Dec 18 2005

SHELBY ANNOUNCES CREATION OF THE GULF COAST RECOVERY AND DISASTER PREVENTION AND ASSISTANCE FUND

WASHINGTON DC - Senator Richard Shelby, a member of the Defense Appropriations subcommittee announced conference committee approval of the fiscal year 2006 Defense Appropriations Bill. The conference report includes a provision to create the Gulf Coast Recovery and Disaster Prevention and Assistance Fund (the Fund). This new fund will provide the necessary resources required for the long-term recovery of the Gulf Coast following the devastating hurricanes experienced this year. In addition, the Fund will provide resources to affected states to aid in their efforts to prepare for future storms and assist with mitigation.

Senator Shelby said, “I believe the Gulf Coast Recovery and Disaster Prevention and Assistance Fund will go along way towards providing the necessary resources for the Gulf Coast states to recover from this year’s storms. These storms provided a clear picture of the gaps in our preparedness. In addition to assisting in the recovery efforts, the Fund will provide the necessary resources to bolster state and local officials’ ability to better plan and prepare for future disasters.”

The Gulf Coast Recovery and Disaster Prevention and Assistance Fund is a revolving fund that will be financed by proceeds generated from bonus bids and rental revenues associated with the exploration and production of oil and gas from the Arctic National Wildlife Refuge (ANWR) in Alaska. Further, revenue will be provided to affected states once production in ANWR begins and royalty payments are made to the Fund. Specifically, the state of Alabama will be entitled to a percentage of drilling royalties paid to the federal government.

Funds will be distributed by formula to Alabama, Mississippi, Louisiana, Texas, and Florida starting in fiscal year 2008. Alabama’s share of funds generated by the bonus bid and rental revenues paid to the Fund are expected to be approximately $400 million between fiscal years 2008 and 2010. In addition, the oil and gas royalties generated from production are expected to provide Alabama an additional $800 million once production begins (which is expected to begin sometime between 2012 and 2015 and continue until approximately 2045).

Finally, the Fund is also expected to receive revenue as a result of proceeds generated from the auction of radio frequency spectrum. These proceeds, it is anticipated, will provide Alabama an additional $200 million in distributions from the Fund in 2008 or 2009.

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