The House of Representatives approved a bill Tuesday night that would relax the federal ban on offshore drilling and try to expand renewable energy.
The bill, which was adopted by a vote of 236 to 189, was backed by Democrats, who long fought the lifting of the 26-year ban but have been under intense political pressure to look as though they are taking steps to ease high gas prices. Republicans, whose vociferous calls for expanded offshore drilling have been met with widespread public approval, opposed the bill, claiming that it did not offer enough financial incentives to coastal states. On the final roll call, 221 Democrats and 15 Republicans voted for the bill; 176 Republicans and 13 Democrats voted against it.
The 290-page Comprehensive American Energy Security and Consumer Protection Act, as the bill is known, contains a number of important provisions. Here's a breakdown:
• Allows drilling between 50 and 100 miles from a state's coastline, if the state approves it. Areas beyond 100 miles from the coast would be completely open to drilling. This map, taken from House Speaker Nancy Pelosi's website shows what it would look like.
According to the Associated Press, Republicans opposing the bill cite data from the Interior Department that estimate that 88 percent of the recoverable oil lies within the closed 50-mile zone. Republicans also argue that there is little incentive for states to permit drilling off their shores. They want a revenue-sharing plan, such as that enjoyed by Louisiana. Democrats counter that such a plan would be too expensive.
House Republican leader John Boehner of Ohio, whose competing bill would technically allow drilling as close as three miles from the shore (where state jurisdiction ends and federal waters begin) believes that this bill would not result in any significant offshore drilling. "It's a hoax on the American people," he said.
If nothing is done, the offshore-drilling ban will expire Sept. 30.
• Sell 70 million barrels of light crude oil from the Strategic Petroleum Reserve and replace it with less-valuable heavy crude. The swap, which amounts to 10 percent of the total reserve, seeks to provide immediate relief to gas prices. It would be the first time that heavy crude, which is more difficult to refine into gasoline, would be put in the SPR. This provision is based on HR 6578, the Consumer Energy Supply Act, which failed to pass in the House in July.
• Allow oil shale development in Wyoming, Utah, and Colorado, if they approve. Environmentalists have long opposed development of oil shale, a sedimentary rock from which fossil fuels can be extracted, because it is far more CO2-intensive than conventional oil and gas and mining it can cause air and groundwater pollution. Oil shale development is currently banned, but this ban is also set to expire Sept. 30.
• Require oil companies to "diligently develop" federal lands for which they already hold leases. Oil companies have leased 68 million acres of federal lands, but many of these leases are not being tapped. This bill would require oil companies to use it or lose it.
• Repeal some $18 billion in tax breaks for big oil companies. In 2004, Congress enacted a provision that effectively lowered the corporate tax from 35 percent to 32 percent for manufacturers, engineering and architecture firms, Hollywood studios, and oil and gas companies. This bill would repeal this reduction for the so-called Big Five oil companies: ExxonMobil, Chevron, ConocoPhillips, BP, and Royal Dutch Shell. Other oil and gas companies would continue to enjoy the reduced taxes. Additionally, the bill would eliminate a provision that allows US oil companies to claim tax credits for oil extracted abroad.
• Require oil companies to pay royalties avoided because of an Interior Department contracting error. In 1998 and 1999, theInterior Department issued more than 1,000 leases for deep-water drilling in the Gulf of Mexico, and, to encourage development of these areas, offered a break from the usual 12 percent royalty. In issuing these leases, the Interior Department accidentally left out the standard escape clause that rescinds this break if prices climb higher than $34 per barrel. The omission was noticed in 2000, but nobody fixed the leases. Oil passed $34 a barrel in 2004, and in January 2007, investigators calculated that the government could have collected an additional $865 million.
• Offer renewable energy and efficiency tax credits. These credits would be covered by that $18 billion taken back from the oil companies, and would apply to solar, wind, tidal, geothermal, biomass, landfill gas, hydropower, and other forms of renewable energy. The bill also includes credits for plug-in electric vehicles.
• Require utilities nationwide to generate 15 percent of their electricity from renewables by 2020. This would be slowly phased in, beginning with a 2.75 percent requirement in 2010 and gradually increasing each year until 2020.
• Offer tax breaks for improved building efficiency and strengthen efficiency standards for building codes. This bill requires new homes and commercial buildings to realize a 30 percent improvement in minimum building standards by 2010, and 50 percent by 2020.
• Offer tax breaks for companies that promote bicycles for commuting.
• Issue grants to reduce public-transportation fares and expand bus and rail service.
• Crack down on Minerals Management Service ethics violations. This is a response to the MMS ethics scandal that came to light last week. This bill would make it a federal crime for oil companies holding federal leases to offer gifts to government workers. The bill would also institute drug testing for MMS employees.
The bill faces a possible veto from President Bush. Also, the Senate is expected to take up an offshore-drilling bill this week – one that would open up less area than the House bill. The differences between these two bills will need to be reconciled before Congress sends a finalized bill to the White House.
The two chambers don't have much time: Congress is scheduled to adjourn Sept. 26.