House Passes Bill Ending Ban On Offshore Oil and Gas Drilling

House Passes Bill Ending Ban On Offshore Oil and Gas Drilling

The House, voting 232-187, yesterday approved a bill to end a 25-year-old moratorium on offshore oil and gas drilling. The vote came even after the White House surprised the bill’s supporters by estimating that the measure’s royalty terms would divert “several hundred billion dollars” away from the federal treasury over the next 60 years.

Amid high oil and gas prices, the idea of allowing more offshore oil and gas exploration on the Outer Continental Shelf had widespread support in the House. The measure would let firms drill anywhere within 50 miles of U.S. coastlines, while forcing states that want to keep drilling 100 miles off their own shores to pass legislation every five years. States could also ask the federal government to allow drilling closer.

A more limited offshore drilling bill still awaits a vote in the Senate.

Oil and gas exploration firms as well as industrial users of natural gas hailed the House action, which they said would help consumers and keep jobs in the United States. David N. Parker, chief executive of the American Gas Association, said “this commonsense approach to developing our domestic energy resources is good for all Americans.”

Environmental groups, however, warned of the danger to coastlines and sea habitats from exploration activity and the risk of oil spills while deploring the House’s failure to act to cut oil and gas consumption. Yesterday, a measure to raise the minimum average gas mileage of American cars was defeated.

“Congress should not be allowing an industry as dirty and dangerous as the oil industry this close to America’s coastlines, especially since drilling off of our coasts will not solve our energy problems,” said Athan Manuel, director of lands protection for the Sierra Club.

Perhaps the most controversial section of House bill would divert from the federal government to coastal state governments large portions of royalties from drilling in federal waters. This would apply to both new leases and existing offshore oil and gas production.

In a policy statement yesterday, the Office of Management and Budget said that the Bush administration “agrees with the goal” of expanding oil and gas production and supported passage of the House measure “to advance the legislative process.” But OMB also said that the administration “strongly opposes revenue sharing provisions” that would not create incentives for new production and would have “adverse long-term consequences on the federal deficit.”

Foes of the bill read parts of the White House statement to back their own position during the debate yesterday afternoon. Rep. Edward J. Markey (D-Mass.) called the bill a “rip-off of the federal taxpayer” and said it would funnel money from 46 states to four states on the Gulf of Mexico where the bulk of offshore oil and gas is currently produced.

But House Resources Committee Chairman Richard Pombo (R-Calif.) said sarcastically that he “appreciated” Markey’s efforts “to recycle and reuse his information even though it’s inaccurate.”

Meanwhile key Senators hammered out their own agreement on royalty revenue sharing that could clear obstacles to a Senate drilling bill. Sen. Mary L. Landrieu (D-La.) had said that she and senators from three other Gulf Coast states would block any offshore drilling measure that did not give coastal states half the revenue from oil and gas produced on new federal leases. This week, after talks with Senate Republican leaders, Landrieu agreed to accept 37.5 percent of those royalties for coastal states.

Landrieu’s office estimated that such a deal would send $210 million to Louisiana over the next 10 years and as much as $650 million a year after 2017.

Unlike the House bill, which would open up all U.S. coasts to exploration, the Senate version, which supporters hope will be voted on next month, would open up only 8 million acres in the eastern Gulf of Mexico.

Sources said that Sen. Mel Martinez (R-Fla.), like most Florida lawmakers a longtime foe of offshore drilling, was also close to agreeing to the Senate compromise.

Stumbling blocks remain. Florida’s other senator, Bill Nelson (D), issued a statement last night threatening to block any measure resembling the one approved by the House. “Drilling will destroy the unique environments that are the backbone of the tourism-driven economies of our nation’s first- and fourth-largest states,” Nelson said.

Other critics said that the House bill, by channeling royalties to states, could create disputes over offshore state boundaries. The Sierra Club said it would require states “to jump through bureaucratic hoops to regain protections they currently enjoy” by forcing them to pass new legislation every five years to restrict drilling activity.

Rep. Sherwood K. Boehlert (R-N.Y.) said that the bill “pretty much defines ‘travesty.’ ”

Key parts of the House bill were rewritten Wednesday night by Pombo, the bill’s manager, to lower the bill’s cost. On Monday, the Congressional Budget Office said that the bill would cost the federal government $3.2 billion over five years and $11 billion over 10 years, enough for it to be stopped on procedural grounds for breaking the budget resolution. Yesterday, the CBO issued a letter saying Pombo’s changes might yield $900 million in federal revenue over 10 years but did not address the longer-term cost estimated by the White House.


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