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Bans on Offshore and Oil Shale Drilling Set to Expire

September 29, 2008
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The House last week passed by a wide margin a continuing resolution that allows the 27-year-old congressional moratorium on offshore oil and natural gas drilling, as well as a ban on oil shale exploration in the Intermountain West, to expire Tuesday. House Democrats, who waged a lengthy battle against offshore drilling, conceded that the odds of renewing the ban over the opposition of the White House were slim this year. The Senate was expected to follow suit and pass the CR over the weekend.

The continuing resolution, which would fund federal agencies through March 6, cleared the House by 370 to 58. House Democrats initially had wanted to include the House-passed energy bill (HR 6899), which would have restricted drilling to 50 miles or more off the Atlantic and Pacific coasts, in the stopgap spending measure (see NGI, Sept. 22).

But the White House forced their hand. As a result, when the existing congressional moratorium expires this week, oil and gas leasing will be permitted as close as three miles from the Atlantic and Pacific coasts and in the eastern Gulf of Mexico -- except off the western coast of Florida. Remaining in place will be a 125-mile buffer off the Florida coast until 2022.

Republicans were declaring victory after the Democratic leadership ceded to the pressure to allow the current offshore drilling ban to lapse at the end of the federal government's current fiscal year on Tuesday.

Rep. David Obey (D-WI), chairman of the House Appropriations Committee, "negotiated the best package he could get with the White House to take a budget standoff off the table so we can address the larger [Wall Street] financial crisis. The White House made it clear any new drilling provision was a nonstarter. The future resolution of offshore drilling will have to be addressed [by] a new president," said Drew Hammill, spokesman for House Speaker Nancy Pelosi (D-CA).

"I think it's awful. This battle is not over. We will come back and fight another day -- that's for sure," said Sen. Dianne Feinstein (D-CA). "I regret the House Appropriations Committee didn't see fit to go with a better, more widely accepted alternative, which would have kept in place a moratorium [of] 50 miles or more offshore. In my view, there were better options than this."

The reprieve from the decades-long ban could be short-lived if Democratic presidential candidate Barack Obama is elected in November. He could easily reinstate all or part of the offshore moratorium. "With these bans no longer in place, work can begin to allow us to tap into our abundant oil and gas resources -- if our leaders don't lock them back up next year. Americans will be watching closely," said Sen. Pete Domenici of New Mexico, the ranking Republican on the Senate Energy and Natural Resources Committee.

Democrats are letting the offshore drilling moratorium lapse, if only temporarily until after the November elections, because they "want to hide from voters who support offshore [drilling]," said Rep. Doc Hastings (R-WA).

As the moratorium expiration looms, Rep. Edward Markey (D-MA) introduced legislation to protect the Georges Bank area off the coast of Massachusetts from drilling. At the same time Rep. Joe Barton of Texas, the ranking Republican on the House Energy and Commerce Committee, proposed a bill that calls for a federal permit coordinator to be appointed by the president, who would coordinate all federal agencies involved in oil and gas permitting on public lands onshore or offshore. The aim of the measure is to speed up the permitting process.

While Democrats had frowns on their faces last week, Republicans were grinning. Both House and Senate Republicans opposed HR 6899, which would have opened the door to drilling 100 miles from shore without a coastal state's consent and allowed a state to "opt in" to drilling as close as 50 miles from shore with the approval of its legislature. Although the bill passed the House earlier this month, the Senate had not yet acted. Fearing that the bill could die, House Democrats sought to drop the bill into the must-pass stopgap funding measure for the federal government.

Republicans threatened to block the continuing funding resolution if that was done. President Bush, who supports lifting the entire offshore ban, also vowed to veto the House energy bill.

"The news that Democrats have finally recognized the significance of this energy crisis and will allow the moratorium...to expire is welcomed by the millions of American families, farmers and small [businesses] struggling to make ends meet because of their soaring energy bills," said House Republican Whip Roy Blunt of Missouri.

"While details remain unclear, I hope the Democrats do not use this as an opportunity for another ruse that would put vast energy reserves under lock and key," he said.

Republicans and the oil and natural gas industry opposed the House bill because it would have taken a lot of "promising areas" off the table by setting a 100-mile buffer for drilling off the Atlantic and Pacific coasts and barring further activity in the eastern Gulf of Mexico. Nor did the bill provide for sharing of royalties between the federal government and coastal states, so there was no incentive for states to permit leasing .

They also objected to provisions in HR 6899 that would have raised taxes on oil and gas companies by $18 billion; would have required holders of the flawed deepwater leases issued in the late 1990s to renegotiate their lease contracts to include price thresholds before they can bid on new offshore leases; and would have required producers to "diligently develop" the federal lands that they already control.

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