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Trump to repeal Gulf state payments

Written by  Tuesday, 23 May 2017 14:25

President Trump wants to take away the Gulf of Mexico Energy Security Act (GOMESA) payments from four coastal states in the Department of Interior’s (DOI) proposed US$11.7 billion budget for 2018.

Trump. Image from White House Flickr.

The Gulf of Mexico Energy Security Act of 2006 opened additional areas in the GoM for offshore oil and gas leasing, in which 37.5% of revenue from certain areas are distributed to four coastal states: Alabama, Louisiana, Mississippi, and Texas, in addition to their local governments.

According to Trump’s proposal, his administration wants to “repeal these revenue sharing payments, set to expand substantially starting in 2018, to ensure the sale of public resources from Federal waters owned by all Americans, benefit all Americans.”

The move is expected to save some $3.6 billion over the next 10 years.

Gulf Coast states currently receive significant economic benefits from activity in their States associated with offshore energy development and are further set to receive additional benefits from the payout of the $20.8 billion BP oil spill settlement agreement reached in 2015, according to the DOI.

“The GOMESA funding for LWCF (Land and Water Conservative Fund) State Grants would continue, but this legislative proposal would replace GOMESA’s complicated allocation formula with a fixed annual appropriation of a comparable dollar amount, starting at $90 million in 2018 and increasing to $125 million in 2022 and remaining at $125 million each year thereafter,” the proposed budget states.

“President Trump promised the American people he would cut wasteful spending and make the government work for the taxpayer again, and that's exactly what this budget does,” says Interior Secretary Ryan Zinke. “Working carefully with the President, we identified areas where we could reduce spending and also areas for investment, such as addressing the maintenance backlog in our National Parks and increasing domestic energy production on federal lands.”

“The President's budget saves taxpayers by focusing program spending, shrinking bureaucracy, and empowering the front lines," he says.

In the DOI budget, Trump has also proposed to cut some $5 million from Bureau of Ocean Energy Management (BOEM), allotting $171 million for 2018, compared to 2017's $175.1 million.

BOEM is responsible for the management of offshore energy and mineral resources.

Trump's 2018 budget request for the bureau focuses on core program responsibilities, such as the Outer Continental Shelf (OCS) Oil and Gas Leasing Program, offshore renewable energy leasing efforts, marine mineral resource management, and environmental analyses and studies in support of these programs.

In Trump’s $791 million proposal to “power America’s future,” $343 million will be designated to the offshore sector, which includes a $10 million increase to update the Five-Year OCS oil and gas plan.

Industry reaction 

National Ocean Industries Association (NOIA) President Randall Luthi says Trump’s decision misses the mark.

“…Budget proposals regarding Gulf State revenue sharing and the Strategic Petroleum Reserve (SPR) appear to miss the mark on the Administration’s stated goal of energy dominance. Eliminating Gulf state revenue sharing for offshore energy production would punish coastal states that support and host the development of home-grown energy and jobs, and would be a serious step backward in the quest for energy reliability and independence. In addition, the proposed sale of one-half of the nation’s emergency oil supply in the Strategic Petroleum Reserve (SPR) could threaten domestic energy security by limiting our ability to counter any unforeseen supply interruptions.  Any plan for depleting the SPR should be accompanied by a plan to refill it,” says Luthi.

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