SUMMARY OF OFFSHORE OIL AND GAS REFORM BILLS Passed out of Committee and/or Passed out of the House as of July 22, 2010

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1 SENATE SUMMARY OF OFFSHORE OIL AND GAS REFORM BILLS Passed out of Committee and/or Passed out of the House as of July 22, 2010 S Big Oil Bailout Prevention Liability Act Amends Oil Pollution Act of 1990 (OPA 90) Sponsor: Menendez (23 Cosponsors) Status: Passed out of Environment and Public Works Committee June 30 Key provisions: 1) Eliminates cap on financial liability for an oil spill at an offshore facility retroactive to April 15, 2010 so it will apply to BP for the Deepwater Horizon blowout. (Boxer amendment removed $10 billion cap). 2) Improves oil spill response plans: requires proof of financial capability; requires descriptions of training, equipment testing, drills, effects of response methodologies; description of economic and environment impacts of worstcase spill and activities to mitigate impacts. Response plans to be updated periodically and be subject to public review. S Outer Continental Shelf Reform Act Amends Outer Continental Shelf Lands Act (OCSLA) Sponsor: Bingaman (Cosponsors: Murkowski, Dorgan, Stabenow) Status: Passed out of Energy and Natural Resources Committee June 30 Key provisions: 1) Amends policy for OCS so managing agencies recognize other uses and resources of the marine and coastal environment, and minimize potential impacts of development on those resources. 2) Eliminates internal agency conflicts between offshore oil and gas revenue collection and the permitting and regulatory functions by separating them into separate Bureaus: one for leasing and permitting, and another for safety and environmental regulation. Revenue collection will move to a separate office. Also strengthens restrictions on employees to eliminate influence by industry. 3) Adds requirement for safety case documentation to determine safety of systems. 4) Establishes independent program for environmental and technical safety research within a bureau separate from leasing. Program will gather baseline data before drilling and every 3 years on leased areas, and undertake ecosystem research and monitoring as well as research to improve understanding of effects of deep water oil spills, and undertake safety studies every 3 years. 5) Disqualifies from bidding any operators with bad track records. 6) Improves process for developing 5 year plans by requiring that decisions reflect need to protect marine and coastal environments and allows for meaningful input from NOAA and other interested agencies (Fish & Wildlife, 1

2 Coast Guard for example) and requires public consideration of their recommendations on 5-year plans. 7) Strengthens requirements for exploration activities by requiring permits for all drilling operations, extending the 30 day deadline for plan approval to allow adequate time for environmental analysis, adding standards for exploration plan approval including more detailed description of activity and equipment, engineering review of equipment, and capability to respond to a blowout and worst case spill and requiring safety and environmental management plan before permit approval. 8) Requires best available technology and improves safety by requiring redundancy in blowout preventers and adds requirements for permitting deepwater wells. 9) Requires environmental and safety managers on rigs at all times, and requires training, adequate experience and pay rates for offshore regulators. 10) Provides funding for oil spill response and well control research and development. 11) Requires regular reviews and report to Congress on financial responsibility requirements, royalty rates and taxes. 12) Permits National Transportation Safety Board to investigate major accidents at the Secretary s request, require industry cooperation in investigations as condition of lease or permit and calls for more frequent investigation of incidents.. 13) Eliminates current exemption for Gulf of Mexico operations from OCSLA production requirements. 14) Requires study on effect of moratoria on deepwater drilling in Gulf. 15) Establishes a national oil spill commission in the legislative branch. S Department of Interior Research and Technologies for Oil Spill Prevention and Response Act Sponsor: Shaheen (Cosponsors: Bingaman, Udall) Status: Passed out of Environment and Public Works Committee on June 30 1) Requires Department of Interior to carry out a program of research, development, technology demonstration and risk assessment relating to oil spill response in order to improve the state of knowledge and technologies relating to oil spills. 2) Establishes an independent Science and Technology Board to identify knowledge gaps the program should address. 3) Establishes research centers of excellence for research development and demonstration of spill response and containment technologies and a grants program. 4) Requires demonstration projects of spill response in deepwater and extreme environments, and a pilot program for field tests in coordination with EPA. 5) Requires peer review of all research. 2

3 6) Funds program through allocation of $25 million from Oil Spill Liability Trust Fund. S Gulf of Mexico Restoration and Protection Act Amends Clean Water Act Sponsor: Wicker (Cosponsors: Landrieu, Cochran, Nelson) Status: Passed out of Environment and Public Works Committee June 30 1) Establishes Gulf of Mexico Program Office within EPA to coordinate action of EPA and other agencies to monitor, restore and protect water quality and marine ecosystems of Gulf of Mexico. 2) Appropriates $90 million for grants between to state and local governments, non-profits and universities in grants. S Securing Health for Ocean Resources and Environment Act (SHORE) Amends Outer Continental Shelf Lands Act (OCSLA), Oil Pollution Act of 1990 (OPA 90), Coastal Zone Management Act of 1972 Sponsor: Rockefeller Status: Mark up in Commerce, Science and Transportation Committee July 22 Mark up not completed vote pending 1) Enhances National Oceanic and Atmospheric Administration s (NOAA) ability to respond to spills by requiring NOAA to review its current spill response capability and report to Congress; to develop and maintain spill trajectory modeling capabilities; to update every 7 years mapping of environmentally sensitive areas that are leased or under consideration for leasing; and to review its ability to track subsea hydrocarbons and dispersants and review their affect on marine organisms. 2) Establishes within NOAA a national information center on oil spills as single point of access to provide scientific information on spill preparedness, response and restoration. 3) Requires NOAA to establish an initiative to determine effects of oil spills from aging and abandoned oil infrastructure on the OCS and recommend how to address such spills; and to inventory abandoned or sunken vessels and priority for preemptive removal of oil or other action to mitigate risk of spills from the vessels. 4) Amends OPA 90 to authorize funding of $25 million to NOAA for preparedness, response, restoration and damage assessment. 5) Amends Coastal Zone Management Act to authorize grants to states for revising CZMA plans to identify and implement new spill response procedures. 6) Requires NOAA to carry out a long-term (10 years) marine environmental monitoring program for the Gulf to monitor fate, transport and persistence of oil, dispersants and affects on fish and wildlife and local 3

4 economies; requires cooperation with US Coast Guard, academics and experts; requires data be made available to the public; biennial report to Congress. 7) Requires NOAA, in collaboration with other agencies with expertise, to direct research to improve oil spill prevention, response and recovery in Arctic waters. Research to address: baseline data, identification of important ecological areas, critical habitats and migratory behaviors, spill trajectory modeling; currents and weather data, cold water oil recovery, local and traditional knowledge. 8) Requires Coast Guard to improve capability to respond to maritime disaster in Beaufort and Chukchi Seas (open to offshore leasing). 9) Gives Coast Guard, authority to review and approve oil spill contingency plans. 10) Requires that Area Contingency Plans include advance planning regarding closing and reopening fish grounds following an oil spill. 11) Requires best available technology for spill response equipment; establishes technology clearinghouse in Coast Guard and enhances inspection requirements for Coast Guard for drill rigs, drill ships and vessels. 12) Requires Coast Guard in consultation with NOAA to establish navigation safety measures to protect ecologically important natural resources. 13) Establishes Gulf of Mexico Regional Citizens Advisory Council under OPA ) Increases financial liability under OPA 90 for vessels. 15) Increases maximum allocation from the Oil Spill Liability Trust Fund to the Coast Guard from $25 to $50 million for oil spill operating expenses. 16) Requires immediate notice of oil spills to the public and of marine casualties to appropriate government entities. 17) Requires NOAA, in coordination with relevant government agencies, to develop standard national protocols for oil spill response and cleanup assessments. 18) Amends the Outer Continental Shelf Lands Act to provide for input from NOAA and Coast Guard into Dept. of Interior s 5-year leasing program, and requires consultation with NOAA and inclusion of recommended mitigation on all oil and gas activities. 19) Establishes Federal Oil Spill Research Committee of representatives from NOAA, Coast Guard, EPA and other appropriate agencies to coordinate research and development on oil spill prevention and response capability. 20) Amends the Clean Water Act to give the Sec. of Transportation authority to require and inspect oil spill response records of offshore facilities. 4

5 S The Oil Spill Response and Mitigation Act of 2010 Sponsor: Hutchison (Cosponsor: LeMieux) Status: Passed out of Commerce, Science and Transportation Committee July 22 1) Creates a Maritime Center of Expertise for Oil Spill Response to train Coast Guard personnel, as well as other federal, state and local first responders, on the latest techniques and strategies to respond to oil spills; 2) Require the Coast Guard to maintain a National Strike Force and Strike Force Teams with the ability to mobilize and respond to oil spills and hazardous substance releases anywhere in the continental US within 24 hours. 3) Require the Coast Guard to maintain an inventory of oil spill response equipment that has been tested and approved to ensure that first responders are using the most effective equipment and technologies available. HOUSE H.R Consolidated Land, Energy and Aquatic Resources Act (CLEAR) Amends Outer Continental Shelf Lands Act (OCSLA) in Title II Sponsor: Rahall Status: Passed out of Natural Resources Committee July 15 1) Eliminates internal agency conflicts in Department of Interior by abolishing Minerals Management Service and creating new Bureaus: Resource Management (includes independent office of environmental science); Safety and Environmental Enforcement; and Office of Natural Resources Revenue. Also requires employees comply with ethics laws and strengthens restrictions on employees to eliminate influence by industry 2) Adds requirement for safety case evidence to determine safety of systems. 3) Amends OCS policy to require more balanced approach to oil and gas development so that impacts to marine, coastal and human environments are minimized. 4) Requires Sec. of Interior to promulgate new regulations to set standards for ensuring harmful effects of drilling activities are minimized, for performance standards for blowouts and mandatory 3 rd party inspection of safety equipment. Consultation with Dept. of Commerce is required on marine and coastal issues. 5) Improves 5-year plans by requiring consideration of environmental factors and advice from NOAA and other interested agencies, limiting the size of lease tracts to 5,760 acres, requiring 3 years of baseline data, and disqualifying from bidding on leases or drilling wells companies with violations of health, safety, and environmental laws in the preceding 7 5

6 years; and requiring consideration of availability of oil spill response infrastructures. 6) Strengthens standards for approval of exploration plans by extending the deadline for approving exploration plans from 30 days to allow adequate time for review and environmental analysis; requiring environmental analysis under NEPA (eliminating use of categorical exclusions from NEPA); requiring greater detail about planned operations, 3 rd party certification of safety equipment, scenario for a blowout and availability of rig to drill relief well; requiring the use of best available technology and requiring demonstrated capability to respond immediately to worst-case spill. 7) Requires environmental baseline studies in cooperation with the Sec. of Commerce on areas where lease sales are scheduled, at least every 3 years, and requires Sec. of Interior to identify and reduce data gaps relating to deep-water oil spills. 8) Requires permit for drilling activity and requires full engineering review of well system and safety and environmental management plan. 9) Requires more frequent studies of adequacy of health and safety regulations relevant to OCS and requires use of best available technology. 10) Requires more rigorous inspections of drilling rigs that must occur monthly and requires more frequent investigations of safety incidents. 11) Strengthens production plans by adding safety and environmental protection requirements (similar to exploration plans) requiring environmental review under NEPA (eliminating use of categorical exclusion from NEPA) and making plan approval contingent on demonstrated spill response capability. Also eliminates current exemption for Gulf of Mexico operations. 12) Directs a portion of OCS revenue into a new Ocean Resources Conservation and Assistance (ORCA) fund. 13) Requires regular reviews and report to Congress on financial responsibility requirements, royalty rates and taxes. 14) Repeals royalty relief provisions (deep water, shallow water-deep gas and Alaska) enacted in 2005, and eliminates authority for a regular royalty-in-kind program. 15) Establishes system for coordinated planning and regional assessments of ecosystems to inform decisions for ocean, coastal and Great Lakes resources. 16) Establishes Gulf of Mexico restoration program. 17) Establishes a national oil spill commission in the legislative branch. 6

7 H.R Oil Spill Accountability and Environmental Protection Act Amends Oil Pollution Act of 1990 (OPA 90), Clean Water Act and Jones Act Sponsor: Oberstar Status: Passed out of Transportation and Infrastructure Committee July1 1) Strengthens OPA 90 liability provisions by repealing the $75 million cap on liability for spills from offshore facilities, retroactive to April 19, 2010 so it will apply to BP for the Deepwater Horizon blowout; increasing the minimum level of financial responsibility for an offshore facility to $1.5 billion and requiring review and increase of limits every 3 years; and authorizing compensation for human health impacts. 2) Updates the 1920 Death on the High Seas and Jones Acts to authorize recovery for non pecuniary damages allowed under general maritime law. Also repeals limits on liability of ships owners under 1851 Limitation of Liability Act. 3) Requires vessels including offshore drilling units, to be U.S.-flagged and thus subject to U.S. safety regulations 4) Streamlines process for claims approval for damages from a spill. 5) Requires all offshore drilling units implement a safety management plan and the Coast Guard to develop standards to address a worst-case oil spill. 6) Requires Coast Guard to concur in oil response plans for offshore facilities, and clarifies responsibilities of EPA, Coast Guard and Dept. of Transportation with respect to response plans. 7) Requires Coast Guard to increase marine safety inspectors, engineers and investigators, and increases Coast Guard personnel. 8) Amends OPA 90 to require safe use of dispersants. 9) Amends the Clean Water Act to require a publicly available database to track all discharges of oil or hazardous substances into marine and coastal environment. 10) Calls for review by Deepwater Horizon Commission to recommend to Congress necessary changes to division of responsibility among agencies. 11) Authorizes additional appropriations for the next 4 years from Oil Spill Trust Fund to pay for Coast Guard, EPA and Dept of Transportation for costs of implementing Act. H.R Blowout Prevention Act Amends Clean Air Act Sponsor: Waxman (Cosponsors: Markey, Stupak) Status: Passed out of Energy and Commerce Committee July 15 1) Prohibits drilling high risk wells without demonstration and written certification by CEO that blowout or other control equipment will prevent a blowout, that applicant has a response plan and can promptly stop a blowout and demonstrates capacity have relief well within 90 days. 7

8 2) Requires regulations be issued to require use of blowout preventers and well casing and cementing programs for high-risk wells, and that designs will operate in location to be used. Sets out specific technical requirements and requires 3 rd party certification of blowout preventer prior to drilling, and specific standards for certification. Establishes independent Well Control Technical Advisory Committee to review and comment on regulations 3) Requires regulations to ensure safe design of high-risk wells that will include barriers and other controls and 3 rd party certification. 4) Requires operators to stop work when conditions indicate immediate risk of blowout. 5) Requires periodic unannounced inspections and in-person observation of tests by federal inspectors. 6) Establishes for judicial review of regulations, investigations of violations and citizen suits to compel compliance with Act. 7) Amends Clean Air Act to facilitate investigation by the Chemical Safety and Hazard Investigation Board into marine oil spills. H.R Safer Oil and Natural Gas Drilling Technology Research and Development Act Amends Energy Policy Act (EPACT) of 2005 Sponsor: Gordon Status: Passed House of Representatives July 21 Key provisions: 1) Enhancement of existing efforts for research and development of safety technologies. Amends section 999 of EPACT The bill shifts the focus of each of the program s four elements toward advancing safety and accident prevention and mitigation technologies associated with oil and natural gas exploration and production. It also expands the scope of offshore R&D activities to those involving water depths of 1,000 feet or greater, a reduction from the 5,000 feet in current law. H.R Federal Oil Spill Research Program Act Amends Oil Pollution Act of 1990 (OPA 90) Sponsor: Woolsey (Cosponsors: Baird, Lujan, Johnson) Status: Passed House of Representatives July 21 Key provisions: 1) Establishes federal oil spill research committee for response plans 2) Directs NOAA to work with National Academy of Sciences and to award grants for research related to oil spill detection or prevention 8