Murkowski Comments at Bureau of Ocean Energy Management Field Hearing on Offshore Development

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Thank you Director Bromwich and thank you all for inviting me to provide this formal statement on the future of offshore energy development. While I am encouraged that representatives of the Interior Department are here to listen to Alaskans, I have reason to remain deeply concerned that not enough is being done, or will be done, to put our nation back on a path to economic and energy security.

In 2009, I provided comment when Secretary Salazar held a hearing on the OCS 5-year plan here in Anchorage. At the close of the comment session, I was left with a level of confidence that our discussion would result in a good faith effort to advance a balanced and productive offshore energy policy.

Almost exactly a year later, the President announced the proposed revisions to the 5-year plan. These revisions were the result of years of work, negotiation and education on the many contentious issues surrounding the concepts of federal oil and gas development. But the plan included a very modest and tightly limited exploration season for the Beaufort and Chukchi sea planning areas, while issuing a Presidential moratorium in the North Aleutian Basin planning area. Future Arctic offshore lease sales were delayed due to the potential cumulative impact of too much exploration too fast.

It’s fair to say that this revised plan was a difficult compromise for all parties to agree upon, but it was a path forward. Much has changed since that time. We still mourn the loss of the 11 workers on the Deepwater Horizon rig and I feel the strong and lingering emotion at the images and accounts of the spill itself, which brought back many of our worst memories of the Exxon Valdez spill. It’s appropriate to react to the Gulf spill with disappointment, but some responses have been motivated by anger rather than sound policy choices.

On May 28, Interior issued what it called a deepwater drilling moratorium. I believe there’s no dispute over the fact that the administration knew that more than 23,000 jobs would be lost as a result of this decision, and that the National Academy of Engineers, who the administration charged with determining what responses would be appropriate to deal with safety issues after the spill, never recommended any moratoria. In other words, the administration knowingly destroyed 23,000 jobs in a time of nationwide economic instability for no apparent safety or environmental benefit.

What’s worse is the fact that this administration’s estimate of 23,000 jobs lost is incomplete. It doesn’t tell the whole story because it presumes, wrongly, that all drilling under the moratorium will simply resume the moment the President declares the moratorium over. Even if the President lifts the moratorium early, as I understand he’s considering, it won’t matter because the permit process has also been frozen.

It is dangerously naïve for anyone with regulatory experience to suggest that all the Gulf’s drilling rigs would be able to simply switch back on the minute the moratorium is removed. It doesn’t work like that, Director Bromwich. During this moratorium, rigs have left the country and will stay gone for years. Diamond Offshore, Anadarko, Murphy Oil have all shifted investments overseas. People with special skills have left with those jobs and are now working under governments who can manage the risks of an industry without simply removing the underlying activity.

And certainly, when we’re talking about Alaska specifically, the end of the moratorium carries no guarantees that the permitting work necessary for the 2011 exploration season will be in place. The primary leaseholder in the Alaska OCS was notified that its leases would be suspended from exploration as well, even though they were not in deepwater and were operating under none of the criteria laid out in the moratorium documents. This killed what would have been a critical exploration season this summer and sidelined some 600 Alaskan jobs. To this day there has been no formal explanation as to why or how Alaska’s activity was suspended in reaction to an accident thousands of miles away.

Let me repeat that. There has been no clarification, no documentation, no explanation of why Alaska was dragged into this moratorium or what the terms of this suspension are. This is one more reason why the moratorium itself has been called into legal question. It was invalidated under the most scathing federal court opinion I have ever read. Judge Feldman called the moratorium “punitive,” which clearly applies to the apparent rationale for the suspension of Alaska’s leases. What is the rationale for not communicating with Alaska’s leaseholders or working on their permits? Are there environmental risks involved in answering questions or processing documents?

Since the court ruling, the administration has reissued the moratorium, but again the process is so baffling and unclear that our Alaskan companies can’t tell which moratorium they are under because neither set of documents covers or even references the class of activities which would be taking place in the Alaska OCS. In fact, the most recent moratorium documents go to great length to describe the comparatively small risk of shallow water exploration, which at 150 feet of water is exactly what Alaska’s leases would be.

The arbitrary and capricious nature of this continued suspension and continued refusal by Interior to explain its actions is inexcusable and potentially illegal. My sense, unfortunately, is that this administration has succumbed to political pressure to pull Alaskan activity into the moratorium in reaction to the Gulf spill, even though it had no defensible justification for doing so.

But again, this problem goes beyond Alaska. And while it may be difficult to appreciate the broader impacts of this moratorium on the families, workers and companies who did nothing wrong and simply want to get back to work, the consequences are very real and getting worse. The oil and gas industry is not regional; it buys goods and services from every single state and it delivers its products to every single state in the nation.

If the administration wants a safer offshore program, it needs to say what the new requirements are and let leaseholders know that they may resume work as soon as they comply. This has been within your power throughout this ordeal and it’s beyond comprehension why it has taken so long to verify compliance with the additional safety requirements of the NTL’s.

Director Bromwich, I know you view your top priority at Interior as leading a “swat team” to go after what you perceive to be bad actors within your agency. But it’s been months since the moratorium was imposed, and at this point I believe the best thing you could do is provide a date certain on which you are prioritizing your duty as a manager rather than an unusually aggressive inspector general.

Interior needs to do its job. The Outer Continental Shelf Lands Act directs the expeditious development and production of America’s offshore resources. The administration is in violation of this statute. This violation is tearing families apart and permanently damaging the national economy.

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