Ben Geman, E&E Daily senior reporter

Congress must somehow confront offshore oil-and-gas drilling policy in the final days before adjournment, but the Wall Street crisis could pre-empt a substantive energy floor battle and effectively shelve major decisions until a lame-duck session or next year.

Before leaving Washington to campaign for the upcoming election, Congress will act on must-pass budget legislation to continue federal spending beyond the Sept. 30 end of the fiscal year.
Coastal drilling bans are renewed annually in federal spending bills, but this year, Republicans are pushing relentlessly to let the bans expire. Democrats have been increasingly willing to make at least some concessions on relaxing the bans in order to maintain at least some of the offshore protections.

Democratic leaders have not said how they plan to address the issue through the continuing resolution (CR) to maintain spending at least until a potential lame-duck session.
Most sources on and off Capitol Hill said an effort to ram through a full renewal of the bans is probably off the table, especially now that Democratic leaders have endorsed, however reluctantly, new drilling.

Instead, the question is whether to try and include more limited restrictions or none at all and attempt to revisit the issue at a later date. Indeed offshore drilling could resurface if there is a lame-duck session, when knowledge of who will occupy the White House could affect the issue’s trajectory.

Sen. John McCain (R-Ariz.) has made support for new offshore drilling a major campaign theme in his White House run, while rival Sen. Barack Obama (D-Ill.) has criticized the idea but indicated he is open to some expansion as part of a larger energy compromise. President Bush lifted executive-level moratoria over the summer and wants Congress to scrap overlapping limits lawmakers impose.

A spokesman for House Speaker Nancy Pelosi (D-Calif.) said last week that energy provisions may surface on the CR. The House passed a bill last week that allows drilling greater than 100 miles from the Atlantic and Pacific coasts and in the 50-100 mile zone of coastal states agree.
“The book is still open on this,” said an aide to a senior member of the House Appropriations Committee. Similarly, on the Senate side, Majority Whip Richard Durbin (D-Ill.) on Thursday said no decisions have been made.

Durbin also said it was not an “emergency” if the bans are allowed to lapse before revisiting the issue, citing the long time frames for offshore development (E&E Daily, Sept. 19). However, it could be politically difficult to vote in favor of adding new restrictions, rather than simply continuing existing policy, even if that existing policy has only lapsed briefly.
Nonetheless, many say that whatever happens this week is unlikely to be the last word on the issue. “There is nothing between now and the beginning of the next Congress that is irrevocable,” said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America.
Senate energy debate

While the must-pass spending bill forces at least short-term decisions on continuing, weakening or nixing the bans, a debate on energy legislation — including outer continental shelf policy — is scheduled in the Senate this week as well.An aide to Majority Leader Harry Reid (D-Nev.) said Friday the debate remains on the agenda before lawmakers leave for the election season, and Reid said last week that the House-passed (H.R. 6899) bill would be the vehicle for consideration.

Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) has been crafting a Democratic Senate plan.But a major bipartisan proposal has failed to materialize. The Senate’s so-called Gang of 20 last week shelved efforts to craft a bill that blends drilling, conservation and alternative energy, citing a poisonous pre-election atmosphere. Instead, they hope to introduce legislation after the elections.

Also, Congress plans to take up a $700 billion Wall Street rescue package the Bush administration unveiled Saturday, which will add more pressure to the already-tight agenda before Congress breaks. Some aides said this could curtail or even squeeze out the debate on energy bills.The consulting firm Eurasia Group, in a note Friday, addressed the fast-changing priorities on Capitol Hill.

“The economy and Wall Street turmoil has recaptured the election narrative, displacing energy, at least for the time being. Lower retail gasoline prices in the U.S. through August have helped as well. Congress has a week left to pass energy legislation, but a crowded agenda and continued disagreement over funding complicate prospects for energy legislation,” it stated.
Action is planned on a separate package of the renewable energy tax credit extensions (see related story).