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President Donald Trump’s proposed budget raised some hackles in Louisiana because of it includes elimination of state oil-and-gas royalty sharing. That money is supposed to help the state out by contributing to coastal restoration projects.
And coastal restoration projects – in addition to their stated purpose – also serve as an increasing source of jobs that could make up for flagging oilfield service business for the local marine industry.
Overall the White House proposes ending payment to four states now required under the Gulf of Mexico Energy Security Act, Alabama, Louisiana, Mississippi and Texas, to the tune of billions. It amounts to a sharing of dollars the feds take in on oil and gas royalties, allowing dollars back to the states themselves.
So far Louisiana’s delegation doesn’t seem terribly worried, Sen. John Kennedy R-La among them.
“It’s vital for Louisiana and other states along the Gulf of Mexico to continue to get a share of the federal revenue from offshore drilling,” Kennedy said in a statement issued after Trump’s proposed budget was announced. “That’s why GOMESA exists; this money is used for critical coastal and wetlands restoration and preservation. I fully support GOMESA and, after talking to many of my Senate colleagues, I’m confident that GOMESA will be preserved and will not be repealed.”
GOMESA, pushed hard by former Sen. Mary Landrieu, was signed into law in 2006 by President Barack Obama. It shares leasing revenues with Gulf producing states and the Land & Water Conservation Fund for coastal restoration projects. GOMESA also contains restrictions including a ban on leases within 125 miles off the Florida coastline and other areas until 2022.
Beginning in Fiscal Year 2007, 37.5 percent of all qualified outer continental shelf revenues, including bonus bids, rentals and production royalty, were shared among the four states and their coastal political subdivisions from certain new leases.
A second phase of revenue sharing kicked in this year.
There was a bonus for the oil and gas industry in the legislation, which mandated the offering of an additional 8.3 million acres.
Sen. Bill Cassidy R-La. made clear his reservations about the GOMESA portion of the budget.
“Taking funding away from Louisiana’s coastline is a nonstarter,” Cassidy said. “Our state’s future depends on this funding to rebuild our coastline. However, this budget is a guideline; Congress must now hold hearings and do the necessary work to ensure the bill protects American taxpayers and families. There are deal breakers for me in the current budget. For one, this budget fails to prioritize restoring Louisiana’s eroding coasts. This is a national issue – restoring Louisiana’s coasts ensures our state can continue to produce energy needed by our entire nation. Any cuts to coastal restoration efforts or GOMESA are short-sighted. As the committee process moves forward, I will not only oppose cuts to the revenue sharing program but continue to work to expand it for the gulf coast.”
Closer to home, the chairman of the agency that stands to lose ground without GOMESA said he is not panicking.
Tony Alford, chair of the Terrebonne Levee and Conservation District, said the president’s busget must be seen in perspective.
“A lot of things are up in the air,” Alford said. “When the president is looking over this budget he is not zeroing in on every little fact of that budget because it’s not up to him. This budget is his recommendation. It’s still up to congress to implement the budget to make it happen. The president does not have the final say. The sky is not falling.” •
