The House will soon vote on the FY 2017 Interior, Environment, and Related Agencies Appropriations bill. The underlying legislation is a step forward and includes several promising policy provisions. Two amendments provide significant improvements to the bill. One amendment, offered by Rep. Boustany, will further improve the bill by blocking funds from being used to implement the Administration’s proposed offshore well control rule. Another, offered by Rep. Ratcliffe, will prohibit wasteful spending by blocking funds from being used to implement the Clean Energy Incentive Program (CEIP), part of the Administration’s crusade against affordable, reliable energy. The American Energy Alliance supports these measures and urges all Representatives vote YES.
In April 2015, the Bureau of Safety and Environmental Enforcement (BSEE) published aproposed rule imposing new regulations on the offshore drilling industry. The rule is very complicated and many policymakers, industry specialists, and others directly impacted by the rule are still trying to determine how and if it could be implemented.
This complexity has made evaluation difficult. However, analyses thus far suggest massive costs imposed by this rule. Wood Mackenzie estimated a cumulative GDP reduction of $260-$390 billion and roughly $70 billion in lost federal revenue through 2030. Most importantly, the rule could destroy up to 190,000 jobs by 2030.
API determined that the rule “ultimately could increase risk and decrease safety.” The group indicates the rule prescribes a one size fits all mentality, is far too rigid in its technical aspects, and imposes unnecessary and potentially detrimental administrative and bureaucratic requirements. Ultimately, the rule could actually “increase risk of harm to personnel and negatively impact the environment.”
The oil and gas industry shares the goal of the BSEE in increasing safety and protecting the environment. To that end, the proposed well control rule imposes significant hardship and dramatically higher costs. At the end of the day, innovation and private investment have yielded significant advancements in productivity and safety in offshore resources development. This trend will continue as long as Americans are allowed to experiment and improve. The well control rule will stifle industry development. Rep. Boustany’s amendment will ensure continued improvements in oil and gas safety and environmental stewardship, and all Representatives are strongly encouraged to vote YES on the amendment.
In June 2016, the Administration issued a proposed rule for CEIP design details. The CEIP is a program for states to apply for early credit under the so-called “Clean Power Plan” (CPP). In essence, the CEIP will incentivize the unnecessary shuttering of reliable power plants and instead construct expensive, intermittent energy sources — specifically wind and solar power. Basically, states issue credits to compliant energy projects and the EPA matches said credit.
The CEIP is a quasi-grant/credit program (the Environmental Protection Agency calls them “allowances”) that incentivizes funding to projects that may not be entirely necessary, viable, or cost effective. In the proposed rule, the EPA does not specify if a qualified energy project must be commercially viable. That’s the whole point: without an incentive like the CEIP (or wind Production Tax Credit or solar Investment Tax Credit) this whole operation would be economically unfeasible. Replacing affordable and reliable energy sources like natural gas and coal with wind and solar is simply too expensive — and technically unsound — to make any sense.
Further, the Supreme Court stayed the implementation of the CPP earlier this year. This means the deadlines were all tolled, or delayed, including the CEIP. In fact, 112 Representatives recently requested Administrator McCarthy to clarify her statements regarding the stay. The legal debate surrounding the CPP (and the CEIP) will be tangled up in courts for months, far beyond this appropriations cycle. Federal funds should not be obligated towards the CEIP, especially as it’s legal standing is shaky.
Rep. Ratcliffe’s amendment would block taxpayer dollars from going towards this program. This amendment should be supported by any Representative who values fiscal responsibility and accountability. The American Energy Alliance urges all Representatives vote YES on the Ratcliffe CEIP amendment.