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Kennedy, Cassidy propose plan to increase Gulf of Mexico lease sales

William Taylor Potter
Lafayette Daily Advertiser
Senator John Kennedy.

Louisiana's U.S. senators are spearheading an attempt to require the federal government to hold two lease sales in the Gulf of Mexico each year — a move the senators say would protect jobs and secure conservation funding.

Sen. John Kennedy, a Republican from Madisonville, introduced the bill Tuesday. The bill, called the Conservation Funding Protection Act, lists five other Republican senators as cosponsors: fellow Louisianan Bill Cassidy, Ted Cruz and John Cornyn from Texas and Cindy Hyde-Smith and Roger Wicker from Mississippi.

The bill would require at least two area-wide lease sales each year on available land in the western and central portions of the Gulf of Mexico. The U.S. Department of Interior is currently required by the Outer Continental Shelf Lands Act to schedule lease sales for the Outer Continental Shelf — the submerged land in the gulf — but it does not have a set number of required sales for the department to hold. 

In a news release, Kennedy's office said the law would keep environmental regulations and ensure the Department of Interior conducts environmental reviews. The law would not change environmental regulations for lease sales, rig operations or exploration.

“Louisianians and other energy producers help keep America running and keep America safe," Kennedy said in a statement. "If Americans aren’t allowed to use U.S. resources to fuel our economy, we’ll be dependent on nations that don’t share our values and that even oppose our interests. We can’t afford to lose the energy independence our country has earned, the Louisiana jobs that make it possible or the coastland conservation that it funds."

Healthy Gulf, a group dedicated to preservation and restoration in the Gulf of Mexico region, said the bill is an attempt by oil companies to buy oil leases in the Gulf while prices are low.

"As Senator Kennedy once infamously said, 'Some hogs have all four feet and their snout in the trough'. This bill is nothing more than a huge giveaway to oil companies," said Dustin Renaud, communications director for Healthy Gulf. "We shouldn't be selling off our resources in the Gulf for rock bottom prices. And the fact that they are trying to sell this as 'conservation' legislation is a farce. Don't be fooled by Senator Kennedy's play on words." 

The senators argue the bill would ensure funding for their states' coastal restoration projects. As part of the Gulf of Mexico Energy Security Act, Alabama, Texas, Louisiana and Mississippi receive a share of the money collected in lease sales for coastal restoration. 

In fiscal year 2019, the federal government received more than $1 billion for offshore leases, which triggered a cap on the states' share of the revenues, the Office of Natural Resources Revenue said on March 30. The gulf states were able to receive up to $375 million of that money.

Louisiana generally receives the majority of the GOMESA money allocated to the Gulf states. Of the $353 million given to the Gulf states in fiscal 2019, Louisiana and its parishes received $155.7 million, or about 44% of the total.

In June, Kennedy introduced a bill that eliminated the cost-sharing cap, giving coastal states more money from GOMESA. Cassidy has also been involved in efforts to remove the cap over the last year. 

U.S. Senator Bill Cassidy

'Radical environmental agendas' feared

In a statement, Cassidy said the bill would protect Louisiana's workers from "radical environmental agendas."

“Many Louisiana families depend on energy production and the jobs it produces, Cassidy said. "This bill keeps the Gulf open for business and ensures these workers won’t be threatened by radical environmental agendas."

Several oil and gas groups — including the Louisiana Mid-Continent Oil and Gas Association, American Petroleum Institute, National Ocean Industries Association, International Association of Drilling Contractors, Consumer Energy Alliance, International Association for Geophysical Chemistry, Petroleum Equipment and Service Association — are backing the legislation, and several have been critical of President-elect Joe Biden's energy plan.

"The Conservation Funding Protection Act is critical to protecting existing energy production in the Gulf of Mexico and the livelihoods of thousands of hardworking citizens across the Gulf coast," said Tyler Gray, Louisiana Mid-Continent Oil and Gas Association president, in a statement. "Oil and gas leasing and production in the Gulf of Mexico is also the primary source of funding for conservation projects across the country, and, importantly, for Louisiana's hurricane protection systems and coastal restoration efforts.”

Biden's platform has called for no new drilling on federal lands or in federal waters. Some groups have said Biden seeks to end all drilling on federal lands and in the waters — a claim PolitiFact rates as "mostly false."

In May, the National Ocean Industries Association released a report that said restricting future lease permits could cause a 25% drop in oil and gas related jobs in Louisiana from 2020 to 2040. The state could also lose about $4 billion in GDP contributions in 2040, and government revenues from oil and gas could drop about 26% across the Gulf states.

If no new drilling permits are issued after 2022, the projections for oil and gas and related jobs for 2020-2040 is 50% lower than the projections if there were no changes to policy — around 52,000 jobs on average.

The state could also see declines in GDP contributions of around $8 billion. Louisiana could also see government revenue fall up to $100 million by 2040.

"This legislation effectively protects hundreds of thousands of jobs and environmental funding throughout every U.S. state," said NOIA President Erik Milito in a statement. "U.S. offshore energy provides source of energy with a small environmental footprint, produced with a low carbon intensity and under the highest level of regulations and standards.”