Senate rejects bill to boost state revenue from offshore drilling

Senators on Thursday rejected a bill that would have given states a share of the royalties from oil and natural gas drilling off their shores.

The procedural vote for the American Energy and Conservation Act was 51-47, short of the 60-vote threshold needed to continue consideration in the Senate.

{mosads}The bill, sponsored by Sen. Bill Cassidy (R-La.), would have given states 37.5 percent of the revenue that the federal government collects from oil and gas production and wind power in the outer continental shelf off their shores.

It would have expanded the limited revenue-sharing that is in place for some areas of the Gulf of Mexico.

Republicans framed the bill as a way to ensure that states get a fair return for the millions of dollars in energy production off their shores, which the federal government usually keeps for itself.

“The American Energy and Conservation Act will benefit American families and small businesses by expanding opportunities for states, not just Gulf Coast but elsewhere, to support energy development,” Cassidy said on the Senate floor.

Senate Majority Whip John Cornyn (R-Texas) said the revenue sharing “is important because states like mine, especially along the Gulf Coast, spend an awful lot of money investing in infrastructure to support an industry that benefits not just our states, not just the region, but the entire country. And it’s time to balance these costs with reasonable revenue-sharing agreements such as we have struck in the past.”

The bill would not have expanded offshore drilling, which is only happening in federal waters at a large scale in the Gulf of Mexico.

But Democrats said it would have incentivized states to seek offshore drilling in areas like the Atlantic and Arctic oceans, while taking billions of dollars out of the federal coffers.

“This bill is about one thing and one thing only: another giveaway to big oil,” said Sen. Bob Menendez (D-N.J.), a vocal opponent of the push to allow offshore drilling in the Atlantic.

“It’s about paving the way for oil drilling up and down the Atlantic coast. It’s about expanding drilling in the Gulf, even as those communities work to recover from the BP disaster.”

Sen. Ed Markey (D-Mass.) said the measure would have only benefited the Gulf states that host offshore drilling.

He called it “a massive wealth transfer from 46 states to those four states, at a time when my friends on the other side of the aisle are saying that we need to cut spending to crucial programs that help our seniors and that help low-income Americans and that help students.”

The bill got the support of the Chamber of Commerce. The League of Conservation Voters asked senators to vote against it, saying it would have incentivized more drilling.