Tuesday, a leading Democratic lawmaker said the provision containing the moratorium will be dropped. Appropriations Committee Chair David Obey (D-WI) made the announcement Tuesday.
Republicans are calling it a major victory for Americans. The GOP had made lifting the ban a key campaign issue after gas prices spiked to record levels.
The Interior Department estimates there are 18 billion barrels of recoverable oil beneath coastal waters that are now off-limits.
But the Congressional battle over off-shore drilling is far from over.
Democrats are expected to press for broader energy legislation next year that would put limits on any off-shore drilling.
Regardless of what happens in Washington, there is still powerful opposition to offshore drilling in California.
Governor Schwarzenegger has called the California coastline an international treasure that must be protected.