Lott, Cochran Introduce Bill for Offshore Gulf Drilling

[verbatim statement] A bill to direct revenues to Mississippi and other Gulf states, generated by the expansion of deepwater oil and gas leasing in the Gulf of Mexico, was introduced in the U.S. Senate Wednesday by Senators Trent Lott and Thad Cochran of Mississippi. The bill, authored by Senator Lott, is a response to legislation now before the Congress which proposes to open about three million acres in the Gulf's Lease Sale 181 Area, 123 miles southeast of Biloxi but which fails to provide any coastal impact assistance to states like Mississippi from the revenues that will be generated from the offshore oil and gas drilling.

"This legislation will allow Mississippi to get a fair share of the profits from the oil and gas produced in the 181 Area of the Gulf of Mexico," Cochran said. "This is especially important for our state in light of the loss of tax revenue we have faced because of the damage of Hurricane Katrina. The income Mississippi will gain from this revenue sharing agreement will provide funds for infrastructure improvements, conservation programs, and restoration of coastal areas."

"The Gulf Coast states have provided the ports, pipeline facilities, fabrication facilities, and other support functions to maintain oil and gas exploration in the Gulf of Mexico," Lott said. "As we saw from the devastation caused by hurricanes Katrina and Rita, the damage to this supporting infrastructure causes its own damage to our coastal communities. The increase in Gulf oil and gas exploration that will occur as a result of leasing Area 181 will increase the impact on the Gulf Coast communities. The provision of coastal impact assistance using a portion of the federal revenues from these leases is appropriate and greatly needed by those communities."

The Senators' bill would require that 50 percent of the federal revenue from leases in the 181 Area be shared with the Gulf states, off which exploration takes place and which do not have a majority of their coastline subject to a leasing moratorium, making Florida ineligible. Of the funds apportioned for each state – based on their distance from the lease tract – a Gulf state would receive 65 percent, while that state's coastal counties would get 35 percent of those funds. The Lott/Cochran bill would authorize this revenue sharing for the lifetime of the Area 181 leases.

Senator Lott said he does not yet have an accurate estimate of how much revenue Mississippi and its coastal counties would receive from this bill, but he said that based on his bill's formula, Interior Department predictions of Area 181's lifetime revenue production and Mississippi revenue shares from previous offshore revenue policies, he estimated that Mississippi could receive between $1.25 billion and $1.5 billion over the lifetime of the 181 Area leases. That compares with $125 million which Mississippi is expected to get from last year's federal Energy Policy Act revenue sharing provision during the 2007-2010 period.

The Lott/Cochran bill prescribes that the states and coastal counties may use their offshore revenue fund shares for any of the following purposes: 1) conservation, protection or restoration of coastal areas including wetlands; 2) mitigation of damage to fish, wildlife or natural resources; 3) implementation of federally-approved marine, coastal or comprehensive conservation management plans; 4) onshore infrastructure projects and public service needs; 5) activities related to energy production or efficiency, or hazard mitigation, including education or training programs or facilities; or 6) planning assistance or administrative costs to comply with this act. States could also use the funds as non-federal shares for federal matching purposes.

The Senators' bill would prohibit exploration in the portion of the 181 Area that is within the eastern Gulf military training area, unless the Defense Secretary determines that that portion can be developed in a manner that won't interfere with military training. Navy and Air Force bases in Florida use the eastern Gulf for flight training.

Senator Lott said he will offer the bill as an amendment or substitute to S. 2253, introduced by Senate Energy and Natural Resources Committee Chairman Pete Domenici of New Mexico, that directs the Interior Secretary to offer the 181 Area for oil and gas leasing.

Other original cosponsors are Senators Mary Landrieu and Dave Vitter of Louisiana, and Richard Shelby and Jeff Sessions of Alabama.
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