Money and moratoriums

Patrick Crow
Washington, D.C.
[email protected]

U.S. congressional committees are expected to mark up bills this summer to earmark federal revenues from Outer Continental Shelf oil and gas production.

The legislation would designate 50% or more of OCS revenues, about $2.5 billion/year, for grants to coastal states and to fund nationwide conservation and wildlife programs. The bills wouldn't cost the oil industry a cent.

All 34 states bordering oceans or the Great Lakes would share the boon, although there is production off only six. The allocation would be under a formula based on OCS oil and gas output, coastline miles, and population.

Sen. Mary Landrieu (D-La.), chief sponsor, told the National Ocean Industries Association last year she included 34 states in her bill in order to "deliver 60 votes," the number needed to override a potential Senate filibuster.

She predicted "it will be hard" for anti-drilling states like Florida to reject the cash the bill dangles.

Landrieu claimed OCS production has been costly to the environment and infrastructure of coastal states. She said that it is unfair that the U.S. shares 50% of federal onshore oil and gas revenues with the states where the production occurs, while coastal states only get 27% of revenues from a 3-mile strip of federal lands just beyond the state offshore boundary.

The carrots

The bills contain two large lures: financial aid for coastal communities and dedicated OCS revenues to fund conservation and wildlife programs-a concept dear to the hearts of environmentalists.

But they're not taking the bait. In a joint letter to Congress, 19 green groups declared, "Our organizations are strongly opposed to the establishment of any financial incentives that promote offshore oil and gas development."

They noted that the government's policies-and congressional moratoriums-have banned leasing off most of the U.S. coast since 1981.

The American Oceans Campaign claimed, "This legislation is nothing more than an attempted raid on the federal treasury and a cynical stealth attack on America's remaining unspoiled coastal areas, carefully orchestrated by the oil industry. The petroleum industry hopes to use these bills to coerce coastal communities into accepting more oil rigs."

Veto bait

Leon Panetta, President Clinton's former chief of staff, has warned senators about the legislation.

Panetta had worked to enact OCS moratorium efforts when he was a congressman from California.

He told a Senate energy committee hearing the legislation that it is obviously intended to sway coastal communities to support drilling, especially because 50% of a state's allocation would be tied to the proximity of OCS production.

Panetta said that Clinton has pledged "that incentives for new OCS activities will not be an acceptable part of any Land and Water Conservation Fund legislation sent to the White House."

In other words, it's veto bait.

Oil groups yearn for more support for OCS drilling but have kept a low profile on this legislation. They're smart to avoid such pork-barrel politics.