Republicans on the House Natural Resources Committee Wednesday approved legislation that would expand offshore energy production to include the East and West Coasts, and would extend revenue-sharing to all coastal states.

The measure (H.R. 2231) cleared the panel by a vote of 23-18, with Republicans defeating all attempts by Democrats to weaken the legislation to open new offshore areas — such as the East and West Coasts — to energy production by requiring the Obama administration to submit a new leasing plan by 2015 — two years before the existing plan expires.

The bill requires that the new leasing plan, and subsequent five-year offshore leasing plans, include lease sales in areas containing the greatest known oil and gas reserves. Areas with the greatest known reserves are estimated to contain 2.5 billion bbl of oil and 7.5 Tcf of gas. It calls for specific leases sales off the coast of Virginia, earlier canceled by the Obama administration; off the coast of South Carolina; and off the coast of California using existing offshore infrastructure or onshore extended-reach drilling.

It also opposes 37.5% revenue-sharing for other coastal states with energy production off their shores. Currently only the Gulf Coast states receive 37.5% of the revenue from new leases, with the remainder going to the U.S. Treasury.

Virginia is in favor of developing its Outer Continental Shelf (OCS) waters, said Rep. Rob Wittman (R-VA). “If New Jersey doesn’t want it, [that’s] fine,” he noted. Virginia lawmakers in Congress and at the state level have pressured Interior for years to open Virginia’s coastal waters to offshore development, but so far they have been unsuccessful (see Daily GPI, July 7, 2011).

Wittman said he was convinced that exploration and development could be conducted in Virginia’s waters without harming Virginia’s water and its beaches.

“Our state wants to see this,” said Rep. Jeff Duncan (R-SC). “This is the right bill for the right time,” he noted, adding that there is natural gas to be harvested in offshore South Carolina.

New Jersey has been staunchly opposed to developing oil and natural gas reserves off of its coastline. In fact, Rep. Rush Holt (D-NJ) offered an amendment to prohibit leasing off the Atlantic Coast, but it was defeated 24-17. The Holt amendment “is a step backwards,” said Chairman Doc Hastings, the chief sponsor of the bill.

The Democrats also were unsuccessful in their attempt to pass through an amendment that would prohibit issuing new leases in the California OCS. Democrats complained that the bill was fast-tracked to mark-up without any input from the Obama administration.

“Why are we ramming this [bill] through our committee?” asked Rep. Niki Tsongas (D-MA). The bill is “bad policy,” and will be “dead on arrival” in the Senate, she noted.

Rep. Raul Grijalva (D-AZ) sought to double the penalty amount to $80,000 per OCS violation per day, but Republicans shot down the amendment by 25-14.

Moreover, the measure incorporates into law the reorganization of the Interior Department’s offshore energy agencies, namely abolishing the Minerals Management Service and creating the Bureau of Ocean Energy, Bureau of Ocean Energy Safety Service and Office of Natural Resources Revenue (see Daily GPI, May 21, 2010). At the time, former Interior Secretary Ken Salazar signed a secretarial order to split the MMS into three separate entities.

The Senate bill also would establish an Under Secretary of Energy, Land and Minerals to be appointed by the president and confirmed by the Senate. The office would oversee all offshore and onshore energy operations.

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