S-2418-116
Placed on Senate Legislative Calendar under General Orders. Calendar No. 430.
Sponsored by Bill Cassidy (R-LA)
What it does
The COASTAL Act would change how the federal government shares revenues from oil and gas leasing on the Gulf of Mexico and Alaska Outer Continental Shelf (OCS). It would increase the share of those revenues going to Gulf Coast states (Alabama, Louisiana, Mississippi, and Texas), remove the cap on how much those states can receive, shield those payments from automatic federal spending cuts (sequestration), direct Alaska OCS revenues to Alaska for specific uses including wildlife and natural resource damage mitigation, and eliminate the 2% administrative fee the federal government currently deducts from each state's share.
Who benefits
Gulf Coast state governments (Alabama, Louisiana, Mississippi, Texas), which would receive larger and uncapped shares of federal oil and gas lease revenues. Alaska's state government, which would gain a new dedicated revenue stream from Alaska OCS energy development. Coastal communities and wildlife programs in those states that could receive funding for natural resource mitigation. Oil and gas companies operating on the OCS may benefit indirectly if increased state revenue sharing reduces state-level opposition to offshore drilling.
Who is hurt
The federal Treasury, which would retain a smaller share of OCS lease revenues currently used for general federal spending. Taxpayers broadly, to the extent reduced federal revenues must be offset elsewhere or contribute to deficits. Non-coastal states, which currently benefit from federal OCS revenues flowing into the general fund and receive no direct share under this bill. Federal programs subject to sequestration that compete for limited budget resources, since exempting these payments could shift sequestration cuts onto other programs.
Supporters argue
Supporters argue that Gulf Coast and Alaska communities bear the direct environmental, infrastructure, and public safety burdens of offshore energy production — including oil spill risk, coastal erosion accelerated by pipeline and drilling activity, and wear on local roads and ports — yet receive a disproportionately small share of the revenues that production generates. They contend that removing the revenue cap and the sequestration exemption would give these states stable, predictable funding to invest in coastal restoration, wildlife protection, and community resilience. Supporters also argue that eliminating the 2% administrative fee returns money that rightfully belongs to states under the existing revenue-sharing framework, and that directing Alaska OCS revenues specifically toward fish, wildlife, and natural resource mitigation ensures that energy development dollars are reinvested in the ecosystems most affected by that development.
Opponents argue
Opponents argue that OCS lease revenues are collected on federal public lands owned by all Americans, and that redirecting a larger share to a handful of states reduces funding available for national priorities — including deficit reduction, conservation programs, and services that benefit all taxpayers. They contend that removing the revenue cap and sequestration exemption creates a privileged class of state payments that are insulated from the budget discipline applied to other federal spending, setting a precedent that could be exploited by other states seeking similar carve-outs. Opponents also argue that the bill effectively subsidizes fossil fuel production by making it more financially attractive to coastal states, potentially undermining federal climate and conservation goals, and that the benefits flow primarily to state governments and energy-producing industries rather than directly to affected residents or ecosystems.
Constitutional context
OCS revenue sharing rests on Congress's authority over federal property under the Property Clause (Art. IV, Sec. 3) and its broad Commerce Clause powers over navigable waters and natural resources. The existing framework — the Gulf of Mexico Energy Security Act (GOMESA, 2006) — has not faced significant constitutional challenge. The Tenth Amendment is tangentially relevant: because this bill provides funding to states rather than directing state action, it avoids anti-commandeering concerns established in New York v. United States (1992) and Murphy v. NCAA (2018). The sequestration exemption implicates congressional budget authority under the Appropriations Clause (Art. I, Sec. 9). Post-Loper Bright (2024) and West Virginia v. EPA (2022) scrutiny of agency authority is less directly relevant here, as the bill modifies a statutory revenue-sharing formula rather than delegating broad regulatory power to an agency.
Checks and balances
The bill shifts fiscal authority from the federal executive branch (which controls sequestration implementation) to Congress, by statutorily exempting specific payments from the automatic spending-cut process. It also reduces executive branch discretion over OCS revenue allocation by locking in a higher state share and eliminating the administrative fee by statute. State governments gain increased and more stable revenue streams, strengthening their fiscal position relative to the federal government in the management of OCS-adjacent resources.
Historical precedent
The Gulf of Mexico Energy Security Act of 2006 (GOMESA) established the existing revenue-sharing framework this bill would modify, allocating a share of Gulf OCS revenues to Alabama, Louisiana, Mississippi, and Texas, as well as to the Land and Water Conservation Fund. The Mineral Leasing Act of 1920 established the broader precedent of sharing federal mineral revenues with states where extraction occurs (typically 50% to states for onshore production), which this bill partially mirrors for offshore contexts.