Speaking at a Richmond-area gas station as a backdrop, Gov. Bob McDonnell and other Virginia leaders on Thursday praised legislation in the U.S. House to move forward with oil and gas development in the Outer Continental Shelf, including areas off Virginia.

The House passed one of the bills, H.R. 1230, requiring the Secretary of the Interior to conduct certain offshore oil and gas lease sales, by a vote of 266-149 on Thursday.

The other bill cited at the news conference was H.R. 1372, the Virginia Energy Act, sponsored by Rep. Bob Goodlatte (R-VA).

Excerpts from the news release:

Gov. McDonnell: “America has an energy policy problem.  Today, Virginia businesses and families are paying, on average, $3.88 per gallon for gasoline.  That’s up $1.00 from a year ago. The Energy Information Administration estimates that gasoline will cost the average U.S. household $1,210 more this year than in 2009. That is money that could be spent by families on education, groceries and vacations. Instead it is money being spent at the pump.  The pain at the pump is the result of many factors, one of which is the result of our ongoing dependence on foreign sources of oil. That is why I strongly support increasing domestic energy production from every possible source, including wind, solar, biomass, nuclear, oil and natural gas. A key part of that effort should be the environmentally responsible development and production of oil and natural gas off of Virginia’s shores.”

Rep. Goodlatte: “Virginians understand that a major component in lessening energy costs is to produce more energy. I believe that Virginia should have every tool available to access its energy supplies. That is why legislation like the one the Congress is considering today, that would provide for access to Virginia’s energy supplies as well as legislation that I have introduced that would provide for revenue sharing with the Commonwealth for its energy resources are vital to the Commonwealth of Virginia. In addition to helping us become energy independent, access to these resources will help create thousands of jobs for Virginians and infuse the Commonwealth with new capital growth.” (continue reading…)

Dyke Messinger, a member of the National Association of Manufacturers’ board of directors, testified this week before the House Committee on Education and the Workforce, a hearing, “State of the American Workforce.” Dyke is president and CEO of Power Curbers, Inc., a manufacturer of curbing machines. 

From his prepared testimony:

The United States is the world’s largest manufacturing economy, producing
21 percent of global manufactured products. U.S. manufacturing alone makes up 11.2 percent of our nation’s GDP. More importantly, manufacturing supports an estimated 18.6 million jobs in the U.S. – about one in six private-sector jobs. To put this in context, this is about the equivalent of the entire populations of the five largest cities in the U.S.: New York City, Los Angeles, Chicago, Houston and Phoenix combined. Nearly 12 million Americans (or 9 percent of the workforce) are employed directly in manufacturing. Manufacturing jobs are high paying jobs, too. In 2009, the average U.S. manufacturing worker earned $74,447 annually, including pay and benefits – 22 percent more than the rest of the workforce.

But today’s manufacturers face many challenges to our global competitiveness and job creation efforts. Proposals that increase taxes and impose new regulations will make business in the United States less competitive. These proposals will stifle the already weak recovery and destroy manufacturers’ ability to create jobs. 

Dyke’s testimony drew on the NAM’s “Manufacturing Strategy for Jobs and a Competitive America.” 

Others testifying were: 

• Robert F. McDonnell, Governor of Virginia
• Douglas Holtz-Eakin, President, American Action Forum
• Heather Boushey, Senior economist, Center for American Progress

Coverage …

WHSV, “McDonnell Discusses Job Creation on Capitol Hill”

Examiner.com, “McDonnell gives top marks to Rep. Ryan’s SOTU response”

Roll Call has published an op-ed by Gov. Bob McDonnell (R-VA) and Jay Timmons, president of the National Association of Manufacturers, citing the EPA’s pending limits on ground-level ozone and industrial boiler emissions (the Boiler MACT rule) as an example of excessive regulation that slows economic growth and damages jobs creation.

From “Proposed EPA rules could hurt job growth“:

Manufacturers have also been alarmed by two proposals that have generated less public attention but could still wreak economic damage: lower limits on ground-level ozone and emissions controls on industrial boilers.

New rules for ozone would supersede lower emission limits adopted just two years ago, with compliance costs that EPA acknowledges could near $90 billion annually by 2020. Democratic and Republican senators and governors from industrial states have criticized this rulemaking as a “financial and regulatory burden” that would “create additional barriers to job creation and industry growth.”

Industrial boilers play a critical role in our economy, generating power for companies large and small, as well as municipalities and universities. The EPA has proposed dramatic new rules that skirt cost-benefit analysis and would be impossible for many existing facilities even to meet. The forest products industry, which makes extensive use of boiler-generated energy, would be hit especially hard, facing estimated costs of $7 billion.

None of our international competitors confronts standards such as these, which will only drive more jobs offshore. Industry studies demonstrate that hundreds of thousands of jobs may be at risk if this rule is adopted. The Administration’s own Commerce Department has produced a study that concludes the draft rule could cost the United States 40,000 to 60,000 jobs a year.

Since the column was written, the U.S. District Court for the District of Columbia granted the EPA a one-month extension to issue the final Boiler MACT rule (deadline is now February 21, 2011). The EPA had requested a 15-month extension to re-propose the rule to consider new information about the achievability of the regulations.

 The court order is available here, and the opinion is available here.

Virginia Gov. Bob McDonnell did not use the word “manufacturing” in his State of the State address delivered Wednesday, but he did discuss the state’s business climate, government economic development incentives, and workforce issues, the building blocks of a growth and jobs agenda backed by Virginia’s manufacturers. From the text:

In mid-December we announced our “Opportunity at Work” budget and legislative proposals calling for $54 million in new state funding to help us better compete with Maryland and North Carolina; India and China.

Among the proposals are $25 million for a Virginia Research and Technology Innovation Program; $5 million in funding for Virginia Small Business Financing Authority, to help small businesses gain access to capital; additional funding for Virginia’s growing tourism, wine and film industries, investments in successful workforce development programs, and improvements to industrial sites and enterprise zones….

Government can’t create jobs, but it can create the conditions and incentives that unleash the genius of the entrepreneur. Your approval of this money and legislation will keep us on the winning path.

The “Opportunity at Work” budget announced on Dec. 15 seeks to support the efforts of the newly established Economic Development and Jobs Creation Commission. Among McDonnell’s proposals are:

• Virginia Research and Technology Innovation Fund (VRTIF) – $25 million
• Clean Energy Manufacturing Incentive Grant (CEMIG)
• Virginia Port Tax Incentive – $5 million
• Refundable Research and Development Tax Credit – $5 million

The December news release included a statement from Brett Vassey, President & CEO of Virginia Manufacturers Association: “Virginia manufactured goods make up over 80% of the Commonwealth’s exports and increasing domestic exports is important to Virginia’s economic recovery.  The Virginia Port Tax Credit incentive proposed by Governor McDonnell will improve the competitiveness of the Port of Virginia and incentivize manufacturers to ship more products through Virginia.”

From President Obama’s remarks, cited at the White House Blog in a Feb. 5, 2009, post, “Serious about energy independence“:

Washington may not be ready to get serious about energy independence, but I am. And so are you. And so are the American people.

Inaction is not an option that is acceptable to me and it’s certainly not acceptable to the American people – not on energy, not on the economy, and not at this critical moment.

Department of Interior news release, Dec. 1, 2010, “Key Modifications Based on Ongoing Reforms, Unparalleled Safety and Environmental Standards, and Rigorous Scientific Review“:

[The] area in the Eastern Gulf of Mexico that remains under a congressional moratorium, and the Mid and South Atlantic planning areas are no longer under consideration for potential development through 2017.

Statement, Jack Gerard, President and CEO, American Petroleum Institute, Dec. 1, 2010, “Extension of offshore ban to halt job creation, economic growth“:

This decision shuts the door on new development off our nation’s coasts and effectively ensures that new American jobs will not be realized. It will stifle investment, deny billions in revenue for critical government services and increase our dependence on foreign energy sources.

The oil and natural gas industry is committed to safe and environmentally responsible operations, and both the industry and regulators have added new safeguards to ensure such operations.This reversal on new lease sales off America’s coasts comes on top of a de facto moratorium, which has all but stopped new drilling in the Gulf of Mexico.

Virginia Governor Bob McDonnell, Dec. 1, “Statement of Governor Bob McDonnell on Obama Administration Decision to Block Offshore Energy Development Efforts in Virginia“:

I am extremely disappointed that the Obama Administration has unilaterally blocked environmentally responsible, and economically crucial, offshore energy exploration and development in Virginia, along the Atlantic Coast and throughout other broad swaths of offshore territory nationwide. This is an irresponsible and short-sighted decision. It demonstrates a complete lack of confidence in the entrepreneurial spirit of American industry and its ability to fix the problems experienced in the Gulf spill, and no confidence in the ability of the U.S. government to better plan for and react to offshore emergencies. …
(continue reading…)

News release, “Northrop Grumman Selects Virginia for New Corporate Office“:

LOS ANGELES – April 26, 2010 – Northrop Grumman Corporation (NYSE:NOC), announced that it will locate its new corporate office in Virginia, concluding a search that also included the state of Maryland and the District of Columbia.

“We are pleased to have identified Virginia as the home for our new corporate office. Virginia, Maryland and the District put forward compelling, competitive offers. Our final decision was driven largely by facility considerations, proximity to our customers, and overall economics,” said Wes Bush, chief executive officer and president. “We are very appreciative for the tremendous assistance we received from Governor O’Malley and the State of Maryland, Mayor Fenty and the District of Columbia, and Governor McDonnell and the Commonwealth of Virginia as well many local counties and municipalities.”

Northrop Grumman is currently conducting negotiations with several building owners in the Falls Church/Arlington area, with a specific building selection to be announced soon. The company expects to initiate operations in the new corporate office in summer of 2011 with approximately 300 people.

At the risk of being redundant, welcome to the area! As the next line of the news release notes, “Northrop Grumman currently employs approximately 40,000 people in Maryland, Virginia and Washington, D.C. and is the largest industrial employer in both states.”

News coverage tended to highlight Virginia Gov. Bob McDonnell’s role in the recruitment of the corporate headquarters, as well as the incentive packages offered by the states. Congratulations to the governor, too, but the comparatively friendly business and investment environments in Virginia versus Maryland or the District probably played a more important role. In CNBC’s “Top States for Business 2009,” Virginia ranked No. 1. Maryland ranked 27.

• Washington Post, Northrop Grumman picks Virginia for corporate headquarters“
• Washington Examiner, “Va. ponies up millions to add Northrop”“
• News Channel 8, Virginia Woos Northrop Grumman, Winning Hard-fought Battle”

Big week for Northrop Grumman. Today the company announced first quarter earnings, which increased to $462 million, or $1.51 per diluted share, from $366 million, or $1.10 per diluted share, in the first quarter of 2009.

And then there’s this news, good for the national defense, “Northrop Grumman Delivers Mine Detection Pods Ahead of Schedule.” Photo here.

The National Association of Manufacturers’ statement from Executive Vice President Jay Timmons, “Manufacturers Urge Continued Expansion of Offshore Development.”

American Petroleum Institute, a statement from President Jack Gerard:

The announcement by President Obama and Secretary Salazar is a positive development. We look forward to reviewing the details of the proposal, and we stand ready to work with them to make this a reality. We appreciate the administration’s recognition of the importance of developing our nation’s oil and natural gas resources to create jobs, generate revenues and fuel our nation’s economy.

Exploring for and developing our nation’s offshore resources could help generate more than a trillion dollars in revenues and create thousands of jobs to add to the already 9.2 million jobs supported by today’s oil and natural gas industry.

As we move forward, we hope that consideration can be given to other resource-rich regions, such as the Destin Dome area of the Eastern Gulf and areas off the Pacific Coast and Alaska. We also need to ensure that the permitting processes are handled in an expeditious way. The oil and natural gas industry has a proven track record of safe oil and natural gas development and the majority of the American people recognize this by supporting greater offshore development for the benefit of their communities, their states and their nation.

Virginia Gov. Bob McDonnell, “White House Decision Ensures Virginia will be First State on Eastern Seaboard to Produce Natural Gas and Oil Offshore“:

I thank the President and Secretary of the Interior Ken Salazar for ensuring Virginia will be the first state on the East Coast to explore for and produce energy offshore. The President’s decision to allow energy exploration off Virginia’s coast will mean thousands of new jobs, hundreds of millions in new state revenue and tens of billions of dollars in economic impact for the Commonwealth. It will also help our nation take a further step towards energy independence. Environmentally-safe offshore energy exploration and production is good for Virginia workers, the Virginia economy and national security. Just this session the General Assembly passed, with bipartisan support, legislation I requested to authorize offshore oil and gas exploration and drilling and to allocate 80% of revenues to transportation and 20% to green energy research and development. (continue reading…)

Virginia Attorney General Ken Cuccinelli was the first attorney general out of the box this morning to announce litigation against the health care bill President Obama plans to sign into law. Cuccinelli’s argument is a straightforward one challenging the constitutionality of an individual mandate. Excerpt from Cuchinelli’s statement:

With this law, the federal government will force citizens to buy health insurance, claiming it has the authority to do so because of its power to regulate interstate commerce. We contend that if a person decides not to buy health insurance, that person – by definition – is not engaging in commerce, and therefore, is not subject to a federal mandate.

Virginia is in a unique situation that allows it the standing to file such a suit since Virginia is the only state so far to pass a law protecting its citizens from a government-imposed mandate to buy health insurance. The health care reform bill, with its insurance mandate, creates a conflict of laws between the federal government and Virginia. Normally, such conflicts are decided in favor of the federal government, but because we believe the federal law is unconstitutional, Virginia’s law should prevail.

Just being alive is not interstate commerce. If it were, there would be no limit to the U.S. Constitution’s commerce clause and to Congress’s authority to regulate everything we do. There has never been a point in our history where the federal government has been given the authority to require citizens to buy goods or services.

Washington Post, March 11, “Va. assembly approves bill to bar health-insurance mandate”
Heritage Foundation, Dec. 9, 2009, “The Individual Mandate in Obamacare is Unconstitutional“

Prominent play on the front of the Metro section in today’s Washington Post, “Virginia leaders express interest in offshore drilling“:

RICHMOND — Never has the political climate in Virginia so favored offshore drilling.

Most Virginia leaders — regardless of their political party — have expressed interest in joining Alaska, Texas, Louisiana and other states in setting up offshore platforms to drill for oil and natural gas.

Gov. Robert F. McDonnell and fellow elected Republicans strongly back the proposal, as do most members of the state’s congressional delegation, including both U.S. senators, who are Democrats.

The Tallahassee Democrat reports, “Drilling report’s conclusions disappoint both sides:

With its chief proponent saying he is in no hurry, the push to open Florida waters to oil and gas drilling inched past another milestone Monday when a House panel was briefed on a report by a Florida think tank.

House Speaker-designate Dean Cannon, R-Winter Park, said he was pleased with the report, which was prepared by the Collins Center and the Century Commission for a Sustainable Florida.

“It was fascinating how much of it jibed with what we’ve been hearing in testimony from the experts,” Cannon said.

Cannon: “I’m pleased with the report.” Newspaper: “Both sides disappointed.”

The report concludes that Gulf of Mexico oil production would produce $80 million to $190 million annually in revenue to the state, creating 2,000 to 5,000 jobs.

A recent article in Newsweek provides the big picture, or deep picture, as the case may be. From “Journey to the Center of the Earth“:

From the window of a helicopter 1,500 feet above the Gulf of Mexico, oil platforms look like Tinkertoys in a swimming pool. Dozens dot the horizon stretching south from New Orleans and continuing out as the water deepens and turns a darker blue. Then, about 50 miles offshore, the platforms stop, and for the next hundred miles there’s nothing. This is the deepwater Gulf of Mexico, where the ocean floor is 8,000 feet down and covered in a heavy layer of muck. Below that is an ancient salt bed several miles thick, and hidden under that, trapped tens of thousands of feet down, there’s oil—billions and billions of barrels of it. And it’s all in U.S. waters.

The article uses Chevron’s Tahiti platform (pictured above) as the base of reporting. Good story, tremendous prospects.

If only …

From The Washington Examiner, “The Obama Moratorium: No offshore drilling while he’s in office”

The Obama administration’s six-month delay in approving new offshore drilling leases in federal waters will become a new three-year ban, Interior Secretary Ken Salazar quietly told reporters last Friday. Which means that no new oil and gas leases will be approved during President Obama’s term even though two –thirds of the American public supports such activity, according to a December 2009 Rasmussen poll.

Sixty percent also believe that gas and oil prices will drop if the government allows offshore drilling, opening up an estimate 14 billion barrels of oil and 55 trillion cubic feet of natural gas

From the governor’s office, a news release, “Governor McDonnell Signs Legislation Positioning Virginia to Become the “Energy Capital of the East Coast”

RICHMOND – Governor Bob McDonnell was joined by a bipartisan group of delegates and senators this afternoon as he signed legislation that will allocate 80% of future offshore royalties and revenues to transportation and the remaining 20% to the Virginia Coastal Energy Research Consortium, which researches and develops renewable energy solutions.  HB 756, a key piece of the Governor’s ‘Jobs and Opportunities’ Agenda, will allocate 80% of future offshore royalties and revenues to transportation (70% to Transportation Trust Fund and 10% to local transportation projects) and the remaining 20% to the Virginia Coastal Energy Research Consortium, which researches and develops renewable energy solutions.  Equally important, HB 787 provides a clear statement of the Commonwealth in support of oil and natural gas exploration, development, and production 50 miles or more off Virginia’s coast.  The Governor and members of his administration have been in steady communication with United States Secretary of the Interior Ken Salazar expressing strong support for keeping the offshore lease sale on schedule for 2011.  These pieces of legislation underscore those efforts and provide valuable evidence of Virginia’s readiness to lead on offshore exploration and drilling.

While signing the legislation, Governor McDonnell remarked, “These key pieces of legislation are necessary to help Virginia become the ‘Energy Capital of the East Coast.’  Virginians understand that this common–sense policy will lead to millions of dollars in revenue as well as thousands of new jobs.  Revenue gained from offshore exploration will go directly to two key areas–transportation and energy research and development.  Millions of dollars will go towards improving our transportation system that will ensure the free flow of commerce and attract further business investments in the Commonwealth.  By investing 20% in renewable energy research and production we will ensure that energy sources of the future, such as wind and biofuels, are made more commercially practicable.”

• HB756: http://leg1.state.va.us/cgi–bin/legp504.exe?ses=101&typ=bil&val=HB756
• HB787: http://leg1.state.va.us/cgi–bin/legp504.exe?ses=101&typ=bil&val=HB787

News coverage…

AP, “Va. gov McDonnell signs offshore energy bills”

WTVR, “McDonnell signs offshore drilling bills”