LOUISIANA FILES SUIT TO BLOCK LEASE SALE IN GULF OF MEXICO

A federal judge in New Orleans was to decide last week whether to block a planned sale of federal oil and gas leases in the western Gulf of Mexico.

At issue was whether the Minerals Management Service would be allowed to offer for lease 4,287 blocks encompassing about 23.6 million acres on the gulf's Outer Continental Shelf in an Aug. 21 sale in New Orleans.

Louisiana filed a lawsuit Aug. 7 in U.S. district court for eastern Louisiana seeking a preliminary injunction to stop the sale.

Louisiana Gov. Charles E. (Buddy) Roemer III said the state needs federal assistance to ease adverse effects on its coastal parishes of OCS oil and gas development. Roemer said the state spends more than $100 million/year on public infrastructure in its coastal areas to support OCS oil and gas activities.

Louisiana claims OCS Lease Sale 135, if allowed to proceed as planned, would violate the Coastal Zone Management Act (CZMA) and National Environmental Policy Act because:

• MMS failed to provide enough data to show socioeconomic and environmental effects of the sale are "consistent to the maximum extent possible" with Louisiana's coastal zone management program.

• Sale 135's environmental impact statement inadequately analyzes effects of proposed activities or alternatives to the proposed sale.

Louisiana said Sale 135 would cause the loss of 2865 sq miles of the state's wetlands, reduce long term biological productivity of the state's coastal areas, and damage critical habitat of endangered species despite practical and feasible alternatives to the sale.

Roemer said the state hopes to prevent Sale 135 from occurring in a manner that ignores the need to mitigate its adverse socioeconomic and environmental effects. He charged that boombust cycles of OCS oil and gas development have "devastated" the people, businesses, and environment of Louisiana's coastal parishes.

"I firmly believe that, with a source of revenue to help us plan development in our coastal parishes to allow us to implement social, educational, and environmental programs in Louisiana, we can weather continued, large scale OCS activity," Roemer said. "But without a source of funding to ensure adequate planning and program implementation, we are sitting ducks. We are at the mercy of the world oil market."

LOUISIANA'S VIEW

Louisiana officials say they have repeatedly told the federal government of their objections to Sale 135.

In January 1991, Roemer said, he and Louisiana Department of Natural Resources (DNR)) Sec. Ron Gomez met with U.S. Interior Sec. Manuel Lujan to voice the state's need to share revenues generated by sales of OCS leases.

"We were assured at that time the federal government would give serious consideration to the provision of such impact assistance," Roemer said.

He said federal government has collected more than $35 billion in revenues from development of OCS resources, $30 billion of which was generated by OCS activities off Louisiana but none of which is shared by Louisiana.

In a letter dated Feb. 14, 1991, DNR warned Interior it would not acknowledge the consistency with Louisiana's coastal zone management program of future OCS leasing plans "unless a program of impact assistance was implemented," Roemer said.

Despite that warning, in March 1991, Interior again asked Louisiana to approve proposed Sale 135. DNR responded in May 1991 it could not approve Sale 135 because it did not meet coastal zone management requirements.

Roemer pointed out that President Bush has declared a moratorium on OCS development in other U.S. coastal areas. As a result, he said, the pace of leasing and development is accelerating in the Gulf of Mexico, which is being asked to bear the full burden of OCS oil and gas production until the next century.

Of the $450 million Interior has spent on its environmental studies program, Roemer said, only 14% went to studies in the Gulf of Mexico where 98% of OCS development has occurred.

THE OTHER SIDE

An MMS spokesman said Interior currently is sharing all the federal revenue with Louisiana the law allows.

He said MMS is proceeding as if Sale 135 will be held. "We think it's an important sale, and we're getting prepared for it."

William DuBose, National Ocean Industries Association vice-president, said, "We agree that states with oil and gas operations off their coasts should receive more money from the federal government to help offset any impacts, but Louisiana is taking the wrong approach.

"Interior and MMS cannot arbitrarily give states more money. That has to be decided by Congress. Trying to stop a lease sale for more money is not in the best interest of Louisiana or the U.S. A leasing program must be reliable. Disrupting that process to make a point about the amount of money a state is or is not receiving is wrong."

DuBose noted the Senate energy committee's omnibus energy policy bill would require the federal government to share its offshore revenues with the states.

The bill would require the government to place in a fund 37.5% of all revenue attributable to OCS leases within 200 miles of the coastline.

The fund would be distributed to states under a complex formula based on the ratio of newly issued leases off the state, current oil and production off the state, and the volume of production landed within the state.

NOIA later filed a motion to intervene in the lawsuit.

Robert Stewart, NOIA president, said, "We regret that Louisiana, in its quest for a larger share of OCS revenue, found it necessary to file this suit.

"We strongly believe that states and localities with oil and gas operations off their shores should receive some of the money generated from federal OCS operations. Unfortunately, neither the courts nor the secretary of Interior can deliver what Louisiana is seeking." Stewart said NOIA will continue to work with Congress for enactment of a bill giving coastal communities federal revenues to compensate them for the effect of offshore operations.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.