Tuesday, October 21st, 2014

The Obameter

Direct revenues from offshore oil and gas drilling to increased coastal hurricane protection

"Will also direct revenues from offshore oil and gas drilling to increased coastal hurricane protection."


Updates

Bipartisan efforts to speed up revenue, lift cap falter in Congress

During the 2008 presidential campaign, Barack Obama promised to "direct revenues from offshore oil and gas drilling to increased coastal hurricane protection." That promise came in the wake of Hurricanes Katrina and Rita; then, earlier this year, the Gulf Coast region was hit by Hurricane Isaac.

As we mentioned last time we checked this promise, a 2006 law -- the Gulf of Mexico Energy Security Act -- is poised to send more drilling revenues to coastal states, to be used for protecting coastlines. The problem for those states is that the bulk of the money doesn't reach them until 2017, and efforts to speed up that effective date have continued to fall short.

Lawmakers from coastal states, particularly Louisiana, have tried numerous times to accelerate that timetable, arguing that states with onshore drilling revenues get a better deal than they do. Under the 2006 offshore bill, Louisiana, Texas, Mississippi and Alabama will collectively secure 37.5 percent of offshore oil and gas revenues beginning in 2017, capped at $500 million per year. By contrast, onshore energy producing states have historically received 50 percent of revenues and have not had a cap.

The money the states will ultimately get is still just a "small portion” of the roughly $6 billion the federal government gets annually from oil-and-gas revenues off the Louisiana coast, Landrieu told the Baton Rouge Advocate in arguing for a more generous share.

The House passed an amendment sponsored by Rep. Jeff Landry, R-La., that would increase the cap from $500 million per year to $750 million per year. But the bill went nowhere in the Senate. (Landry lost a post-Election Day runoff to fellow Rep. Charles Boustany and will not be returning to Congress.)

Meanwhile, in the Senate, Louisiana Democrat Mary Landrieu secured three Republican co-sponsors and four Democratic co-sponsors for the Offshore Petroleum Expansion Now Act, which would eliminate the cap altogether. But that bill never even made it out of committee.

For now, both the caps on drilling-royalty revenue and the delay for the four Gulf Coast states in initiating fund-sharing remain in place. We rate this a Promise Broken.

Sources:

Rep. Jeff Landry, "House Approves More Coastal Restoration Dollars to Louisiana" (news release), Jun. 21, 2012

Baton Rouge Advocate, "La. fights for coastal funding," Sept. 10, 2012

So far, no progress

As we mentioned in a previous update, a 2006 law would send more revenues to coastal states for protecting coastlines, but the bulk of the money doesn't reach states until 2017.

Legislators from several coastal states, particularly Louisiana, have tried numerous times to accelerate that timetable. But to date, those efforts have failed.

On July 21, 2011, the Senate Energy Committee considered an amendment to offshore drilling safety legislation (S 917) by Sen. Mary Landrieu, D-La., to move up (from 2017 to 2015) oil and gas royalty payments to coastal states such as Louisiana. "Every 30 seconds we lose a football field of land" due to coastal erosion, Landrieu said. "We are in a desperate race against time to save our coast."

But the committee adjourned without voting on Landrieu's amendment.

The revenue-sharing proposals have been strongly opposed by committee chair Sen. Jeff Bingaman, a Democrat from New Mexico.

"To redirect a huge revenue stream to a few states just doesn't make sense," said Bill Wicker, a spokesman for Bingaman. And, he said, "with the government at risk of default, how could anyone seriously consider blasting an enormous new hole in the Treasury, to the tune of many, many, many billions of dollars."

Landrieu and Sen. Lisa Murkowski, R-Alaska. also tried an amendment in committee to dedicate 12.5 percent of royalty payments to an alternative energy trust fund for the coastal states. But the proposal was defeated 12-10.

According to the New Orleans Times-Picayune, even if the amendment were offered again on the floor "the defeat made it unlikely there would be a majority vote for the Landrieu-Murkowski revenue-sharing proposal."

Revenue sharing was also was talked about last year in relation to a climate change bill that never made it to the floor.

Wicker said he wasn't aware of any other proposed legislation aimed at directing offshore drilling revenues to coastal restoration. After the Deepwater Horizon oil spill in the Gulf of Mexico, much of the attention on coastal restoration has been focused on making sure BP pays for any damage the spill caused to coastal areas, he said.

For her part, Landrieu isn't giving up.

"Despite the chairman's adamant opposition, there are members on the Democratic side and many members on the Republican side that seem to me willing to move forward; that is really the good news," Landrieu said. " "...We live to fight another day."

Perhaps. But two and a half years into Obama's presidency, this promise hasn't yet gained enough traction to move forward, despite repeated efforts from Louisiana lawmakers (and others). Landrieu and other coastal legislators haven't given up, so we're reluctant to call this promise broken. But it is Stalled.

Sources:

Times-Picayune, "Offshore-drilling revenue sharing faces Senate challenge," by Bruce Alpert, April 19, 2010

U.S. Sen. David Vitter's website, Press release: "Vitter, Landry Introduce Natural Resources Restoration Act," March 29, 2011

Times-Picayune, "Sen. Mary Landrieu's oil revenue sharing amendment denied a vote by Senate Energy Committee," by Bruce Alpert, July 21, 2011

Times-Picayune, "Editorial: Coast needs revenues now ," July 23, 2011

CQ, "Royalty-Sharing Effort Stalls Panel"s Action on Offshore Drilling Overhaul," by Lauren Gardner, July 22, 2011

Congress expected to address energy in 2010

Congress kept busy in 2009 with legislation on health care and financial regulations, which means energy will be on the agenda in 2010.

There are several bills introduced that would expand offshore drilling. At least one would send the extra money to coastal states, in part to address "coastal restoration, environmental restoration, and beach replenishment."

A 2006 law would send more revenues to coastal states for protecting coastlines, but the bulk of the money doesn't reach states until 2017. Some conservationists are urging that this timetable be accelerated, but we can't find any evidence that it has been.

We'll be watching in 2010 to see what happens with offshore oil drilling. It's possible such a measure could be part of a cap-and-trade bill on climate change, or it may pass separately.

Since legislation has been introduced that would direct revenues from drilling to states for coastal protection, we rate this promise In the Works.

Sources:

CQ.com, Bills Would Allow Some Expansion of Offshore Drilling in Exchange for Higher Fees, Sept. 9, 2009

Politico, Senate Democrats to W.H.: Drop cap-and-trade , Dec. 27, 2009

Thomas, H.R.2227, American Conservation and Clean Energy Independence Act (Introduced in House)

Thomas, H.R.3534, Consolidated Land, Energy, and Aquatic Resources Act of 2009 (Introduced in House)

The Times-Picayune, Coastal restoration and business interests conflict in halls of Congress , Sept. 23, 2009

America's Energy Coast, A Region at Risk: Preventing the Loss of Vital National Assets , Nov. 4, 2009
Kerry-Lieberman-Graham Framework for cap and trade bill , Dec. 10, 2009