737 



11 



In addition to the visible ecological damage in Louisiana wetlands, 

 other experiences in that State create concern in coastal areas facing 

 oil development for the first time. For instance, 80 percent of all invest- 

 ment in Louisiana's new manufacturing facilities between 1938 and 

 1971 took place in coastal parishes (counties), reflecting support activ- 

 ities for offshore petroleum development. A total of $5 billion was in- 

 vested in petrochemical industrial facilities in Louisiana's coastal zone 

 during those years, with over 100 major petroleum and petrochemical 

 plants placed in coastal parishes.® 



A 1973 study done by the Baton Rouge-based Gulf South Research 

 Institute, paid for with Louisiana State funds, attempted to assess the 

 net impact of all these activities on Louisiana's fiscal position during 

 1972. Comparing tax revenues from oil-related facilities with costs 

 incurred in providing public services and facilities for persons directly 

 or indirectly involved in operating them (as well as their families), 

 the study estimated that Louisiana had sustained a net loss of $38 

 million during 1972 stemming from federally licensed offshore oil and 

 gas operations. Since completion of the study, both supporters and 

 opponents of offshore oil development have cited it as evidence to 

 bolster their viewpoints. The study has served to illustrate the point 

 that States are likely to be significantly affected — economically and 

 otherwise — by Federal leases for oil exploration and production on 

 adjacent OCS lands. At the same time, it appeare that methods for 

 quantifying such effects are still at a relatively primitive stage. Critics 

 have charged that the methodology used in the Louisiana study re- 

 sulted in a serious understatement of Federal financial contributions 

 toward the provision of public facilities and services, and that the em- 

 ployment multiplier used in the study also resulted in understatement 

 of benefits. The study also fails to take into account some of the social 

 and environmental costs which do not lend themselves easily to quan- 

 tification. 



In any case, it is clear that benefits to coastal States and localities 

 from adjacent offshore development come primarily from whatever the 

 Stat-e or municipality can capture in income, sales and property taxes 

 covering corporations and individuals involved. A series of court cases, 

 culminating in early 1975 with a Supreme Court, decision in United 

 States V. 3Iaine, has determined that the Federal Government has sole 

 control over resource development beyond the 3-mile offshore jurisdic- 

 tion of the States. Consequently, under present law, the States have 

 neither a major role in decisions to develop OCS resources nor a claim 

 to the revenues they generate through lease bonuses and royalties. 



It can he expected that sparsely populated areas which are subjected 

 to rapid growth as a result of OCS oil and gas development will have 

 a particularly difficult time coping with such drastic change and gen- 

 erating sufficient revenues to match the costs. Several regions near 

 proposed offshore development — most notably Alaska, parts of New 

 England and elsewhere along the Atlantic coast — are particularly fear- 

 ful of this prospect. 



One of the first such areas to experience coastal development related 

 to offshore oil could well be Cape Charles, in coastal Noi-thampton 



" Marc .1. Hershman, "Louisiana Wotlands I'prspeotivp," Louisiana State University 

 School of Law. 



