A Louisiana Democrat and Alaska Republican are looking to use the lure of guaranteed federal funding for state restoration programs as a way to draw support for a new plan to give coastal states a share of offshore drilling revenue.
The promise would be embedded in new royalty sharing legislation being drafted by Sen. Mary Landrieu, D-La., and Sen. Lisa Murkowski, R-Alaska. The pair are using a bill that faltered last year as the framework for a new approach, and are poised to introduce the bill soon, Murkowski told reporters on Wednesday.
Murkowski is also working with the Senate Natural Resources Committee’s chairman, Ron Wyden, D-Ore., to find common ground on the issue. Wyden has signaled he is open to advancing a royalty bill and Murkowski said she and Wyden are in “draft negotiations …on revenue sharing and how that might come together.”
Although inland states generally claim 50 percent of the revenue from oil and gas production on federal lands within their borders, coastal states don’t have the same deal when it comes to royalties from development in federal waters near their shores. There is one exception under existing federal law, which guarantees four coastal states _ Alabama, Louisiana, Mississippi and Texas _ will be able to collect 37.5 percent of oil and gas royalty revenue on some leases beginning in 2017, capped at $500 million annually.
Landrieu and Murkowski’s plan, which is still being developed, would move that timeline up for the Gulf, while extending similar revenue sharing deals to every other coastal state. Under the working plan, other coastal states could claim 27.5 percent of offshore drilling revenues, with the option to collect an additional 10 percent for funding conservation and restoration programs.
The move could help attract senators from coastal states in the Northeast, where residents may be skeptical of offshore drilling.
Similarly, the two senators are aiming to lure support from colleagues in land-locked states by broadening their legislation so states could collect 50 percent of the revenue from renewable energy development on federal lands within their borders.
It is unclear whether they will push to end a $500 million annual cap on the revenue the four Gulf Coast states can take home.
A federal revenue sharing law could be a big windfall for coastal states with offshore energy development, including California, where current projects are ongoing, and Alaska, which could take in dollars tied to potential oil development in the Beaufort and Chukchi seas more than a decade from now.
The political division over revenue sharing typically matches the divide over offshore drilling, with foes worrying that the prospect of drilling dollars would be impossible for cash-strapped states to resist. Supporters point to the inequity between coastal and inland states when it comes to energy harvested in federal territories and stress that coastal states bear the burden and risk of what happens offshore.
Wyden’s interest in the issue has buoyed oil and offshore drilling industry advocates, who are optimistic they will see movement on the long-stalled issue.
American Petroleum Institute President Jack Gerard told reporters last week that revenue-sharing “could be an early breakthrough.”