The US House of Representatives passed legislation June 29 that would lift federally imposed moratoriums on Outer Continental Shelf oil and gas drilling. But passage, by a 232-187 vote, came amid opposition not only from several coastal state members but also from the White House Office of Management and Budget.
Before the final vote, opponents used OMB’s statement of administration policy, released earlier in the day, to support their charges that provisions to share federal OCS revenues with coastal states make HR 4761 fiscally irresponsible.
OMB said the provisions would not provide production incentives but simply reduce federal revenue by billions of dollars. It also said the bill’s plan to issue “natural gas-only leases” offshore could prove difficult to administer, while another provision allowing lessees to ask the federal government to repurchase leases is “overly broad” and “shifts normal investment costs and risks from lessees to the government.”
It also criticized a section in the bill that it says establishes oil shale royalty rates before any demonstration that commercial production is possible. The section also provides state and local governments 75% of all oil shale revenues in the first 20 years of a lease instead of the standard 50% for minerals produced from federal lands within a state.
During debate, however, there were indications that the federal offshore legislative landscape has continued to shift. Michael Bilirakis (R-Fla.) proposed an amendment to add 25 more miles to the 100-mile buffer that the bill would establish off coastal states. It failed by a 35-353 vote.
Bilirakis said states should be able to opt in to, instead of having to periodically opt out of, participating in future federal offshore leasing “if we want to maximize the ability of states to control what goes on off their coastlines.” That idea probably will reappear.
Senate maneuvers
From the Senate, there were reports that Mel Martinez (R-Fla.), was discussing possible compromises. But the other Florida senator, Democrat Bill Nelson, reiterated his threat to block any bill resembling what was passed in the House if it reached the Senate.
Other senators expressed dismay over the bill. Jeff Bingaman (D-NM), the Energy and Natural Resources Committee’s chief minority member, said it “contains controversial provisions that would create, in the long term, a huge hole in our federal budget and undermine environmental protections on our lands and off our coasts.”
The committee’s chairman, Pete V. Domenici (R-NM), said during the debate that he was pleased the House was considering legislation to increase domestic supplies. But he noted that work was continuing on the Senate committee’s own bill, S. 2253, which Bingaman also cited.
Mary L. Landrieu (D-La.) announced that she and seven other senators from Mississippi, Alabama, Texas, and Louisiana reached an agreement with majority leader Bill Frist (R-Tenn.), majority whip Mitch McConnell (R-Ky.), and Domenici on a reduced share of federal revenues for the four states.
The bill, which would open for leasing about 8 million acres-including the so-called Lease Sale 181 area in the eastern Gulf of Mexico-would give 37.5% of the revenues to the four coastal states, according to Landrieu. The eight senators originally sought a 50% share.
“This agreement marks a significant victory in our delegation’s decade-long fight to secure our fair share of the substantial revenue we generate each year,” said Landrieu. The agreement sets the stage for Domenici to formally introduce S. 2253 on the Senate floor during July, she indicated.
Domenici was more restrained when he issued a statement regarding revenue-sharing negotiations on June 30. “I’ve had a number of productive meetings with Sen. Landrieu and others about my Lease Sale 181 bill. We’ve made good progress in those meetings, but we’re not there yet,” he said.
He added that he remained optimistic that the Senate would pass an OCS bill of its own this month and potentially go to conference with the one approved by the House.
House modifications
HR 4761, which previously combined two separate OCS reform measures before its passage by the House Resources Committee, arrived on the House floor with a manager’s amendment that proposed lengthening the schedule for phasing in coastal states’ revenue-sharing.
Resources Committee Chairman Richard Pombo (R-Calif.) developed the amendment after the Congressional Budget Office said June 26 the bill’s revenue-sharing provision would cost the federal government $3.2 billion from fiscal 2007 through 2011 and $11 billion from 2007 through 2016.
The $11 billion estimate “is dominated by new payments to states totaling about $20.6 billion over the 2007-16 period,” CBO said.
Pombo’s amendment to implementing coastal states’ revenue-sharing over a longer period, which the House adopted, would change the estimated federal cost to $2.3 billion in 2007-11 and $900 million in 2007-16, with $18 million in payments to states in the latter period, CBO said on June 29.
Opponents quickly cited this fine-tuning of one of the bill’s key provisions by one of its main sponsors as well as the OMB’s concerns earlier in the day as evidence that HR 4761 was fiscally irresponsible.
Rep. Edward J. Markey (D-Mass.) charged that it would divert $600 billion of federal revenues to Louisiana, Texas, Alabama, and Mississippi from the other states. Rep. Lois Capps (D-Calif.) called it “a budget-busting bill that threatens all our coastal communities.”
Many Democrats and a few Republicans also protested that the House was pushing legislation to open new offshore areas to oil and gas activity without considering bills aimed at conserving energy or making oil product price manipulation a federal crime.
“We should not be opening our coasts to oil drilling when we haven’t taken the first step toward reducing our oil consumption. This bill basically hands our coastal waters to oil interests and makes it hard for states to act,” said Rep. Sherwood L. Boehlert (R-NY).
He said the bill was “rife with financial gimmickry” and attacked Pombo’s late changes to an already complex proposal. “This process gives new meaning to the phrase ‘oil slick’,” Boehlert declared.
Supporters’ views
Majority Whip Roy Blunt (R-Mo.) responded that the bill does not neglect energy alternatives but offers a transition to them instead. It also will increase federal OCS revenues, even with states getting a share, he said.
Rep. Bobby Jindal (R-La.), who cosponsored the original OCS revenue-sharing bill with Charlie Melancon (D-La.), noted that the bill basically gives coastal states the same share from federal OCS production that onshore states receive from federal production within their borders.
“For 25 years, observing Congress, it’s great to see we’ve finally brought something worthwhile to the floor. Until today, the policy has been to just say no,” added Melancon.
The bill’s other key provision-creating a means by which coastal states can remove federally imposed OCS moratoriums and request leasing under specific terms-also stayed intact.
“This bill forces states along the coast to consider whether to take positive steps to lower energy prices for all Americans or whether they’re prepared to say goodbye to millions of the best-paying jobs we have left,” said Rep. John E. Peterson (R-Pa.), cosponsor with Rep. Neil Abercrombie (D-Hi.) of the original bill with that provision.
Opponents saw this differently. Several said it was an attempt to pressure coastal states that previously opposed oil and gas activities off their shorelines into accepting them.
Still others emphasized the provision that codifies drilling bans close to shore. “I’m faced with a question of whether to let the people of my state decide what happens within 100 miles of our coast, or do nothing,” said Rep. Ander Crenshaw (R-Fla.).
Other House members from Florida supported the bill. Ric Keller, a Republican representing a district that includes Orlando, said Gov. Jeb Bush backs HR 4761 because it “strikes an appropriate balance of protecting Florida’s beaches within a 100-mile buffer while reducing our dependence on foreign oil.”
Noting that other members of Florida’s delegation in the House have expressed concern over potential damage to beach tourism from offshore oil and gas activity, Keller said other tourist destinations already are suffering because gasoline costs more than $3/gal.
Following the bill’s adoption, Pombo said it “finally corrects the one-size-fits-all bans that were adopted during times when energy production and environmental protection were thought to be mutually exclusive. They are not, and today a bipartisan majority in the House voted for both.”
