Senators Revamp Offshore Revenue Sharing Plan to Ease Budget Impact (CQ)

A pair of senators introduced new legislation Wednesday revamping their proposal to boost the revenue from offshore drilling that is shared with coastal states, in an attempt to minimize the bill’s budgetary impact.

Like an earlier version (S 630), the draft legislation sponsored by Sens. Mary L. Landrieu, D-La., and Lisa Murkowski, R-Alaska, would direct as much as 37.5 percent of the revenue from offshore energy production in federal waters — both fossil fuel and renewable — to the coffers of coastal states. But the new version contains several provisions clarifying when and where the new regime would apply.

The bill would explicitly exclude from the new program areas of the Gulf of Mexico already scheduled to begin revenue sharing from oil and gas drilling in fiscal 2017. Under the bill, other coastal states would qualify for 27.5 percent of the energy production royalties and leasing fees and could earn an additional 10 percent if they set up funding mechanisms to support conservation or clean-energy research.

An aide to Landrieu said staff could not figure out a way to create a new revenue-sharing system without dismantling the Gulf-specific regime established in a 2006 law (PL 109-432).

The bill also would not apply to leases in place before the current system was enacted.

“That itself should help keep things down,” the aide said, referring to the bill’s price tag.

Landrieu and Murkowski have worked behind the scenes with the Interior Department in the months since they introduced the first bill to tighten the legislative language so it could better address concerns about costs and workability.


Congressional aides said the Senate Energy and Natural Resources Committee will hold a hearing on the legislation July 23. Both senators serve on that panel and Murkoswki is the ranking Republican.


Funding for the two offshore regulatory agencies — the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement — derived from Outer Continental Shelf rental rates would not be subject to the sharing formula, according to a Landrieu aide.


“We don’t want to take that back,” the aide said.

The new bill also explicitly leaves renewable energy projects within three nautical miles of shore under the state’s control. Current law already grants states ownership of the land and resources within that area.

Like the earlier version, the revised bill would gradually lift the $500 million annual cap on receipts that may be shared with gulf states and begin revenue sharing now slated to begin in fiscal 2017 three years earlier.

But it would clarify that the 12.5 percent of the revenue shared with the Land and Water Conservation Fund is still subject to that ceiling, the Landrieu aide said, meaning the fund would be guaranteed a maximum of $62.5 million per year from energy produced in the Gulf.

“[The fund] doesn’t get anything new out of this bill as currently drafted,” the aide said, noting that the provision could change as senators continue to negotiate the measure’s substance.

The bill’s cost remains uncertain, though the Landrieu aide said staff expects to have an informal Congressional Budget Office score by the time the energy panel holds its hearing.

Source: By Lauren Gardner, CQ Roll Call