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Republicans Seeking to Relax OCS Ban as Part of Budget Reconciliation Process

September 5, 2005
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The energy bill has been approved by Congress and signed into law by President Bush, but debate over some of the more controversial energy issues that didn't make it into the bill, such as removing the moratoriums on oil and natural gas drilling in much of the federal Outer Continental Shelf (OCS), appear to be far from over, according to Washington sources.

Republican leaders are considering offering a proposal to open up more of the OCS to exploration and production (E&P) as part of the filibuster-proof budget reconciliation process when they return after Labor Day.

The proposal would give states an opportunity to opt out of the congressional and presidential moratoriums on drilling that have been in effect for more than 20 years, and it would provide producing states with greater royalty income from offshore drilling, said Paul Cicio, executive director of Industrial Energy Consumers of America (IECA). "We expect a legislative approach that reflects these two key principles to surface in September," he told NGI.

"There is more than just smoke here," said an energy industry source, referring to reports about a Republican proposal to relax the OCS moratoriums.

Republican congressional leaders believe an OCS moratorium proposal would fare better now than it did during the energy bill negotiations because it will be brought up during the omnibus budget reconciliation process, the industry source noted. The budget reconciliation measure cannot be filibustered under Senate rules, meaning that pro-OCS drilling Senate forces won't have to muster 60 votes to overcome a filibuster by anti-OCS drilling lawmakers. Instead, the measure will require only a simply majority vote (51) to pass. That makes a "big difference," the source said.

A proposal seeking to relax the OCS moratoriums never made it into the energy bill over the summer because Florida's senators threatened to block the bill unless they received written assurances from Senate leaders that the ban on drilling off Florida's shores would remain in tact. The Florida senators won and got their agreement. Even though the accord applied only to Florida's offshore region, it dealt a major blow to the plans of Sen. Mary Landrieu (D-LA) to offer an amendment that would give non-producing coastal states a chance to waive the moratorium on drilling.

The Republican proposal, if approved in Congress, could open up areas -- such as the East Coast, eastern Gulf of Mexico and other regions -- where industry and policymakers believe there are large, untapped reserves of natural gas. The existing presidential and congressional moratoriums ban drilling off the East Coast, West Coast, eastern Gulf of Mexico and parts of the Alaskan coast. The presidential ban expires in 2012, while the congressional moratorium is renewed annually.

Some coastal states where drilling is currently banned, such as Virginia, have expressed an interest in exploring for natural gas off of their coasts, while other states, such as Florida and California, are dead set against opening their coasts to producers. The opponents argue that drilling would foul their beaches and hurt their tourism trade.

Rep. Richard Pombo (R-CA), chairman of the House Resources Committee, has been leading what he describes as lengthy negotiations with the California and Florida delegations on the proposal, the Wall Street Journal reported.

Also expected to be in the omnibus budget package is proposed drilling in the Arctic National Wildlife Refuge (ANWR). Congress in late April passed a $2.6 trillion budget resolution for fiscal 2006 that could clear the way for oil and gas drilling on the coastal plain of ANWR.

The budget for fiscal 2006 assumes that ANWR will produce $2.4 billion in savings over five years. The Senate Energy and Natural Resources Committee, which has jurisdiction over energy legislation, is expected to report back legislative language in September that authorizes exploration in the Arctic refuge.

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