By Debra DeHaney-Howard
August 7, 2006

Before adjourning for the August recess, the Senate August 1 passed legislation by a vote of 71 to 25 to open over eight million acres of the eastern Gulf Coast of Mexico to oil and gas drilling. This includes drilling in two million acres known as Lease Area 181 and an additional 6.3 million acres in the Gulf Coast. Reports estimate more than one billion barrels of oil and natural gas are in theses areas. Supporters of the legislation say that passage of the bill is a huge step towards producing more domestic energy.

Under the bill, S. 3711, Louisiana, Texas, Alabama and Mississippi would receive 37.5 percent of the revenue the federal government would collect from the oil and gas that is retrieved from those coastal areas. The bill also prohibits drilling within 125 miles of the Florida coastline through the year 2022. Florida Senators Mel Martinez and Bill Nelson both indicated that they would have opposed the legislation if it did not contain language prohibiting drilling closer than 125 miles off the Florida coastline.

Last month, the House of Representatives passed broad offshore drilling legislation by a vote of 232 to 187. The bill, H.R. 4761, the Deep Ocean Energy Resources Act of 2006, replaces 25 years of coastal leasing bans with tiered bans that states, in exchange for revenue royalties, could opt to move drilling closer to shorelines. Coastal areas 50 miles from shore remain under moratorium; however states may choose to open such waters. While areas between 50 to 100 miles are open to drilling, states may choose to ban drilling. Coastal areas 100 miles from shore are open to drilling.

In addition, H.R. 4761 increases revenue sharing between the federal government and states where coastal drilling occurs. Under the legislation, states will receive 64 percent of leases less than 12 miles from the shore. Revenue from current leases will be phased in over ten years, while revenue for new leases will begin at 64 percent. Leases beyond current levels will be split by 50 percent. The Senate bill must now be reconciled with the House bill, which is scheduled for September.