- The Washington Times - Thursday, December 7, 2006

Congress is expected to pass a mammoth bill containing several unfinished legislative priorities before it adjourns today, including opening up millions of acres in the Gulf of Mexico to oil and gas exploration.

Oil companies will be able to lease 8.3 million acres of federally owned land in the Gulf for the production of oil and natural gas for the first time.

The bill also diverts about $300 billion over the next 60 years to Alabama, Texas, Mississippi and Louisiana, under a new formula between the federal government and the states to split royalties oil companies pay to profit from the land’s use.

“Thirty-seven-and-a-half percent goes to the royalty sharing for the coastal states with Louisiana getting … the most, followed by Texas, then Mississippi, then Alabama,” said Sen. Mary L. Landrieu, Louisiana Democrat, adding that the formula provides that the states receive revenue in direct proportion to the percentage of oil and natural gas produced on their land.

An additional 12.5 percent would go to a land and water conservation fund to be administered by the states to heal their environments by recouping coastal wetlands lost in large part because of dredging in the oil exploration and extraction process among other factors. The remaining 50 percent would go to the federal government, an arrangement that was necessary to secure White House approval.

Floridians, who have historically fought against offshore ocean drilling in the Gulf, were also satisfied with a special provision that sets up a 100-mile moratorium on drilling from their beaches.

Democrats also demanded that the bill be sent to the Senate with instructions demanding oil companies with existing leases signed in 1998 and 1999 to renegotiate them before their bids on new leases in the Gulf can be considered. The new provision passed.

Because of an oversight by the Clinton administration, leases signed in those two years do not require the oil companies to pay any royalties to the federal government, a “loophole” Democrats have reviled ever since.

Overall, four bills were passed by the House and sent to the Senate as one legislative package last night. It included extending many of President Bush’s tax cuts, establishing normal trade relations with Vietnam and lowering tariffs on manufactured clothing imported from Haiti and Africa, and increased Medicare payments to doctors.

Those bills were all combined and sent to the Senate as one package to speed passage in the more deliberative body.

“This legislation is a bipartisan compromise that is ‘must-do’ work in Congress this year,” said Rep. Bill Thomas, California Republican and outgoing chairman of the House Ways and Means Committee.

“It will prevent tax increases on millions of Americans and improve the Medicare program and use of taxpayer money.”

The tax portion extends more than 60 exemptions and deductions from out of pocket expenses for teachers and student tuition costs to a manufacturing deduction for U.S. businesses with branches in Puerto Rico.

“I will do everything in my power, every measure available to try and stop these additions to the tax extenders,” said Sen. Judd Gregg, New Hampshire Republican and chairman of the Senate Budget Committee.

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