Democrats want to prevent new oil and gas drilling in most U.S. waters. Their plan might work.

December 02, 2021

Democrats might be able to halt most new offshore oil and gas drilling

A slew of climate provisions in Democrats' roughly $2 trillion social spending bill face an uncertain future in the Senate. But there's one big exception: limits on offshore oil and gas drilling.

Democrats, aides and environmentalists feel confident that the prevention of oil and gas drilling in most U.S. waters will survive scrutiny in the Senate, including from key centrist Sen. Joe Manchin III (D-W.Va.).

Under the version of the Build Back Better Act that passed the House last month, new offshore drilling would be permanently prohibited in three major regions: the Atlantic, the Pacific and the eastern Gulf of Mexico.

Other policies aimed at limiting oil and gas development have inspired fierce partisan divides on Capitol Hill. But coastal lawmakers of both parties have rallied around preventing drilling off their coastlines. For instance, Sen. Marco Rubio (R-Fla.) earlier this year introduced the "American Shores Protection Act," which would codify a temporary moratorium on drilling off the coasts of Florida, Georgia and South Carolina.

Meanwhile, Manchin has not publicly expressed concerns about the offshore drilling provision — a sharp contrast to his outspoken opposition to a tax credit for union-made electric vehicles, among other things.

“Let's put it this way: I don't know anyone that represents a coastal district or a coastal state that wants more offshore drilling. So I feel there's reason for confidence that this will happen," Rep. Jared Huffman (D-Calif.), a member of the Natural Resources Committee, which wrote the drilling provision, told The Climate 202.

Diane Hoskins, a campaign director at Oceana, an ocean conservation group, similarly expressed optimism. "Given the bipartisan nature of the support for this provision, the economic benefits of this provision, and the president's commitment to addressing the climate crisis, I'm very hopeful," she said. 

Hoskins said a recent oil spill off the coast of Southern California demonstrated the economic damage that offshore pipeline leaks can cause to the tourism, fishing and recreation industries. The spill of roughly 25,000 gallons closed beaches and fisheries for weeks.

Hoskins also pointed to a recent analysis from Oceana, which found that permanent offshore drilling protections for all unleased federal waters could prevent more than 19 billion tons of planet-heating greenhouse gas emissions and more than $720 billion in damage to people, property and the environment.

Industry opposition

Still, the U.S. oil and gas industry has expressed serious concerns about the limitations on offshore drilling.

In a letter to Manchin yesterday, industry groups took issue with the offshore drilling provision and other policies that they said would stifle domestic energy production.

  • "Such impacts on domestic production threaten to result in greater reliance on foreign production from nations with weaker environmental standards as compared to production from U.S. federal waters and comparable regions onshore," the groups wrote.
  • The letter was signed by industry heavyweights including the American Petroleum Institute, the Independent Petroleum Association of America and the National Ocean Industries Association.

The Build Back Better Act “taxes American energy, restricts access to our own resources and advances the same type of 'import-more-oil' strategy that this administration has been promoting as a solution," API President Mike Sommers previously said in a statement.

 

Huffman said that while the fossil fuel industry has clout in Washington, he does not expect its concerns to derail the provisions.

"I think we've got to sleep with one eye open when it comes to anything opposed by the fossil fuel industry," he said. "But we have talked quite a bit with the Senate at every step of this process. So I think we're cautiously hopeful that this holds together."

Sam Runyon, a spokeswoman for Manchin, did not respond to a request for comment.

The Manchin-Murkowski dynamic

The House version of the bill would also repeal a provision in Republicans' 2017 tax law that opened up Alaska's Arctic National Wildlife Refuge to onshore oil and gas drilling.

That effort could test Manchin's close relationship with Sen. Lisa Murkowski (R-Alaska), who has championed drilling in the refuge, saying it can be done safely.

But a House Democratic staffer expressed confidence that Manchin would not come out against the ANWR provision. The staffer, who spoke on the condition of anonymity to offer a candid assessment of the situation, noted that the Congressional Budget Office has helped Democrats' economic case for the provision.

  • In 2017, the CBO projected that Republicans' tax law allowing leasing in ANWR would raise $2 billion.
  • But more recently, the CBO estimated that Democrats' plan to block drilling in the refuge would cost only $35 million.

Royalty reform: The bill would also increase the onshore royalty rate — the percentage of profits that fossil fuel developers must pay to the federal government in exchange for drilling on public lands — from 12.5 percent to 18.75 percent. 

That provision could get a boost from a recent Interior Department report, which recommended raising the royalty rate to be more in line with the rates charged by most states and private landowners.

Asked yesterday whether he supported royalty hikes, Manchin told reporters: "I think adjustments need to be made. I’ve always thought adjustments need to be made."


By:  Maxine Joselow and Alexandra Ellerbeck
Source: The Washington Post