US House Panel to Resume Effort on 'Opt-Out' Bill Next Week

The House Resources Committee plans next week to resume efforts to relax offshore energy drilling bans with a hearing on legislation that allows states to "opt-out" of coastal restrictions and shares revenues with states with offshore production.

The hearing comes ahead of House plans to bring several energy measures to the floor late this month (see related story), and it is expected to include an offshore drilling bill.

The committee has set a June 14 hearing on Rep. Bobby Jindal's (R-La.) bill, the "The Domestic Energy Production Through Offshore Exploration and Equitable Treatment of State Holdings Act of 2006," according to Jindal's office.

Jindal's measure, H.R. 4761, lets states petition for leasing off their shores for either oil and gas, or natural gas-only leases. Current restrictions essentially cover both coasts, most of the eastern Gulf of Mexico and part of Alaska.

"Offshore oil and gas drilling is not a one-size-fits all policy -- individual states can and should be able to decide whether to allow offshore drilling," according to a "dear colleague" letter Jindal is circulating. He adds that if states allow drilling, they are "providing our nation with essential energy resources and ought to be compensated for this effort."

The revenue-sharing system would apply to states such as Louisiana that already have coastal production, as well as states that "opt-out" of the leasing bans. Winning a share of offshore bonus bid and production royalties is a major goal of Louisiana and Gulf Coast lawmakers. The measure also requires leasing next year in a substantial portion of the eastern Gulf's Lease Sale 181 area -- which is not covered by formal leasing bans.

The legislation mirrors Resources Committee Chairman Richard Pombo's (R-Calif.) opt-out measure offered last year, although Jindal's measure provides a greater revenue share to states with coastal production than Pombo's revenue plan. Pombo's measure had been attached to broad spending-cut legislation but was jettisoned by House leadership before the floor vote.

Peterson bill offers competition

But opt-out plans face competition from Rep. John Peterson's (R-Pa.) aggressive push for his legislation that lifts all offshore bans on natural gas drilling, stopping 20 miles from state shores. Peterson's plan also includes revenue-sharing. It has attracted 166 House sponsors.

Peterson spokesman Chris Tucker said today that Peterson believes his measure should advance through committee, not the opt-out plan. "We have enough cosponsors that we have to be taken seriously," he said. "We would like to see our bill come out of Resources and represent the committee's offering to the House floor."

But Pombo has indicated he wants the opt-out plan to again become the House's vehicle for allowing greater coastal production. "The chairman prefers a more comprehensive, flexible approach that puts the states in the driver's seat with control over their offshore resources, and the ability to prevent development if that is what the state desires," Pombo spokesman Brian Kennedy said.

The intricate, escalating revenue-sharing formula in Jindal's bill would ultimately provide producing states with 75 percent of offshore royalties within 12 nautical miles of shore, with an eventual 50 percent split beyond 12 miles, according to Jindal's office.

The bill would provide $10 billion for Louisiana during the first 10 years of the revenue-sharing program, increasing to $28 billion over the first 20 years and $50 billion over the first 30, Jindal's office said in announcing the hearing yesterday.

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

For More Information on the Offshore Rig Fleet:
RigLogix can provide the information that you need about the offshore rig fleet, whether you need utilization and industry trends or detailed reports on future rig contracts. Subscribing to RigLogix will allow you to access dozens of prebuilt reports and build your own custom reports using hundreds of available data columns. For more information about a RigLogix subscription, visit