all share the opportunities American energy creates,” they wrote. “Our country cannot afford to block access to new energy supplies and risk losing our energy advantage.” Signatories include the American Chemistry Council, American Gas Association, American Petroleum Institute, American Forest & Paper Association, the U.S. Chamber of Commerce, and Laborers’ International Union of North America.

Administration Position

The White House OPPOSES the bill, and the president’s advisers would recommend he veto it, according to a Sept. 9 statement of administration policy.

Developing energy resources in ANWR’s coastal plain “is expected to increase America’s energy security and independence, create jobs, and provide affordable, reliable energy for consumers while providing much-needed revenue to both the State of Alaska and the Federal Government,” the Office of Management and Budget wrote.

“Prohibiting energy development in new Federal areas would hinder future administrations’ efforts to make up for revenue lost as production declines from leases in aging energy fields.”