House Rejects Push to Renegotiate Contracts

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In a 207-to-205 vote, the U.S. House on Friday rejected a plan aimed at pushing oil and natural gas companies to renegotiate flawed 1998 and 1999 drilling contracts.

Due to a clerical error at the Interior Department, the drilling agreements have made way for companies such as Royal Dutch Shell and Chevron Corp. that drill for energy in the Gulf of Mexico's deep waters to forgo paying royalties to the federal government.

U.S. lawmakers this year vowed to pass legislation that would address the error and close what Democrats have described as a leasing "loophole."

But, the House on Friday decided against addressing the drilling issue via a pending tax bill.

Key Republicans had argued that although they're supportive of legislation aimed at blocking royalty relief for oil companies, the tax bill wasn't the right vehicle.

Still, the tax legislation includes a plan to open more than 8 million acres in the U.S. Gulf of Mexico oil and gas drilling. And Rep. Edward Markey, D-Mass., had argued that the drilling plan should not be approved without a fix for the contracts that give energy firms relief from paying royalties.

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