GOP’s Hunt for Revenue Revives Longtime Fight Over Arctic Oil Drilling

Republicans need offsets for their tax-reform plan, but some inside and outside the party want to look elsewhere.

The coastal plain of Alaska's Arctic National Wildlife Refuge is seen in this July 2001 file photo.
AP Photo/ Al Grillo
Brian Dabbs
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Brian Dabbs
Oct. 11, 2017, 8 p.m.

The GOP’s search for revenue has revived the perennial partisan fight over plans to open an arctic refuge for oil and gas development—and sparked fierce debates over other energy-related ways to find money.

Both House and Senate budgets task the natural-resources committees to produce legislation to bump up federal revenue in order to—at least ostensibly—help offset tax reform.

Republicans are homing in on energy liberalization in the Arctic National Wildlife Refuge—a subject of partisan battles for several years—as the primary means to comply, but that could fail to create enough revenue or even fall victim altogether to more wrangling.

Democrats, however, are already batting down other Republican suggestions on how to generate that revenue, arguing their counterparts are only willing to consider gifts to the fossil-fuel industry. Democrats and environmental groups also say the legislation under consideration is financially irrelevant for a tax-reform bill that could slash tax revenue by $1.5 trillion.

Democratic Rep. Alan Lowenthal of California lashed out Wednesday at a Republican draft bill to boost Interior Department oil and gas leasing on the Outer Continental Shelf.

The legislation would allow the Interior secretary to disregard the department’s five-year OCS planning program in order to lease more areas of the ocean, which in turn would create more revenue for the federal government and states. The bill could therefore be used to comply with the budget instructions.

“Instead of carefully gathering and balancing stakeholder input and providing certainty to coastal areas for five years at a time, every coastal area would be perpetually at risk,” Lowenthal told a hearing on the bill. “Lease sales would be entirely at the discretion of the secretary, who would be free to ignore the five-year plan all together.”

The five-year plan has come under particular scrutiny over the past year, after the Obama administration issued its plan in the waning weeks of 2016. The plan banned drilling in two areas of the Alaskan Arctic, and Interior Secretary Ryan Zinke is now devising an overhaul it.

Another bill to open up more onshore federal land to more oil and gas development will hit the committee spotlight on Friday. That legislation, which could also be used to comply with the budget instructions, would allow the Interior Department to authorize states to issue oil- and gas-development resources on federal land.

The bills haven’t yet been scored by the Congressional Budget Office, so it’s not known how much additional revenue could be generated.

A spokeswoman for the House Natural Resources Committee said Chairman Rob Bishop is “keeping an open mind at this point” on legislation that the committee may choose to meet the revenue demand. In past Congresses, the committee has signed off on a range of budget-related revenue measures, including oil- and gas-royalty reform, land conveyances, and refinancing of federal power administrations.

But Rep. Raul Grijalva, the ranking member of the committee, said he has no hopes to reach bipartisan consensus on the revenue legislation.

The House fiscal 2018 budget calls on the committee to produce legislation that would generate $5 billion in revenue. That language passed the House by a razor-thin margin last week, and the Senate is poised to consider its version of the budget in the coming weeks following recent markup. The Senate document calls on the Energy and Natural Resources Committee to boost revenue by $1 billion.

Cross-Capitol negotiations would then identify a figure the committees would need to generate, and legislation to accomplish that would be coupled with broader tax reform.

Senate Energy and Natural Resources Chairwoman Lisa Murkowski of Alaska said the committees have several options at their disposal to meet the budget instructions. Energy liberalization for ANWR is a preference, she said.

“Is ANWR clearly a very direct way to meet that budget instruction should it come our way? Yes,” Murkowski said.

Oil and gas development in the refuge has long been a wedge issue, and that partisan fervor hasn’t abated. “As much as ANWR is mythical to the people that want to open it up, it’s as mythical to the people that don’t,” Grijalva said.

The policy faces Republican dissent as well. Six House Republicans, led by Reps. Brian Fitzpatrick and Dave Reichert, urged the Budget Committee in June to reject ANWR as a revenue source, pointing to conservation needs. The nearly 20-million-acre refuge is “home to 37 species of land mammals, eight marine mammals, 42 fish species, and more than 200 migratory bird species,” according to the Defenders of Wildlife, a conservation group.

Environmental groups fiercely oppose oil and gas development in the refuge.

“The scale is a drop in the bucket of the broader budget and tax-reform process,” said Franz Matzner, a deputy director at the Natural Resources Defense Council. “There’s only one excuse to look at our remaining natural resources for development, and that is ideological.”

Estimates vary on the actual revenue that ANWR liberalization could yield. The Trump administration’s fiscal 2018 budget put that figure at $1.8 biillion over 10 years. A Congressional Budget Office estimate in recent years landed on $5 billion, but the price of oil has since plummeted. The Interior Department is currently preparing a plan to assess the resources in ANWR.

Even some business groups are downplaying the significance of the resource potential.

“There’s a very real question about who is going to be interested at $45 a barrel and with limited infrastructure to bring it to market. I’m not saying the industry doesn’t support it, but you’re not going to see a lot of people falling on their sword for me,” said Christopher Guith, senior vice president for policy at the U.S. Chamber of Commerce’s Institute for 21st Century Energy, who pointed to corporate tax revisions as a much more important issue for oil and gas companies.

Still, proponents are steadfast in their support. Asked where the House Natural Resources panel will come up with the budget-mandated billions of dollars in revenue, Rep. Don Young, Alaska’s at-large congressman, left little room for debate.

“You know how we’re going to do it: ANWR,” he said. “We got a chance to do it this time.”

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