Congress’ latest budget deal contains a number of environmental policy changes — most importantly a U.S.-Mexico compact on how to share fossil fuel reserves in the Gulf of Mexico.
Among other things, the compromise struck by Sen. Patty Murray (D-WA) and Rep. Paul Ryan (R-WI) yesterday approves the U.S.-Mexico Transboundary Hydrocarbons Agreement. The pact lays down a framework for how the two countries — along with private American firms and Mexico’s state-owned petrochemical company Pemex — can cooperate in developing offshore oil and gas reservoirs that cross the maritime boundary between U.S and Mexican waters. Since Mexico’s legislature already approved the agreement back in April of 2012, and the Ryan-Murray deal gives the Secretary of the Interior permanent authority to implement it, the agreement should make new oil and gas exploration in the Gulf of Mexico considerably more likely.
“This agreement will make nearly 1.5 million acres of the Outer Continental Shelf, currently affected by a moratorium under the Western Gap Treaty, immediately available for leasing,” said Tommy Beadureau, a senior Interior Department official, at a Senate hearing in October. It will “also make the entire transboundary region, which is currently subject to legal uncertainty in the absence of an agreement, more attractive to U.S.-qualified operators.” Interior’s Bureau of Ocean Energy Management estimates that the area contains as much as 172 million barrels of oil and 304 billion cubic feet of natural gas.
Final approval of the agreement was held up in Congress over disagreements between the House and Senate versions of the bill. The House version included a waiver allowing fossil fuel companies to wiggle out of a provision in the Dodd-Frank financial reform law that required them to disclose payments to foreign governments. The Senate version did not include the waiver from Dodd-Frank, and ultimately the Ryan-Murray deal went with the Senate’s language on the matter.
The Ryan-Murray deal also alters a few other provisions in an effort to bring more money into federal coffers. It eliminates public funding for the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Resources Research Program, which aimed at developing technologies to increase domestic oil and gas production. It also makes permanent a requirement that states help pay the administrative costs of handling and developing mineral leases on public lands, which should save the federal government about $415 million over the next decade. Finally, it reduces the interest the federal government has to pay fossil fuel companies for royalty overpayments on public leases, and it changes the way the government acquires oil for the Strategic Petroleum Reserve.
But arguably the most significant aspect of the Ryan-Murray deal when it comes to environmental issues is what it doesn’t do: it doesn’t get rid of the sequester cuts. The across-the-board government spending reductions will now be $45 billion less in 2014 than before — with the relief evenly split between defense and non-defense spending — and $18 billion less in 2015. But that leaves half the cuts in place for 2014, and even more in place for 2015. And it leaves the remaining six years of cuts untouched, while taking only a small chunk out of the more than $1 trillion in cuts the sequester will ultimately inflict.
The spending reductions have already forced the Environmental Protection Agency to furlough thousands of employees on certain days and to delay non-emergency activities, such as approving air pollution permits. They’ll also force the National Park System to close facilities, delay openings, or reduce hours of operation.
It’s worth noting that between the fiscal cliff deal at the start of this year, the unexpected slowdown in health care costs, and the surprisingly low cost of premiums on Obamacare’s exchanges, deficit projections through 2021 are already $1.6 trillion lower than they were in 2011, when sequestration was passed. In short, sequestration’s original goal has already been achieved, making the cuts unnecessary.