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Chukchi lease sale will trigger major increase in federal grant money
The question of who gets the government revenue from oil and gas activities on Alaska’s outer continental shelf is the subject of a continuing debate that has heated up following recent industry interest in exploring the Beaufort and Chukchi seas. The OCS consists entirely of federal land, so that royalties and taxes generated outside the state’s three-mile limit go to Uncle Sam, rather than into the coffers of the state or the coastal communities.
But since offshore activities impact local communities and require onshore support, should not the federal government share some of the oil and gas revenues with the state and local governments?
On Sept. 30 the U.S. Minerals Management Service took a significant step into revenue sharing by approving the State of Alaska’s plan under the Coastal Impact Assistance Program or CAIP, an initiative that forms part of the 2005 Energy Policy Act. MMS approval of Alaska’s plan opens the way to the approval of federal grants for projects aimed at environmental remediation and protection around Alaska’s coast.
And that’s a big deal.
Under the terms of the assistance program MMS will disburse $250 million of federal funds in each federal fiscal year 2007 to 2010 among six qualifying states: Alabama, Alaska, California, Louisiana, Mississippi and Texas. Allocation of funds between those states will depend on the relative amount of OCS revenue generated offshore of each state, but will be subject to a per-state minimum of 1 percent of total funds.
Chukchi sale For Alaska the funding for 2007 and 2008 will amount to the minimum allocation of $2.5 million. But because the bumper Chukchi Sea lease sale that MMS held in February 2008 generated more than $2.6 billion in federal OCS revenues, that sale will have a significant impact on Alaska’s future allocation, said MMS Director Randall Luthi in Anchorage on Oct. 16 during the ceremony officially announcing approval of the Alaska plan.
“We expect the funding to Alaska to rise dramatically to approximately between $30 million and $40 million each year for 2009 and 2010,” Luthi said.
The release of funds within the program requires that a state submits a CAIP implementation plan and that MMS approves the plan — Alaska is the second of the six qualifying states to receive plan approval.
“It’s a great step. … I look forward to continuing this partnership, a partnership with the State of Alaska, with the local communities … as well as the oil and gas industry. All will benefit in the long term,” Luthi said.
State support Tom Irwin, commissioner of the Alaska Department of Natural Resources, said that the state supports responsible offshore oil and gas development, while also protecting natural resources and the users of those natural resources.
“I have faith in the leasing and permitting programs and process, and how the state and MMS both address concerns,” Irwin said. “… The Alaska CIAP plan goal is to protect Alaska’s coastal areas through wise management of resource development.”
And the $2.5 million that will go to the state in 2007 and 2008 is a “huge number” that will fund numerous projects around the state, Irwin said.
MMS will allocate 65 percent of the Alaska funding to the state and 35 percent of the funding to the coastal boroughs of Anchorage, Bristol Bay, Kenai Peninsula, Kodiak Island, Lake & Peninsula, Matanuska-Susitna, North Slope and Northwest Arctic. Distribution of funds between the boroughs depends on a formula involving the proportion of the Alaska coastal community in each borough, the length of each borough’s coastline and an allocation of 50 percent of the funding to the two boroughs closest to a leased OCS tract.
The upshot of the funding formula is that the North Slope Borough and the Northwest Alaska Borough between them will receive more than 50 percent of the borough funds, with Anchorage receiving 16 percent of the funds. The other boroughs are entitled to smaller amounts.
Solicited projects In May 2007 Alaska’s Division of Coastal and Ocean Management started soliciting project proposals for grants from the 2007 and 2008 CIAP funding — the state and all of the boroughs except Bristol Bay submitted projects (Bristol Bay is entitled to less than 1 percent of the total borough funding and determined that its fund allocation was too small to warrant the grant application effort).
Projects had to fit within the CIAP mandate that funds must be used for certain environmental activities such as the conservation, protection or restoration of coastal areas; mitigation of damage to wildlife; the implementation of a federally mandated conservation plan; or the mitigation of OCS activities through onshore infrastructure.
And DCOM evaluated projects submitted for the Alaska plan using four criteria:
• the extent to which the project meets the goal and objectives of the Alaska plan;
• the extent to which the project addresses immediate concerns;
• the clarity with which project deliverables are defined; and
• the extent to which the program is dependent on CIAP funding.
DCOM recommendations for project funding went to the Governor’s Ocean Policy Subcabinet for final project ranking and have now been incorporated into the state CIAP plan.
On Oct. 16 MMS posted the CIAP Alaska grant program on the federal www.grants.gov Web site, so that projects can start applying for grant money.
Increased funding Because of the major increase in Alaska CIAP funding for 2009 and 2010, DCOM is soliciting for additional projects to be funded with money from those years, with project proposals due by mid January. DCOM will revise the Alaska plan to reflect the higher funding levels and the additional projects.
The upshot of the project ranking process for projects to be funded from 2007-08 money was the acceptance of 39 tier one projects that will likely consume all of the available funding. The state has lined up 12 additional tier two projects to be funded if money becomes available as a result of any tier one projects being cancelled or deferred.
The projects encompass a wide range of activities.
The state, for example, has proposed two projects to assist with the relocation of the village of Newtok in the Yukon Delta. The state has also proposed some offshore monitoring and measurement studies, including measurements in the landfast ice zone of the Beaufort Sea; the hydro-acoustic monitoring of ambient noise and marine mammals in the Chukchi Sea; and the monitoring of stellar sea lions at remote sites in the Bering Sea.
North Slope Borough projects include an assessment of mitigation measures to reduce the impact of the changing Arctic environment on marine mammals; the formulation of plans to protect archaeological and cultural sites from coastal erosion; and the implementation and enhancement of borough permitting activities.
The Northwest Arctic Borough has put forward projects that include the protection of coastal areas from the effects of waste management, from the impact of sustainable tourism and from marine debris.
The Municipality of Anchorage wants to conduct a four-year project to restore natural habitat around creeks in Anchorage.
—Alan Bailey
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