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Key provisions in House Democrats’ emerging energy bill raise the possibility that expanded offshore drilling could be approved by the federal government but blocked by coastal states.
The possibility is alarming drilling advocates and could harm the chance of the bill passing on the floor.
The problem is that, according to lawmakers and aides, the Democratic plan would allow drilling off a state’s coast only if the state government agrees. That concept is called “opt-in.”
But key lawmakers say there’s no plan to share the money from drilling with the states.
“It takes away the incentive for the states to do it,” said Rep. John Peterson (R-Pa.). “I think it would be a mistake.”
House Speaker Nancy Pelosi (D-Calif.) announced Wednesday night the bill will allow drilling 50 to 100 miles off the Atlantic and Pacific coasts if states “opt in.” Drilling 100 miles out or more would be completely open.
In exchange, the Democratic plan requires electric companies to use more renewable power and creates new tax incentives for renewable energy companies. Those incentives are offset with money gained from repealing tax benefits for oil companies.
It would also require oil companies to drill their federal leases quickly, or forfeit them.
Democratic leaders are to announce Friday when the bill will go to the floor.
House Natural Resources Committee Chairman Nick Rahall (D-W.Va.) said Wednesday that the federal government should get all the royalties from drilling because the oil off the coasts belongs to all federal taxpayers.
“These are the American people’s resources,” Rahall said.
But he said there’s also a problem that traces back to the Democrats’ decision to obey “pay-as-you-go,” or “pay-go,” budgetary rules. And that complex issue is made even trickier by President Bush’s decision to lift his executive order banning drilling off the coasts.
The problem was laid out in a Tuesday letter to Rahall from the Congressional Budget Office.
When Bush lifted the executive order that banned drilling off most of the nation’s coasts, CBO’s rules required it to assume that drilling would begin after Sept. 30, when the current statutory moratorium ends (for years, an annual moratorium has been tagged onto spending bills).
So any limit on drilling in federal waters counts as a loss in revenue, according to CBO, even though the federal government hasn’t been getting any money from drilling. Under pay-go rules, that loss in revenue must be “paid for” with spending cuts or tax increases.
Limiting offshore drilling to at least 50 miles of the coasts cuts off additional revenues that could be generated by drilling closer in. Further limiting drilling to just Southeastern states keeps other states from generating revenue. And sharing the money with the states limits money that would go into federal coffers.
The centrist, fiscally conservative Democrats who call themselves Blue Dogs are the chief enforcers of “pay-go” rules. But Blue Dogs are also among the biggest supporters of drilling in the Democratic Caucus. Some of them are fuming about the pay-go quandary confronting the energy bill.
“The way CBO scores this is crazy,” said Rep. Dennis Cardoza (D-Calif.). “That’s not how pay-go was designed.”
House leaders drafting the legislation have asked Blue Dogs to agree to waive their concerns, since it is “new money” and giving money to states wouldn’t increase the deficit.
But the fixes could run into problems. Some drilling opponents might not want to offer any incentives for drilling. And supporters might want to allow drilling closer to the coasts. |
