Gulf States Get Offshore Deal

Wednesday, December 13, 2006
The last bill passed by the 109th Congress will give Louisiana, Texas, Alabama and Mississippi opens about eight million acres in the Gulf of Mexico to oil and gas drilling, but the bill's landmark aspect was a deal that diverts 37.5 percent of federal royalties from future drilling to the four Gulf of Mexico states.. The accord could ultimately be worth $650 million a year for Louisiana. Foes of the legislation fear it will lure states opposed to offshore drilling such as California, Virginia, Florida and North and South Carolina into supporting exploration off their shorelines in return for a gusher of new revenue. Louisiana’s governor has said that the legislation will help Louisiana restore coastal wetlands and take measures to protect such energy infrastructure as ports, pipelines and oil refineries. In fact, the state has amended its constitution to restrict use of the money to those purposes. Opponents of the bill call it fiscally irresponsible and say that any royalties from drilling in federal waters, which begin three miles from shore and extend up to 200 miles out, belong to the federal government. Those are the boundaries Congress drew in 1953 and the Supreme Court affirmed. Given the size of the federal budget deficit and future Social Security and Medicare obligations, many lawmakers say the federal government is in no position to give away big revenue streams. (Source: Washington Post)

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