Panel OKs Giving States Billions From Offshore Oil

The House Interior Committee narrowly approved a plan Wednesday that would give California and other coastal states billions of dollars in disputed offshore oil revenue, as well as a share of future federal oil payments.

Under the legislation, which is far more generous to the states than a plan advanced by the Administration, California would receive $375 million from funds already collected, $225 million over the next several years and several hundred million dollars more in later years.

Battle Over Drilling

In a reverberation of an ongoing battle over future oil and gas drilling, the legislation would also require Interior Secretary Donald P. Hodel to give governors of coastal states substantially more clout in leasing decisions.

“California and other coastal states were promised very substantial benefits from offshore oil development, and the federal government has reneged,” Rep. George Miller (D-Martinez) said after the vote.

The legislation, approved 21 to 17, attempts to resolve a 7-year-old dispute over the amount of revenue Gulf and Pacific coast states should receive from federal leases bordering on state waters.

Although the states have jurisdiction only over waters within three miles of their shores, they have long contended that they should share in revenue produced from oil drilled in federal waters but actually drawn from reserves lying under state waters.

Leases and Royalties

Oil and gas companies pay the government for the right to lease tracts in federal waters. In addition, royalties are derived from the profits earned from the oil and gas that is produced.

Congressional budget committees decided last spring, with the Administration’s consent, to give seven coastal states about 27% of $5.8 billion in offshore oil revenues that had been set aside pending settlement of the dispute.

The new plan distributes the existing money and stipulates that future revenues will be divided and distributed along the same lines. The proposal by Rep. Jerry Huckaby (D-La.) first failed on a tie vote and then was approved by four votes.

The committee rejected by one vote an Administration plan, introduced by Rep. Morris K. Udall (D-Ariz.), to limit the states’ share of royalties.

Both the Huckaby and Udall bills apply to a federal zone three to six miles from shore, and both would give states a share of bonus and rent money from leases in that area.

Differences in Bills

The two bills differ over royalties: Huckaby’s would give states 27% of royalties from all federal leases in the zone, even if they lie only partly in it; Udall would have limited states to royalties from leases that actually draw oil and gas from pools under state waters.

Opponents of the Huckaby measure complained that it would deprive the deficit-ridden federal government of funds while giving states money earned from oil and gas that are not situated in state waters.

The measure is expected to face a stiff fight on the House floor.

Six other states besides California would share in the $5.8 billon already collected. They are Louisiana, $635 million; Texas, $424 million; Alabama, $73 million; Alaska, $56 million; Mississippi, $15 million, and Florida, $30,000. The federal government would keep the rest.

The plan would also limit the discretionary authority of the Interior secretary in offshore leasing decisions. He would be required to accept or consider a governor’s recommendation on offshore leasing unless he could show “substantial evidence” that the proposal would significantly impair the national interest.

California ‘Outraged’

“We in the state of California are outraged by the recent actions of Interior Secretary Hodel, who tore up and threw away a carefully negotiated agreement on offshore leasing,” Rep. Miller said.

Hodel earlier this month backed out of a compromise agreement that would have limited drilling off the California coast to a small number of sites. He contended that the agreement, negotiated with California members of Congress, would have yielded too little oil.