A bill that combines elements of the two main US Outer Continental Shelf leasing proposals has been developed by the House Resources Committee, Chairman Richard Pombo (R-Calif.) said June 19.
Designated the Deep Ocean Energy Resources Act, the bill strikes a balance between one measure introduced by Reps. John E. Peterson (R-Pa.) and Neil A. Abercrombie (D-Hi.) and another developed by two committee members from Louisiana, Republican Bobby Jindal and Democrat Charlie Melancon.
Pombo said, “The current one-size-fits-all federal framework locks away massive amounts of desperately needed energy resources and will not withstand the pressures of economic necessities much longer. It does not allow states that wish to produce offshore energy for the nation the ability to do so, nor does it give states that wish to continue offshore production bans any real assurance they will be able to do so for the long term.”
Pombo said that the new bill would codify the existing OCS moratorium into permanent law for the first time by banning oil and gas activity within 50 miles of a coastal state’s shoreline. A state could opt-out of a moratorium with the approval of its legislature and governor, however-a key provision of Peterson and Abercrombie’s original bill.
The bill also would give coastal states 1 year from the date of enactment to decide whether to allow natural gas leasing 50-100 miles from its shoreline. Such leasing could occur if a state did not reach a decision.
A state would be able to extend leasing prohibitions in up to 5-year increments by simple votes of its legislature.
The bill also would give states until June 30, 2009, to prohibit oil leasing in the same area. Leasing for oil or gas would be banned in any OCS area within 25 miles of a neighboring state that did not support leasing in its own adjacent zone, and within 50 miles of such a neighboring state’s shoreline. It also would repeal the 2005 Energy Policy Act provision requiring an OCS inventory.
The new bill incorporates the main provision of Jindal and Melancon’s legislation, which would provide for the sharing with coastal states of 75% of federal oil and gas revenues in a band from 3-12 miles offshore and 50% farther out (see story, p. 30).
It also would create three new federal funds designed to provide financial support for local and state government services in affected coastal areas.
Finally, said Pombo, the new bill would attempt to rectify the bookkeeping error that omitted price thresholds from federal deepwater royalty provisions in 1998 and 1999 by granting the Secretary of the Interior authority to renegotiate those agreements. Leaseholders unwilling to renegotiate would be subject to a new “conservation of resources” fee on each unit of production.
The price threshold omissions also was the subject of a June 21 hearing before the House Government Reform Committee’s energy and resources subcommittee.
