Republicans may use budget to open Arctic, Atlantic to oil rigs

By Ari Natter and Jennifer A. Dlouhy on 10/18/2017

WASHINGTON (Bloomberg) -- Congressional Republicans have found a way to use the federal budget to open the Arctic National Wildlife Refuge to oil drilling -- and they don’t plan on stopping there. 

GOP leaders in the House and Senate are exploring ways to also expand drilling in the Arctic and Atlantic Oceans through congressional budget rules that allow them to pass major policy changes on a simple majority vote.

"There are other opportunities for us," Alaska Senator Lisa Murkowski, the chairman of the Senate Energy and Natural Resources Committee, said in an interview. "There is a significant way that we can help with the budget process."

Money from selling drilling rights and royalties from oil and gas production would be a revenue-raiser that could help offset some of the tax cuts Republicans are proposing. The House has instructed its Natural Resources Committee to find ways to generate $5 billion in revenue over the next decade. And the Senate is set to vote as soon as this week on a budget plan imposing a $1 billion target on Murkowski’s natural resources committee.

The moves give committee leaders the ability to advance proposals for drilling in ANWR -- or other areas, as long as they would generate new funds for the U.S. Treasury. Once the budget is approved a later bill following its instructions is immune from the type of Democratic filibuster that has blocked drilling in the past.

Senator Ed Markey, a Democrat from Massachusetts, called the tactic a "heartless Republican budgetary scam."

"This GOP budget sets the stage for Republicans to ram drilling in the crown jewel of America’s wildlife refuge system through the Senate using only a 50-vote threshold," Markey said at a news conference Tuesday.

While the initiatives still face hurdles as environmental groups vow to fight and some Republicans may object, it shows the scope of oil industry priorities lawmakers are considering.

Allowing drilling in ANWR, a 19-million acre preserve on Alaska’s northern coast, has been debated in Washington for decades, pitting oil industry allies who see it as a way to revive production in The Last Frontier against environmental advocates who say there should be permanent protections for a wild area filled with polar bears, caribou herds and wolves.

But drillers have also lobbied the Trump administration to open up other areas for exploration, including the eastern Gulf of Mexico near Florida, mid-Atlantic areas and Arctic waters. In some cases, those areas might be easier and cheaper to access and develop than ANWR.

"It’s not just the refuge,” said Franz Matzner, deputy director of federal campaigns for the Natural Resources Defense Council. “Once they pry the door open with these instructions, the committees of jurisdiction can put virtually anything in there. They have license to legislate anything."

ANWR is really only a starting point, said Senator James Inhofe, a Republican who has long advocated on behalf of the oil and gas interests in his home state of Oklahoma.

"We begin there," he said. "Anything else we can get in there with a simple majority vote we ought to do." 

Because it’s part of the budget process, the changes would only require 50 votes in the Senate -- with the possibly of Vice President Mike Pence serving as tie-breaker -- and not face the usual 60-vote hurdle. Republicans hold a 52-48 advantage in the Senate.

Among the options on the table is legislation advanced by Murkowski and Dan Sullivan, both Alaska Republicans, compelling the government to sell drilling rights in Arctic waters. That bill also reverses former President Barack Obama’s decision to withdraw more than 100 million Arctic acres from future oil and gas leasing.

Congress "should seize the opportunity" to restore opportunities for drilling in areas withdrawn by Obama, Sullivan said in an interview.

The House Natural Resources Committee also has been advancing other drilling legislation that could be folded in, with hearings last week on proposals to accelerate oil leasing on federal land and authorize speedy sales of offshore acreage.

Representative Rob Bishop, a Republican from Utah who heads that committee, has argued Congress should consider additional drilling in part because it could send billions of dollars to federal coffers. Other options being considered by the panel include increasing timber receipts and overhauling oil and gas permitting, Parish Braden, a spokesman for the committee, said in an email.

“This is a Trojan Horse for all sorts of drilling proposals that otherwise wouldn’t get the votes needed to pass on their own," said Matt Lee-Ashley, a senior fellow with the Center for American Progress. It’s especially "perilous" because the committees might not stop at ANWR, Lee-Ashley said. "As bad as the Arctic refuge proposal might be, you’re going to end up behind closed doors with lots of giveaways to industry and no accountability."

Republicans plan to use the budget resolution to allow fast-track consideration of a tax overhaul plan.

President Donald Trump already asked Congress to open up the ANWR refuge to oil and gas development, contending it would raise $1.8 billion over the next decade. But the Center for American Progress estimates that drilling in the Arctic refuge is likely to yield no more than $37.5 million to the U.S. Treasury over 10 years.

That’s because it’s not clear that energy companies would clamor for leases in the refuge. Monster discoveries there could yield decades of oil production, but the cost of operations in remote stretches of northern Alaska could discourage the activity amid modest crude prices and the domestic shale boom.

Still, the opportunity to advance energy priorities that have stalled remains a tempting prospect for Republicans.

"After losing ground for the past eight years, congressional Republicans have an opportunity to use the budget process to make new areas of potential oil and gas resources available for energy production," said CEO Dan K. Eberhart of Denver-based Canary LLC.

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