[Congressional Record (Bound Edition), Volume 145 (1999), Part 21]
[Extensions of Remarks]
[Page 30822]
[From the U.S. Government Publishing Office, www.gpo.gov]



       FEDERAL GOVERNMENT'S OBLIGATION TO THE STATE OF LOUISIANA

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                         HON. CHRISTOPHER JOHN

                              of louisiana

                    in the house of representatives

                      Wednesday, November 17, 1999

  Mr. JOHN. Mr. Speaker, I rise today to introduce a bill with Mr. 
Tauzin and the entire Louisiana congressional delegation that will 
bring closure to an issue that has lingered long enough concerning our 
home State of Louisiana. Mr. Speaker, the State of Louisiana and the 
Federal Government have a long history of working together to develop 
our abundant natural resources in a cooperative manner that protects 
our unique habitat and spurs economic development. I am pleased that we 
have been able to rectify our differences when they occur in order to 
reach sensible and judicious decisions that foster goodwill and the 
efficient use of our resource base.
  Mr. Speaker, there remains before this House an obligation on the 
part of the Federal Government to satisfy an authorization that was 
included in the Oil Pollution Act of 1990. This authorization was 
crafted to resolve a unique dispute between the State of Louisiana and 
the Federal Government over the development of the oil and gas 
resources on the Outer Continental Shelf. Unfortunately, this 
authorization has never been satisfied and my home state has lost 
literally millions of dollars as a result.
  Today, I am joined by members from Louisiana, Texas, New York and 
Pennsylvania in introducing legislation directing the Minerals 
Management Service (MMS) to grant the State of Louisiana and its 
lessees a credit in the payment of Federal offshore royalties to 
satisfy the authorization contained within the Oil Pollution Act of 
1990 for oil and gas drainage in the West Delta Field.
  I will be brief with the history of this matter, but I feel compelled 
to clarify for all our colleagues why the language contained in OPA 
must be satisfied both out of concern for the treatment of the State 
and for the protection of our coastal environment.
  In November of 1985, the State of Louisiana began to notify the MMS 
that a federal lessee was draining the West Delta Field at the expense 
of the State and its lessees. The Governor made this request based on 
the entire history of cooperative development agreements between the 
State and Federal government. The State sought to ``unitize'' the field 
by allocating the appropriate shares of the field's resources to each 
lessee. Unitization is standard practice in cases where multiple 
producers share common reservoirs. Much to the State's amazement, 
officials at MMS disagreed with the State and the entire Louisiana 
congressional delegation regarding the need and availability of relief 
for the State.
  In order to bring some unbiased perspective to the debate, the 
Congress authorized an independent fact finder to review the situation 
and to determine if unauthorized drainage occurred and to what extent, 
if any, loss had been identified. In 1988, the Congress, in the 
Interior Appropriations Act for FY89, authorized the Secretary of the 
Interior to appoint an independent fact-finder to determine if 
Louisiana had been drained of its gas and oil reserves and, if so, the 
market value of those confiscated reserves.
  That independent fact finder reported to Congress in 1989 that 
drainage had indeed occurred and quantified the resulting loss. At that 
point, the congressional delegation sought and obtained an 
authorization of appropriations for compensation that matched the 
determination of the fact finder. It is important to note that during 
the 4-year period of study, the federal lessee continued to drain the 
sacred reservoir and actually continued to drain the field until the 
Federal wells ceased producing in 1998.
  Why is that important to note? Because the State is seeking 
compensation only for the drainage that can be empirically determined 
by the fact finder's report for those initial 4 years. All drainage 
that occurred for the next decade has basically been written off by my 
State although they would have every right to seek their share of those 
revenues siphoned by the Federal Government. In short, my State is 
knowingly leaving money on the table in order to make a good faith 
effort to resolve this issue.
  In addition, we believe it is important to point out that satisfying 
this obligation in no way opens the doors to a myriad of similar 
demands on the Federal budget. From early on, the uniqueness of this 
situation was recognized when the Department of Interior wrote to then-
Senator Johnston on September 19, 1991, that ``To the best of our 
knowledge, the West Delta dispute is the only (emphasis added) 
situation in which the Department did not agree to unitization, or a 
similar joint development agreement on the Outer Continental Shelf when 
requested to do so by the Governor of a coastal State.'' To verify that 
this situation is unique, the State of Louisiana thoroughly reviewed 
its records and has confirmed that there are no other similar cases 
anywhere along the OCS boundary. In fact, in that same letter the 
Department wrote, ``The Department agrees with your understanding that 
Section 6004 (c) of the Oil Pollution Act does not create a precedent 
for the payment of any funds to any parties other than the State of 
Louisiana and its lessees.''
  As for the environmental concerns raised by the Federal government's 
inappropriate actions, the record is clear. In OPA 90, the Congress 
specifically reiterated the harmful effects of ``unrestrained 
competitive production on hydrocarbons from a common hydrocarbon-
bearing geological area underlying the Federal and State boundary.'' 
The logic behind this language is simple. Why would we encourage the 
construction and operation of more oil and gas wells in U.S. waters 
than are necessary? If a field can be produced with one well, having 
two only doubles that chances of an accident. The concept is common 
sense and has been at the root of all Federal and State policies for 
decades. I see no reason to abandon that intelligent precedent now.
  Mr. Speaker, after years of waiting, my State is interested in 
putting this issue behind us and moving on. What makes that statement 
so intriguing is that is the exact line the MMS stated in a letter to 
the dean of the Louisiana delegation over 9 years ago when they too 
wrote, ``We are also very interested in putting this matter behind 
us.''
  Our legislation is simple. It will allow the State and its lessees to 
recover a portion of what was lost by the unauthorized development of 
the West Delta Field and will do so in the most benign of methods. The 
State and its lessees have proposed an alternative method for providing 
compensation by foregoing payment of federal royalties due by the 
lessee on other federal leases and distributing those withholdings to 
the State and lessee until the federal obligation is satisfied. Upon 
restitution, the lessee will resume their payments to the Federal 
Government. By withholding royalty payments and sharing those revenues 
proportionately between the State and its lessees we expect the Federal 
obligation will be satisfied within 2 to 3 years.
  After more than a decade, it is time for the federal government to 
settle this outstanding obligation and, at the same time, protect the 
rights of my home State. In addition, we must reaffirm that this 
Congress does not support policies that may well create precedents that 
would needlessly and recklessly endanger our coastal environments.

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