Sen. Pete Domenici (R-NM) Tuesday criticized a subcommittee panel's approval of an appropriations measure that would prohibit producers from bidding on future offshore leases unless they agree to renegotiate the flawed 1998 and 1999 leases they currently hold.

The Senate Appropriations Subcommittee on Interior and Related Agencies voted out the measure, sponsored by Sen. Dianne Feinstein (D-CA), as part of the fiscal year 2008 appropriations bill for the Interior Department and related federal agencies.

"I believe it [this issue] would best be solved through the regular process in the Energy and Natural Resources Committee, rather than in an appropriations bill," said Domenici, the ranking Republican on the Senate energy panel.

"It is unfortunate that an error made by the Clinton administration when they negotiated deepwater leases has cost the federal Treasury so much money. However, the way to address this error is not through a punitive provision that will only result in years worth of litigation," he said. It's estimated that the 1998-1999 leases, which omitted price thresholds, have cost the federal government approximately $1 billion in lost royalties so far, and unless corrected, could cost up to $10 billion over the life of the leases.

"In addition, the provision in the bill would quite possibly increase the cost of energy and decrease our domestic supply -- exactly the opposite of what we should be doing at a time when gas prices are so high," Domenici noted.

"The Senate is on notice that the Department of Interior...has told us that a provision like Sen. Feinstein's could cost us a three-year delay in leasing. That would result in a loss of 1.6 billion barrels of domestic oil and $13 billion over 10 years. That is simply unacceptable."

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