Senate rejects OCS revenue-sharing extension

The US Senate rejected an effort on to extend federal Outer Continental Shelf revenue sharing beyond the US Gulf Coast to other coastal states and communities. The vote was 61-36.

April 3, 2009

3 min read

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Apr. 3 -- The US Senate rejected an effort on to extend federal Outer Continental Shelf revenue sharing beyond the US Gulf Coast to other coastal states and communities. The vote was 61-36.

The vote on the proposed amendment to the fiscal 2010 budget, which the Senate subsequently passed, 55-43, indicated that senators weren't ready to adopt the revenue-sharing formula for future federal OCS oil and gas activity outside the Gulf of Mexico.

"I have always found the thought of taking revenue from the OCS, which is owned by all Americans and which is not part of any state, and dedicated the revenue to just a handful of states to be unfair," Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) said following the amendment's defeat. "To make additional OCS revenue sharing budget-neutral, we would have to either raise taxes on all Americans or cut worthwhile programs. That makes this proposal even more unpalatable to me and my colleagues."

Sen. Mary L. Landrieu (D-La.), who sponsored the amendment with Sen. Mark Begich (D-Alas.), said it was important for OCS revenue to be shared equitably and fairly not only with the US Treasury but also with states and local governments which provide operating bases for offshore oil and gas development.

She said the amendment would set aside 50% of future OCS revenue in the manner established for Texas, Louisiana, Mississippi, and Alabama under the 2006 Gulf of Mexico Energy Security Act. The law mandated that some of the money would go to the Land and Water Conservation Fund and to energy research as well as to state and local governments directly feeling OCS development impacts.

"This amendment does not say where we are going to drill. It does not authorize drilling. It says when those decisions are made that the revenue should be shared with state and local governments appropriately to enter into strong, reliable, and mutually beneficial partnerships for increased drilling domestically," Landrieu said.

But Senate Finance Committee Chairman Max Baucus (D-Mont.) said the proposal would have major consequences for all states. "A very small number, a handful, will get a windfall. All of the rest of the states will have money raised from mineral leasing royalties not go to them at all," he said. The proposed amendment also would set the stage for a $110 billion tax increase because it was a revenue-neutral provision requiring an offset for money paid to coastal states, he said.

Contact Nick Snow at [email protected].