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Capital Report


December 2012 Issue

Post-US Election Outlook for Oceans, Energy to be Hot Topic in Next Few Years
President Obama was re-elected in November for a second term, in a race that largely resulted in a leadership status quo for the White House and Congress.

Looming post-election is the 'fiscal cliff,' which refers to a set of federal budget laws that, if kept in place, would likely result in increased taxes and massive cuts to government spending. Whatever happens with the fiscal cliff will determine funding appropriation to science and ocean-related agencies, which will likely be tight.

'I don't think the calculus has changed at all, so we have the same hurdles in terms of getting through a filibuster in the Senate or a conservative-led House,' said Kevin Wheeler, vice president of the Consortium of Ocean Leadership. 'The question is if they're able to find a different path to negotiating.'

Energy is likely to be a hot topic in the next few years. Ocean sciences could find new funding from an energy production bill that would involve revenue sharing and redirecting tax proceeds from offshore leases into science or restoration efforts, Wheeler said. Sens. Ron Wyden (D-Ore.) and Mary Landrieu (D-La.) have voiced support for such a bill, which faces opposition from Sen. Jeff Bingaman (D-N.M.).

Rep. Doc Hastings (R-Wash.) on the U.S. House Natural Resources Committee, who has championed more offshore access and energy production, has two years left as chairman. There has been some speculation that he would leave early if asked by Speaker of the House John Boehner (R-Ohio) to chair the House Rules Committee, although Rep. Pete Sessions (R-Texas) is also a strong candidate.

The House Energy and Commerce Committee saw a handful of members suffer election losses, but Chairman Rep. Fred Upton (R-Mich.) and ranking member Rep. Henry Waxman (D-Calif.) remain in place, according to the National Ocean Industries Association.

US Coast Guard Releases Guidance on New Ballast Water Management Regulations
The U.S. Coast Guard posted in November guidance to help explain the new ballast water management regulations, including guidance on verification of fouling maintenance and sediment removal procedures.

The fouling maintenance procedures should contain details of the anti-fouling systems and operational practices or treatments used, where and when installed, areas of the vessel coated, and maintenance and operation; hull locations susceptible to fouling and a schedule of planned inspections, repairs, maintenance and renewal of anti-fouling systems; details of the recommended operating conditions suitable for the chosen antifouling systems and operational practices; details relevant for crew safety; and documentation of actions taken to implement the fouling maintenance procedures.

Sediment removal procedures should provide information on practical steps to be taken during ballast uptake to avoid sediment accumulation; procedures for using tank flushing when sediment has accumulated; procedures for monitoring sediment volume in a ballast tank on a regular basis; procedures for removing accumulated sediment on a timely basis and as necessary; procedures for sediment disposal, which should only take place in areas outside 200 nautical miles from land and in water depths more than 200 meters; and particulars of vessel design and construction intended to minimize the uptake and entrapment of sediments, facilitate their removal and provide safe access to allow for sediment removal and sampling.

Jones Act Waived Temporarily to Allow Fuel Transportation to Hurricane Sandy-Hit Areas
As a result of impacts caused by Hurricane Sandy, Secretary of Homeland Security Janet Napolitano issued a temporary, blanket waiver in November of the Jones Act to immediately allow additional oil tankers coming from the Gulf of Mexico to enter Northeastern ports to provide additional fuel resources to the region. The Jones Act requires that only U.S. ships be allowed to carry all goods transported by water between U.S. ports.

In a letter to President Barack Obama, the American Maritime Partnership wrote that the U.S. maritime industry would support waivers necessary to facilitate the delivery'of petroleum products into the regions affected by Sandy.

US Senators Ask Interior Secretary for Economic Reasoning Behind OCS Lease Sale to Wind Energy
U.S. Sens. David Vitter (R-La.) and Lamar Alexander (R-Tenn.) sent a letter in November to U.S. Department of Interior Secretary Ken Salazar asking him to explain the Obama administration's economic reasoning for allowing in October an offshore lease sale for wind energy in the Atlantic Outer Continental Shelf (OCS) to NRG Bluewater Wind Delaware LLC (Princeton, New Jersey).

'Under this administration, we've seen policies that pick and choose preferred energy technologies such as wind energy and implement policies that favor a chosen technology without any evident regard to economic impacts,' the letter said. It noted that the agency will not allow offshore oil and gas leasing in the Atlantic OCS and requested data on the economics of the wind lease sale to compare with 'the value of a similar lease for oil and gas on equivalent acreage.'

The senators asked for answers to questions such as the effective royalty rate that the Interior has contracted with NRG for the energy it produces and the anticipated revenue to be raised from this development over the next 10 years. They also asked whether the total value of production or renewable tax credits exceed the price paid for the lease.

The senators wanted to know the intended customers for the electricity to be sold by NRG and what rate NRG will be able to charge utilities for bringing electricity to the grid, noting that the Energy Information Administration said offshore wind generation is estimated to be more than three times as expensive to build and operate as onshore wind generation. Names of utility companies interested in purchasing electricity from NRG and the states within the potential service area were also asked for in the letter.

The senators inquired about the environmental review process for the lease and whether it considered threats posed by the development to avian species that could be affected by wind turbines.


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