The Magazine


Jul 5, 1999, Vol. 4, No. 40 • By ROBERT H. NELSON
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Most federal outer-continental-shelf oil and gas leases are sold to oil companies and then returned to the government without any exploration ever taking place. Despite considerable federal leasing in the Atlantic in the '70s and '80s, for example, little drilling took place, and today there are no producing wells off the Atlantic states. Yet, the Young-Dingell bill would distribute almost $ 200 million per year to New York, New Jersey, Virginia, and other East Coast states to mitigate nonexistent oil and gas "impacts." The Young-Dingell bill would allocate one quarter of the coastal funds on the basis simply of "shoreline miles" and another quarter on the basis of "coastal population," irrespective of any past or future federal oil and gas leasing activity.

Young has contrived an outer-continental-shelf impact-aid formula based on a series of heroic fictions. The result is not really coastal-impact aid at all but a new form of federal revenue sharing based on a very peculiar distribution formula, one designed simply to maximize support in Congress.

In the new era of budget surpluses, the only way to remove the apparently irresistible temptation to squander federal resources is to send them back to the taxpayers. Otherwise, expect to see lots more exercises of congressional imagination like declaring Lake Michigan part of the outer continental shelf.

Robert H. Nelson is a professor at the School of Public Affairs at the University of Maryland and senior fellow of the Competitive Enterprise Institute.