[Congressional Record Volume 144, Number 125 (Friday, September 18, 1998)]
[Extensions of Remarks]
[Page E1762]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF LEGISLATION TO COMPENSATE FOR OIL AND GAS DRAINAGE IN 
                          THE WEST DELTA FIELD

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                         HON. CHRISTOPHER JOHN

                              of louisiana

                    in the house of representatives

                       Friday, September 18, 1998

  Mr. JOHN. Mr. Speaker, I am pleased today to join a number of my 
colleagues in introducing legislation that will right a wrong suffered 
by the State of Louisiana over a decade ago.
  I believe that all of my colleagues know that most of the Federal 
Outer Continental Shelf oil and gas development occurs off the coast of 
Louisiana and, indeed, off the coast of my Congressional district. 
Large portions of the Gulf of Mexico are among the very few areas of 
the OCS where offshore drilling is not prohibited by the 
Administration's recently announced leasing moratorium. To put the 
contributions of the State of Louisiana in perspective, in FY97 $3.2 
billion of the slightly over $4 billion of OCS revenue received by the 
Federal government was generated off the coast of Louisiana. Louisiana 
has been making this type of contribution to the Federal government's 
effort to develop its oil and gas resources every year beginning in the 
early 1950's.
  Throughout the entire history of Federal oil and gas development off 
the coast of Louisiana, the state and the Department of the Interior 
have cooperated on the development of oil and gas resources that might 
underlie both the state and Federal offshore waters. Obviously, the 
interest of our state and our delegation is that the revenues generated 
by the development of oil and gas resources owned by the people of 
Louisiana be returned to the treasury of the state of Louisiana. Where 
oil and gas resources occur in underground formations that underlie 
both state and Federal waters, the state and the Federal government 
have developed these areas through cooperative agreements that ensure 
that neither sovereign develops the resources of the other.
  Unfortunately, this spirit of cooperation broke down in the mid-
1980's in the development of a natural gas field along the seaward 
boundary of Louisiana called the West Delta Field. For the first and 
only time in the history of Federal OCS development off the coast of 
Louisiana, the Department of the Interior refused to cooperate with 
Louisiana in protecting Louisiana's resources from being developed by 
Federal lessees. As a result, Federal lessees drained over $18 million 
of Louisiana's natural gas, the revenues from which went to the Federal 
treasury rather than the State of Louisiana's treasury. In 1989, an 
Independent Fact Finder appointed by the Secretary of the Interior at 
the direction of Congress confirmed these facts. Since 6004(c) of the 
Oil Pollution Act of 1990 authorized an appropriation to repay the 
State of Louisiana and its lessees for the $18 million of gas developed 
improperly by the Federal lessees, plus interest. Today, the total 
authorized payment to the State and its lessees, with interest, is 
approximately $32 million.
  The State of Louisiana and its lessees have never received this 
money. Therefore, this legislation authorizes an alternative means of 
compensating the State and its lessees. Under this legislation, the 
state lessee in the West Delta Field would be authorized to withhold 
its Federal royalty payments on other OCS production in the Gulf of 
Mexico, using these funds to pay the State of Louisiana and itself 
until the authorization in Section 6004(c) of the Oil Pollution Act of 
1990 is satisfied. At that point, the lessee would resume its royalty 
payments to the Department of the Interior.
  Mr. Speaker, the time has come to close this unhappy chapter in the 
relationship between the State and the Federal government on Federal 
OCS oil and gas development. Louisiana has been a good host to the 
Federal government with respect to OCS development. Louisiana expects 
the Federal government to honor the authorization enacted in 1990. I 
encourage my colleagues to support this long-overdue legislation and 
ensure its enactment this year.

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