The debt ceiling bill includes changes to federal law after an effort by local leaders, which will facilitate coastal restoration without increasing Louisiana’s share of offshore revenues.
Rep. Garret Graves, R-Baton Rouge, and Speaker of the House Kevin McCarthy, R-CA, meet with a bipartisan group of leaders from Louisiana in March to discuss the BREEZE Act. Will McGrew/Télé-Louisiane
By Jonathan Olivier
After weeks of negotiations between President Joe Biden and House Republicans, an effort led by Rep. Garret Graves, R-Baton Rouge, the Fiscal Responsibility Act was passed on June 3 to avoid a historic default on U.S. debt obligations. The bill also includes provisions that will work to speed up projects to protect Louisiana’s coast.
In addition to avoiding a financial crisis, the bill includes changes to the 1970s-era National Environmental Policy Act, or NEPA, which requires federal agencies to examine how large-scale projects will impact the environment, an approval process that can often take years. The bill narrows the scope of these reviews by placing a two-year limit on them without reducing any environmental requirements.
NEPA was created at a time when Louisiana’s coastal crisis wasn’t as advanced as it is today. Therefore, these updates to federal policy will allow the Coastal Protection and Restoration Authority (CPRA) to more efficiently tackle large-scale projects that involve some initial environmental impacts in the quest to actually protect and enhance coastal ecosystems, such as the Mid-Barataria Sediment Diversion.
“NEPA’s process has slowed down major ecosystem restoration projects because it was written with different assumptions about projects in mind,” said Neal McMillin, director of federal affairs for the Office of the Governor’s Coastal Activities division. “By allowing federal agencies to finally consider the cost of doing nothing, and to make decisions in a more timely manner, the NEPA reforms in the Fiscal Responsibility Act will allow the coastal program to better restore Louisiana’s coastal wetlands in a major way.”
The bill also clarifies and reinforces that shared revenues from offshore energy production are treated akin to state funds rather than federal, and this designation allows flexibility which can help to increase efficiency in executing coastal restoration or flood control projects. While this change is a partial win for local leaders, a bipartisan push to increase Louisiana’s share of offshore energy revenues continues.
Private companies pay the federal government fees and royalties in order to drill offshore. Through the Gulf of Mexico Energy Security Act (GOMESA), 37.5 percent of this funding is shared among the four oil producing states of the Gulf Coast: Louisiana, Alabama, Mississippi and Texas. These funds go toward coastal restoration projects, and local leaders would like this share to be increased to 50 percent—the level allocated to other states where oil and gas production occurs on land.
Garret Graves, R-Baton Rouge, discusses increased offshore revenue for Louisiana at the Capitol in March. Will McGrew/Télé-Louisiane
During previous negotiations, the Republican plan to raise the debt ceiling by $1.5 trillion called the “Limit, Save, Grow Act,” or H.R. 2811, contained an energy package that would have increased this shared revenue to 50 percent. House Republicans included in H.R. 2811 a previous bill dubbed H.R. 1 that was passed in March on a vote of 225-204, which included the text from the Budgeting for Renewable Electrical Energy Zone Earnings, or BREEZE Act, sponsored by House Majority Leader Steve Scalise, R-Jefferson, and Troy Carter, D-New Orleans. In addition to increasing revenue sharing from 37.5 percent to 50 percent, the BREEZE Act would also remove the $375 million cap on revenues transferred by the federal treasury to states and begin revenue sharing for offshore wind production.
Graves noted in an email that H.R. 1 is a critical piece of legislation for the future of Louisiana’s coastline. “Not only will this bill increase our domestic energy production, but it will also increase the resiliency funding our state and parish governments receive from energy development,” he said. “These local resiliency projects will drive down flood insurance rates, strengthen our region’s economic and ecological resiliency, and reduce federal disaster costs. This is a win-win-win that will protect our state’s communities, people, languages, culture, and our way of life.”
U.S. Senate Majority Leader Chuck Schumer, D-N.Y., called H.R. 1–a broad piece of legislation that includes a variety of energy-related provisions– “dead on arrival,” while the White House released a statement charging that the bill rolls back investments in clean energy made by Democrats.
Without increased revenue sharing, Louisiana will continue to lose out on billions from offshore energy leases compared to states that primarily produce onshore, which already receive a 50 percent share. If no further action is taken, Louisiana will also receive no revenue-sharing funds from its nascent offshore wind industry. Thanks to the debt ceiling deal, the increased revenue would all be considered state revenue and continue to be split between the state of Louisiana and its coastal parishes.
“The BREEZE Act levels the playing field for Louisiana and other coastal states, who deserve a fair share of the revenues generated from energy produced off our shores,” said Chip Kline, the chairman of the state’s Coastal Protection and Restoration Authority (CPRA). “Disasters like the Deepwater Horizon Oil Spill cannot continue to be our main source of funding for coastal projects. The revenue sharing improvements in the BREEZE Act would provide an additional $3.1 billion to Louisiana’s coastal program over the next decade, which is critical revenue that will help us continue implementing large-scale, transformational projects for decades to come.”
While H.R. 1 was passed on a party line vote, the BREEZE Act provision has broad, bipartisan support in Louisiana, including Governor John Bel Edwards. In March, a bipartisan coalition of economic and political leaders from Louisiana, including local governments and the CPRA, met with congressional leaders at the U.S. Capitol to express the importance of increased investment in Louisiana’s coastal crisis.
Matt Jewell, parish president of St. Charles Parish, was part of the group and said in an email that the bill has the potential to unleash American energy production, while further investing in efforts to protect the state’s coastline.
“Southeast Louisiana relies on funding made available through our offshore energy production to fund critical projects to restore and rebuild our vanishing coast,” Jewell said.