Adding a lucrative financial incentive for coastal states that allow energy production off their shores would greatly enhance prospects of congressional passage of a bill to strengthen rules on offshore-drilling safety, National Journal’s Energy and Environment Insiders say. Still, Insiders are pessimistic that Congress would pass any such plan.
After the April 2010 explosion at the Deepwater Horizon drilling rig and the ensuing oil spill in the Gulf of Mexico, Senate Energy and Natural Resources Chairman Jeff Bingaman, D-N.M., and ranking member Lisa Murkowski, R-Alaska, began work on a measure to boost offshore-drilling safety. But the legislation is now stalled in their committee over language that would allow coastal states to secure 37.5 percent of revenues from new energy production off their shores.
Currently, virtually all royalties and revenues from energy production in federal waters—about $5 billion to $10 billion annually—goes to the Treasury. Under a 2006 law, Gulf Coast states—chiefly Louisiana—do enjoy a 37.5 percent share of revenues from some Gulf drilling, and Louisiana Democrat Sen. Mary Landrieu is seeking to extend that privilege to all coastal states, something that would promote expanded drilling.
Of the 35 Insiders who took part in the NJ poll, 63 percent said that linking revenue sharing to an offshore-drilling safety bill would increase its chances of passage.
“There is not much point in allowing the drilling without revenue sharing,” one Insider said. “If the states don't get any of the gravy, they are likely to block drilling off their coasts.”
Though 77 percent of Insiders answered “No” when asked whether they think this Congress will pass legislation that would divert revenue from offshore drilling and renewable-energy production from the federal government to coastal states, the majority noted that linking the new state-revenue provision to an offshore safety reform measure might be enough to convince moderate and coastal-state Democrats to back new oil drilling and other energy production off their states’ shores.
“Adding safety requirements will give some moderate Democrats the cover they need,” one Insider said.
Language to divert some of the revenue from new offshore energy production to the states is sure to garner support in the Republican-controlled House, which has already passed three offshore-drilling bills this year.
House Natural Resources Committee Chairman Doc Hastings, R-Wash., introduced his own offshore-drilling reform bill earlier this week, and his committee will take a look at revenue sharing for coastal states on Wednesday. While Hastings’s spokesman Spencer Pederson said on Monday that the congressman is still “looking at these two issues separately,” it is all but certain that House Republicans will aim to load the reform bill with a revenue-sharing provision.
Although it would likely pass the House, some Insiders say such a measure wouldn’t make it through the Senate, where the $14 trillion debt is overshadowing every piece of legislation.
"This is whack-a-mole," said one Insider. “Marrying the two would prompt the revenue-sharing delegations to line up in support—but non-revenue sharing states and the anti-drillers would share the common goal of defeating it. There’s a lot more of the latter than the former.”
So long as Bingaman, who adamantly opposes the revenue-sharing plan, is in charge of the Senate Energy Committee, some Insiders said the provision is doomed.
“It is hard to imagine that Bingaman will let coastal revenue sharing be his legacy as chairman, given his long-standing opposition to it,” one Insider said.
Insiders also said the debt-ceiling negotiations show that many bills will stall in this Congress.
“This Congress couldn't pass legislation commuting its own death sentence,” one Insider joked.
Would linking revenue-sharing to a bill that would set new offshore drilling safety requirements increase chances of passage for the drilling reform measure?
(35 votes)
- Yes 63%
- No 37%
Yes
“It probably would improve the chances of passing an overall offshore-drilling bill, but prospects in the Senate for inclusion of such a provision are bleak.”
“Without any prospect of a broad energy bill, revenue sharing may be necessary to remove objections to a drilling-reform bill.”
“It would greatly enhance the chances of passage in a future Congress under Chairwoman Murkowski.”
“An OCS [Outer Continental Shelf] safety bill cannot pass without some Republican support. Revenue sharing would help provide that.”
No
“More poison pills just make a bill more poisonous, not more passable.”
“Most clean-energy leaders don't believe these funds will ever make it to the renewable industries.”
“On the surface maybe, but it makes the OCS reform bill more complex, weighing it down even more.”
“In fact, it will be the opposite. [Revenue] sharing will take down everything if it is included.”
“It may, but it's not enough to overcome the objections in the Senate. This is an issue Bingaman tried to avoid at the markup last week – unsuccessfully.”
Do you think Congress will pass legislation that would divert revenue from offshore drilling and renewable energy production from the federal government to coastal states?
(35 votes)
- Yes 23%
- No 77%
Yes
“In the past, Congress has enacted laws that provided for revenue sharing with coastal states for offshore drilling in federal waters in a zone close to state waters in order to encourage state support for development. So, revenue sharing is not a departure from past practice.”
“There is not much point in allowing the drilling without revenue sharing. If the states don't get any of the gravy, they are likely to block drilling off their coasts.”
“If states have an incentive to allow OCS development, it will actually increase federal revenues. In most coastal areas now, what the federal government is getting is 100 percent of nothing.”
No
“This Congress couldn't pass legislation commuting its own death sentence.”
“Congress needs any revenue source it can get right now, I just don't see this occurring.”
“This is the most dysfunctional Congress I've seen in my 25-plus years in Washington. You'll have to check with Speaker [Grover] Norquist and Leader [George] Soros before scheduling a vote.”
“There are only a handful of states who would benefit and lots of others who oppose because they don't. Plus, revenue sharing is the Alamo for the anti-drilling lobby.... If new states like California and North Carolina have an economic incentive to explore off their coasts, the anti-drillers don’t stand a chance in this economy.”
“Not as long as Jeff Bingaman is still in the Senate.”
“In the midst of a crisis created by Republican leaders who say they won’t vote to increase the debt limit without cuts to Medicare, it is absolutely ludicrous for some of them to be simultaneously talking about increasing the federal deficit by diverting revenues from offshore drilling on federal lands to a handful of coastal states. I guess deficits don’t matter when it comes to promoting [Big] Oil’s 'drill, baby drill' agenda.”
“Not in the 112th. You [may] see a bill passed out of the House this Congress only to die in the Senate. Next Congress, stay tuned for an increase in domestic energy-friendly senators and pressure from states awaiting a new revenue stream.”
National Journal’s Energy and Environment Insiders Poll is a periodic survey of energy policy experts. They include:
Jeff Anderson, Paul Bailey, Kenneth Berlin, Denise Bode, Kevin Book, David Brown, Neil Brown, Stephen Brown, Kateri Callahan, McKie Campbell, Guy Caruso, Paul Cicio, Douglas Clapp, Eileen Claussen, Steve Cochran, Phyllis Cuttino, Kyle Danish, Lee Dehihns, Robbie Diamond, Bob Dinneen, Sean Donahue, Jeff Duncan, John Felmy, Mike Ference, David Foster, Josh Freed, Don Furman, Paul Gilman, Richard Glick, Kate Gordon, Chuck Gray, Jason Grumet, Christopher Guith, Lewis Hay, Jeff Holmstead, David Holt, Skip Horvath, Bob Irvin, Bill Johnson, Gene Karpinski, Joseph T. Kelliher, Brian Kennedy, Kevin Knobloch, David Kreutzer, Fred Krupp, Tom Kuhn, Con Lass, Mindy Lubber, Frank Maisano, Drew Maloney, Roger Martella, John McArther, Mike McKenna, Bill McKibben, David Miller, Kristina Moore, Richard Myers, Aric Newhouse, Frank O'Donnell, Mike Olson, T. Boone Pickens, Thomas Pyle, Hal Quinn, Rhone Resch, Barry Russell, Joseph Schultz, Bob Simon, Scott Sklar, Bill Snape, Jeff Sterba, Christine Tezak, Susan Tierney, Andrew Wheeler, Brian Wolff, Franz Wuerfmannsdobler and Todd Young.
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