06.13.18

House Republicans propose financial penalties for states that block offshore drilling

House Republicans put forward a proposal this week to impose hefty fees on states that do not approve of drilling for oil and natural gas off their coasts, a move that would pressure local leaders who oppose the Trump administration’s plan to expand offshore leasing.

The administration’s plan has been met with stiff resistance from many Democrats and even Republicans in coastal communities. Elected leaders in several seaside states even vowed to block the federal government from allowing offshore leasing off their shores.

The draft proposal, which will be discussed at a hearing of the House Natural Resources Committee on Thursday, says that states will be allowed to disapprove of drilling offshore in up to half of the lease blocks off its coast without incurring a penalty.

But any state with a proposed lease sale that wants to put more than 50 percent of the blocks off-limits would be required to pay a fee equal to at least one-tenth the estimated government revenue that would have been generated from lease sales, royalties and other revenue streams, if oil and gas drilling had taken place.

The bill would also create revenue-sharing scheme for states that do decide to drill. Under current law, only Alabama, Louisiana, Mississippi and Texas receive a share of offshore oil and gas receipts.

Democrats objected to the idea of dinging states for protecting their coastlines, saying the plan if enacted could cost individual states hundreds of millions, if not billions, of dollars in fees.

“This bill is a ransom note in a cheap disguise,” Rep. Raúl M. Grijalva (Ariz.), the committee’s top Democrat, said in a statement. “Penalizing states for protecting their own beaches is what you’d see in a petro-state, not in a modern democracy. The Republicans on this committee seem to think we’re here to do industry’s bidding regardless of the consequences, and until control of Congress changes, this is the best the American people can expect.”

Republicans on the committee led by Rep. Rob Bishop (R-Utah) emphasize that the draft bill is subject to change.

“What we want to really convey is that when states out East, like the coastal states, are trying to prohibit development rather than facilitating it, they are not only harming the potential oil and gas development, but they’re also harming the rest of the country” by depriving the federal government of revenue, said a Republican committee staffer speaking under condition of anonymity to discuss the proposal before it is formally introduced.

Lois Epstein, Arctic program director for the Wilderness Society environmental group, said she thought the draft needed work, noting that it empowers the interior secretary to estimate the value of offshore reserves when calculating the potential penalty.

“You could come up with almost any number there,” Epstein said. “This is very bad policy.”

At the beginning of the year, the Trump administration initially called for opening nearly every corner of U.S. waters in the Arctic Ocean, Pacific Ocean, Gulf of Mexico and the Atlantic Ocean for petroleum exploration.

But the plan was met with skepticism and, at times, outright hostility from many local politicians of both parties who still had the 2010 Deepwater Horizon disaster, the largest oil spill in U.S. history, still fresh in their minds. That unplugged well released more than 200 million gallons of oil into the Gulf of Mexico, killing billions of animals of sea creatures and economically and medically imperiling thousands of Gulf of Mexico residents.

In response to the proposal from Trump’s interior secretary, Ryan Zinke, state legislators in New York, South Carolina and Rhode Island began considering legislation to block oil and gas infrastructure from being built in state waters. Leaders in California, which has decades-old restrictions on offshore development since a 1969 oil spill near Santa Barbara, promised to block the transportation of oil from any new offshore rigs through the state.

And by April, New Jersey became the first Atlantic state to adopt a legal barrier to offshore drilling when its new governor, Democrat Phil Murphy, signed a law prohibiting oil exploration in state waters, which extend three miles from shore.

By that month, Zinke acknowledged there was “a lot of opposition” to drilling outside of the Gulf region already dotted with oil rigs. Zinke told Congress that month that he will scale back the offshore administration’s plan.

Among the dissenters in Congress to the Trump administration’s offshore plan are GOP Sens. Lindsay O. Graham of South Carolina, who has called it “horrible public policy,” and Marco Rubio of Florida, who also opposes drilling off the coast of his state.

With the lack of support from the full Republican Senate caucus, it will be difficult to get a measure penalizing states for blocking offshore drilling through the upper chamber, which the GOP controls by a slim 51-to-49 margin.


By:  Dino Grandoni
Source: The Washington Post