White House Budget Proposal Could Result in Huge Financial Loss for Gulf Coast Region

On May 23, 2017, at a time when oil prices have started to rise and energy companies have regained optimism about the prospect of Deepwater drilling, the White House proposed ending a program that allows increased revenue-sharing from offshore oil and gas drilling royalties with the Gulf Coast states of Louisiana, Alabama, Mississippi, and Texas. That program is called the Gulf of Mexico Energy Security Act, or GOMESA, which Congress passed in 2006. GOMESA was created to boost offshore drilling efforts by giving these Gulf Coast states a portion of the revenue when federal water was leased to oil and gas companies for exploration.

 

President Trump’s proposal to end GOMESA is part of his blueprint to limit the growth of the U.S. federal deficit; however, the Gulf Coast region stands lose billions in revenue as a result. Rather than revenue-sharing with the Gulf Coast states, the profits from any Deepwater drilling in federal water would be sent directly to the federal treasury.

 

Congressmen and residents from the Gulf Coast states, along with Louisiana Governor John Bel Edwards, have openly voiced their opposition to President Trump’s proposal. Indeed, Governor Edwards proclaimed that President Trump’s proposed budget for the 2018 fiscal year “robs Louisiana of financial resources promised to us for coastal restoration.” Congressman Bradley Byrne (R-AL), further exclaimed, “The GOMESA program is critical to coastal states, who assume the environmental and economic risks and provide a majority of the infrastructure and workforce for the offshore oil and gas industry.” Indeed, the people of the Gulf Coast know these risks all too well. Considering that the GOMESA revenue is to be used for coastal conservation, restoration, and hurricane protection, if President Trump’s budget proposal is approved and another BP Deepwater Horizon oil spill or Hurricane Katrina subsequently materializes, these Gulf Coast states could suffer enormous consequences.

Megan Jaynes
Megan T. Jaynes’ areas of practice include transportation defense, insurance defense, general casualty litigation, and commercial defense. Prior to joining MBLB, Megan worked for a New Orleans law firm where she gained significant experience in a wide variety of litigation practice areas, including general insurance defense, personal injury defense, mass tort defense, asbestos and benzene exposure cases, and complex commercial litigation. Having a public relations background, she is no stranger to effectively building relationships between herself and her clients. To contact Megan, please call (504) 595-3000 or direct at (504) 648-8468. She may also be reached via email at mjaynes@mblb.com.