Policy: Environment & Energy

States look to cash in on offshore drilling; bill would aid re-election bid of Lousiana's Mary Landrieu

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Coastal states stand to bring in cash from offshore drilling through a Senate shuffle that would promote Mary Landrieu of Louisiana to chairwoman of the Senate Energy and Natural Resources Committee.

Landrieu has been pushing a bill that would allow those states to grab a share of the federal revenue from offshore oil and gas drilling. The legislation has been one of the Democrat's signature policy aims the last several years, and she has stumped on it in the oil-heavy state during her re-election bid.

"I promise you I will use that gavel on behalf of the people of Louisiana, who have never, in my view, gotten our fair share of our offshore oil and gas revenue for the last 50 years," she said at a campaign stop in Mansura, La.

President Obama's appointment of Sen. Max Baucus, D-Mont., as ambassador to China could give her the chance to do it. Energy Committee Chairman Ron Wyden, D-Ore., is expected to assume Baucus' Finance Committee chairmanship, opening Energy's top spot for Landrieu.

The bill's supporters say it would allow coastal states to enjoy some of the same benefits as interior states. Inland states receive half the revenues from energy development on federal land within their borders. Coastal states get nothing from drilling off their coasts, though a clutch of Gulf Coast ones will collect 37.5 percent of revenues — up to a total of $500 million — beginning in 2017.

Landrieu's bill would eliminate the $500 million cap and allow other coastal states to collect 27.5 percent of federal drilling revenues off their shores, and up to an additional 10 percent for installing more renewable energy or undertaking conservation projects.

With Landrieu facing a fight from GOP challenger Rep. Bill Cassidy, some analysts say Democratic leadership will push the bill to boost her chances.

"I can think of little reason why the Senate majority leader would create real obstacles to the proper and regular functioning of the Energy Committee, particularly when revenue sharing is so important to Louisiana communities," said Scott Segal, a partner at Bracewell & Giuliani, a law firm representing the energy industry.

But getting it to the Senate floor for a vote could be difficult, as controversial amendments derailed innocuous energy-efficiency legislation last year.

And the Congressional Budget Office estimated the bill's cost at $6 billion through 2023, making it a hard sell for some Republicans.

"Passing the FAIR Act would be a nice trophy but is controversial given the hole in the federal budget it leaves," said Chris Prandoni, energy and environment policy director with the conservative Americans for Tax Reform, who said Cassidy has a better, deficit-neutral proposal.

The measure has faced other resistance. Former Sen. Jeff Bingaman, who led the Energy Committee until his retirement in 2012, blocked it because the New Mexico Democrat believed the nation's coastlines are a federal entity and, therefore, revenue should flow to the Treasury. Many fiscal conservatives share that view.

Sen. Lisa Murkowski, R-Alaska, a co-sponsor and the top Republican on the Energy Committee, said the bill remains a priority, though she said "the cost issue ... has been handicapping advancement."

In an attempt to broaden the bill's appeal, Landrieu adjusted it to give interior states half the revenue from fees and royalties for renewable energy projects on federal land.

The American Petroleum Institute, the influential oil and gas industry group, has been supportive of revenue-sharing proposals.

"If that policy were put before the Energy Committee today, I believe it would pass," API CEO Jack Gerard said.

Washington Examiner Political Correspondent Rebecca Berg contributed to this report.

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