Offshore revenue sharing bill filed

U.S. Sen. Mary Landrieu, D-La., introduced her new FAIR Act bill on Wednesday to expedite and increase the revenue sharing of offshore oil-and-gas production with Louisiana and other coastal states.

The bipartisan Fixing America’s Inequity with Revenues Act is cosponsored with U.S. Sen. Lisa Murkowski, R-Alaska, and also includes new revenue sharing for alternative energy production both offshore and on federal lands. Unlike Landrieu’s previous legislative efforts, the new bill excludes the expansion of offshore oil-and-gas drilling in order to give it a more viable chance of passing the Democratic-led Senate.

The bill is introduced at a time when the chairman of the Senate Energy and Natural Resources Committee, Sen. Ron Wyden, D-Ore., has expressed a greater interest in finding a national solution to state revenue sharing for offshore energy production.

“The purpose of this bill is to bring justice to coastal states and to create an opportunity for all states to move to cleaner alternative energy by better using the revenues that come from our fossil fuels,” Landrieu said. “With the fuels of the last century, we’re trying to build a bridge I think to the next century.”

Since 1920, interior states have kept 50 percent of revenues from all oil, gas and coal produced on federal lands. However, energy production offshore of the Gulf Coast states has generated $211 billion in federal revenues, while the states have received very little.

In 2011, for instance, energy production off of Louisiana’s coast generated $5.7 billion in federal revenues with $26.7 million going back to the state. But Wyoming generated $2.1 billion in energy production revenues on federal lands and got $995 million back.

The argument is that coastal states should benefit more because they take nearly as much economic and environmental risk with offshore production, such as the 2010 BP oil tragedy, as the interior states do with production on federal lands.

Critics though contend that more state revenue sharing will deplete federal revenues and only motivate more offshore drilling.

Earlier this month, eight Senate Democrats sent a letter to Wyden asking him to oppose such revenue-sharing plans.

“Passing a law that would allow for revenue sharing would be premature without reforms designed to make the offshore oil industry safer,” the eight Democrats wrote.

“This is going to be very rigorous debate,” Landrieu said Wednesday. “We do not expect the sledding on this to be easy, to borrow an Alaska term.”

The FAIR Act would send 37.5 percent of offshore energy production revenues, including offshore wind and wave energy, to the states. But 27.5 percent would be received if the participating states refuse to opt into state-supported funds to support clean energy and conservation projects. The legislation also would give 50 percent of the federal revenues to the states for renewable and alternative energy production on federal lands.

The FAIR Act is intended to speed up Landrieu’s Gulf of Mexico Energy Security Act which became law in 2006 but does not fully kick in until 2017.

That law would allow Louisiana to share in the 37.5 percent royalty that the federal government receives from new drilling in 8.3 million acres in the Gulf of Mexico. Louisiana is expected to receive close to half of the funds, with the rest going to Texas, Mississippi and Alabama.

Because the offshore drilling revenue sharing is capped at $500 million a year for the four states, rough estimates show Louisiana starting with as much as $100 million in 2017, and then growing from there. But much of that depends on the amounts of future offshore oil-and-gas drilling off Louisiana’s coastline.

The FAIR Act would remove the $500 million cap and move the timeline up from 2017 to 2013.

The legislation could butt heads with President Barack Obama’s proposal last week to create a new “Energy Security Trust” to fund research and development for alternative energies and more efficient fuels. Landrieu previously criticized the proposal because it involves funding the $2 billion, 10-year trust by using royalty revenues from offshore oil-and-gas drilling in the Gulf of Mexico and beyond.

Landrieu said Obama’s proposal “could be complementary to our idea” but that it must be tweaked.

“In the White House proposal, there is no security for the Gulf Coast,” Landrieu said. “Until there is security for the Gulf Coast, I can’t be supportive of basically using money produced by Gulf Coast states for everybody else’s security and leaving us sinking into the ocean.”