Oil and natural gas producers scored a major victory Thursday when the House defeated a Democratic measure that would have forced them to either use their existing leases or lose them. The House did pass two energy bills before leaving for the Fourth of July recess, which require the Commodity Futures Trading Commission (CFTC) to be more aggressive in its regulation of energy futures markets and would provide mass transit agencies with new funds to deal with skyrocketing gasoline and fuel prices.

By 222-195, the House rejected the “use it or lose it” bill (HR 6251), sponsored by Rep. Nick Rahall (D-WV), which would have barred the secretary of the Department of Interior from issuing new federal oil and natural gas leases to holders of existing leases who do not “diligently” develop them. Producers would have had to give up their nonproducing leases and “allow another company to [have] a go at that land,” Rahall said. The measure was offered under the House suspension rules, which requires a two-thirds majority or greater to pass.

The House passed another measure (HR 6377) by 402-19 that directs the CFTC to use all of its authority, including its emergency powers, to immediately curb excessive speculation in any contract market that the agency oversees, as well as unlawful activity that is causing major market disturbances. In short, it directs the Bush administration to take more aggressive action in regulating energy and other commodity futures. The bill also was offered under the House suspension rules.

Also clearing the House by 322-98 was a third piece of legislation (HR 6052) that authorizes $1.7 billion in grants over a two-year period to assist mass transit agencies to help reduce fares and expand services.

The “use it or lose it” bill sought to compel “the oil industry to do what it should do best — drill,” Rahall said. “Big Oil does not need to be coddled; it needs a swift kick in the backside.” Rahall and other House Democrats argued that the oil and natural gas industry is “stockpiling” leases. They said producers are sitting on 68 million acres of leased public land, which they estimated could produce an additional 4.8 million b/d of crude oil and 44.7 Bcf/d of gas.

According to the Minerals Management Service and Bureau of Land Management, more than half of the 68 million leased acres is not producing oil or natural gas, said Majority Leader Steny Hoyer (D-MD). “This bill simply says to the oil companies, ‘be diligent in the development of what you have or lose the lease to someone who will pursue the discovery and production of oil.'”

Rep. Rahm Emanuel (D-IL) said producers shouldn’t get additional leases until they “finish everything that’s on your plate.” Rep. Lois Capps (D-CA) accused the oil and gas industry of “dragging its foot” with existing leases.

If it had passed the House, the “use it or lose it” bill would have faced either a Senate filibuster or a White House veto, said energy analysts Christine Tezak and K. Whitney Stanco of Stanford Group Co.

“The true source of most nonproducing [lease] acres is the U.S. Congress,” countered Rep. Mary Fallin (R-OK). She estimated that the majority of federal lands are not even leased. However, the Democrats’ legislation “is based on the premise that oil companies are sitting on resources that they should be developing,” which she called false.

House Democrats tried to turn the tables on Republicans, who believe the only way to deal with the energy crisis is to remove the 27-year-old ban on oil and gas leasing in much of the federal Outer Continental Shelf (OCS). “It’s time we started drilling here in the United States,” said Rep. Dan Burton (R-IN). And “we have to start drilling now.”

But Tezak and Stanco think there is little chance of Congress lifting the long-standing moratorium. “While we think there is some support in the electorate for this, we don’t expect a decade of Democratic opposition to more exploration in Alaska or the Outer Continental Shelf to suddenly disappear.”

Hoyer said 81% of the estimated oil and natural gas resources on federal lands and offshore are presently available for development, with resources equaling 107 billion bbl of oil and 658 Tcf of natural gas. “Our Republican friends have…charged that we’re keeping the best lands out of the hands of oil and gas companies. [This] is not the case.”

There will be “no relief at the pump unless we address supply” by providing producers with more access to federal land, countered Rep. David Weldon (R-FL). Instead, House Democrats have focused their attention on market speculation, he said. The “legislation that is before us today is a scam,” added Rep. Devin Nunes (R-CA).

If the Republicans want the offshore leasing ban lifted, Rahall asked why doesn’t President Bush with “one stroke of the pen” exert his authority to remove the OCS moratorium. Rather, he noted Bush puts the onus on Democrats in Congress.

Minority Whip Roy Blunt (R-MO) called the Democratic energy measures nothing more than “Band-Aids.”

The CFTC-related measure “points a finger in the face of the Commodity Futures Trading Commission and very sternly says, ‘Do your job,'” said Rep. Mike Conaway (R-TX). The CFTC “has historically been a reluctant regulator,” and an “industry lapdog,” Rep. Edward Markey (D-MA) charged.

The measure “simply tells the Commodity Futures Trading Commission to do what it already has the authority to do,” said Rep. Bob Goodlatte (R-VA).

The bill came one day after House Speaker Nancy Pelosi asked President Bush to “immediately direct” the CFTC to use its existing emergency authority under the Commodity Exchange Act to restore order to the crude oil and gasoline markets in the United States (see Daily GPI, June 26). She noted that the CFTC has exercised its emergency authority in the past.

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