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Louisiana Lawmakers Seek Share of OCS Revenues to Aid in Katrina Recovery

Louisiana Sens. Mary Landrieu and David Vitter last Thurday introduced legislation that would give Gulf Coast producing states a share of federal revenues from offshore oil and natural gas production to help with recovery efforts in the wake of Hurricane Katrina.

The proposal is part of bipartisan comprehensive legislation seeking $250 billion in Katrina disaster relief and economic recovery package for affected Gulf Coast states. Lawmakers are seeking 50% of the billions of dollars that are deposited into federal coffers annually from royalty and leasing activities in the federal Outer Continental Shelf (OCS), where much of the oil and natural gas production occurs.

Currently, coastal states that permit drilling off their shores receive none of the revenues from production in the federal OCS waters, but they do get 27% of the revenues from production in state-owned waters. Coastal states are seeking parity with other states, such as Wyoming and Montana, which are allowed to keep 50% of the revenues from onshore energy production.

The OCS revenues would be used for coastal restoration, hurricane protection and flood control for Louisiana and other Gulf coastal states that allow production, according to a Landrieu spokeswoman.

The recently enacted energy bill already provides $1 billion in coastal impact assistance over the next five years to six states that currently allow production off of their coasts, with Louisiana receiving the lion's share of the funds (approximately $535 million).

In May, Landrieu proposed a bill that would allow the sharing of revenues from OCS production with five energy-producing states that aren't restricted by moratoria off their shores. The proposal also could make it easier for interested states to open their coastlines to energy leasing. The proposal still is pending in the Senate Energy and Natural Resources Committee, Landrieu's spokeswoman said.

The OCS revenue-sharing proposal has come under attack in the past by congressional offshore drilling opponents who argue that providing increased financial incentives would motivate other interested coastal states, such as Virginia, to open up their currently closed coastlines to oil and natural gas production activities.

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