Oil and gas in Washington
Industry supports sharing OCS revenues with statesThe National Ocean Industries Association (NOIA) has taken a strong role in industry's support for a new effort to get Congress to enact legislation to share OCS revenues with states. At the present time, all revenues from federal OCS leases go into the federal treasury to fuel America's growing economy. The new plan provides for revenues from existing and future OCS leases to be shared with impacted states and to support national conservation and wildlife education. The controversial legislation — the Conservation and Reinvestment Act (CARA) — was made public for comment just before Congress recessed for its summer break. CARA had very strong bipartisan sponsorship in the House of Representatives when it was released by Reps. Don Young (R-Alaska), Billy Tauzin (R-Louisiana), Richard Baker (R-Louisiana), John Dingell (D-Michigan) and Chris John (D-Louisiana). The distribution of the draft included members of Congress, all 50 state governors and more than 50 national environmental groups. It can be accessed at http://www.house.gov/resources/ocs. The "Discussion Draft" was molded after the 1997 OCS Coastal Impact Assistance report that was prepared by the MMS OCS Policy Committee of the Department of the Interior. Its avowed purpose is to reinvest revenue, that comes into the federal government from nonrenewable resources development, into renewable resources providing financial impact assistance to coastal states, territories and local entities impacted by OCS-related activities. Currently, 100% of the federal OCS offshore revenue is deposited into the U.S. Treasury, while onshore, 50% of the revenue is shared with the adjacent state. The new proposal would establish formulas for allocating federal revenues from all bonuses, rents and royalties from existing and future leases beyond state waters in the following manner:
The House Resources Committee wanted to get started with consideration of the legislation. But in the drive to adjourn the 105th Congress and conclude the mid-term elections, that hearing was postponed. The House Resources Committee staff was saying it's more reasonable for the real serious work on the OCS impact assistance concept to begin after the 106th Congress gets underway. The Senate was not to be outdone on this important issue. So, shortly after the House announced its concept discussion, Louisiana Senators Mary Landrieu (D) and John Breaux (D) released their own proposal. Their ideas about CARA are similar in the overall percentage distributions of revenues, but they adopt some different allocation formulas for the state shares to local subdivisions. The NOIA Board of Directors adopted a resolution during the Annual Meeting in April reaffirming support for the general concept of coastal impact assistance. The Board went on to issue broad support for legislation implementing a "fair and equitable" coastal impact assistance program that does not impose additional burdens on the offshore oil and natural gas industries. Revenues from mineral production from federal lands, including offshore oil and gas leases, have already yielded millions of dollars to share with several states in which the federal lands are located. Thirty-four states have received $293 million from the MMS, representing revenue receipts during the first half of 1998. OPA '90 financial responsibility rule is final. For almost a decade, the domestic petroleum industry and the federal government have been engaged in running discussions, debates, arguments and almost battles at times about the final rule implementing the oil spill financial responsibility provisions of the Oil Pollution Act of 1990 (commonly known as OPA '90). Now, MMS has issued the final rule for the Clinton Administration, to be effective Oct. 13, 1998. The new provisions apply to certain oil wells, production platforms and pipelines located along and seaward of the U.S. coastline. They cover any offshore facility, structure or their components (pipelines) used for exploring, drilling and producing oil, or transporting oil from drilling, exploration and production facilities. In the case of mobile offshore drilling units, the unit itself will not be considered as a covered facility. But a well drilled therefrom will be covered by the financial responsibility requirement. Also contained in the final rule are procedures for filing claims for spill-related compensations. How much financial responsibility? There will be an exemption for facilities with a worst-case spill discharge of 1,000 bbl or less. Then, the minimum amount of financial responsibility will be $35 million for facilities on the OCS and $10 million for facilities in state waters, with a worst-case oil-spill discharge volume of more than 1,000 bbl, but not over 35,000 bbl. The applicable amount of financial responsibility increases in three more steps: over 35,000 bbl but not more than 70 million bbl will be $70 million; over 70,000 but not more than 105,000 bbl will be $105 million, and over 105,000 bbl will be $150 million. MMS came up short on several industry suggestions. Industry representatives had concerns
with MMS's proposed methodologies for calculating worst-case spill discharges and expressed
reservations about the tests MMS established for use of self-insurance as proof of oil spill
financial responsibility. Ben Dillon, IPAA's vice president of public resources, has raised
concerns with the MMS regarding several issues — including the level of financial
responsibility, restrictions on how companies may provide insurance, and applications to
inland waters.  Charles D. Matthews is president of Charles Matthews & Co., consultants and advocates on government relations, Arlington, Virginia.
Copyright © 1999 World
Oil |
