• Offshore Energy Development
  • November 8, 2010 | Author: Michael D. Olsen
  • Law Firm: Bracewell & Giuliani LLP - Washington Office
  • Where Offshore Drilling Legislation Currently Stands:

    • Despite overwhelming public support for a legislative response to the Macondo blowout, drawn out Congressional actions allowed science and technology to catch up with the rhetoric, and slowly public interest and outrage began to fade.

    • Ironically, the Obama Administration also slowed the momentum for passage of spill response legislation with its statements that three quarters of the oil that had been released into the Gulf had evaporated, broken down, been captured, or burned.

    • Energy and oil spill response legislation during the lame duck is implausible. Senate Majority Whip Dick Durbin (D-IL): "There are many choices and most of them are controversial, so to think that we could do them quickly in a lame-duck is a long shot." (The Hill, 9/28/10)
    • House and Senate Republicans are united in their opposition to legislation that mirrors the House-approved CLEAR Act.

    Political Climate Surrounding Drilling Legislation in the 112th Congress:

    • The change in the House to Republican control and significant pickups by Republicans in the Senate will certainly impact the legislative agenda for offshore drilling.

    • Action taken in the Congress will depend to some degree on the Interior Department's efforts to impose additional requirements on industry through regulation.

    • A Republican-controlled House and a Democratic-controlled Senate are well suited for deal making and compromise.

    • A split Congress may force the Democrats and Republicans to soften some of their more hard-line stances and find common ground.

    • Consequently, the President will be in a stronger position to act as a deal broker. 
    • Indications are that House Republicans, with support from Senate Republicans, will also focus on more robust oversight and investigations of the Interior Department's decision making in the wake of the Macondo blowout.

    What Could Generate Renewed Interest in Drilling Legislation?

    • We do not expect to see a rush to legislate at the beginning of the 112th Congress. Staff will likely make recommendations on legislative action based on the final results of ongoing investigations into the causes of the Macondo blowout. For example, look for hearings following the January release of the report of the Bipartisan Commission on the BP Deepwater Horizon Oil Spill and then legislation in the spring or summer.

    • Like it has with shallow water permits, we expect that the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) will begin to issue deepwater drilling permits at an exceptionally slow pace, despite the lifting of the moratorium. We expect increased calls from Republicans and oil-state Democrats for legislative action mandating drilling application approvals.

    • With regard to the timing of spill response legislation, consider that after the Exxon Valdez spill in March of 1989, it took Congress more than 18 months to pass the Oil Pollution Act of 1990.

    What Could Offshore Drilling Legislation in the 112th Congress Include?

    • Many Republicans would be very content with doing little or nothing with regard to offshore drilling legislation or comprehensive energy reform legislation. 
    • Nevertheless, the House and/or Senate will likely develop some form of spill response legislation, but it will be more narrow, more technical, and more tempered than the CLEAR Act passed by the House in July. For example, look for more reasonable attempts to address concerns regarding oil spill liability and financial risk.
    • Without a resurgence of public interest in legislation addressing the blow out and offshore drilling generally, a more comprehensive energy bill or other major legislation will likely be the vehicle with which changes to laws impacting offshore drilling will be made.