Democratic Gains Could Derail Coastal Leasing Push

Would a Democratic tide sweep away offshore oil and gas drilling legislation?

The answer is efforts to expand coastal leasing -- which have stalled even with Republicans in control of Congress -- will face much higher hurdles if Democrats control one or both chambers, a variety of observers on and off Capitol Hill say.

Polls suggest Democrats have a strong chance of winning control of the House, while Senate control likely hinges on a few tight races -- especially Missouri, Virginia, Tennessee and New Jersey.

Some lawmakers hope to salvage in the lame-duck session a drilling bill (E&E Daily, Oct. 2), which has proven elusive amid splits between Republicans in the two chambers. But absent an eleventh hour deal, the issue is carried over into the next Congress -- and into a very different landscape.

Drew Hammill, a spokesman for House Democratic Leader Nancy Pelosi (Calif.), declined to say what Pelosi might do as speaker if Democrats win the chamber, saying she is focused on the midterm elections. But Pelosi is not a fan of offshore drilling, he said.

"Expanding offshore drilling is something she has historically opposed. It is not included in any of the proposals on energy the Democrats have put out there," he said, referring to House Democratic leadership platform that focuses on efficiency and renewable energy.

"I think it will be more of an uphill climb to pass anything," said one lobbyist. "I can't imagine Speaker Pelosi will allow an OCS bill to get scheduled for the floor that she has any reservations about supporting."

Democratic control of the House then -- and chairmanships that come along with it -- almost certainly takes major relaxations or lifting of coastal drilling bans off the table.

Not a simple party-line issue

But advocates of wider offshore access also point out that expanded domestic drilling -- especially for natural gas -- doesn't break cleanly along party lines. The Senate passed a limited bill focused on expanding Gulf of Mexico drilling acreage and sharing royalties in a 71-25 vote.

Far more expansive House-passed drilling legislation -- which has proven a non-starter in the Senate -- that would relax drilling bans in all coastal areas passed 232 to 187, with 40 Democrats on board.

Democrats along the Gulf Coast energy belt often support wider drilling and are pushing for a cut of offshore revenues, while members in states with farming and manufacturing interests hear often how elevated natural gas prices squeeze these industries, and these industrial consumers have been lobbying very hard.

"Oil and gas exploration is not a partisan issue. It is regional issue. We don't see it as changing," said William Kovacs, vice president, Environment, Technology and Regulatory Affairs of the U.S. Chamber of Commerce. Other industry lobbyists were also unwilling to declare the offshore access issue dead if the Democrats take control.

"I think there is a chance there will be an OCS-related bill in a Democratically controlled Congress," said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America.

Bill Whitsitt, who heads the Domestic Petroleum Council -- which is comprised of large independent companies -- also said the issue is not going away. He expects there will eventually be wider offshore access, but whether it can happen in the next Congress will be affected by what happens in November.

"It is not as likely if there is a change in control," he said.

But he also said it is not impossible either. The issue is affected by several factors, such as weather-related disruptions. "The market," he said "always surprises us."

Continued focus on energy

The next Congress should at least present opportunities for offshore drilling, because energy is expected to be a continued focus, especially if prices rise again. Bernadette Budde, senior vice president of BIPAC, said she sees health care and energy rising high on Congress' agenda next session.

"It is going to spring from what is taking place inevitably in the economy. You are going to have to do something about energy, and you are going to have to do something about health care," she said. The group supports pro-business candidates.

Some observers see room for including offshore drilling within a larger energy package that includes provisions on, perhaps, fuel efficiency, renewable energy and alternative technologies.

Paul Bledsoe, a spokesman for the bipartisan National Commission on Energy Policy, says that no matter who controls Congress next year, the margin will be just a few seats, which could allow a compromise.

"A measure combining increased natural gas production with gradual CAFE [Corporate Average Fuel Economy] increases may represent the sweet spot for a bipartisan energy deal, because it strikes a balance between production and efficiency," he said.

The lobbyist similarly sees a ray of hope for a House package deal that marries a limited, Gulf-focused OCS component to other energy priorities, but also said Rep. Nick Rahall (D-W.Va.), the presumptive chair of the House Resources Committee if Democrats control the chamber, is unlikely to press for drilling.

Hammill, Pelosi's spokesman, declined comment on speculation over an energy package that includes both wider production and language on energy efficiency or renewables. Also, he said offshore drilling "is not historically an issue that the leadership has whipped on," and said this is normal for issues in which "there are different positions within the caucus."

On the Senate side

If the Democrats take the House, the current chairman of the Senate Energy Committee -- Sen. Pete Domenici (R-N.M.) -- will gauge the prospects of getting an OCS measure through the Senate that the House could accept, spokeswoman Marnie Funk said.

Domenici will seek to "find out where the Democratic caucus is on the concept of OCS, and particularly Lease Sale 181 development and revenue sharing with states, and then go from there." She said Domenici remains concerned that oil and gas prices could again begin climbing and continues to see a need to increase domestic supply.

Domenici is a lead sponsor of the Senate-passed OCS bill that opens 8.3 million gulf acres to new leasing and shares revenues with gulf states that have offshore production. She did not address the prospects for OCS legislation if Democrats win the Senate, saying it is unlikely.

Sen. Jeff Bingaman (D-N.M.), the current ranking member of the Senate Energy Committee and presumptive chair if Democrats win, also favors wider gulf production. He had co-sponsored an earlier bill with Domenici that addresses the Lease Sale 181 area.

But the plan fell apart over the push by gulf state senators for revenue sharing, which Bingaman opposes, and Domenici later co-sponsored the production and revenue sharing bill that passed over the summer.

The production and revenue bill had the support of Senate Democratic Leader Harry Reid (D-Nev.).

The lobbyist tracking the issue believes an limited OCS plan with revenue sharing is still viable under a Democratically controlled Senate -- in part because revenue sharing is, to put it mildly, a major priority for Sen. Mary Landrieu (D-La.). "The wild card in this is that Mary Landrieu is going to be the most vulnerable Democrat in cycle in '08, and Harry Reid will do whatever he has to do to hold onto that seat," this source said.

Reid's office did not return a call seeking comment. Reid backed S.3711, the Senate-passed drilling bill, citing the resources it would provide for helping restore Gulf coast wetlands. But he also said it would do nothing to lower prices and attacked GOP energy policy for failing to sufficiently address alternative energy.

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