Debate Over Amendments Likely to Shape OCS Drilling Bill

The Senate will take up legislation to expand eastern Gulf of Mexico oil and gas drilling this week amid questions over the bill's long-term costs and what amendments lawmakers may consider.

A final vote on the bill that would allow new leasing on 8.3 million acres and steer revenues to Gulf Coast states is expected either late this week or early next week. Floor action should begin with a motion to proceed to the bill and perhaps a cloture filing on that motion, according to congressional aides. The filing of a cloture motion on the bill itself, to bring things to a faster conclusion, is also likely, with 60 votes needed to limit debate.

Supporters of the measure, S. 3711, appear cautiously optimistic they can win the 60 votes they need to proceed to final passage. "I think, at the end of the day, we will get this off the floor," an oil industry lobbyist said Friday.

A well-placed Democratic aide agreed. "It looks like the bill has 60 votes," the aide said.

Even so, lobbyists admit a significant number of votes remain in play. Sources in industry and the environmental community listed the number of potential swing votes at around a dozen or even more, with interest groups on both sides of the debate lobbying these senators aggressively. The swing votes include lawmakers who support expanded gulf drilling but are wary of losing federal money when the bill's complex revenue-sharing formula is fully phased in.

A subset of votes to watch include Democrats from farming states who want more natural gas to ease price pressure on agribusiness but might bristle at the long-term costs. And environmentalists are pressing key senators to oppose the bill because it could be conferenced with a much more aggressive measure that passed the House last month.

The Senate plan would provide access to an estimated 1.26 billion barrels of oil and 5.8 trillion cubic feet of natural gas, according to Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-N.M.) and Senate Majority Leader Bill Frist (R-Tenn.), the two lead sponsors of the measure.

The bill would open 2.5 million acres in the Lease sale 181 area -- which sits south of the Florida panhandle -- with additional acreage coming from an area below it now called "181 south." The 181 area itself is not under formal leasing moratoria but has been mostly withheld from development; the 181 south area is subject to moratoria that the bill would lift for that tract.

The bill also would steer 37.5 percent of the revenues from leases in these areas to gulf states that have offshore production. The funds must largely be directed to coastal protection and environmental restoration projects.

Republican aides on the energy committee cite Congressional Budget Office estimates that show the bill would generate $926 million over 10 years for the federal Treasury, with additional money flowing to the gulf producing states and the stateside Land and Water Conservation Fund. But opponents insist the measure would become costly after a decade -- outside the CBO scoring window -- when gulf producing states begin receiving funds from leases entered into after enactment.

An analysis released by Sen. Jeff Bingaman (D-N.M.), the ranking member on Energy and Natural Resources, says "conservative" Minerals Management Service data show substantial payments to the gulf producing states -- Alabama, Mississippi, Louisiana and Texas -- beginning in a decade.

"By 2022, the entitlement would conservatively amount to $1.2 billion per year. Over the next 60 years, this entitlement to the Gulf Coast states would have a total value of at least $170 billion," the analysis states.

The bill also provides a no-drilling buffer zone for Florida 125 miles south of the panhandle coast until mid-2022, while blocking development east of the so-called military mission line about 234 miles west of Tampa for the same period.

Sen. Mel Martinez (R-Fla.) has backed the deal, saying it provides longer-term protections for Florida as pressure to drill in the eastern gulf increases. Somewhat less clear are the plans of Sen. Bill Nelson (D-Fla.), who is seeking assurances that it will not go to conference with the House-passed drilling measure authored by House Resources Committee Chairman Richard Pombo (R-Calif.).

"He's insisting on a commitment that the Senate won't accept any changes by the House that move the bill closer to Rep. Pombo's position," a Nelson aide said in an e-mail exchange Friday.

The House measure would allow oil and gas drilling beyond 100 miles from all state shores. Between 50 and 100 miles, drilling is also allowed unless state legislatures and governors oppose it, while within 50 miles the situation is reversed -- drilling is banned unless states act to allow it.

The Nelson aide said the House plan would "gut" the moratorium. Its supporters say it allows increased production but will provide states the right to set policy off their coasts.

Differences between the Senate and House versions make enactment of new offshore drilling policy highly uncertain this year. But one industry official said reconciling the two chambers' approach is not out of reach.

"I think we can find a balance between the House and the Senate bills," said Jack Gerard, CEO of the American Chemistry Council. "We are hopeful we can get a bill this Congress."

While natural gas prices have eased considerably over the past several months from a peak of around $15 per thousand cubic feet late last year, Gerard says wider drilling is badly needed. "The short-term impacts have moderated, [but] the long-term impacts are still a serious threat, and because of that long-term threat, our folks are making long-term decisions about where they will be in the future," Gerard said in an interview Friday.

Amendments being considered

Aides say it is not clear how many amendments Frist will allow to proceed. Many observers believe he is unlikely to allow the bill's consideration to become a forum for a wide-ranging set of energy policy votes.

Several amendments are under consideration. Advocates of new bipartisan automobile efficiency legislation hope to add their measure to the offshore drilling measure (E&E Daily, July 20). An aide to Sen. Barack Obama (D-Ill.) said the plan remains in place "if Senator Frist will afford us that opportunity."

Bingaman also hopes to attach amendments addressing his concerns, but he did not address the topic when releasing the Democratic staff analysis of the bill. Bingaman opposes revenue-sharing and believes the Senate bill closes off too much of the eastern gulf to energy production.

Sources tracking the bill say Sen. John Warner (R-Va.) is considering an amendment that would allow drilling in coastal areas outside the gulf, notably Virginia. His office did not return calls last week on the issue. He and Sen. Mark Pryor (D-Ark.) offered legislation earlier this year that would allow states to "opt-out" of offshore leasing bans and receive a share of offshore revenues.

Sen. Ron Wyden (D-Ore.) may seek to offer an amendment to address problems with the federal "royalty relief" program, an aide said. But environmentalists and other sources do not appear optimistic GOP leaders will open the door to a host of Democratic amendments.

There is also speculation a climate change amendment could surface if the Republican leadership allows a more freewheeling energy policy debate. If Frist does open the door to amendments, eyes will first turn to Sens. John McCain (R-Ariz.) and Joe Lieberman (D-Conn.). The lawmakers have vowed to keep bringing back their cap-and-trade plan for greenhouse gas emissions until it passes. It was defeated 38-60 last summer.

Senior reporter Darren Samuelsohn contributed to this story.

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

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