Very good news indeed!!!

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ENVIRONMENT & ENERGY DAILY

Update for Wednesday a.m. March 3, 2004

1 BUDGET/ANWR

Lawmakers to keep Arctic drilling out of FY '05 budget

Mary O'Driscoll, Environment & Energy Daily senior reporter

Neither the Senate nor House versions of the FY '05 budget resolution will include a controversial plan to raise revenues from oil drilling in Alaska's Arctic National Wildlife Refuge.

"Until we know it's actually doable and passable, at least for now, we don't have it in the savings," House Budget Committee Chairman Jim Nussle (R-Iowa) told reporters yesterday.

On the Senate side, Appropriations Committee Chairman Ted Stevens (R-Alaska), long an advocate for drilling in the Arctic, said the issue is not yet dead, but he added it would not come up in this Congress.

"That's one of my favorite dreams," he said of including Arctic drilling in the budget resolution. "I dream it will happen, but I don't expect it to."

The decision to keep ANWR oil exploration out of the FY '05 budget comes days after Republicans and Democrats from both the House and the Senate notified budget writers that they would oppose efforts to raise FY '05 revenues through drilling (E&E Daily <http://www.eenews.net/EEDaily/Backissues/030204/030204d.htm#2> , March 2, 2004).

Environmentalists said they were pleased with the news. "The budget is going to be so contentious anyway," said Anna Aurilio of Public Citizen.

The congressional budget resolution sets spending caps for the upcoming FY '05 appropriations bills. Budget-writing lawmakers will be working off President Bush's budget request of $818 billion in discretionary spending for FY '05, a plan that squeezes most major environmental and energy programs as part of an overall goal to keep nondefense domestic appropriations during the upcoming budget process to 1 percent growth. The Senate Budget Committee is not expected to allow more than $814 billion in discretionary spending.

Bush's discretionary spending request is up $32 billion from the nearly $786 billion approved in FY '04.

The annual budget resolution, which Congress hopes to complete by the end of this month, limits the amount of money that can be spent by the government and sets the sources of funding for federal programs. The Bush administration's FY '05 federal budget calls for $2.4 billion to be raised in FY '06 from oil leasing in ANWR; the revenue would be evenly split between Alaska and the federal government.

Current law prohibits oil drilling in ANWR. To get around that, an ANWR drilling policy could be "reconciled" in separate legislation if there are instructions to do so in the budget resolution. That would make ANWR drilling language not subject to a filibuster, the Senate procedure that has doomed previous efforts to open up ANWR to oil and gas exploration.

Earlier efforts to use the reconciliation process have failed. For instance, the Senate last year voted 52-48 to strike from its FY '04 budget resolution provisions that would have facilitated passage of ANWR development. That vote came after six GOP senators recorded their opposition to the proposal. It is unclear what the effects will be on a potential Senate vote with five instead of six GOP senators stating their opposition to a potential ANWR provision.

Similar efforts to include ANWR revenue in the budget also have failed in each of the past three years in the House Budget Committee.

Senior Reporter Darren Samuelsohn contributed to this report.