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Bipartisan revenue sharing bill offered Alaska’s Murkowski teams with Louisiana’s Landrieu on legislation to give coastal states 37.5 percent of offshore energy revenue Wesley Loy For Petroleum News
Taking new aim at an old complaint, an Alaska senator teamed with a Louisiana colleague to introduce legislation March 20 to give coastal states a “fair share” of federal revenue generated from offshore energy development.
U.S. Sen. Lisa Murkowski, an Alaska Republican, and Sen. Mary Landrieu, a Louisiana Democrat, call their bill the Fixing America’s Inequities with Revenues Act.
The FAIR Act would put coastal states on a more equal footing with other states, the two senators said.
While interior states are allowed to keep 50 percent of oil, gas and coal royalties and other revenue generated from federal land within their borders, coastal states such as Alaska and Louisiana receive little from energy production on the outer continental shelf, the senators said.
The actual text of the bill, and a bill number, were not available to Petroleum News at press time.
According to news releases and other materials from the two senators, the FAIR Act would give 27.5 percent of all revenue from offshore energy development, including oil, gas, wind and other renewables, to coastal states. States creating a clean energy or conservation fund could collect another 10 percent, for a total of 37.5 percent.
The bill does not open any new areas for energy production.
‘Virtually nothing’ Offshore energy development impacts nearby states, and so they rightfully should receive some of the revenue, the senators said.
“Revenue sharing is critical for the coastal communities that will shoulder the increased demands on their roads, docks and other infrastructure from offshore development,” Murkowski said. “It’s only fair that these communities share in the revenues from the resources produced off their shores, regardless of whether that is oil and gas or wind and tidal energy.”
“For decades, coastal energy producing states have faced a glaring inequity in federal energy policy that allows onshore producing states to keep 50 percent of revenues, while offshore producing states, like Louisiana and Alaska, keep virtually nothing,” Landrieu said.
Unlike Alaska, Louisiana and three other Gulf of Mexico oil and gas producing states (Alabama, Mississippi and Texas) are in line to collect 37.5 percent of offshore revenue, under the Gulf of Mexico Energy Security Act of 2006. But the law won’t be fully implemented until 2017, Landrieu’s office said. The FAIR Act would accelerate payments, and gradually lift the $500 million annual revenue sharing cap for the four Gulf producing states.
Louisiana sent $5.7 billion in revenues to the federal treasury in 2011, and received $26.7 million in return, Landrieu’s office said.
Beaufort, Chukchi billions “I could have introduced an Alaska-only bill, but we have purposefully expanded this legislation to gain the support of as many members as possible,” Murkowski said. “We know that in this day and age, it’s a 60-vote world in the Senate.”
Under the FAIR Act, Alaska could rake in billions of dollars if offshore development in the Beaufort and Chukchi seas is successful, a press release from Murkowski’s office said.
“These funds would help the state and impacted coastal communities enhance emergency response capabilities and construct critical infrastructure, such as deepwater ports, airfields and docks,” the release said.
Landrieu said Louisiana needs billions to stop the loss of coastal lands and protect communities from storm surges.
In Alaska, FAIR Act revenue would be allocated among state and local governments, Murkowski said.
“The allocation method for Alaska directs 25 percent of the state’s 27.5 percent share to the communities most impacted by offshore development,” her office said. “Ninety percent of these funds would be allocated to the boroughs closest to offshore leases. Ten percent would go to boroughs that are significant staging areas for offshore development. The state would receive the remainder of the revenue. The federal government would still receive the lion’s share of revenues (62.5 percent) for deficit reduction.”
Begich’s bill Alaska’s other senator, Democrat Mark Begich, on Jan. 31 introduced a bill, S. 199, that also would give Alaska a 37.5 percent cut of offshore energy revenue, fossil or renewable.
His bill, however, would allocate the funds differently, with 25 percent going to local governments, 25 percent to Native corporations, 10 percent to tribal governments, and 40 percent to the state.
“I applaud Sens. Landrieu and Murkowski for their efforts and look forward to working together to make sure Alaska gets our fair share,” Begich said.
On March 13, Begich took exception to a March 8 letter eight of his Senate colleagues, nearly all Democrats, sent to Sen. Ron Wyden, D-Ore., and Murkowski, the chairman and ranking member of the Senate Energy Committee.
The eight senators included Robert Menendez and Frank Lautenberg of New Jersey, Bill Nelson of Florida, Barbara Boxer of California, Richard Durbin of Illinois, Benjamin Cardin of Maryland, and Patrick Leahy and independent Bernard Sanders of Vermont.
Their letter said they would vigorously oppose any effort to expand offshore oil and gas drilling into areas where it is currently prohibited. They also said, among other things, that sharing revenue with the states diverts money the federal government needs to pay down the national debt, and that passing a revenue sharing law “would be premature without reforms designed to make the offshore oil industry safer.”
“These folks just don’t like oil and gas. That’s how I read it,” Begich said of the letter.
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