TE10043 — Issues and Legislation Related to Energy Development on Federal Land

Chairman Murkowski, Ranking Member Manchin, and Members of the Committee, good morning. The Congressional Research Service (CRS) appreciates the opportunity to testify about the legislation under discussion today and about revenue sharing from offshore and onshore energy development on federal lands. My name is Laura Comay, and I am a Specialist in Natural Resources Policy for CRS. The focus of my testimony, as requested by the committee, is on the revenue-sharing provisions of S. 2418 (related to offshore oil and gas development in the Gulf of Mexico and Alaska) and the revenue-sharing provisions of S. 2666 (related to solar and wind energy development on onshore federal lands). In accordance with our enabling statutes, CRS takes no position and makes no recommendations on these bills or on other legislative or policy matters. My testimony draws on my own area of specialization at CRS—federal management of offshore energy activities on the U.S. outer continental shelf—and on the input of other CRS colleagues who cover onshore energy development and broader energy policy issues. S. 2418, the Conservation of America’s Shoreline Terrain and Aquatic Life Act, would make changes to offshore oil and gas revenue distribution for two regions of the U.S. outer continental shelf (OCS), the Gulf of Mexico region and the Alaska region. The collection and distribution of federal revenues from offshore oil and gas activities are governed by several laws. The Outer Continental Shelf Lands Act (OCS Lands Act, 43 U.S.C. §§1331-1356b), which applies broadly throughout the OCS, authorizes the Department of the Interior (DOI) to collect bonus bids, rents, royalties, and other fees or payments from offshore oil and gas leasing. Under this law, revenues generated from projects located within 3 nautical miles of state waters are shared with coastal states at a rate of 27% (a provision sometimes referred to as “Section 8(g)” revenue sharing based on its placement in the law). Other than Section 8(g) revenue sharing, the OCS Lands Act directs that all federal revenues from offshore leasing be deposited to the U.S. Treasury as miscellaneous receipts. Two subsequent laws specified certain dispositions of the offshore revenues that go to the U.S. Treasury under the OCS Lands Act. First, the Land and Water Conservation Fund Act (LWCF Act, 54 U.S.C. §200302) directed that up to $900 million annually in offshore oil and gas revenues be deposited into the Land and Water Conservation Fund (LWCF) for purposes including federal land acquisition and grants to states for outdoor recreation. Second, the National Historic Preservation Act (NHPA; 54 U.S.C. §303102) provided for annual deposits of $150 million from offshore oil and gas revenues to the Historic Preservation Fund (HPF) to carry out the act’s historic preservation purposes. In addition, a more recent statute, the Gulf of Mexico Energy Security Act of 2006 (GOMESA, P.L. 109-432, 43 U.S.C. §1331 note), established a new state revenue-sharing framework to operate alongside the Section 8(g) revenue sharing. GOMESA provided for revenues from specified leases in the Gulf (outside the Section 8(g) area) to be shared with the states of Alabama, Louisiana, Mississippi, and Texas at a rate of 37.5%, as well as with the state grant program funded by the LWCF at a rate of 12.5%.

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