Democrats want to add new drilling bans to Biden’s $3.5T infrastructure bill

Biden-Oil-Gas

Endangered desert fish would get millions of dollars in federal funding while oil companies would face new fees and a ban on most offshore drilling under a plan floated by House Democrats.

The details were summarized in a document seen by Bloomberg News. The document was prepared by staff on the House Natural Resources Committee and circulated to lawmakers before a planned Sept. 2 meeting to vote on the $3.5 trillion budget reconciliation plan being advanced in the House.

It sketches out Natural Resources Committee Democrats’ ambitions for spending roughly $31.5 billion on conservation programs, environmental analysis and cleanup of abandoned mines, among other priorities. The proposals described in the blueprint could be revised before the committee takes up the measure next week. The draft calls for devoting some $550 million to wildlife recovery efforts, including $25 million each to endangered butterflies, freshwater mussels and desert fish.

The oil and gas industry would shoulder the burden of paying for much of that spending.

Speaker Nancy Pelosi said Wednesday during a news conference that work was already under way by committee chairmen in presenting proposals to their panels of what to include in the the budget reconciliation bill, which would represent the biggest chunk of President Joe Biden’s $4.1 trillion economic agenda.

Spokespeople for the committee and several members, reached by telephone and email after hours, declined to comment on the document. A Democratic member of the committee, who asked not to be identified, confirmed the document’s authenticity. Republican staff members said they have heard such a document exists but it had not been shared with them.

Committee Democrats also will seek to spend some $3 billion on a new Civilian Climate Corps, according to the document. The program, which would be modeled after the New Deal-era Civilian Conservation Corps, would put Americans to work building clean energy infrastructure, capping inactive wells and conserving land.

Under the plan, committee Democrats would impose or increase more than a dozen fees, penalties and royalty charges on oil, gas and pipeline companies — ultimately raising as much as $5.6 billion with the changes. The proposals include new fees for idled oil wells, pipeline owners, the inspection of oil and gas facilities. Royalties also would be increased for some minerals, oil and gas extracted from public land.

Democrats also intend to get rid of a congressional mandate for the government to hold two auctions of oil and gas leases in the Arctic National Wildlife Refuge’s coastal plain by Dec. 22, 2024. The requirement was originally adopted by lawmakers a way to pay for the 2017 tax cuts, based on expectations that the lease sales and oil development would yield more than $2 billion in revenues over a decade.

However, when the first auction was held by the Trump administration in January of this year, the government collected less than $20 billion in high bids. The Biden administration has suspended work on leases sold in that auction, while it conducts fresh environmental analysis of the leasing program.

Committee Democrats now estimate that doing away with the Arctic refuge leasing requirement would cost just $40 million, according to the document.

A similar proposal to ban offshore drilling in most U.S. waters, including the eastern Gulf of Mexico, is estimated to cost $50 million. Pacific and Atlantic waters also would be off limits, though the central and western Gulf of Mexico — which now provides about 17% of U.S. crude production — would be unaffected.

The proposal is likely to meet stiff opposition in Congress, where Republicans cast such drilling bans as shortsighted bids to abandon U.S. production of fossil fuels that will only escalate energy costs for Americans, weeks after the Biden administration asked foreign crude producers to bolster output.

The Democrats’ document mentions only a ban on offshore drilling without further detail – a reference that could be shorthand for ceasing the sale of new oil and gas leases offshore. It is unclear how the ban would treat ongoing oil and gas production or new drilling at existing offshore leases but it could be modeled after legislation the panel advanced earlier this year. 

The approach dovetails with Biden’s efforts to discourage fossil fuel development and shift the nation toward renewable and emission-free power sources. And it aligns with a plan advanced by Sheldon Whitehouse, Cory Booker and Brian Schatz, all Senate Democrats, to put a fee on emissions of methane, a potent greenhouse gas.

Yet the proposals could present political risk for moderate Democrats in the House, particularly those with significant oil, gas and coal production in their districts. In the Senate, Joe Manchin of coal-rich West Virginia also has signaled his concern about moving too sharply against fossil fuels.

The reconciliation process being used by Democrats gives them the opportunity to pass the tax and spending plan without Republican support or the threat of a filibuster. However some moderates have balked at the cost, and Pelosi said the goal was to have new spending offset by raising revenue through taxes and fees.

“I would prefer to have it fully paid,” said Pelosi, pointing out that the House Ways and Means Committee is exploring other possible sources of funding. Other members are making their views known on that, as well, she said.

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