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Virginia Governor Vetoes Lifting Offshore Gas Exploration Moratorium

Virginia Gov. Mark Warner last week vetoed a controversial bill that advocated lifting a moratorium to open the Commonwealth's offshore waters to natural gas exploration and production (E&P) activities. Warner said he was "uncomfortable" with the legislation, even though it easily passed the General Assembly earlier this year (see NGI, Feb. 28).

Specifically, the state measure (SB 1054) supported congressional passage of the proposed federal State Enhanced Authority for Coastal and Offshore Resources Act (SEACOR), which would give states more control over their offshore oil and gas resources. The SEACOR legislative language would give Virginia and other coastal states 50% of the revenues from leasing activities up to 12 miles off their coasts, 35% of leasing revenues out to 80 miles and 20% beyond 80 miles.

However, Warner said the bill, sponsored by state Sen. Frank Wagner (R-Virginia Beach), "has two fundamental deficiencies...First, it encroaches on the role of the governor to direct the activities of the Virginia Liaison Office. Second, it directs the Commonwealth to advocate for federal legislation that has yet to be introduced."

The Liaison Office, said Warner, is part of the Office of the Governor and its staff reports directly to him. Its current duties are statutory and "are general in nature and involve keeping the state's congressional delegation informed of the governor's priorities. Even the most important issues are left to the discretion of the governor."

The bill, said Warner, would permanently place in the Code of Virginia a requirement to advocate for lifting the moratorium on offshore exploration and development of natural gas. However, "there is nothing to prevent individual legislators or groups of legislators from advocating for these or other policies.

"That said, the federal legislation referenced in Senate Bill 1054 remains in draft form and has not yet been introduced in Congress. It is impossible to adequately form an opinion on federal legislation that does not yet exist. We need consensus on a national energy policy, and the contemplated federal legislation raises significant public policy issues on which I am willing to keep an open mind. However, it is inappropriate for the state to commit to a position until such time as legislation has actually been introduced."

Warner noted that the General Assembly had acknowledged the "need for further study" on SEACOR, which was approved with his support. The study requests the state's Commerce and Trade office to examine state legislation to respond to "contemplated federal action." Warner said the secretary of Commerce and Trade will be asked to "monitor federal developments on domestic energy production and needed state responses, if any...At the same time, I am uncomfortable with legislation predetermining the outcome of this effort."

Thomas Moskitis, in public affairs with the American Gas Association, said at NGI's GasMart conference in New Orleans recently that the federal plan would allow states to veto part or all of leasing proposals for up to 60 miles from shore. The states also could restrict leasing to natural gas preference leases that would permit production of natural gas and condensate (see NGI, March 21). Moskitis said the East Coast was a likely gas province, citing production off Nova Scotia.

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