House Democrats to Shelve Some Parts of Oil Legislation

WASHINGTON(Dow Jones Newswires), July 22, 2010

U.S. House Democratic leaders plan to remove some controversial features from legislation intended to overhaul the laws governing oil and natural gas development on federal lands in an effort to improve the bill's chances of passage, a senior House Democrat said Thursday.

As early as next week, the House is expected to vote on legislation that tightens regulations of offshore drilling, formally restructures the agency that regulates such drilling, and removes the cap on economic damages paid to residents and small businesses by oil companies after oil spills.

The oil industry and many Republicans fear the package will include a host of provisions, many of them unrelated to the spill, that were approved last week by the House Natural Resources Committee. Those measures would generally tighten regulation of drilling for petroleum on onshore areas and raise the fees that companies must pay when they seek to drill for oil on federal property.

But in an interview Thursday, the committee's chairman, Rep. Nick Rahall (D., W.Va.), said Democrats are likely to set aside some parts that have aroused the industry's ire. As examples, he cited a provision that would require companies to disclose the chemicals used when they engage in hydraulic fracturing, a process for extracting natural gas that environmental groups say threatens drinking-water supplies.

Also likely to go, Mr. Rahall said, is a provision making uranium mining subject to federal royalty requirements. That measure, pushed by New Mexico lawmakers, is intended to raise money to help fund the medical treatment of miners who claim to have suffered health problems as a result of past uranium mining practices.

Mr. Rahall said Democrats would also likely scuttle a provision to raise the minimum bids that energy companies must submit when they compete at auctions for the right to lease federal land.

"The intention is to keep the bill spill-related," Mr. Rahall said. If eliminating certain measures can reduce opposition to the legislation "and ensure the support of our own [members], that's the avenue I'd like to be pursued."

The comments by Mr. Rahall point to broader tensions that Democrats are trying to bridge within their caucus about how to respond to the Gulf of Mexico oil spill. Many members of the party's liberal wing see the spill as an opportunity to pass legislation that attempts to transition the U.S. economy away from carbon-intensive fuels, or to pass other environmental measures that they have worked on for years.

Other Democrats--including those from manufacturing states and regions heavily dependent on coal-fired electricity--want a narrower bill, focused on tightening regulation of offshore drilling and subsidizing electric cars and wind and solar power. Such a bill, the reasoning goes, would have better odds of passage, and avoid a potentially damaging fight shortly before the fall elections.

It isn't clear whether the compromises Democrats are considering will be sufficient to broaden support for the legislation among Republicans. Mr. Rahall said the legislation to be voted on next week will still include provisions to fund various land and water conservation programs, funded by royalties paid by oil and gas companies.

Republicans say that program, which would be authorized to collect roughly $900 million per year, has no place in legislation intended to focus on the Gulf oil spill. But Democrats, who have been working to advance the fund for years, say the spill shouldn't stand in the way of funding conservation programs, either.

"There are some things that are very important to members and are intended to address longstanding problems" in their districts, Mr. Rahall said.

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