OFFSHORE DRILLING:

Contentious amendments pile up for today's spill bill markup

A bitter fight is looming as the Senate Energy and Natural Resources Committee gears up to vote today on a pair of offshore drilling safety bills.

The panel this morning will mark up two measures (S. 916 and S. 917) from Chairman Jeff Bingaman (D-N.M.) that address offshore drilling safety in the wake of the BP PLC oil spill in the Gulf of Mexico last year.

The legislation has faced a tough slog in reaching the markup stage, and today's meeting could create an even tougher road to final passage as lawmakers from both sides of the aisle are gearing up to offer controversial amendments.

One proposed amendment from Sens. Mary Landrieu (D-La.) and Lisa Murkowski (R-Alaska), the panel's ranking Republican, would direct a hefty portion of federal revenues from offshore energy development to coastal states.

Landrieu has long pushed for the federal government to share lucrative leasing bids and production royalties from oil and gas development in federal waters with the adjoining coastal states in order to boost state coffers and to create incentives for other states to support drilling.

Under a 2006 deal, Gulf states are promised a 37.5 percent cut from certain leasing areas, but the bulk of those payments won't phase in until 2016. Landrieu wants to see the revenue-sharing process sped up and expanded.

"It is just the right thing to do for coastal states. It's the right thing to do for America. And there's absolutely -- in my mind -- no reason not to," Landrieu told reporters in the Capitol this week.

Some Democrats oppose such language because it appears to expand drilling. Others, like Bingaman, say the money should remain in the federal treasury because the drilling activities take place in federal waters.

"I don't think revenue-sharing makes much sense, especially with the size of the deficit we face," Bingaman told reporters this week.

But Landrieu and Murkowski are not limiting their language to drilling projects. They have expanded the new language to include nascent renewable energy industries, like offshore wind and tidal projects. Landrieu is confident the tactic will help secure more votes from senators during today's markup.

"I think we're going to have a very exciting discussion and debate and I actually think we're going to be successful in tagging our amendment on to the ... safety bill," she said. "And the reason is because people have decided that, yes, it is fair for states to share in energy production off of their coasts."

"Coastal states are very interested in the opportunity, as well as the Great Lakes states, so I think that we'll have the votes to do it, and we're building Democratic support as well as Republican support," she added.

Sen. Ron Wyden (D-Ore.) yesterday indicated he was working to help find common ground between Landrieu, Murkowski and Bingaman.

"We're going to be at this very, very late tonight," Wyden said yesterday. "The rest of today and certainly very late tonight, we're going to be working on the Landrieu-Murkowski legislation."

But Bingaman has not given any indications that he is willing to budge.

"My position is well-defined," Bingaman said. "I think it's real clear under the law that production of energy in the outer continental shelf is a federal interest, and I think that's the way it has been treated in the past."

Other amendments

Revenue-sharing won't be the only issue causing fireworks at today's markup.

Sen. John Barrasso (R-Wyo.) is planning to offer a pair of amendments that are sure to raise eyebrows.

One measure that he is working on with Sen. Joe Manchin (D-W.Va.) would repeal a section of a broad 2007 energy law that prohibits federal agencies from using alternative fuels -- like coal-to-liquids fuels and those made from Canada's oil sands -- that have higher life-cycle greenhouse gas emissions than conventional petroleum fuels.

Supporters of the amendment language say it would diversify the options and prevent agencies like the Defense Department -- the government's largest fuel purchaser -- from having fuel choices limited to costly advanced biofuels.

But opponents of the legislation -- including Obama administration officials at Defense -- say repealing the law would hinder efforts to decrease the United States' reliance on traditional fuels and would send negative signals to the advanced biofuels industry.

"Our dependence on those types of fuels degrades our national security, negatively impacts our economy and harms the environment," Elizabeth King, assistant secretary of Defense for legislative affairs, wrote in a letter last week to Bingaman.

Bingaman opposes the repeal of the 2007 language. But Barrasso remained optimistic yesterday about finding additional Democratic support for the measure.

"We each have votes. We each have an opportunity to vote and express our opinions, and we'll do that tomorrow in the committee," he told reporters yesterday.

Barrasso will also offer an amendment that would promote oil and gas drilling off the coast of Virginia, his spokeswoman said yesterday.

The amendment language will largely derive from a bill (S. 1331) Democratic Virginia Sens. Jim Webb and Mark Warner introduced earlier this month, requiring the Interior Department to schedule a mid-Atlantic lease sale before 2017.

"Outer Continental Shelf production has strong support among Virginians and their political leadership," Webb, who is not a member of the committee, wrote in a letter yesterday to Bingaman and Murkowski. "I look forward to working with you to ensure that all of Virginia's OCS energy resources are developed in a timely fashion, through a fair distribution of revenues between the federal and state government and in an environmentally sound manner."

Interior late last year said it would not hold any lease sales in the waters off the East Coast in its leasing plan for 2012-2017 and would spend the leasing period conducting preliminary environmental analyses of the region. The announcement reversed proposed plans outlined in March 2010, a month before the BP well in the Gulf of Mexico ruptured, sparking the nation's worst oil spill.

Reporters Jean Chemnick, Phil Taylor and Jason Plautz contributed.

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