Senate hearing examines federal revenues from energy development

The U.S. Senate Energy and Natural Resources Committee held a hearing last week to examine federal revenues from energy development and efforts to share those revenues with state and local governments.

As part of the hearing, the committee heard testimony on a related bill, the Conservation of America’s Shoreline Terrain and Aquatic Life (COASTAL) Act, introduced by Sen. Bill Cassidy (R-LA). The COASTAL Act established a revenue sharing program specific to Alaska to help facilitate the infrastructure needed for responsible development.

“Congress laid the foundation for offshore revenue sharing through the passage of the Gulf of Mexico Energy Security Act back in 2006. At that time, the bill did not include Alaska. The COASTAL Act that we are considering now would establish a revenue sharing program that would include Alaska,” Sen. Lisa Murkowski (R-AK), chair of the committee, said. “Offshore revenue sharing is a matter of simple fairness. The Beaufort and Chukchi Seas and Cook Inlet are American waters by virtue of Alaska, and Alaska alone. We build the infrastructure and provide the public services that are needed for responsible development, but we also bear the impacts. Those who shoulder much of that burden, it is only right that they should share in a greater opportunity for the benefit.”

Murkowski said the bill would provide Alaska and its coastal political subsidiaries with 50 percent of the revenues from energy production in its federal Outer Continental Shelf. Programs like this would also support programs like the Land and Water Conservation Fund (LWCF).

“This may come as a surprise to some, but LWCF is one of the biggest beneficiaries of offshore energy development. Since the 1990s, nearly all revenue credited annually to LWCF has been from Outer Continental Shelf receipts,” Murkowski said. “In recent years, we have seen new ideas emerge for how to allocate the revenues that result from production, whether to address the parks maintenance backlog or to help with the recovery of wildlife. We have also seen proposals to cut off federal oil and gas production, immediately and without any consideration of the economic and fiscal consequences.”

Among the hearing’s witnesses were Mayor Harry Brower of the North Slope Borough, Alaska; Gregory Gould, the director of the Office of Natural Resources Revenue at the Department of the Interior; Chip Kline, the director of Coastal Activities for the State of Louisiana; Randall Luthi, chief energy advisory for the State of Wyoming, and Laura Comay, a specialist at the Congressional Research Service.

“Congress has already authorized resource revenue sharing throughout the United States. The Mineral Leasing Act provides for revenue sharing from onshore mineral development. The Gulf of Mexico Energy Security Act provides for revenue sharing from offshore oil and gas development,” Brower testified. “It would be unconscionable to oppose legislation that would extend offshore oil and gas revenue sharing to Alaska and provide a fair share of revenue from the development of Arctic resources to impacted coastal communities.”

The committee also heard testimony about the Public Land Renewable Energy Development Act. The bill would streamline the permitting process for renewable energy development on public lands and establish a revenue sharing mechanism to ensure local communities receive a percentage of the revenue generated by these projects.