The American Petroleum Institute (API) and National Ocean Industries Association welcomed an offshore revenue sharing bill proposed by Sen. Lisa Murkowski (R-Alaska) and Sen. Mary Landrieu (D-La.) Wednesday.
The senators this week introduced Fixing America's Inequality with Revenues (FAIR) Act, which is designed to ensure all energy-producing states receive a full share of the revenues they help produce while also encouraging investments in clean energy and conservation.
"The federal treasury benefits from the royalties and taxes on production in federally owned waters off Alaska's coast," said Murkowski in a statement Tuesday. "Providing a portion of that money to Alaska would help the state strengthen its emergency response capabilities and build critical infrastructure, such as airfields, deepwater ports, and docks that will help safely open the Arctic, which will further increase federal revenues."
The FAIR Act would provide up to 37.5 percent of all revenues from offshore development to coastal states, including revenues from oil and gas and the development of alternative and renewable energy resources.
Under the bill, states would automatically receive 27.5 percent of these revenues, 25 percent of which would go to the coastal communities most impacted by offshore development. States are eligible for an additional 10 percent if they establish funds to support projects relating to clean energy or conservation.
The bill also would expand revenue sharing onshore to include renewable energy production on federal lands at the same 50-percent share currently given for oil and gas production. The bulk of revenues from offshore development, 62.5 percent, would still flow to the federal government.
The legislation marks an important step towards an all-of-the-above energy policy for the United States, said API Director of Upstream & Industry Operations Erik Milito in a statement Wednesday.
"As today's successful lease sale in the Central Gulf of Mexico demonstrates, the industry is investing billions in American energy development but could do more if additional areas are opened for business," Milito commented. "Expanding access could create one million new jobs, generate $127 billion in government revenue in under a decade, and dramatically increase domestic energy production."
Allowing all U.S. coastal states to share in prospective future revenue from both traditional and renewable offshore energy activities is sound public policy, NOIA President Randall Luthi commented in a Wednesday statement. The group has long supported revenue sharing as fair and equitable treatment for coastal states supporting responsible offshore oil and gas exploration and development.
"However, steps must be taken to ensure that lease sales are actually conducted in new areas where they're currently prohibited or else the revenue is merely theoretical."
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