Congress Passes Offshore Revenue Bill Helping Louisiana, Gulf States
WASHINGTON – In the wee hours of the morning on December 9, as the Republicans said goodbye to control over Congress, in its last roll call vote of the 109th Congress, the United States Senate at 1:49 passed by a 79-to-9 vote final legislation that includes the Domenici-Landrieu Gulf of Mexico Energy Security Act, S. 3711. Earlier, the House passed the same bill.
The legislation opens substantial new areas to oil and natural gas drilling in the Gulf of Mexico. It also shares billions of dollars in revenues with Louisiana and other energy-producing Gulf Coast states for coastal wetlands restoration, hurricane protection and flood control projects. An additional share will be used to build parks and preserve green spaces in all 50 states. The package also includes several key tax provisions, including a two-year extension of the Gulf Opportunity (GO) Zone tax incentive that provides strong motivation to invest in the Gulf Coast. The measure will now go to President Bush for his signature, after the House overwhelmingly passed the bill with a 367-45 vote Friday afternoon.
“Today the Senate confirmed its strong support for Louisiana and the entire Gulf Coast by passing the Domenici-Landrieu fair-share bill, which after nearly 60 years, provides for Louisiana a significant share of oil and gas revenues produced off our shores,” Sen. Landrieu said. “In August, 71 Senators agreed to the bill because they recognized that a dedicated stream of revenue is necessary for Louisiana to protect itself from future storms. Katrina and Rita showed us what devastation can ensue if our communities remain vulnerable.”
Domenici-Landrieu Gulf of Mexico Energy Security Act According to Sen. Landrieu, the legislation passed by bipartisan majorities in both the House and Senate is identical to the Domenici-Landrieu bill the Senate passed by a 71-25 vote on August 1. , It allows coastal states to receive a 37.5 percent share of the revenues they generate offshore. Coauthored by Sen. Landrieu and Senate Energy Committee Chairman Pete Domenici, R-N.M., and endorsed by the White House in July, the plan opens 8.3 million acres in the Gulf of Mexico to new oil and natural gas production and shares 37.5 percent of the new revenues with Louisiana, Texas, Mississippi and Alabama. The funds are specifically dedicated to coastal wetlands restoration, hurricane protection, levee and flood control projects in the four energy-producing states. An additional 12.5 percent is dedicated to the state side of the Land and Conservation Fund, which funds the acquisition of parks and green spaces across the country. According to Senator Landrieu, here are the other benefits:
“The Domenici-Landrieu fair share bill is essential for the recovery and long-term economic vitality of South Louisiana from Venice to Cameron because it will help us defend against hurricanes while at the same time protecting one of America’s most vital ecosystems,” Sen. Landrieu said after Friday’s House vote. “It’s also vital for the nation because it increases energy production along America’s only Energy Coast and restores the wetlands that protect some of our nation’s most critical energy infrastructure. It further serves the Louisiana economy by creating jobs and stimulating business activity, and does so in a fiscally responsible manner without raising the federal budget deficit.” “In the last decade, the price of natural gas has shot up. The National Association of Manufacturers estimates that more than 3 million U.S. jobs have been lost since 2000. The Domenici-Landrieu plan allows for increased domestic energy production for the first time in 25 years, and geologists expect to find significant oil and natural gas reserves. The area is projected to produce enough natural gas to sustain more than 1,000 chemical plants for 40 years, and enough oil to keep 2.7 million cars running and 1.2 million homes heated for more than 15 years. “
“The Domenici-Landrieu bill is a significant step toward solving South Louisiana’s coastal erosion and hurricane protection challenges, as Louisiana is projected to receive more than $13 billion over the next 30 years. Coupled with that, the state is expected to receive $12 billion for hurricane protection, wetlands restoration and navigation projects in the next 10 years from the regular budget process and other previous legislation, such as The Breaux Act, and the Coastal Impact Assistance Program
Tax Extenders The legislative package the House passed along with the Domenici-Landrieu plan would extend tax breaks benefiting Louisianians. Most important among these is the Gulf Opportunity (GO) Zone tax incentive, which the whole delegation has been pushing Congress to extend. The GO Zone incentive passed in 2005 has allowed hundreds of businesses to invest in areas impacted by Hurricanes Katrina and Rita and to take a 50 percent tax reduction for new facilities or equipment, jumpstarting recovery by giving businesses an incentive to quickly invest. Current law requires that businesses put new facilities or equipment in place by the end of 2008, but the package will extend the benefit until 2010.
“Many businesses need incentives, such as the GO Zone tax breaks, to encourage redevelopment in very difficult circumstances, which is essential to strengthening our economy and rebuilding our communities,” Sen. Landrieu said after the House vote. The package also includes some extensions for expiring trade benefits to countries including Vietnam.
Bobby Jindal, who sheparded the legislation in the House said in a written statement, “This legislation ensures that our state receives a steady stream of funding to deal with our most pressing issues. Beginning in Fiscal Year 2007, Louisiana will receive 37.5 percent of the energy royalties in certain offshore oil and gas leases, and parishes will receive a share of this funding. This amounts to hundreds of millions of dollars over the first 10 years for our state, and $650 million a year after 2017 according to U.S. Senate estimates. I have publicly stated that our state should bond this long-term source of funding in order to generate significant short-term revenues to rebuild our coastline and improve our infrastructure.
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