US House passes Senate OCS leasing measure in broader bill

Dec. 8, 2006
The US House approved the Senate's Outer Continental Shelf leasing legislation on Dec. 8 as part of a larger bill.

Nick Snow
Washington Correspondent

WASHINGTON, DC, Dec. 8 -- The US House approved the Senate's Outer Continental Shelf leasing legislation on Dec. 8 as part of a larger bill that included provisions dealing with reimbursement of physicians, extensions of tax credits, and health savings accounts.

Several members objected to the number of unrelated provisions in HR 6111, which was officially designated the Tax Relief and Health Care Act of 2006. But the measure eventually passed.

An amendment by Rep. Edward J. Markey (D-Mass.), which would have changed the OCS portion of the catch-all bill and added alternative minimum tax protection and other provisions, fell two votes short of being adopted.

The leasing measure, S. 3711, originally was one of 16 bills scheduled for votes under suspended rules that would have prevented amendments when the House went back into session on Dec. 5. But it was pulled at the last minute because supporters did not believe they had enough votes to pass it by the required two-thirds majority (OGJ Online, Dec. 6, 2006).

Senate energy leaders previously indicated that the bill, which would reopen tracts in the eastern Gulf of Mexico for leasing as well as adjacent acreage in deeper water, could not become law this year if the House amended it. S. 3711 also provides for revenues from the leases to be shared with Texas, Louisiana, Mississippi and Alabama, and for leasing to be banned within 125 miles buffer of Florida's coast for 16 years.

Several House members were unhappy that the Senate's bill did not contain a requirement for holders of deepwater leases in the Gulf of Mexico issued in 1998 and 1999 without price thresholds limiting royalty relief to renegotiate terms or forfeit the right to bid on future leases in the Gulf. Markey's amendment would have inserted that provision, which also was part of HR 4761, the more ambitious OCS leasing reform bill that the House passed on June 29.

The fact that the amendment failed by only two votes signals that a bill to force renegotiation of those deepwater leases will be a top priority when the Democrats take control of the House in January.

Before the vote, Markey argued that the amendment would not prohibit drilling on any of the tracts covered by the Senate's OCS bill but simply would aim to correct an error that put money in the pockets of oil and gas producers. "This is like Teapot Dome in the 1920s. They're not paying to produce oil and gas from public lands," he said.

Ways and Means Committee Chairman Bill Thomas (R-Calif.) said the problem should be solved. "In another time, another place, another circumstance, we have to correct this. It's been going on for 10 years, and in another few weeks, when the other party takes over, it can make it part of the work done in its first 100 hr," he said, referring to a plan announced following the Nov. 7 elections by incoming speaker Nancy Pelosi (D-Calif.).

Responses to passage
Other House and Senate members and oil and gas trade associations were generally pleased that the Senate's OCS bill finally cleared the House.

Reps. John E. Peterson (R-Pa.) and Neil Abercrombie (D-Hi.), who cosponsored legislation to give coastal states the option of opening more OCS areas off their shorelines to natural gas leasing, jointly said following the vote that HR 6111's passage, with S. 3711 intact, was an important first step.

"When it comes to passing important legislation around here, you learn to shoot for the stars in the hope that you might land on the moon," Peterson said.

Sen. Mary L. Landrieu (D-La.), who led efforts for the four Gulf Coast states to get shares of future federal OCS revenues in the area covered by S. 3711, said that passage cleared "a mighty hurdle" for the region.

"After almost 60 years, Louisiana finally will get a fair share of the oil and gas revenues produced off our shores," she said.

Independent Petroleum Association of America Pres. Barry Russell said passage of a bill including S. 3711 matters because it will allow oil and gas exploration in parts of the Gulf of Mexico while providing coastal states a share of federal revenues.

"This bill is not the solution but a necessary first step to improving American energy security," he said. "The federal government still maintains its unnecessary moratoria on the East and West Coasts as well as the eastern Gulf of Mexico. In fact, right now, there is language in the same bill that would restrict some onshore oil and natural gas exploration. This bill will increase access to new energy supplies in the Gulf of Mexico, yet restrict access to energy supplies in parts of Montana. American policymakers must stop this 'yes-you-can; no-you-can't' paradox."

Contact Nick Snow at [email protected].