Copyright 1999 Federal News Service, Inc.
Federal News Service
JANUARY 27, 1999, WEDNESDAY
SECTION: IN THE NEWS
LENGTH:
1973 words
HEADLINE: PREPARED STATEMENT OF
JAMES I.
PALMER, JR.
EXECUTIVE DIRECTOR
MISSISSIPPI DEPARTMENT OF ENVIRONMENTAL
QUALITY
BEFORE THE SENATE COMMITTEE ON ENERGY AND NATURAL
RESOURCES
SUBJECT - SUPPORT OF S. 25, TI-IE CONSERVATION AND
REINVESTMENT ACT OF 1999
BODY:
Mr.
Chairman, my name is James I. Palmer, Jr. I submit this statement to you and the
members of the Committee in support of S. 25, the Conservation and
Reinvestment Act of 1999, and I appreciate the opportunity to address
you personally about this much needed, and long awaited, legislation.
Since
1980, I have been very much involved in the efforts of Mississippi and all other
similarly situated states to obtain our fair share of revenues from offshore oil
and gas operations in federal waters to help mitigate the onshore impacts of
these activities. As a Special Assistant Attorney General, Staff Counsel to the
Governor, Executive Director of the Mississippi Department of Environmental
Quality (which has jurisdiction over leasing state-owned lands, both onshore and
offshore, for oil and gas exploration and development), Mississippi's
representative on the Outer Continental Shelf (OCS) Policy Committee since 1987,
and both Vice-Chairman and then Chairman of this Committee over the last four
years, I have long been a strong critic of the federal government for its
failure to be fair with Mississippi and other coastal states that have to cope
with onshore impacts from offshore operations, and a strong supporter of all
legislative efforts to right this wrong.
The first, and one of the most
important, points I want to make to you is that you are not plowing new ground
here. Congressional recognition of the reality of-- and the need to fully
compensate effected coastal states for -- onshore impacts attributable to
offshore operations occurred some twenty three years ago, when Congress amended
the Coastal Zone Management Act (CZMA) by creating the Coastal Energy Impact
Program (CEIP) which was grounded in, and had the same goals of, S. 25. The idea
was sound, but the program, administered by the Department of Commerce, was
doomed from the outset because of two fatal flaws. First, and foremost, the CEIP
was not a true revenue- sharing program, because funds flowed to state and local
governments only when Congress was in the mood to approve annual appropriations
under the program. In short, the CEIP provided only periodic handouts, ignoring
the fact that onshore impacts in coastal states can't be turned on and off
according to the whim and caprice of the Congress regarding funding. These
impacts are experienced in the real, everyday world of life in our coastal
states, not the surreal world of politics in Washington.
The second fatal
flaw in the CEIP was a labyrinthine formula for distributing the appropriated
funds which was so convoluted in concept and complex in administration that it
collapsed of its own weight. Administration of the program sparked litigation
among coastal states in which I was personally involved, having authored the
document which was used by the governors of Mississippi and Louisiana in
settlement of the terribly expensive and time consuming CEIP controversy between
our two states.
As to the first flaw in the CEIP, S. 25 provides for direct
distribution of funds to coastal states and local governments by the Secretary
of the Interior, not an annual appropriation by the Congress. The states deserve
a guaranteed, permanent distribution of these revenues based on facts -- not
political temperament. As to the second flaw in the CEIP, the S. 25 revenue
distribution formula is both fair and workable. As this legislation moves
forward to passage, the Congress should make every effort to avoid creating
another situation like the CEIP in which recipient states have to go to court
just to make the program work timely and fairly.
Ultimately, after haphazard
treatment of the CEIP by both the Congress and the Executive Branch, the program
failed and was repealed in the 1990 CZMA amendments.
Reinforcing its policy
decision recognizing the reality of, and the need to compensate coastal states
for, onshore impacts associated with offshore oil and gas exploration and
development operations, Congress amended Section 8(g) of the Outer Continental
Shelf Lands Act (OCSLA) in 1986 to distribute offshore revenues to coastal
states to help offset impacts from federal OCS activities. While the main
purpose of these amendments was to compensate states for possible drainage of
oil and gas reserves from state lands, the funds may be used to mitigate other
costs, as well. The concept is sound, but the relief to the states is limited
because the Section 8(g) "zone" extends seaward only three miles from state
waters. As Mississippi's representative in the multi-state effort to resolve the
Section 8(g) dilemma through Congressional action, I can personally attest to
the success of that initiative. As with S. 25 today, the Section 8(g) battle was
fought over a single issue -- equity. Congress did the right thing, but it was
only a step in the right direction. S. 25 will complete the task of putting in
place a revenue sharing concept that has been denied the states for as long as
there has been oil and gas activity in federal waters on the OCS, and that is
simply intolerable.
After the CEIP died, President Bush directed the
Department of the Interior to develop a legislative proposal to, once again,
establish a coastal impact assistance program. It was inserted into, and then
removed from, the National Energy Policy Act of 1992. Utterly frustrated by yet
another refusal by the Congress to be fair with coastal states, the OCS Policy
Committee then stepped into the breach by formally endorsing a revenue sharing
concept somewhat like S.25 proposes today. Mr. Chairman, each member of this
Committee should carefully review the OCS Policy Committee's 1993
recommendations, which were set forth in their report entitled, "Moving Beyond
Conflict to Consensus."
The Energy and Natural Resources Committee took
notice of the OCS Policy Committee's work, and considered a bill (S. 575) during
the 104th Congress to create a coastal impact assistance program. Unfortunately,
the Committee did nothing but 'consider" -- it did not act -- because of
wrangling over how to make an impact assistance program work in light of the
constraints in the Congressional Budget Enforcement Act.
The OCS Policy
Committee's most recent actions regarding coastal impact assistance began about
four years ago. As Vice Chairman, I recommended to Chairman Paul Kelly that we
make another effort to keep this issue before the Congress. Paul readily agreed,
and he and I again worked this issue through the Committee, culminating in our
report in October, 1997,which became the launching pad for what is now.' S. 25.
As Chairman of the OCS Policy Committee when our report was finalized and
transmitted to both the Secretary of the Interior and Congressional leaders, I
can state unequivocally that the overall concept of S. 25, taking into account
the goals of each of the three titles, is unprecedented. A very large and
diverse coalition of interests, including state and local governments and
various private sector organizations, has come together to push this bill to
passage. And yes, while there is no way to avoid the inevitable nit-picking and
paranoia with which any major piece of legislation like this will meet, the
foundation of S. 25 is rock solid. All coastal states and our territories will
share revenues from offshore operations in federal waters. For producing areas,
these funds are sorely needed to mitigate very real impacts today. In areas now
under moratoria, these funds may be utilized to conduct comprehensive
environmental and economic studies, which will provide decision makers an
informed basis for future decisions regarding possible offshore activities,
consistent with the nation's energy needs.
Most importantly, as I have
already stated, the key feature of S. 25, beyond its geographic coverage and the
revenue distribution formula, is that the funding mechanism will be conformed,
generally, to that of the Section 8(g) program. Simply put, Congress will
authorize the guaranteed, permanent revenue stream and then get out of the way.
Mr. Chairman, while my principal assignment here is to remind this Committee
of the Congress' spotty history of dealing with coastal impact assistance, I
must not miss this opportunity to comment on our situation in Mississippi in
this regard. In recent years, major discoveries, principally deep gas, have
resulted in on-line production from federal OCS waters adjacent Mississippi.
Moreover, shipyards in Pascagoula, Mississippi, Senator Lott's hometown, are
making a major contribution to these activities by providing rig construction
and workovers, as well as crew boat construction. On the downstream side,
Chevron's largest refinery east of the Mississippi River is also located in
Pascagoula, and this facility processes large volumes of crude landed in Venice,
Louisiana and transmitted to the refinery via a pipeline that crosses the OCS
and state waters. Finally, Amoco has just completed a new gas processing plant
in Pascagoula, further expanding Mississippi's contribution to our offshore
industry. As you can imagine, while these activities have brought a much
appreciated boost to our coastal economy, they have also brought growing
concerns about water and wastewater infrastructure and air emissions, along with
a growing need for oil spill contingency planning and preparedness.
As is
the case with most producing states along our nation's coastline, the impact of
offshore operations reaches inland more than meets the eye. Mississippi's best
example of this is the LeTourneau facility on the Mississippi River at
Vicksburg. Now a division of Rowan, LeTourneau is constructing the world's
largest jack-up drilling rigs. The first of these mouth, state-of-the-art units
was launched last year, and work on additional rigs is in progress today. While
the first rig was deployed to the North Sea, Rowan/LeTourneau will no doubt
continue to be a major force in providing offshore drilling capabilities in the
United States, as well. Again, this new industrial activity is a major economic
asset of the Vicksburg area, but the growth issues such as water supply and
wastewater disposal, air emissions, transportation arteries, and the like have
been serious, and the revenues Mississippi will receive when the program
contemplated by S. 25 is in place will be a tremendous help to state and local
officials, as well as planners and regulators, as offshore support industries
like LeTouneau continue to grow in our state.
Because my invitation to
appear before this Committee today gave me only a very short time to prepare, I
was not able to obtain from appropriate Mississippi officials estimates on the
economic impacts associated with the onshore activities in our state that I just
described. We will continue to work with your staff to develop this information
as consideration of S. 25 continues in this Committee and elsewhere in the
Congress.
Mr. Chairman and members of the Committee, it has been my pleasure
to appear before you today and to submit this statement in support of S. 25.
This bill is good law. It rests on a history of clear -- but as yet not fully
implemented -- policy of compensating coastal states for impacts attributable to
oil and gas operations in federal waters, and it creates a rational, workable
program to distribute OCS revenues to state and local governments for use in a
variety of ways, all under a system of accountability to the Secretary of the
Interior and the Congress. Finally, S. 25 couples with this long-needed coastal
impact assistance program welcomed amendments to make the administration of the
Land and Water Conservation Fund also more flexible and permanent. Mississippi
strongly supports all three titles in S. 25, and we urge this Committee to move
the bill to final passage as quickly as possible.
END
LOAD-DATE: January 29, 1999
