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Energy for a Free Society: The ‘American Energy Act’ (Part II: Real World Reform)

Editor note: The first post in in this three-part series was titled A Free Market Energy Vision (Part I: Worldview); the third isFederal Energy Policy for America (Part III: Cato’s priorities–and a few more).”

The Obama Administration has been implementing an anti-energy agenda since coming to Washington. From day one, Obama and his “dream ‘green’ team” have worked to increase the cost of traditional energy to reduce usage and try to make uneconomic consumer-rejected energy (wind, solar, ethanol, electric vehicles) more economic.

The effects of these policies are now playing out in front of the American people: rising energy prices, tens of thousands of jobs destroyed, and increasing dependence on foreign state-owned energy companies. In response, the free market community has been playing defense.

But even before Obama, multiple-hundred-page interventionist legislation has been signed time and again by Republican presidents. (And it was Republican Richard Nixon who began the era of energy politicization with his wage-and-price-control program despite being elected on a platform to roll back government.)

What would actual free-market energy legislation look like? To start this process, the Institute for Energy Research recently offered model legislation –The American Energy Act. This bill would get rid of unnecessary regulations, increase domestic energy production, create millions of jobs, and lower the price of energy for all Americans.

Unlike the president’s approach of subsidizing politically-favored industries with billions of taxpayer dollars, the American Energy Act would not cost taxpayers one dime. In fact, it would increase the federal government’s tax revenues by increasing domestic economic activity.

Here are ten ways in which the American Energy Act will correct the mistakes made by President Obama’s anti-energy administration:

1. Expedite Energy Permits

Obama: Current law enables the Obama Administration to draw out the permitting process without limit. This forces energy companies and American workers to sit idle for months, waiting to hear whether or not the permit will be granted. The longer an application sits in Washington, the more money it costs our economy in lost productivity and lost wages for workers.

American Energy Act: The Act requires that within thirty days of receiving an application, the responsible agency must issue the permit or return it to the applicant with instructions on any steps they could take for the permit to be issued.

2. Create Regulatory Certainty

Obama: Companies must spend millions of dollars in compliance costs to apply for a federal permit to explore for or produce domestic energy. After satisfying the many demands of federal regulators, the Obama Administration is currently able to apply new regulations retroactively to companies that have already secured permits. As a result, companies function in an environment of constant regulatory uncertainty.

American Energy Act: The Act prevents any new regulations from being applied to projects that have already been issued permits to operate. This common sense reform will protect contracts between the government and producing companies and will develop regulatory certainty which is essential to encourage robust domestic energy production.

3. Allow Development of Oil Shale

Obama: Despite the fact that America’s oil shale contains over a trillion barrels of oil – four times as much as Saudi Arabia, one of the Obama Administration’s first actions was to cancel leases in the West that would have allowed research, demonstration, and development of these resources. In February 2011, the administration further delayed development by ordering another review of current rules for oil shale development. While the U.S. dithers, Estonia and China are moving forward with their own domestic oil shale resources.

American Energy Act: The Act forces the Department of the Interior to follow the law of the land as written in the Energy Policy Act of 2005. This would allow for American companies to invest in America’s massive oil shale resources, bringing thousands of jobs and billions of dollars of economic activity to the U.S. The Act also gives permitting authority to the Federal Energy Regulatory Commission – which is tasked with reviewing and permitting for most other energy projects – instead of the Department of Interior.

4. Stop EPA’s Attempted Takeover of Hydraulic Fracturing

Obama: In President Obama’s ‘Blueprint for a Secure Energy Future,’ he insists that the federal government must have an increased role in regulating hydraulic fracturing. This would be achieved by increasing EPA’s role in state water regulations.

American Energy Act: Hydraulic fracturing has been used over one million times over the past fifty years. Yet, not one incident of water contamination has ever been proved by any government agency or outside organization. Recognizing that the ability to regulate this process at the state level has proven incredibly successful, the Act protects each state’s rights as the primary regulator of hydraulic fracturing.

5. Allow Energy Production in Alaska

Obama: The Obama Administration, like previous administrations, has continued to delay energy production in Alaska. As a result, the Trans Alaska Pipeline System, which could be delivering two million barrels of oil per day to the continental U.S., is flowing at less than one-third capacity and forcing the U.S. to spend over $51 billion per year on imported oil.

American Energy Act: Recognizing that Alaska is home to over 40 billion barrels of oil and 200 trillion cubic feet of natural gas, the Act removes barriers to production there. Environmental analysis of energy production in Alaska has been the world’s most exhaustive. The Act recognizes these studies as authoritative and puts an end to further delay and regulatory barriers.

6. Enhance Energy Production in the Outer Continental Shelf

Obama: Each president after Ronald Reagan has leased less taxpayer-owned federal offshore acres than the previous. The Obama Administration has leased the smallest amount of offshore acres in recent history. Currently, 97 percent of the outer continental shelf (OCS) is off limits to energy production.

American Energy Act: The Act requires that the Secretary of Interior ensure that at least ten percent of the OCS is being leased for the production of energy. This would open up enormous energy potential (over 85 billion barrels of oil) while still leaving 90 percent of federal lands and waters untouched at any given time.

7. Protect States’ Rights to Regulate Water

Obama: The Environmental Protection Agency leaked a document in February 2011 stating that “the agencies expect that the number of waters found to be subject to [Clean Water Act] jurisdiction will increase significantly…” under their definition of ‘navigable waters’. This will lead to increased EPA control over waters on state and private lands – even mud puddles – that have never been the business of the federal government.

American Energy Act: States should have primacy to regulate waters within their state borders, especially wholly intrastate waters. The Acts gives precedent to the states to carry out local and state water laws.

8. Codify ‘Energy Effects’ Requirement

Obama: Various agencies of the Obama Administration, including EPA and BOEMRE, have proposed or imposed new regulations on energy production in the U.S. These agencies did not issue any corresponding report that explained the new regulations’ effects on energy supply, distribution, or use, despite the requirement to do so according to Executive Order 13211.

American Energy Act: The Act codifies Executive Order 13211 and requires any agency that promulgates new regulations on energy production to issue a report on how its new regulations would affect energy supply, distribution, and use. This will give Americans a better understanding of how the regulation will affect end-use consumers.

9. Reinstate Yucca Mountain Project

Obama: In 2009, President Obama stopped all development of the Yucca Mountain complex as a repository for spent nuclear fuel, giving the project only enough funding to cover the costs of answering questions from the Nuclear Regulatory Commission. This decision ultimately put a stop to the only legitimate option for long-term spent fuel disposal.

American Energy Act: The Yucca Mountain project has received billions of dollars for research and development. To stop the project on political grounds is indefensible. The Act declares Yucca Mountain to be the repository site for the nation’s radiological material, unless it is found to be unsuitable by the Nuclear Regulatory Commission.

10. Require Congressional Approval for Costly Regulations

Obama: Currently, EPA does not take into account the full scope of the economic impacts that the agency’s new regulations would cause. Recently, EPA assistant administrator Mathy Stanislaus testified that his agency did not know how many jobs would be destroyed by his agency’s new regulations. Also, EPA’s endangerment finding on carbon dioxide does not account for the massive costs and negative consequences that would result from regulating and limiting carbon dioxide emissions.

American Energy Act: The American people should not be subject to the whims of unaccountable bureaucrats at EPA or any other federal agency. The Act requires Congressional approval for all regulations with an annual effect on the economy of $100 million or more. This will ensure that America remains a representative government instead of government by fiat.

6 comments

1 Andrew { 06.01.11 at 8:41 am }

Sadly I think the prospects for such well needed reforms are not good for the remainder of this year. As long as Obama holds veto power and Harry Reid controls the Senate with an iron fist, every bit of actual reform dies not long after it makes it out of the House. Point 9 in particular will be sure to draw Harry into a person crusade against it-it was he who shut down Yucca in the first place.

However it is vital that we at least show the American people what the alternatives we offer are. So I still appreciate the efforts to get these bills voted on and force the liberals to be on record signing their political death warrants by voting down serious proposals.

Also, on a general free market note: It’s rather encouraging that even all the Democrats that wanted a vote on “clean” debt limit increase didn’t in their entirety vote for such an idea with no less than seventeen defections from the petitioners. So it looks like we are definitely winning on the debate over the need for spending cuts. If similar numbers of Democrats would only defect more often, and in the Senate too…Well, then we wouldn’t have to wait for 2013 before getting anything done!

Incidentally, if anyone feels I’m being to pessimistic, I would love to be told so, thanks! :)

2 rbradley { 06.01.11 at 9:02 am }

Once budget pressures reach windpower in particular, this artificial industry will enter into a death spiral. This is why the Obama Administration and the AWEA are so scared of giving an inch.

3 Ray { 06.01.11 at 12:39 pm }

We need to reduce the scope of government. For instance, abolish the Department of no Energy. They were a boondogle from from the start, a waste of money.

4 Andrew { 06.01.11 at 9:57 pm }

Ray-the energy department is a good start. We really ought to be able to make serious cuts like that. My vote for first to the chopping block has to be the education department…heck the vast majority of government spending is outside it’s intended scope, which is nothing more or less than “establish Justice” “insure domestic tranquility” “provide for the common defense” “promote the General welfare” (as opposed to the welfare of every person, here referring rather to the financial stability of the Country as a whole, in Jefferson’s words “only to pay the debts or provide for the welfare of the Union” as opposed to “any purpose they [Congress] please”) and “secure the Blessings of Liberty to ourselves and our Posterity”. Beyond the purposes for which the Constitution was stated to have created our modern government, it lacks legal authority to step. Morally speaking it arguably is properly delimited at least that far if not farther back from our liberties.

5 rbradley { 06.02.11 at 8:43 am }

The above American Energy Act is just a very good start.

Another whole bill would privatize all energy-related assets held by the federal government and deregulate electricity and interestate transportation of oil, natural gas, and electricity.

6 Alex Epstein { 06.02.11 at 7:17 pm }

Rob, I’m curious to know what you think are the most destructive among the existing oil/gas regulations in terms of thwarting production.

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