US lawmakers exit with a last nod to oil drilling

As one of its final acts, the 109th Congress Friday approved opening to oil and gas development 8.3 million previously protected acres off the Gulf Coast – a last bid to influence energy and environmental policy before the Democrats assume control.

Industry officials are pleased; environmentalists much less so.

"Let's hope this is Congress's one last fling with Big Oil and that we can make a fresh start to achieving true energy security with ... the new Congress," said Carl Pope, Sierra Club executive director, in a statement.

But John Engler, National Association of Manufacturers president, says exploring the outer continental shelf is "critical to the US economy." Just how critical depends on the cost of development and on whether other sources of gas and oil are sought and found as well.

For example, the Bush administration is considering lifting a ban on drilling in Bristol Bay, Alaska, imposed by Congress after the 1989 Exxon Valdez oil spill in Prince William Sound. But congressional resistance to such energy-extraction efforts – including in the Arctic National Wildlife Refuge – is likely to mount after Democrats take control of the House and Senate.

Democrats, for their part, say they'll close what they see as loopholes in a program requiring companies to pay royalties on oil pumped on US property. Critics – including the Government Accountability Office and the US Interior Department's inspector general – say officials have not enforced the collection of royalty payments amounting to tens of billions of dollars.

Interior's IG recently found that the number of departmental audits and auditors had declined markedly since 2000. As a result, the investigation found, just 20 percent of firms involved in oil and gas development and 9 percent of properties had been examined in the past three years. Interior often relies on oil companies to report the amount of resources extracted on federal land, which forms the basis for royalty payments.

Testifying before Congress in September, Interior's Inspector General Earl Devaney said the agency operates in a culture that "sustains managerial irresponsibility and a lack of accountability." In defense of their record, Interior officials note that audits in fiscal year 2006 covered 73 percent of revenues, up from 46 percent in 2003.

Still, the IG report led R.M. "Johnnie" Burton, director of Interior's Minerals Management Service, to pledge to strengthen procedures, improve administrative controls, and enhance tracking systems.

Under the Gulf Coast drilling bill passed Friday, 37.5 percent of royalties will go to Louisiana, Texas, Mississippi, and Alabama; 12.5 percent to land and water conservation programs; and 50 percent to the US treasury. To win over Florida lawmakers, the bill disallowed drilling within 125 miles of the Florida coast.

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