House endorses oil royalties plan, Senate brokers compromise
Jeremy Alford -
July 06, 2006
BATON ROUGE – Louisiana came one step closer last week to realizing its longtime goal of increasing its share of offshore oil and gas royalties when the U.S. House approved legislation that would guarantee $9 billion over the next decade.
An agreement was also reached on the Senate side to bring a similar bill up to address royalties from the Gulf of Mexico. Members of Louisiana’s delegation say that debate could come as early as July.
If a version is introduced in the upper chamber, it will have to pass muster with a group of senators who say they are willing to filibuster, an obstructionist move meant to delay legislative action. From there, both the House and Senate bills would then need to be hammered out in a compromise committee.
The White House, meanwhile, has not traditionally been receptive to the idea of boosting offshore revenues for Louisiana.
Still, it was a “sweet” victory, said Rep. Bobby Jindal, R-Kenner, who has long been the lead Louisiana sponsor of the legislation. The issue is an old one in Louisiana politics and Jindal contends headway is finally being made.
States such as New Mexico get back upwards to 50 percent of the oil-and-gas revenues they send to the federal government. But Louisiana continues to lose out on millions due to its three-mile offshore boundary.
Although the state contributes more than $5 billion to the federal treasury each year from offshore drilling, it only gets back about $39 million a year.
“We pushed it because of the equity issue,” Jindal told The Herald-Guide last week. “Louisiana has been fighting for fair treatment for decades, and I am glad that my colleagues in the House have recognized the importance of this issue.”
Jindal said the additional money could be used to build up flood and hurricane protection, as well as bolster coastal restoration efforts.
It’s estimated that the state loses 24 square-miles of coastal land annually from the encroaching Gulf of Mexico, and the price tag exceeds $14 billion for a 30-year fix. One solution is getting more offshore royalty money from the feds, state officials have preached for decades.
The House voted 232-187 to approve the Deep Ocean Energy Resources (DOER) Act, which would also lift a ban on offshore drilling in certain areas of the country. Louisiana would see $600 million during year one of implementation and a total of $9 billion over the next decade.
For the three-to-12-mile zone Louisiana would start out at a 25 percent share and then build up to 75 percent, while the area beyond that would go from 6 percent to an even half.
Rep. Charlie Melancon, D-Napoleonville, who co-sponsored the push in the House, said it was a giant leap forward to have Congress backing the concept, but the state Legislature carried some of the water as well by proposing a special fund to hold the new dollars for certain purposes.
"I am also proud of our state Legislature for passing a constitutional amendment dedicating this new revenue to our most important need in coastal Louisiana: building a comprehensive hurricane protection and coastal restoration system that will protect a vulnerable population of over 1 million," Melancon said.
Voters will decide this fall whether the special fund should stand.In the Senate, Sen. Mary Landrieu, D-New Orleans, has joined forces with other lawmakers from the Gulf Coast to link a debate over opening up a portion of the gulf to approving a greater share of offshore royalties.
The compromise yielded would produce $650 million annually beginning in 2017. Roughly 37.5 percent of the offshore royalties created in the new drilling region would go into a special fund for the gulf state and Louisiana would get back 34 percent of all the money.
“This fight has always been one about fairness,” Landrieu said. “This is a fair bill that will give all the coastal states an effective tool for building levees, battling coastal erosion, securing our national economy and protecting our coastal communities.”
Sen. David Vitter, R-Metairie, said he sees “real progress” occurring in the Senate over royalty-sharing issue and it is more likely to make it through the entire process than the House version.
“I think we have an excellent shot at royalty-sharing combined with opening up new areas of the Gulf,” Vitter said. “I think that more focused approach is a lot more likely than the broader house approach, but certainly what the House has been doing has helped our efforts enormously.”
Underneath the surface, the issue is a hot one politically. Gov. Kathleen Blanco, a Democrat that pundits predict will face off against Jindal in the next election cycle, is pushing her own plan to up revenue sharing.
She is threatening to refuse to sign off on the offshore royalties in August, thus, in theory, blocking the federal government from getting its money. Blanco has also said she is willing to take the federal government to court if necessary.
Jindal said her threats aren’t garnering much attention in Washington, especially since it won’t happen for another month or so.
“D.C. never focuses on anything but today,” Jindal said.
Blanco put out a press release saying she was “pleased” with the House vote, and she has said in the past that she supports Jindal’s move. But she also recognizes that it will take much more than words to push the proposal through.
"Unfortunately, the White House is opposed to sharing revenues with producing states, causing some members of Congress to waiver in their support of the legislation,” she said. “... This is not just Louisiana's problem, it is a national crisis.”