Washington — Louisiana would lose out on hundreds of millions of dollars from offshore oil and gas drilling under a proposal included by President Barack Obama in his budget rollout Monday.
The Democratic president’s $4 trillion blueprint for the 2016 fiscal year starting Oct. 1 would eliminate the sharing of revenue from drilling in federal waters with Louisiana and three other states along the Gulf of Mexico, as outlined in a 2006 law cited in December by former U.S. Sen. Mary Landrieu as the signature achievement of her 18 years in the Senate. In December, Landrieu, a Democrat, lost her bid for re-election to Republican Bill Cassidy, who pushed for expansion of the revenue sharing when he served in the House of Representatives in 2014.
But to undo the 2006 law, known as the Gulf of Mexico Energy Security Act, or GOMESA, would require an act of Congress — not just a White House budget proposal. The law was squeezed through in the waning days of the last Congress that was fully controlled by Republicans before the current Congress, in which Republicans again hold majorities in both the House and Senate.
The president’s budget proposal has “a zero percent chance of becoming law,” U.S. Sen. David Vitter, R-La., said in a prepared statement Monday about the overall spending plan, which calls for tax increases and new government programs that are anathema to Republicans.
“The president’s budget plan to funnel the Gulf states’ offshore energy revenue out of those states is incredibly insulting to Louisianians,” Vitter said.
“The administration’s proposal is short-sighted and a gross injustice to Gulf Coast states,” Landrieu said in prepared remarks — her first public statement since her election defeat. “I trust our delegation has the will and strength to kill it immediately.”
Louisiana, Texas, Mississippi and Alabama have shared in about $30 million a year from GOMESA, mostly revenue from the eastern Gulf. But starting in 2018, revenue from the far more productive central Gulf would come under the law, which caps the total share for all four states at $500 million annually from that point forward.
The White House estimates the value of the GOMESA reversal at $367 million in 2018. The change and other savings connected to offshore drilling would net the federal treasury $5.6 billion over 10 years, the Obama budget proposal says.
“The Administration is also committed to ensuring American taxpayers receive a fair return from the sale of public resources and benefit from the development of offshore energy resources owned by all Americans,” the blueprint says. “The budget proposes to work with Congress to redirect the distribution of expanded revenue payments expected to start in 2018 for Gulf of Mexico oil and gas leases to programs with broad natural resource, watershed and conservation benefits for the entire Nation, help the Federal Government fulfill its role of being a good neighbor to local communities, and support other national priorities.”
The federal law directs some of the shared revenue to land and water conservation, and Louisiana allocates the state’s portion to coastal restoration. The Obama budget proposal represents “a real and grave threat to Louisiana’s three-decade march to save our coast, America’s wetlands,” Landrieu said.
“Our coasts are the first line of defense to a hurricane or tropical storm; plus, they represent a critical part of our ecosystem,” Vitter said. “We’re losing large amounts of coastline every day, and funding our coastal restoration projects is incredibly important.”
And Cassidy pledged in a statement to “do everything in my power” to “not only block the president’s raid on oil and gas revenues, but fight to increase Louisiana’s share of offshore revenue. Funding for coastal restoration must remain a promise to Louisiana and other Gulf Coast states.”
Cassidy won approval in the Republican-majority House of his 2014 bill to double the revenue-sharing cap to $1 billion starting in 2024, but it died in the Senate, then controlled by the Democrats.
Last month, Vitter pitched a Senate measure, co-sponsored by Cassidy, to raise the cap to $699 million and add other costal states to an expanded offshore-revenue sharing program. He initially proposed that as an amendment to the bill the Senate passed last week to green-light the Keystone XL oil pipeline, but he withdrew the amendment after consulting with Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski, R-Alaska, who has said she will take up the idea separately in her committee.
Besides making the argument that revenue from drilling in federal waters should benefit the nation as a whole, opponents of the revenue sharing raise environmental concerns about encouraging development of the continental shelf. GOMESA supporters counter the first argument by noting that affected states receive half of the government revenue from drilling on federal lands within their borders.
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