The Jobs and Energy Permitting Act (H.R. 2021)

July 26, 2011

Through the American Energy Initiative, Congress is pursuing a series of sensible energy reforms designed to increase the production of American-made energy, which will bring down costs, create jobs, and make America more secure and energy independent. As part of that effort, Rep. Cory Gardner (R-CO) and Rep. Gene Green (D-TX) authored H.R. 2021, the Jobs and Energy Permitting Act of 2011, which would eliminate needless permitting delays that have stalled important energy production opportunities off the coast of Alaska. This important jobs and energy bill passed the House on July 26, 2011 by a bipartisan vote of 253 to 166.

Background:  Oil and Gas in Alaska’s Arctic Waters

Two of Alaska’s Arctic seas – the Beaufort and Chukchi – are estimated to contain up to 27.9 billion barrels of oil and 122 trillion cubic feet of natural gas, according to the USGS. This resource, if developed, could produce up to 1 million barrels of oil per day of domestic energy. This volume could completely offset our imports from Saudi Arabia. Additionally, a study performed by Northern Economics and the University of Alaska estimates over 54,000 jobs could be created and sustained with offshore production in Alaska. 

The necessity of Arctic exploration is more evident when considering the future of the Trans-Alaska Pipeline System (TAPS). TAPS is a vital artery for domestically produced oil to reach refineries on the West Coast. Originally constructed to handle over 2 million barrels of oil per day, TAPS currently transports fewer than 700,000 barrels per day from Prudhoe Bay to Valdez, AK as production out of the Alaskan North Slope declines every year. If this trend continues many more years, TAPS will be forced to shut down and undergo complete disassembly. The only way to keep this crucial pipeline pumping is to bring new production online. Currently, offshore production appears to be the best prospect available to ensure TAPS continues delivering oil to American consumers. It is also worth noting that as TAPS has declined, West Coast refineries have experienced a greater increase in volumes of oil from OPEC members than other parts of the country.

Realizing the immense potential of Arctic resources, the Department of Interior commenced lease sales for the Beaufort and Chukchi Seas in 2006. It has been over five years since the initial lease purchases – valued in the billions of dollars – and permitting process began, yet not a single well has been drilled due, in part, to redundant and inconsistent actions by the EPA. 

Bureaucratic Delays are Blocking Energy Development

The Jobs and Energy Permitting Act aims to eliminate uncertainty and confusion under the Clean Air Act that has delayed – sometimes for years – oil exploration in the Alaskan Outer Continental Shelf and will apply to other offshore areas as well. While the Environmental Protection Agency’s regional office has granted air permits to allow offshore drilling, the process has repeatedly been stalled when the Administrator’s Environmental Appeals Board rejects the permit already granted. This prevents final agency action, which leaves energy production in a perpetual state of limbo.

Eliminating Uncertainty, Clarifying the Law

To eliminate this uncertainty and unnecessary litigation, H.R. 2021 makes three technical clarifications to the Clean Air Act.

  • It specifies that any drilling vessel must be considered a stationary source – and regulated as such – once drilling commences. This eliminates uncertainty about which rules apply and when in the energy exploration and development process.
  • It clarifies that service ships are not regulated as stationary sources simply because they supply or service the OCS source. Service ships, like delivery trucks servicing factories on land, are regulated under the Clean Air Act as mobile sources; the proposal clarifies that additional Clean Air Act regulation is not layered on simply because these ships are servicing an OCS source.
  • It specifies that air emission impacts are to be measured onshore. This is consistent with the emissions measurements that apply to facilities on land, measuring emissions at the point where they could affect the public, whether at the shoreline or on the fence line.

Cutting through the Red Tape by Bypassing the Bureaucracy

The Jobs and Energy Permitting Act eliminates the permitting ping-pong between EPA and its Environmental Appeals Board. Rather than having exploration air permits repeatedly approved and rescinded by the agency and its review board, EPA will be required to take final action – granting or denying a permit – within six months. Any appeals will go to the D.C. Circuit Court for resolution, because of the national implications of oil production on the Outer Continental Shelf and the need for consistency in decision-making.