Alaska May Stand to Gain Under Senate OCS Bill

Senators seeking to expand Gulf of Mexico oil drilling intend to formally introduce their legislation today in expectation of floor debate next week. A draft copy secured last night appears to steer money toward Alaska, a provision that has not previously been revealed as part of the proposal.

While Senate GOP leaders floated the outlines of the drilling plan last week, today's planned introduction of the bill could be a revealing step forward prior to the floor fight. Several potential swing votes on the measure have refrained from weighing in because they had not seen details of the complex package.

The measure represents a deal among the Republican leadership, Sen. Mel Martinez (R-Fla.) -- who is seeking coastal protections for Florida -- and Gulf Coast state senators who want a generous cut of federal offshore production revenues steered toward their states.

Summaries released to date say the plan would require leasing in 8 million acres in the gulf, including 1.7 million acres of the Lease Sale 181 area, and 6.3 million acres in a deepwater region to its south. It proposes to share 37.5 percent of Gulf of Mexico leasing revenues from the newly opened regions with Louisiana, Texas, Mississippi and Alabama. In a decade it broadens that plan to include new gulf leases in other areas entered into after enactment of the bill.

Crucially, it also includes a 125-mile buffer for Florida until 2022 and blocks drilling for the same period of time east of the so-called military mission line, which is about 235 miles from Tampa.

New Alaska revenues?

A draft copy of the bill was circulating yesterday, and Capitol Hill aides last night cautioned that the measure was still being modified.

Even so, several provisions prompted questions among off-the-Hill observers last night. One of them proposes the same 37.5 percent revenue share in regions that are neither the gulf producing states nor covered by the current congressional offshore leasing moratoria. This revenue sharing would begin in fiscal 2017.

Richard Charter, an environmentalist with the National OCS Coalition, last night said this provision -- labeled "other producing states" -- appears designed to steer more revenues toward Alaska from offshore leases there. The congressional outer continental shelf leasing moratoria cover almost all coastal areas outside of the western and central Gulf of Mexico, but does not include Alaska.

Therefore Alaska is the only area that would meet the criteria in the bill, Charter said. "It is cleverly hidden, but just by a simple act of deductive reasoning, you take out everything that is left, and it's Alaska," he said last night. "That has got to be Alaska."

Elsewhere, the draft fills in some details of the gulf drilling and revenue plan. For instance, it spells out what the money shared with Louisiana and other coastal states may be used for. According to the draft bill, these uses include coastal protection, meaning money for conservation, coastal restoration, hurricane protection, and infrastructure directly affected by coastal wetland losses.

Other uses include mitigation of damage to fish and wildlife and other natural resources; implementing a federally approved marine, coastal or comprehensive conservation management plan; and mitigation of the impact of OCS activities through the funding of onshore infrastructure projects.

Wyden repeats call for 'royalty relief' fix

Sen. Ron Wyden (D-Ore.) said on the floor last night that Congress should use the offshore drilling debate planned for next week to address the federal "royalty relief" program. Problems with the royalty waiver program have allowed some gulf lease holders to forgo royalty payments regardless of how high energy prices climb.

"While I am very hopeful the Senate can come to agreement on a plan to provide significantly more relief to the areas that have been ravaged by Hurricane Katrina, I am also hopeful that the Senate will use this opportunity to finally address a current program, a current royalty relief program that is out of control and is diverting billions of dollars away from the federal Treasury," he said, according to a transcript his office provided.

He also said that before starting a "brand new program that will involve vast sums," it is important to fix the current problem. "If you clean up the program that doesn't work today, you save some dollars and you can apply it to those devastated Gulf States that have such a great need," he said, adding that he has been speaking with Sens. Pete Domenici (R-N.M.) and Mary Landrieu (D-La.).

"I will continue to press for a floor vote on reforming the oil royalty program at the earliest possible opportunity, and I am going to do everything I can to see that this vote happens in a fashion that will expedite aid to the people and communities in the Gulf States who await our best efforts," he said.

Copyright 2006 E&E Daily. All Rights Reserved. Visit E&E Publishing for a free trial.


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