From: Erica Werner, Associated Press
Published September 22, 2004 12:00 AM

Governors Worry Proposed Ocean Trust Fund Might Spur More Offshore Drilling

WASHINGTON — A presidential commission has modified its proposal for a trust fund that would use up to $4 billion in annual offshore oil and gas royalties to safeguard oceans and coastal areas. The change was to answer governors' fears the idea might spur more drilling off their coasts.

In its final report Monday, the U.S. Commission on Ocean Policy included language to clarify that the recommended Ocean Policy Trust Fund would not be used to change current government policy on offshore drilling.

"The sole intent of the trust fund is to ensure a dedicated source of funding for improved ocean and coastal management, including the sustainability of renewable resources," the report said. "It is not intended to either promote or discourage offshore uses authorized under existing laws, and the fund itself would not drive activities in offshore waters."

The change was one of a few minor modifications to a nearly 500-page draft report the commission issued in April. It was included after several governors, including Republican Arnold Schwarzenegger of California and Democrat John Baldacci of Maine, expressed concerns that drawing on federal royalties from offshore gas exploration could create incentives for more drilling and pumping.

"I support the establishment of an Ocean Policy Trust Fund as well as a thorough evaluation of all available funding sources and partnership opportunities," Schwarzenegger wrote to the commission. However, the letter insisted that "no incentives for additional offshore oil and gas development be created through the use of funds from these revenue sources."


The proposal for an Ocean Policy Trust Fund is among more than 250 recommendations the commission made in the first federal review of ocean policy in 35 years. By law, President Bush now has 90 days to respond to the recommendations.

The 16-member commission, chaired by former Energy Secretary James Watkins, a retired Navy admiral, delivered the report to administration officials Monday and welcomed its recommendations in a conference call with reporters.

James Connaughton, chairman of the White House Council on Environmental Quality, said the administration strongly supports the commission and would move quickly to respond to its recommendations.

Asked about the trust fund proposal, Connaughton said, "There are numerous competing proposals for those revenues as well, so we'll have to take a close look at that."

The panel spent 2.5 years studying coastal areas, the Great Lakes, and 4.4 million square miles of ocean. It issued a grim assessment, pointing to rising sea temperatures that spread viruses and kill reefs; contaminated seafood; and pollution from urban and farm runoffs that causes algae blooms harmful to ocean life.

Among recommendations were to create a new Cabinet-level National Ocean Council, reform the management of domestic fisheries, give coastal commissions and other local government bodies more authority over growth, and double the budget for ocean research.

The commission estimated the cost of its recommendations at $1.3 billion the first year, $2.4 billion the second year, and $3.2 billion annually after that.

The proposed trust fund would draw on $5 billion annually in royalties and leases that now goes to the Treasury from offshore oil and gas drilling. The commission wants to use $4 billion of that; the other $1 billion already is directed to specific purposes. The commission also recommended tapping revenues from any new offshore activities, such as wind energy projects.

Recommendations from the last ocean commission report in 1969 led to the creation of the National Oceanic and Atmospheric Administration in 1970 and coastal zone and fishery management laws in 1976.

Source: Associated Press

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