Yesterday, U.S. Reps. Tim Murphy (R-PA) and Neil Abercrombie (D-HI) and a group of bipartisan House members introduced the American Conservation and Clean Energy Independence Act, H.R. 2227. The legislation would approve the 2010-2015 OCS Oil and Gas Leasing Program adopted during the Bush administration and expedite the leasing process for new exploration and production. Under the provisions of the bill, within 30 days of the bill's passage the Interior would be required to conduct a lease sale in each OCS planning area in which there is commercial interest in purchasing federal oil and gas leases for production. The agency would then be required to hold lease sales every 270 days thereafter upon a determination by the Secretary that commercial interest exists in a planning area.
In what would amount to a significant development if the legislation is passed, it would extend the seaward boundary of coastal states to 12 nautical miles from the current 3 miles applicable to most states. However, it appears that the federal government will maintain leasing and regulatory authority over “Federal oil and gas mineral rights” in the 3- to 12-mile zone. In an apparent effort to gain support from critical coastal state members, the legislation grants states the right to “exercise all of the sovereign powers of taxation” in this zone.
Importantly, the legislation would allocate 30% of the expected royalties generated from the exploration and production in the new 12-mile zone to producing coastal states. The U.S. Treasury would receive 10% of the expected revenues, and the remainder, in the ballpark of $1 trillion according to the summary of the bill, would be allocated to offset the costs of the renewable energy tax incentives and credits, and promote clean energy technology development, environmental restoration and protection, and energy efficiency. According to the section-by-section analysis of the legislation available on Rep. Murphy’s website, states also could receive royalties from renewable energy projects up to the 12-mile boundary. However, a close reading of the legislation indicates that this is not the case, as royalties are derived only from oil and gas activities in that zone.
No word yet on the bill's viability, but it seems to us that there is increasing recognition on Capitol Hill that a balanced energy portfolio, including traditional sources of energy, is in the nation's best interest … and is likely to obtain the most support on both sides of the aisle.