Red Tape Is Strangling America's Energy Supply
By Chairmen Sam Graves & Scott Tipton
May 8, 2012
As loudly as American families are demanding refuge from economic burdens like high gas prices, small businesses are now chiming in as well. Persistently high energy costs are forcing owners to reduce hiring and cut back on employee hours.
According to the National Federation for Independent Business, one in 10 business owners says energy is his or her single greatest cost, ranking it ahead of wages, materials and other investments that help companies thrive. Another 25 percent claim it as the second or third biggest expense.
Congress should be looking for ways to provide relief from the burden of high energy costs with policies that promote development of all available energy sources. By expanding access to traditional domestic resources, as well as promoting exploration of innovative energy resources, we can help reduce energy costs and ensure abundant American resources for years to come.
The lingering threat of an energy crisis needs to serve as a catalyst for America to begin exploring more domestic solutions. The only thing stopping us now is miles and miles of red tape.
During a Small Business Subcommittee hearing on innovative energy solutions several weeks ago, Ralph Tommaso, CEO of Greenworks Holdings in Bethlehem, Pa., said, "There are layers of regulations and laws at the federal, state, county and town level. Small businesses need stable policies with reasonable time frames for permits and approvals."
While the president repeatedly claims that he supports an "all-of-the-above" approach to reducing energy prices and enhancing our energy security, his actions demonstrate the opposite. The president's rejection of the Keystone XL pipeline is an example of this, but even more significant is his refusal to lease vast onshore and offshore federal lands for oil exploration and development. In 2007, the U.S. Energy Information Administration projected total 2010 U.S. oil production on federal lands to be 850 million barrels. But actual production was only 714 million barrels -- 16 percent below the projection.
Recent regulations issued by the Bureau of Land Management (BLM) present challenges for energy producers who are trying to begin drilling. Particularly daunting is the lengthy processing time imposed upon permit applicants. At a March hearing, Tim Barber of the Yates Petroleum Corp. in Gillette, Wyo., told the Subcommittee that the process for BLM's Application for Permit to Drill a first well should take about 90 to 120 days. In his experience with BLM, applicants regularly wait two years for a permit, with some waiting up to 5 or 6 years.
Even after obtaining the BLM Application for Permit to Drill, companies have still not reached the end of the regulatory wringer. They are still subject to more provisions and stipulations. At any time, Conditions of Approval, or COAs, can be tacked onto the issued permit by BLM, making it that much harder for producers to get final approval. The biggest problem with impending provisions, COAs and other unforeseen roadblocks is that they create uncertainty among operators. Without a set schedule, businesses find it very difficult to create accurate financial projections or long-term road maps. This uncertainty has driven some small producers out of the business altogether.
Waiting on the sidelines, ready to work, small firms need the government to act quickly to clear regulatory roadblocks. The weight of the BLM's regulatory regime is making small energy producers unable to sustain work. Thus, energy small businesses and their contractors suffer, domestic resources remain idle and gas prices remain high.
Our government needs to do everything possible to unlock these federal lands and streamline the cumbersome processes of obtaining permits to drill. If we don't, small businesses will lose out on producing opportunities and non-energy businesses will continue to be burdened by high gas prices.
Rep. Sam Graves, R-Mo., is chairman of the House Small Business Committee, and Rep. Scott Tipton, R-Colo., is chairman of the Small Business Subcommittee on Agriculture, Energy, and Trade