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The Louisiana Coast: Last Call
Mon August 5, 2013
The Louisiana Coast: Last Call — Funding The Master Plan
When Louisiana officials unveiled the $50-billion Master Plan for the Coast, a 50-year program that could prevent most of southeast Louisiana from sinking under the Gulf by the end of the century as predicted, they knew one of their most important priorities would be getting reliable, long-term funding through Congress.
While acknowledging $50 billion isn’t a small sum, they felt once Congress knew what was at stake the money would flow. After all, what would the nation do if it lost the infrastructure protecting 90 percent of its domestic energy supply, 50 percent of its refining capacity, and a port vital to the economies of 32 states. And that’s just what Louisiana’s coast provides.
But two years later, the only eyes that have been opened belong to state officials and the national green groups helping them.
In the words of John Barry, the author and member of the state’s Coastal Protection and Restoration Authority, when it comes to help from Congress, Louisiana can forget about it.
“Given the fiscal situation in Washington, it’s just not realistic to expect any significant help from that area — from the federal government — and the fact remains that the Tea Party is against spending money, and I don’t think they look kindly in general on spending money down here,” Barry says. “Short term we’re okay. Medium term, we’re probably okay. It’s the longer term, ten years out and beyond that, that I think are the biggest concerns.”
That short- and mid-term outlook is good for two reasons: Better coordination of coastal agencies on the part of the CPRA; and the largest oil spill in the nation’s history, the Deepwater Horizon disaster of 2010.
In fact that disaster’s ultimate long-term impact on the coast may end up being salvation, not destruction.
The state has already received $1.4 billion from criminal fines BP agreed to, money that can only be used for river diversions and barrier islands restorations.
Still to come are two other pots of money from the spill. The first will be from fines for the company’s violation of the Clean Water Act, an amount currently being litigated in federal court.
That sum, estimated to be anywhere between $10 and $17 billion, will be divided among the five Gulf states under provisions of the RESTORE Act.
Experts on the law say Louisiana could see direct payments of anywhere between $700 million to $5 billion, but could also benefit from billions more being spent on its coast through shares going to federal agencies that will work on Gulf restoration.
The third pot will be from what is called the Natural Resources Damage Assessment, which basically counts up the damage done to everything from marsh grass to fish and presents a bill to the responsible party. Estimates on this payment range up to $5 billion to Louisiana.
If the best-case scenarios work out for Louisiana, the CPRA could be looking at a windfall of $10 to $12 billion.
And, beginning in 2017, the state will start receiving about $200 million a year from offshore energy production royalties under the Gulf of Mexico Energy Security Act — GOMESA.
That’s a lot of money, but still well short of the $50 billion needed. More importantly, it doesn’t reach the level of reliable long-term funding the CPRA says is important.
Reliable and long-term funding are key, because the projects in the Master Plan can’t be thrown together at the last minute; they require years of careful research, design and planning. If funding shortages cause the schedule outlined in the Master Plan to be broken, projects may not just get postponed, they could be cancelled, because every year that slips by the areas that need to be rebuilt grow wider and deeper — eventually becoming too big to fix. And that means the Gulf will take an even larger bite out of the state.
“No one is under any illusion that we have funded the plan, or that we should be able to count on that money,” says David Muth of the National Wildlife Federation. “Part of what we have to do is to continue to make the case that the money has to be found. You know, one of the reasons that national environmental organizations are here is because we believe that it’s critical that that investment be made for coastal Louisiana.”
The best ideas to surface for closing that gap both involve the oil industry.
Louisiana’s congressional delegation is working to gather allies among other coastal states to raise the annual $500 billion cap on GOMESA. They’d like to raise that to 37 percent of each year’s total.
This would cost the oil industry nothing, since it doesn’t raise the excise taxes they pay the federal government, it just changes they way they are spent.
Opposition will come from non-coastal states, because that will reduce the share of the money from royalties that goes into the general fund.
Another idea being talked about is an old one: Having Louisiana place a fee on oil and gas transported through the state. The oil industry has always opposed that idea because it would an added expense for them.
But, unlike past attempts to push such a measure through the Legislature, this time the oil industry may have an incentive to tax itself.
“You have an industry that knows that this is not just a threat to wildlife, and it’s not just a threat to small coastal communities, it’s a threat to their very infrastructure,” says Muth. “And it’s not just the infrastructure, it’s not just the wellheads and the pipelines, but eventually it’s the entire refinery corridor. We’re talking about the possibility that huge refineries will have to relocated because they’re no longer sustainable.”
And recently, a new but long-awaited funding source proposal has become a reality: Suing the oil and gas industry for the damage they did to the wetlands. The Southeast Louisiana Flood Protection Authority – East filed an historic suit in July, claiming the loss of wetlands increased storm surge, which makes their job of protecting citizens more expensive. Not surprisingly, many of the state’s political leaders, staunch friends of oil and gas, have opposed that effort.
But if the suit goes forward and the oil companies see they may be on the hook for tens of billions of dollars, that could open the door for all sorts of cooperation, including a Louisiana excise tax on production and transport.
Coastal advocates know finding that financial solution can’t be put off, even with all those windfalls coming down the pipeline from BP. The final tally from those settlements could be well less than the best-case scenario. And even if they match optimistic estimates, they won’t stop the state from sinking or the Gulf from rising.
There are no cures for those events. There’s just a plan that could allow the state to adapt to the changes so folks can still live here in the next century — and that plan costs $50 billion the state doesn’t have yet.
Support for The Louisiana Coast: Last Call comes from the Greater New Orleans Foundation, an organization that addresses the challenges facing people who live and work in the coastal communities of Southeast Louisiana.
The Louisiana Coast: Last Call is written and reported by Bob Marshall of The Lens, and produced by Fred Kasten.