Conservationists pushed to include measures that would slow oil and gas drilling on public lands, while the industry lobbied to have them taken out. The compromise struck in the House bill will be fought over during final negotiations with the Senate, which did not include the measures.
The overall House bill would require electric utilities to produce 15 percent of their power from renewable sources like wind, solar or biomass by 2020. It also would repeal $16 billion in tax breaks over 10 years for the oil and gas industry, using the money for renewable fuels and efficiency programs.
The bill has drawn a range of reactions.
“It's really a very modest, common-sense series of reforms to bring back some balance to the way the federal government manages its oil and gas program,” said David Alberswerth of the Wilderness Society. “They're good management, good government provisions and folks in Wyoming and Montana really need to support those.”
Kendall Van Dyk, a Billings Democrat in the Montana Legislature and a field coordinator for Trout Unlimited, said his group still supports the bill despite their disappointment.
“Some of the most important protections for hunting and fishing were stripped out in the negotiation process,” he said. “Sportsmen asked Congress for leadership and what we got was political posturing and milquetoast policy.”
Andrew Bremner of the Independent Petroleum Association of Mountain States said some of the provisions are “the antithesis of trying to work on energy independence.”
“In general, we think it's a wrong step for energy policy in the United States, at least as it relates to domestic production,” he said.
Both Rep. Denny Rehberg, R-Mont., and Barbara Cubin, R-Wyo., criticized the bill for not focusing on clean coal technologies.
“Simply said, this is not an energy bill,” Cubin said in a statement. “It actually moves our country dangerously further away from energy independence. The bill either ignores or flat-out hinders oil and gas production, clean coal technologies, oil-shale development and nuclear power.”
The House bill would amend the Energy Policy Act of 2005 so that applicants for drilling permits on public lands would pay a $1,700 fee. The money would go to the Bureau of Land Management for administrative costs.
The bill also would eliminate pilot projects established by the 2005 act to streamline that permitting process, Alberswerth said. BLM field offices with pilot projects include those in Miles City, and in Rawlins and Buffalo, Wyo.
Each permit costs the BLM $4,000 to process, Alberswerth said. He said the cost to the BLM of processing applications has more than doubled - from $58 million in 2000 to about $121 million in fiscal year 2008. The industry that's benefiting financially ought to pick up part of the costs, he said.
Bremner said the fee would just take money out of capital budgets that could otherwise be spent on putting products into the pipeline. “It's like the IRS charging a fee for the time they spent to process your tax return,” he said. “They created the process, and now they're saying you have to pay me.”
The bill also deals with split estates, where the BLM controls the underground minerals but private landowners control the surface rights.
It would require that surface owners be notified in advance of lease sales, be informed of activities on leases, and participate in bond proceedings and inspections. It would also require either a surface use agreement or special permit conditions and a bond to cover the cost of restoring damages to protect surface owners' interests.
“These are very important provisions for ranchers and farmers in eastern Montana and northeastern Wyoming in particular,” Alberswerth said.
Bremner said the vast majority of cases have surface use agreements and that in the case of legitimate disagreements there are other ways to resolve the dispute than the House provisions.
“Once again, it adds more costs, delays to the process, which means fewer molecules of natural gas headed to the consumers,” he said.
He also said the provision would raise the issue of land values and what the areas are worth to the surface owner. “This leaves it much more open to disagreement,” he said.
Jill Morrison, of the Power River Basin Resource Council, said her group is particularly interested in the split-estate provisions and another on higher bonding requirements.
The House bill would require the BLM to impose bonds on oil and gas operators on federal lands at a level that reflects the actual cost of returning disturbed sites to their previous condition. The BLM currently requires a blanket fee of $150,000 per operator for all wells nationwide, she said.
“The oil and gas industry gets away with almost murder on bonding and reclamation compared to almost any other industry,” she said. “Coal has updated bonding every year for the cost of reclamation.”
The bill would also require oil and gas operators to replace water supplies lost or damaged as a result of drilling operations. Van Dyk said sportsmen see compliance with the Clean Water Act as one of the most important provisions.
“Production in Montana and Wyoming is increasing,” Van Dyk said. “Putting our public lands and clean water at risk during this time of energy development is not something that's acceptable to the sports community.”
Bremner said the change would raise an issue of creating new water rights by replacing underground water. “I think it could open a host of litigation issues that may not be anticipated or foreseen by the folks that drafted that,” he said.
“If you damage someone's water you probably are going to be held liable under some other theory of liability,” he added.
The original House Natural Resources Committee bill would have completely repealed the use of “categorical exclusions,” which exempt certain drilling projects from requirements to prepare an environmental assessment. But the House-passed bill instead allows the BLM to continue using the exclusions if it follows existing Council on Environmental Quality rules governing their implementation.
“Right now, they're not doing that,” Alberswerth said. “They claim they're exempt from that. That's an improvement. The (BLM) issued over 2,000 drilling permits last year under categorical exclusions.”
Van Dyk criticized the bill for dropping the original provision. “What I'm concerned about is agency managers under the bill now can bypass requirement for environmental review and public involvement through these categorical exclusions,” he said.
But Bremner said the exclusions apply only to situations where environmental analysis has already been done. “Why do we have to keep doing redundant analysis?” he asked. “Why take BLM resources that could be monitoring implementation and require them to do more paperwork at their desk?”
The bill would also impose a $1 per acre annual fee on idle federal leases. That would raise about $30 million and would be used for the Healthy Lands Initiative, Alberswerth said. “Those damaging wildlife values should pay for restoration,” he said. “This is a mechanism for coming up with some money from industry for wildlife restoration projects.”
Another provision would require an opportunity for public notice and comment when the BLM grants waivers from lease stipulations, or provisions protecting environmental values.
The 2005 act would be changed so that the 30-day deadline for review of drilling permit applications would be extended to 45 days. The bill originally would have extended it to 90 days, but that was reduced during negotiations.
Alberswerth said the change would give the BLM a little more flexibility. Bremner said it would likely have small impact because most permits take longer to be approved anyway, but that it could increase the costs for some producers.
The House bill must now be reconciled with the Senate version, which does not contain any of the proposals. Alberswerth said it will be difficult to keep them through the conference committee process.
“The industry is absolutely opposed to any of these changes, they'll try to get them all taken out,” he said. “They have influential allies in the conference (but) we've gotten this far.”
Van Dyk said Trout Unlimited will still support the bill, although “it's not enough to ensure responsible development out West.”
“We just wish Congress would have been a little more farsighted,” he said. He added the group will “be there every step of the way” as negotiations continue.
Bremner said his group will be monitoring the bill “and see what information we can provide to make a reasonable choice as they contemplate this during the conference.”
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