Jun 11 2020
WASHINGTON—This op ed by Senator John Kennedy (R-La.) first appeared in The Advocate on June 11, 2020.
For fifteen years, a federal statute — the Gulf of Mexico Energy Security Act, or GOMESA — has shortchanged Louisiana and our neighbors. Gulf states bear the many risks to people and property that come with offshore drilling. GOMESA was supposed to give us equity — to balance our risk and reward. It has failed, and Congress needs to remove the arbitrary and punitive cap on revenue from oil and gas produced in our coastal waters. We have earned what we are asking for.
Under GOMESA, four states — Louisiana, Texas, Mississippi, and Alabama — share an anemic 37.5 percent of the royalties generated from oil and gas drilling operations in the Gulf. Those revenues would not exist but for the investments Louisiana and our neighbors made in the roads, bridges, pipelines, hospitals, public schools, universities, and people who support oil and gas exploration in the deep water of the Gulf, which contribute mightily to our nation’s energy independence. Louisiana, in particular, is shortchanged because we contribute the most, and the pittance we receive in return is dedicated to coastal and wetlands restoration.
Simply put, Louisiana makes and bakes the pie, but the federal government allots us only a tiny sliver of it. At the same time, landlocked states to our west and the U.S. Treasury gobble up the rest of the proceeds from our wells.
The federal government receives 50 percent of offshore royalties under GOMESA, and the federal Land and Water Conservation Fund (LWCF), which purchases land and water for the federal government in order to preserve that for public use, gets 12.5 percent. Moreover, the 37.5 percent given to Louisiana and the other three Gulf states is capped at $375 million per year, with a $176 million limit for Louisiana specifically. That means Louisiana reaps no reward when the energy sector is booming and its revenues surpass that number.
Meanwhile, 24 states in the interior of our country receive 50 percent of the royalties produced by oil and gas drilling on federal lands in their states — with no cap at all.
With that in view, GOMESA and current proposals in the U.S. Senate are clearly not smart or fair. They’re not smart because they claim to prioritize the environment at the expense of Louisiana’s coastal wetlands. They aren’t fair because Gulf states aren’t allowed to use the fruits of the industry we built and maintain on behalf of the citizens we serve.
Hurricanes, oil spills, and epic erosion all plague the Gulf states. It’s nonsensical to siphon more resources away from these high-risk areas — especially when the resources were ours to begin with. Last year, LWCF states received $125 million from GOMESA revenues alone, mostly for park maintenance projects. I support our parks, but any fair mind wonders why the federal government is cutting checks to landlocked states from drilling revenues produced in water thousands of miles away. Those Western states bear no risk of oil spills, injuries, or coastal degradation.
We do. Hurricane season is again bearing down on the Gulf states, and we need these resources to safeguard our coastline and interior wetlands. Our lives and our livelihoods depend on it.
If the Land and Water Conservation Fund would live up to its name, Congress must find a way to fund parks that doesn’t come at the expense of our safety or our state’s beauty, land, and bayous. The status quo is illogical because states that rake in funds from onshore energy production typically aren’t even required to spend that money on environmental priorities.
Louisiana, on the other hand, constitutionally dedicates revenues from offshore energy production to pay for conservation and restoration projects here at home. Since 1932, our state has lost approximately 2,000 square miles of land — nearly the size of Delaware.
GOMESA revenues are more important than ever for safeguarding the environment, but the distribution remains patently unfair. To put this unfairness in perspective, the U.S. Department of Interior distributed more than $7.11 billion in 2017 revenues from natural resource extraction. GOMESA states had to share approximately 2.6% of that — or $188 million — among themselves even though the Gulf provides almost 20% of U.S. oil production. What’s worse, the U.S. Department of Interior estimates that we will reach the GOMESA revenue sharing cap in 2024.
Lifting GOMESA’s arbitrary revenue cap is the fairest and simplest way to direct millions of additional dollars to vital conservation efforts. Louisiana doesn’t have 30 more years of football fields to sacrifice. Congress should pass the Offshore Cap Parity Act to remove the GOMESA cap on state revenues.