Why you should pay attention to Louisiana’s Coastal Protection and Restoration Fund Amendment this election.
This article is a part of Down-Ballot, a weeklong series highlighting state measures worth watching in the 2024 United States election.
While wind energy production in the Gulf of Mexico is still a nascent industry, Louisiana voters will soon decide whether potential royalties from offshore renewables should be spent on protecting and restoring the state’s sinking coastline.
Louisiana has lost more than 2,000 square miles of land since the 1930s, in large part because of the construction of levees along the Mississippi River meant to prevent flooding, which have blocked sand and mud carried by the river from replenishing the coast. Canals dredged through the marsh by oil and gas exploration companies and sea level rise have also contributed to the state’s land loss. As the coast has eroded, communities have retreated inland, landmarks have been wiped off the map, and the threat of hurricane storm surge has increased. Native American communities once driven to the coast by white settlers are now among the most vulnerable to storms and sea level rise. Indigenous fishing villages like Grand Bayou, Isle de Jean Charles and Pointe-au-Chien have also been left outside of the federal levee system. Their populations have dwindled as frequent hurricanes have destroyed their homes and saltwater intrusion has made it difficult to grow crops.
“We’re talking about part of the country not being here anymore because of man made environmental change,” says Charles Sutcliffe, a resilience, climate, and coastal policy specialist for the National Wildlife Federation. And energy production in the Gulf of Mexico depends on the people and ports along Louisiana’s coast, he explains.
As one potential solution, a November 5 ballot measure asks voters, “Do you support an amendment to require that federal revenues received by the state generated from Outer Continental Shelf alternative or renewable energy production be deposited into the Coastal Protection and Restoration Fund?” The Coastal Protection and Restoration Fund at the center of the measure is a trust fund that the state’s constitution says must be spent on projects in line with Louisiana’s Coastal Master Plan, a roadmap of projects aimed at protecting residents from flooding and restoring the state’s wetlands. The plan includes a $2.9 billion project to unleash the Mississippi River into degrading wetlands downriver of New Orleans and a $1.9 billion project to elevate thousands of flood-prone homes. Currently, a portion of the royalties from offshore oil and gas production is already directed to the state’s $50 billion Coastal Master Plan. If passed, the measure would also direct royalties from alternative energy production towards the same efforts.
State Rep. Joseph Orgeron introduced the Constitutional amendment in the legislature this spring. He said he’s been asked whether the measure is putting the cart before the horse, since there isn’t a federal law yet that directs the Department of the Treasury to share offshore renewable royalties with states like there is for offshore oil and gas.
“Louisiana is moving from only oil and gas to any energy,” Orgeron says. “If there are federal revenues to be received from them we would like those to also be dedicated to the Coastal Restoration Fund.”
The Gulf of Mexico Energy Security Act (GOMESA) allocates a portion of the revenue from oil and gas pulled from federal waters of the Gulf to Alabama, Louisiana, Mississippi, and Texas. Before former Senator Mary Landrieu (D-LA) pushed to get GOMESA passed in 2006, Louisiana lawmakers created state legislation to dedicate revenue from offshore oil and gas to coastal protection and restoration, Orgeron noted.
“It would have been difficult for her to pass that legislation if it was not for her state legislature the year before making this legislation,” he says. “Mary Landrieu used that to go to Congress and say that we’re not going to use it on splash parks and butterfly museums.”
According to Oregron, U.S. Senator Bill Cassidy (R-LA) is following Landriue’s footsteps with his efforts to get a slice of the royalties from offshore renewables sent to states. Sen. Cassidy introduced legislation last year that would send 37.5% of offshore wind revenue to states adjacent to offshore wind farms. The bill has bipartisan support and is expected to pass out of the Senate Energy and Natural Resources Committee next month, says Molly Block, Senator Bill Cassidy’s Communications Director. As written, the bill would also lift a cap on the amount of revenue states receive through GOMESA.
So far, Louisiana has secured about $21 billion of the $50 billion needed to construct all of the projects in its Coastal Master Plan. Gulf states have received more than $2 billion from offshore oil and gas royalties under GOMESA since 2009. But the $8 billion Louisiana received in legal settlements and fines resulting from BP’s 2010 oil spill in the Gulf has made up the lion’s share of funding for Louisiana’s flood protection and coastal restoration projects. Oil spill settlement payments to the state will end in 2031, leaving Louisiana’s delegation in search of more funds.
Royalties from offshore wind in the Gulf are unlikely to shore up the state’s funding shortfall for coastal projects. There are currently two offshore wind projects planned in Louisiana waters, and a third project further out in federal waters off the coast of Lake Charles, Louisiana. The offshore wind industry is expected to create thousands of jobs in Louisiana over the next decade. Proceeds from wind lease sales in federal waters go to the U.S. Treasury General Fund. Wind farm companies also pay the federal government annual rental fees during construction and operating fees once the projects start generating electricity, says John Filostrat, Director Of Public Affairs at the Bureau of Ocean Energy Management.
But those fees are smaller than the severance fees collected on oil and gas production in the Gulf, Orgeron notes. “There is no severance. It’s not like you’re extracting oil and gas and you’re taking something from the ground. Wind works differently because you’re returning the molecules of air on the other side of the blade,” he says. “You’re not severing anything.”
Last year, two million barrels of oil per day were produced from the federal waters of the Gulf of Mexico, generating $6 billion in federal revenue. At most, wind energy in the Gulf could produce about a tenth of the royalties that Louisiana gets from oil and gas production, Orgeron says.
Still, Sutcliffe says the state could use every penny it gets to put towards its coast, where nearly two million people call home. “I think it’s too early to know how much it’s going to produce, but right now it’s zero,” he says. “This amendment is just trying to say however that works out those dollars are dedicated to the coast.”
