[Congressional Record (Bound Edition), Volume 149 (2003), Part 22]
[Extensions of Remarks]
[Pages 31111-31113]
[From the U.S. Government Publishing Office, www.gpo.gov]




         CONFERENCE REPORT ON H.R. 6, ENERGY POLICY ACT OF 2003

                                 ______
                                 

                               speech of

                        HON. W.J. (BILLY) TAUZIN

                              of louisiana

                    in the house of representatives

                       Tuesday, November 18, 2003

  Mr. TAUZIN. Mr. Speaker, offshore oil and gas production in the Gulf 
of Mexico provided nearly $6.6 billion in royalty, bonus and rent 
revenues to the federal government in 2001. The coastal states which 
supported this production received approximately $130 million 
combined--a royalty sharing rate of less than two percent. Yet onshore 
oil and gas production revenues on federal lands is shared 50/50 
between the federal government and the state in which the production 
occurs. In the case of Alaska, the state gets 90 percent of these 
onshore revenues produced on federal lands.
  The disparity between the onshore and offshore royalty sharing 
programs and their contribution to our domestic energy security is 
striking. Federal lands within the United States generated an estimated 
$2 billion in royalties from the production of oil, gas and coal in

[[Page 31112]]

2001 with about $1 billion of these revenues going to the states for 
``hosting'' these energy production activities. In contrast, offshore 
production in Louisiana's waters of oil and gas contributed over $5 
billion in royalties to the U.S. Treasury in 2001 yet Louisiana 
received royalties of less than $30 million, a 0.6% return. The Gulf of 
Mexico produces more energy and associated revenues to the U.S. 
Treasury than any other area of the federal domain. Nearly $130 billion 
has been provided to the federal government as a result of oil and gas 
production in the Gulf of Mexico.
  States receive 100 percent of the royalties they charge and collect 
in state waters. Louisiana's waters extend to only three nautical 
miles, compared to 9 miles for Texas and Florida. Therefore, if 
Louisiana had waters equal to these states, the significant revenues 
produced in these waters would have been wholly received by the state, 
not the US Treasury.
  Section 1412 of the Energy Policy Act of 2003, the Secure Energy 
Reinvestment Fund (SERF), recognizes the significant contribution 
coastal states provide by supporting offshore development to decrease 
our nation's dependence on foreign oil and gas. The SERF program shares 
a small portion of Outer Continental Shelf (OCS) revenues with states 
that host offshore oil and gas production. As included in the 
conference report, section 32(a) of the Outer Continental Shelf Lands 
Act defines the terms used in the section, including `coastal energy 
state'. It is the intention of the conferees that the Secretary of 
Interior (Secretary) reevaluate the eligibility of each coastal energy 
state's participation in the SERF program annually.
  Section 32(b) provides $35 million annually, as well as OCS royalties 
and bonuses above the CBO baseline (in some cases, royalties and 
bonuses will have to reach levels hundreds of millions or over a 
billion dollars above the baseline before additional revenues will be 
shared with coastal energy states). This subsection authorizes up to 
$500 million for each Fiscal Year through 2013, and after 2013, 25 
percent of qualified OCS revenues are to be shared with coastal energy 
states. Section 32(b) also includes a provision to protect deposits 
into the Land and Water Conservation Fund and Historic Preservation 
Fund.
  Section 32(c) establishes a distribution formula comparable to those 
used in other federal royalty sharing programs. It also recognizes the 
historical contribution that some states provided by hosting offshore 
oil and gas production for decades, despite unfulfilled promises of 
royalty sharing by the federal government. The conferees have confirmed 
the document referred to in subsection 32(c)(2)(A)(iii). This section 
also provides 35 percent of a state's share directly to the political 
subdivisions that are within the state's coastal zone. When determining 
criteria for the ``relative level of OCS oil and gas activities'' in a 
state, the Secretary shall seek to direct the majority of this portion 
to the most impacted, or two most impacted, political subdivisions. In 
the case of Louisiana, the conferees have determined activities in Port 
Fourchon/LA1 should be recognized as OCS oil and gas activities and the 
conferees direct the Secretary to provide funds from the relevant 
portion of the formula in subsection 32(c)(2)(B)(iii) to address these 
impacts before any other activities in the state.
  Section 32(c) specifies that only coastal energy states that have an 
approved plan as described under section 32(d) are eligible to receive 
funds. Section 32(c) also gives the Secretary authority to hold a 
state's funds in escrow (within the fund) if necessary and establishes 
a reallocation provision if states fail to have an approved plan. 
Finally, the section ensures coastal energy states will receive a 
minimum share of revenues.
  Section 32(d) requires states to submit plans to the Secretary for 
approval. The Governor of each eligible state must include the plans 
prepared by the political subdivisions in the state plan. It is not the 
intention of this section to allow the Governor of a state to 
disapprove the plans of a political subdivision. In preparation of the 
plans, the conferees strongly urge the Secretary to ensure that states 
and political subdivisions carefully evaluate and coordinate with other 
regions. Further, states and political subdivisions should seek to use 
existing federal and state programs that advance the goals of the state 
plans. States and political subdivisions should leverage SERF resources 
to other federal programs to the maximum extent practicable.
  Subsection 32(d)(2)(A)(v) is designed to ensure that any state with 
significant offshore oil and gas operations will address impacts that 
are ``significant'' or ``progressive''. This subsection requires that 
any state producing more than 25 percent of qualified OCS revenues 
spend not less than 30 percent of funding received annually from the 
SERF program (together with appropriate political subdivisions) to 
address ``significant'' or ``progressive'' impacts identified in the 
most recent EIS. For the first ten Fiscal Years of this program, the 
term ``significant'' means only infrastructure supporting ``focal 
points of impact'' (LAl) as identified in a relevant EIS. The term 
``progressive'' means only coastal wetlands restoration. It is the 
conferees intent that greater than 15 percent of the funding received 
by the state and appropriate political subdivisions be used equally for 
each of these items. Further, it is the conferees intent that these 
monies shall be in addition to those provided to a political 
subdivision under subsection 32(c)(2)(B)(iii) (25 percent discretionary 
portion).
  Section 32(e) specifies that the funds should be used in a manner 
that is consistent with federal environmental laws and all relevant 
state laws. Additionally, this section provides the eligible use of 
funds by states and political subdivisions. The SERF program is 
designed to ensure that mitigation and natural resource protection are 
top priorities of the eligible states. The Secretary should work with 
states and political subdivisions to establish reasonable 
administrative costs and keep these costs to a minimum. It is not the 
intent of this program to fund any otherwise required function of local 
or state government unless that function was designed to mitigate OCS 
activities or improve the coastal environment. Should any state propose 
a program or expenditure that would be authorized under subsection 
32(e)(5), the Secretary shall not approve this use of funds unless 
there is a clear and direct link to OCS activities.
  Section 32(f) requires the Secretary to withhold funding to any state 
or political subdivision that spent funds provided under this section 
in a manner inconsistent with the approved plan of such state or 
political subdivision.
  Section 32(g) allows the Secretary to require arbitration to resolve 
disputes among any combination of coastal political subdivisions, 
states and the Secretary.
  Section 32(h) provides for an administrative cost to be retained by 
the Minerals Management Service to implement this program. It is the 
intent of the conferees the Secretary will designate only the Minerals 
Management Service as the agency to administer and provide oversight to 
the SERF program. Since the majority of the coastal energy states and 
nearly all the federal offshore production is located in the Gulf of 
Mexico, the conferees expect the current Gulf of Mexico OCS Region 
office to play a significant role in the administration of this 
program.
  Section 32(i) directs that two percent of the SERF fund be provided 
to the CREST program which has an existing relationship with the 
National Oceanographic and Atmospheric Administration. This payment 
shall be without limit and consist of two percent of all revenues 
available in the fund annually. It is the intent of the conferees that 
the funds provided under this section be used in a manner that is 
largely consistent with the goals of the existing CREST MOU and the 
current relationship with NOAA. In addition, the consortium may perform 
any activity authorized in section 1412(c) of this act. It is the 
intent of the conferees that Nicholls State University act as the 
fiscal agent for this section. The conferees expect CREST to retain its 
primary facilities at their existing location at CCEER.
  Section 32(j) requires that any expenditure by a state or political 
subdivision using funds provided under section 32 must be in compliance 
with authorized uses specified in subsection 32(e). Section 32(j) also 
provides that these funds may be used for any payment that is eligible 
under section 35 of the Mineral Leasing Act. So as to create parity 
with other federal revenue sharing programs, it is the intent of the 
conferees that any funds provided under section 32 may be used for any 
purpose that is in an approved plan. The conferees expect the Secretary 
to work with other federal agencies, if appropriate, to ensure that 
states and coastal political subdivisions be permitted to use SERF 
monies in accordance with this section.
  Section 32(k) requires states and political subdivisions to submit an 
annual joint report to the Secretary describing the expenditure of 
funds for the preceding fiscal year.
  Section 32(l) requires that the otherwise established signs at 
projects or programs receiving funds under this section identify the 
source of revenue as being from the ``Secure Energy Reinvestment Fund 
(SERF) program'' or other common name established by the Secretary. The 
signage should also identify the source of funding as being from 
revenues generated from offshore oil and gas production.
  Section 1412(b) amends section 31 of the OCSLA to reauthorize the 
program.
  Section 1412(c) authorizes the CREST consortium through the 
Secretaries of Interior and

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Commerce. It is the intent of the conferees that the consortium will 
focus their work on coastal wetlands loss in the lower Mississippi 
River delta and adjacent estuaries. Further, as a condition of funding, 
the conferees expect the Secretaries to require the consortium to 
establish an online library of existing information and findings on 
coastal wetlands restoration, the interaction between the Mississippi 
River and Gulf of Mexico, and other similar information. The agencies 
should use CREST as a tool to coordinate the various coastal 
activities, research and development, and programs of the various 
federal agencies that have existing authority over coastal activities 
or programs that affect coastal use. It is not the intent of the 
conferees that, as a condition of funding, the Secretary or Secretaries 
require the consortium to conduct operations outside the region in 
which it currently operates.

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