Louisiana Gov. Bobby Jindal proposed using the state's royalties from offshore oil and gas drilling (OCS) revenues to pay Louisiana's $1.8 billion share of future federal levee improvements.

But at a Congressional tour of New Orleans this week, U.S. House Speaker Nancy Pelosi rejected Jindal's offer to use future OCS revenues, saying that rather than tapping money already earmarked for restoring the state's fragile coast, she would seek to "find another way" to eliminate the expensive levee burden entirely. As the Times Picayune reported, under Jindal's proposal:

• Washington would keep future OCS revenues until the $1.8 billion was paid off.
• The arrangement would cost the state about $20 million a year until 2017, and about $600 million or more each year after 2017.

What's the story behind Jindal's sacrifice of coastal reconstruction funds? Last month Facing South reported on the supplemental Iraq war spending package passed by Congress and signed by President Bush last month. It included $5.8 billion to build southeast Louisiana's flood-control structures to 100-year storm levels by 2011. But the House dropped a Senate-passed provision that would have given Louisiana the 30 years it wanted to pay its share of the levee costs. The bill increased the state's share of the cost by $200 million and allowed just three years to pay it off.

Jindal has acknowledged that the federal government's requirement that Louisiana pay its $1.8 billion share of the Army Corps of Engineers flood protection over three years would undercut critical work on coastal wetlands restoration, something for which the state already has dedicated $500 million. According to the Times Picayune:


Jindal said he never understood why the White House wanted to increase the state's cost-share from its pre-Katrina level, nor why Louisiana was not granted a longer period to pay. Time extensions were granted to California and Nevada following disasters.

Some local leaders are arguing that Louisiana should not be penalized and forced to reimburse the federal government any money for levee improvements, pointing out the unfairness of the policy and the impact upon Louisiana's ability to rebuild.

Majority Whip James Clyburn, D-S.C., called on Jindal to push Bush to grant a "wholesale waiver" for the flood projects. New Orleans Mayor Ray Nagin expressed a similar sentiment, arguing that the state and local governments shouldn't have to pay anything for the levee work.

"While I support the governor's compromise position on federal funding for this protection and appreciate his advocacy, I believe that this city and this region deserve 100 percent federal funding for this flood protection system," Nagin told the Times Picayune.

(Levee construction photo by FEMA)