Louisiana Asks Feds for Explanation on Missing Oil and Gas Payments

BATON ROUGE (CN) – Louisiana Gov. John Bel Edwards’ Office asked House Majority Whip Steve Scalise in a letter Friday to look into the reason behind the drastic cut in oil and gas royalties earmarked to help fund urgently needed coastal restoration projects statewide.

If those funds appear to be slashed for the long run, the letter asks Scalise to help identify another form of federal funding to restore coastal Louisiana.

Coastal restoration and land loss mitigation in Louisiana is a very serious undertaking and has a very narrow projected timeframe in order to be effective at saving the coastal lands that are left: Louisiana loses roughly a football field of land every 100 minutes, which totals 18 acres a day. Put another way, in 50 years, if nothing changes, 42 percent of all existing land will be lost, according to current authority estimates.

Coastal restoration is also a heavily underfunded venture.

At a coastal restoration meeting Wednesday news that profit sharing from oil and gas under the Gulf of Mexico Security Act, or GOMESA, will be just half of the previously anticipated $140 million was delivered as “not good news.”

Louisiana’s expected current share of offshore oil and gas royalties has been cut in half, Chip Kline, chairman of the authority, said during a public coastal renovation meeting Wednesday in Plaquemines Parish.

Johnny Bradberry, the governor’s executive assistant for coastal activities, sent a letter to Scalise asking for an explanation.

“As you are well aware, the federal revenue-sharing provided by the Gulf of Mexico Energy and Security Act of 2006 (GOMESA) is one of the most crucial funding streams supporting Louisiana’s coastal program,” Bradberry’s letter says.

The letter clarifies that GOMESA “money flows directly to the Coastal Protection and Restoration Trust Fund” as well as provides payment straight to coastal parishes.

“Louisiana’s Congressional delegation was not only the leading force getting GOMESA passed into law, but has been steadfast in its efforts to defend the law from political challenges over the years,” the letter says.

Bradberry’s letter asks Scalise to assist in getting clarification from the federal government on what Louisiana’s actual royalty payment will be and when it will be made, on how stable the Office of Natural Resources Revenue expects Louisiana’s percent allocation to be over time and what the forecasts are for energy activity in the Gulf of Mexico and how that will impact shared revenues into the future.

Royalties under GOMESA are calculated using complicated measurements that involve such things as how far offshore the energy is produced.

Although GOMESA was passed in 2006, it was implemented in a two-phase system. Phase II began in 2017 and expands the areas of the Gulf subject to revenue sharing and will increase disbursements from hundreds of thousands of dollars, as they were in Phase I, to tens of millions of dollars, the letter explains.

In recent years, Louisiana was told that its share of royalties in Phase II would be an estimated $176 million, which would be split 80 percent to fund coastal restoration projects and 20 percent to individual parishes.

The 2017 fiscal year ended in September, at which time the state was told that its share of oil and gas royalties will be roughly $62-75 million, the letter says.

“Funding the coastal program is a complicated business,” the letter says, and goes on to say that many of the revue streams are grant based and require payment upfront and only later give reimbursement.

“GOMESA is one of the few true revenue streams that we have that not only allows CPRA to implement projects, but also provides the cash needed to cover expenses under the grant-reimbursable funding streams,” the letter states.

“As such, I respectfully request that you help us obtain additional information about this program and what can be expected in the future as it is extremely critical to our planning efforts,” the letter states and continues.

“If indications are that Phase II will be a $60-70 million funding stream rather than a $100+ funding stream we would respectfully ask for your help to revisit and pursue other federal opportunities that could also provide assistance for coastal protection and restoration going forward.”

Earlier this year President Donald Trump’s administration tried to do away with GOMESA altogether.

More than 280 people, including government, business and outdoor groups wrote a letter opposing that decision, according to a report by the New Orleans Advocate.

“Louisiana is confronting the largest land loss crisis in North America,” the people wrote, according to the Advocate. “This accelerated land loss has far-reaching economic implications and poses real threats to the Mississippi River navigation system, our nation’s largest port system, seafood industries, as well as oil and gas production and petrochemical manufacturing.”

At the meeting Wednesday when the unexpectedly low GOMESA fund for 2017 was announced, Bradburry insisted the state will get through this.

“I just want to give everyone here the confidence that we at CPRA will get this figured out,” Bradberry said at Wednesday’s meeting.

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