March 20, 2023

Republicans Introduce Bill To Enhance U.S. Energy Production While President Approves Key Project

Lawmakers in the U.S. House of Representatives have introduced H.R. 1, The Lower Energy Costs Act. The designation of H.R. 1 means this bill will be among House Speaker Kevin McCarthy’s (R-Calif.) top priority for this session of Congress.

Announcement of the legislation came the same week that President Joe Biden’s administration approved a permit for the $8 billion Willow oil drilling project in the North Slope of Alaska. That move will make 16 million acres of land and water in Alaska available for energy exploration and production.

The purpose of H.R. 1 is to increase “the production and export of American energy and reducing the regulatory burdens that make it harder to build American infrastructure and grow our economy. H.R. 1 combines 20 previously separate legislative measures designed to remove permitting roadblocks to oil, gas and renewable energy production, pipeline and powerline construction, critical minerals mining and processing, energy refining, and export infrastructure.

Specifically, the legislation would:

  • Reduce royalty rate companies that drill offshore need to pay to the government from at least 16.67 percent to 12.5 percent.
  • Limit the president’s authority to block cross-border energy projects like the Keystone XL pipeline.
  • Make it easier to sell U.S. liquified natural gas abroad by getting rid of the need for Energy Department approval for export applications for countries where the U.S. doesn’t have a free trade agreement.
  • Set two-year time limits for conducting a more-stringent type of environmental review known as an environmental impact statement for major projects. These reviews would also be limited to 150 pages, except for extraordinarily complex projects, where the reviews would have a 300-page maximum.
  • Eliminate a program that aims to reduce planet-warming methane emissions from the oil and gas sector by both providing grants and loans to help companies cut emissions and also issuing fines on excess emissions.

While U.S. House lawmakers may ultimately consider and approve the legislation, Senate Majority Leader Chuck Schumer (D-N.Y.) called the package a “non-starter” for negotiations with his chamber.

Individual companies will need to weigh in with their support.

The Energy Equipment and Infrastructure Alliance (EEIA), which MSCI is a member of, will send its Executive Committee to Washington, D.C. this week to meet with leaders in both the House and Senate to develop strategy to help move the bill through the House in the next couple weeks, and then through the Senate once it passes the House.

MSCI also will support this legislation because it presents one of the biggest opportunities the industrial metals sector has had in years to make significant progress in removing barriers to energy infrastructure development. The supporting voices of businesses and workers in the community will be decisive in this debate.

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