Oil Industry Regulations by the US Government - Literature review Example

Oil Industry Regulations by the US Government Name: Institution: Professor: Course: Date of Submission: Oil Industry Regulations by the US Government Introduction There have been a number of cases that have resulted into the setting up of regulations and laws to govern natural gas and oil exploration on the offshore land of the Gulf of Mexico. These laws were put in place by the United States of America’s government in the lieu to resolve some of the problems experienced in the exploration and production of oil as well as natural gas. The setting up of regulations has taken a number of years and process which would take a good period of time to discuss them all (Northrup, 2003). As a result, this article will only focus on the oil industry regulations set up by the US government in most recent years to improve productivity in the industry. However, the earliest disputes were more inclined on the ownership of waters at the cost which had oil exploration potential. This went through a number of stages to resolve who had the right to own the land in which a certain percentage was given to the right and governance of the US government. Literature Review From research done on peer reviewed literatures, legislation on oil industry encompassed both land and environmental issues. The most recent policies to be formed were in the year 2005. It is therefore important that these regulations are looked at systematically to offer a clear view of what entailed the regulations and how the industry was affected (Bantekas, Paterson & Suleimanov, 2004). The Energy Policy Act of 2005 This policy was signed by President George W. Bush in August 2005. This was the first inclusive state energy preparation for the United States of America for the previous 13 years. It was an amalgamation of most regulations previously done and in cases which they proved not to survive the test of time. This policy has a wide range of impacts on oil exploration in the offshore regions of the Mexican Gulf. This Act mainly affected the Mineral Management Service (MMS) and the Outer Continental Shelf (OCS). The following are just a section of the provisions included in the Act which should not be taken as totally inclusive: According to this policy, the MMS was meant to carry out an expansive account and investigation of the approximated oil recourses on the OCS. This account encompasses the Moratoria sections that are at the moment prohibited for oil exploration. The policy states that MMS has to employ any possible expertise except the use of drilling to carry out the account as well as the 3-D seismic analysis. After the account, an original report has to be provided to the congress within a period of six months. Following the limitation in the timeframe of report submission to the congress, the MMS was provided by the law that mandate to get available seismic information from the oil industry’s database (Garte, 2008). On the other hand, a novel coastal effect aid program was meant to offer $250 million from the OCS income every year for the financial years from 2007 to 2010 that has to be channeled to six energy-producing offshore economies including Alabama, California, Mississippi, Alaska, Texas and Louisiana. These funds would be allocated to the respective states according to the income ratio of OCS gotten out of the countries’ offshore to the entire OCS income in the central government waters (Benjamin, 1982). The effect of the new formula would cause Louisiana to get the lion’s share of financial support from the federal government going up to 54%. This money according to the policy had to be put in the improvement and conservation of the coastal region of the state. Similarly, the policy has clearly stipulated the Federal Energy and Regulatory Commission (FERC) exceptional rights under the Natural Gas Act for positioning, creation, development, and operation of any given equipment that imports or exports natural gas in liquid form. This still had to be done in consultation with the respective states’ authorities concerning safety matters. There is also room in the Act which establishes a timeframe for resolutions on appeals of the persistency establishment under the Coastal Zone Management Act. In case an affected state appeals the persistency resolution made by the secretary of Commerce, this Act of 2005 calls for the Secretary to close the management record for the complaint within 160 days. However, there are conditions in which an allowance of 60 days is granted. This has to follow the secretary’s ultimate rule on the results of the complaint (Melosi & Pratt, 2007). A number of rights in the 2005 Act offers escalated rewards for oil exploration in the coastal areas so as to catalyze production. Among the rewards, there was royalty relief based on natural gas produced from bottomless wells in the superficial waters of the Mexican Gulf as well as the oil production deep waters of the same region (Clark et al, 2001). However, according to this Act, the internal Secretary has control over giving out the relief basing on the oil market prices. Still, the legislation adds to the OCSL Act to incorporate planning sections coast of Alaska for royalty deferral at the Interior Secretary’s will. This policy grants power to the MMS to control and supervise other energy linked schemes on the entire OCS (Hirsh, 2003). It was meant to control tendencies of unnecessary conflicts on projects towards oil and gas exploration developments. Before this right was legitimized, there was a gap in the policy concerning alternative energy schemes. US Commission on Ocean Policy This commission was established in the Ocean Act of 2000 (Geology Survey (US), 2009). This involved a bipartisan panel chosen by the sitting president to evaluate current ocean laws and provide recommendations for the prospective future of the ocean resources. This commission completed the task given to them by 2004 and had a wide range of recommendations of up to 212 which discussed all areas concerning natural gas and oil exploration as well as production. These proposals by the commission however have a number of effects on the coastal natural gas and oil exploration. According to some of the proposals, there should be a change in the constitution of leasing income allocation so as the offshore states exploit renewable marine and coastal assets, enlarging studies on the environment carried out by the MMS (Hoffman, 2006). This program was meant to provide a more detailed study about the suitability and viability of natural gas exploration and manufacture. In the entire report, the commission put more emphasis on the significance of environmental conservation and reclamation, heightened utilization of preservation activities, as well as the necessity to transform tendencies in biodiversity decline. The policy was therefore enacted by the federal government to make sure that ocean recourses are not overexploited and only renewable assets are extracted. The environment was as well in mind when this policy was being formed so that cases of environmental pollution and degradation are reduced to the minimal levels as much as possible. The commission therefore carried out an extensive research on the possibility of oil extraction causing harm to the society around and recommendations were meant to curb such incidences (Hoffman, 2006). States’ Rights In the most recent time, there has been a lot of focus in the United States of America on the level of power rendered to respective States about the control of their coastal waters. Such controversies have led into the enactment of the Coastal Zone management Act in which a State can evaluation governmental actions on the coastal region of its territory and compare with the State’s plan for any approval to be done (Lowrie & United States Congress, 2011). It therefore involves the State itself in the establishment of the potential exploration of natural gas and oil on its coastline. In case the activities go in line with the requirements of the State, then endorsing is required from the State before exploration commences. The Act did not however become effective until in early 2005 when the State was given the mandate to have more control of their coastal lands. This would allow the State to either approve or prohibit excavation activities from its coastline of up to 12 nautical miles from the coastline. This was opposed to the initial proposal of 3 nautical miles prohibition. In the initial laws concerning oil exploration, there was a clear stipulation of the state oil drilling of up to 100 miles from the shores and 40 miles for the case of natural gas. However, there is currently no distinction between oil and natural gas. This puts the oil wells at risk of being overexploited as restrictions are meant to safeguard the investors from destroying natural resources (Olien et al, 2000). Conclusion As noted from the discussion in this article, natural gas and oil exploration has formed a major economic activity in the United States of America. However, controversies have been noted for some decades now on the safety of engaging in these explorations (Public Affairs Information Service & H.W. Wilson Company, 1983). This has resulted into the formation of laws and regulations to govern the activities particularly on who should have total control over the coastal land between the federal government and the respective states. This is what has formed the central theme of this article as it has sought to find out some of the regulations put in place by the United States of America’s central government. The article has as well given an explanation on the effects of these regulations to the respective states as they seek to benefit from the entire venture into oil and natural gas exploration (Dautrich et al, 2009). Notably, some of these regulations sought to allow the individual States to have full control of their coastal land and either endorse or prohibit the production of these natural resources. It has also been discovered that environmental safety became a vital point to consider in the enactment of such regulations. Among the policies looked at include the Energy Policy Act of 2005, US Commission on Ocean Policy and ultimately the States’ Rights. Social responsibility of the federal government in the three areas so far looked at was to facilitate development out of the revenue received through natural gas and oil exploration to the particular States. References: Northrup, C. (2003). The American economy: a historical encyclopedia. California: ABC-CLIO. Dautrich, K., et al. (2009). American Government: Historical, Popular, and Global Perspectives - Texas Edition. New York: Cengage Learning. Hoffman, B. (2006). Art and cultural heritage: law, policy, and practice. Cambridge: Cambridge University Press. Miller, C. (2010). Cities and Nature in the American West. Nevada: University of Nevada Press. Congress (US) (Ed.) (2010). Congressional Record, V. 153, Pt. 1, January 4, 2007 to January 17, 2007. Illinois: Government Printing Office. Public Affairs Information Service & H.W. Wilson Company. (1983). Bulletin of the Public Affairs Information Service, Volume 69. Illinois: Public Affairs Information Service. Geology Survey (US). (2009). Minerals Yearbook, 2006, V. 3, Area Reports, International, Latin America and Canada. New York: Government Printing Office. Olien, R. et al. (2000). Oil and ideology: the cultural creation of the American petroleum industry. Chicago: UNC Press Books. Bantekas, I., Paterson, J. & Suleimanov, M. (2004). Oil and gas law in Kazakhstan: national and international perspectives. Kluwer: Kluwer Law International. Lowrie, W. & United States Congress. (2011). American state papers / 1: documents, legislative and executive, of the Congress of the United States. From the 1st session of the 1st to the 3rd session of the 13th congress, inclusive: commencing March 3, 1789, and ending March 3, 1815, Volume 2. New York: Gales and Seaton. Hirsh, R. (2003). Technology and Transformation in the American Electric Utility Industry. Cambridge: Cambridge University Press. 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