Louisiana Gov. Kathleen Babineaux Blanco filed a complaint in federal court last Thursday seeking to block oil and natural gas Lease Sale 200 off the coasts of Texas and Louisiana that is scheduled for Aug. 16. The legal action came only days after Interior Department’s Minerals Management Service (MMS) said it would proceed with the sale as scheduled, despite Blanco’s objections.

The complaint, which was filed in U.S. District Court for the Eastern District of Louisiana, names MMS Director Rejane “Johnnie” Burton and Interior Secretary Dirk Kempthorne as defendants. Louisiana contends that Burton and Kempthorne would violate the Outer Continental Shelf Lands Act, the Coastal Zone Management Act and National Environmental Policy Act by allowing the lease sale to occur. The state has asked the federal court to enjoin Interior from opening bids and/or awarding leases.

“In spite of the persistent and dramatic land loss in coastal Louisiana and the devastating effects of Hurricanes Katrina and Rita on our coast, MMS has chosen to proceed with the lease sale over my objections. This action shows a callous disregard for the serious concerns the state has articulated in letters requesting the lease sale be postponed,” Blanco said in a statement Thursday.

“The state of Louisiana has historically been the federal government’s number one partner in providing our nation its domestic offshore energy supply. However, we cannot continue future OCS leasing until the state receives a federal commitment to ensure its ability to protect these national assets, both environmental and economic,” she said.

Blanco has been vowing for months to stop the oil and natural gas lease auction unless the federal government agrees to give Louisiana a greater share of the federal royalties from production offshore Louisiana to help restore the state’s receding coastal areas.

Under current law, interior states that allow oil and gas drilling receive 50% of the royalties from production. But coastal states that support offshore production, such as Louisiana, receive only a small fraction of the royalties, with the bulk of the revenues going to the federal government. Blanco wants to change that equation.

Two bills currently are in the Senate and House that would significantly increase the offshore royalties that would go to Louisiana and other coastal states. The House, as part of the broader measure to expand Outer Continental Shelf (OCS) leasing (HR 4761), approved last month revenue-sharing provisions that would immediately bring Louisiana 25% of the energy royalties produced three to 12 miles offshore for the first five years, with that amount increasing to 42.5% between six and 10 years. This would escalate to 63.75% as royalty receipts grow. The state also would receive 42.5% of the royalties from 12 miles out phased in through 2022, resulting in nearly $9 billion over the next 10 years. The Senate OCS measure — which was to be introduced on the Senate floor Friday — has a more modest revenue-sharing provision. It would give the four Gulf coast states 37.5% of the federal revenues generated from offshore production in the Gulf of Mexico.

Lease Sale 200 includes 3,865 unleased blocks of approximately 20.87 million acres in the OCS Planning Area offshore Texas and in the deeper waters offshore Louisiana. The blocks are located from three to about 210 miles offshore, according to MMS. The agency estimates the sale could result in the production of between 136 million and 262 million barrels of oil and 0.810 Tcf to 1.440 Tcf of natural gas.

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