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Energy Panel Holds Hearing on Bipartisan Offshore Revenue Sharing Legislation

WASHINGTON, D.C. – The U.S. Senate Energy and Natural Resources Committee today heard testimony on bipartisan legislation by Sens. Lisa Murkowski (R-Alaska) and Mary Landrieu (D-La.) that would expand the federal revenue sharing program to ensure all energy producing states receive a fair share of the revenues they help generate.

The Fixing America’s Inequities with Revenues (FAIR) Act (S.1273) would bring parity to the federal revenue sharing program, both onshore and offshore. The bill extends the Outer Continental Shelf revenue sharing program to all coastal states where oil and natural gas development may occur. It also extends the current onshore and offshore revenue sharing programs to include alternative and renewable sources of energy. 

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“Revenue sharing is important for the coastal communities that will have increased demands on their infrastructure and public services from offshore development,” Murkowski said. “In Alaska, the federal government has not invested in the infrastructure necessary to support offshore development. The only pot of money available to pay for the roads, docks and other infrastructure that are needed is through expansion of the revenue sharing program.”

While onshore producing states keep about 50 percent of royalties, rents and bonus bids; offshore producing states do not receive a share of any of those revenues. The FAIR Act aims to address this inequity by authorizing up to 37.5 percent of revenues for all states with energy production off their coastlines, regardless of the type of energy produced. States that produce renewable energy on federal lands within their borders would keep 50 percent of the associated revenues, just as they currently do for traditional energy.

The bill would also gradually lift the current congressionally mandated $500 million annual cap on revenues kept by producing states along the Gulf of Mexico.

“The FAIR Act does not open any new areas for energy development, nor does it touch any areas currently under a moratorium on oil and gas development,” Murkowski said. “It simply puts a revenue sharing mechanism in place for states that want energy development off their shores or to open federal lands within their borders for alternative or renewable energy projects.”

The FAIR Act also provides states with an incentive to support clean energy projects by requiring them to set up funds in their state treasuries to support programs for alternative and renewable energy, efficiency, energy research and development, and conservation in order to receive additional revenues from offshore energy development.

“There has been a lot of discussion about the benefits that flow to coastal states and communities from offshore energy development, but not much about the impacts to these areas that results from development,” Murkowski said. “Revenue sharing is absolutely critical to fund the infrastructure needed to support offshore energy activity, emergency and oil spill preparedness and response capabilities, mitigation and restoration projects, and to meet increased demands on public services.”

Murkowski and Landrieu are committed to finding offsets for the cost of the bill to the federal treasury before moving it out of committee and seeking a vote of the full Senate.

The full text of the FAIR Act is available here.

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