Senate committee passes Kennedy-supported bill to bring millions more in oil revenue to Louisiana

Published 3:33 pm Thursday, July 21, 2022

WASHINGTON – Sen. John Kennedy (R-La.) today applauded the U.S. Senate Committee on Energy and Natural Resources’ move to eliminate the state revenue sharing cap that the Gulf of Mexico Energy Security Act (GOMESA) establishes. Kennedy has worked closely with committee members and his Senate colleagues to lift the revenue cap that penalizes Gulf states unfairly and has remained especially focused, in recent days, on moving this bill to the Senate floor.

The Reinvesting in Shoreline Economies and Ecosystems (RISEE) Act, which Kennedy cosponsored, would reform GOMESA to allow Louisiana and other states to share more resources from offshore oil and gas leases. Kennedy also introduced the Offshore Cap Parity Act to eliminate the GOMESA cap.

“The current GOMESA cap unfairly targets oil producing states and denies them revenue that they have earned. Without this money to build infrastructure and storm barriers, Louisianians remain even more vulnerable to natural disasters. Eliminating the GOMESA cap is key to protecting people’s lives and livelihoods, and I’m glad we’ve made a way to move this bill forward. There’s still more to be done, but this is a step in the right direction,” said Kennedy.

Background:

GOMESA divides federal revenues from the offshore energy production of Gulf states into three portions. The federal government returns 37.5 percent of this revenue to Louisiana, Texas, Mississippi and Alabama. The Land and Water Conservation Fund receives 12.5 percent of offshore revenue and directs most of that money to landlocked states. The final 50 percent of Gulf oil and gas revenue goes to the U.S. Treasury.

The GOMESA cap limits the dollar value of Gulf states’ 37.5 percent revenue share to $375 million, meaning the states receive no benefit when the energy sector peaks and revenues surpass the cap. Conversely, the Mineral Leasing Act ensures that states with onshore drilling operations receive 50 percent of their revenues, while there is no cap on how much money that share includes.

States with onshore energy production typically aren’t required to spend that money on environmental priorities. Louisiana, however, constitutionally dedicates that revenue from offshore energy production fund its coastal conservation and restoration projects.