S. 3110, American Energy and Conservation Act
Background: Senator Cassidy introduced S. 3110, the American Energy and Conservation Act of 2016, on June 29.
Floor Situation: On November 17, the Senate is expected to vote on cloture on the motion to proceed to S. 3110. Senator McConnell filed cloture on the motion to proceed to S. 3110 on November 15.
Executive Summary: S. 3110 incentivizes American energy production through revenue sharing with the states, permitting reforms for renewable energy projects on federal lands, and increased investment in the payment in lieu of taxes program, the National Park Service’s deferred maintenance backlog, access to public lands for recreational activities like hunting and fishing, and other priorities.
Overview of the Issue
States that host energy production onshore and that adjoin energy production offshore bear additional costs associated with infrastructure, increased traffic, environmental impacts, and additional demands on state and local resources. To balance these costs, these states seek greater revenue sharing with the federal government. The American people benefit from energy production through enhanced energy security, economic opportunity, and geopolitical leverage.
Considerations on the Bill
According to a January 19, 2015, Congressional Research Service report, the offshore oil and gas revenue system has provided the Treasury Department with 80 percent or more annually of its total energy and mineral leasing revenue stream over the past several fiscal years. Coastal states, by contrast, have consistently received less than 2 percent of the total revenue generated from federal offshore leases. Their allocation consists of 27 percent of all offshore revenues generated within three miles of a state’s coastal boundary, as provided for by the Outer Continental Shelf Act.
Coastal state allocations were slightly modified in 2006 by the Gulf of Mexico Energy Security Act, which provides Alabama, Louisiana, Mississippi, and Texas with 37.5 percent of revenue generated from selected leases off their costs. A small amount of GOMESA revenues have been allocated while the vast majority are scheduled to be disbursed beginning in 2017. Current law imposes an annual cap of $500 million that can be awarded to these states.
Offshore oil and gas revenues are also statutorily allocated to the Land and Water Conservation Fund, the National Historic Preservation Fund, and the Treasury.
According to the CRS report, proponents of increased revenue sharing argue that states supporting oil and gas development off their coasts should receive a greater share of offshore oil and gas revenues because they are subject to significant impacts on their infrastructure and environment. Currently, interior states receive 50 percent of royalty revenue derived from public lands and are not subject to a revenue sharing cap. Opponents of increased revenue sharing argue that the revenue should be used for the general public good, not necessarily for the benefit of any particular state.
In January 2015, the Obama administration announced its Draft 2017 – 2022 Outer Continental Shelf Oil and Gas Leasing Program, which provided for leases sales in the Gulf of Mexico, Alaska, and mid-Atlantic Outer Continental Shelf. S. 3110 provides for additional revenue sharing for Gulf states, and future revenue sharing for mid-Atlantic states and Alaska.
Notable Bill Provisions
Title I – Onshore and Offshore Energy Production Reforms
Section 101 – Disposition of Outer Continental Shelf revenues to Gulf producing states
Current law stipulates that 50 percent of all rentals, royalties, bonus bids, and other outer Continental Shelf revenues received by the U.S. from offshore oil and gas leases for the 181 Area, the 181 South Area, and the 2002-2007 planning areas in the Gulf of Mexico shall be deposited into the U.S. Treasury; 12.5 percent shall be deposited into the Land and Water Conservation Fund; and 37.5 percent shall be shared among qualified Gulf-producing states – Texas, Louisiana, Mississippi, and Alabama. This section redirects 3 percent of OCS revenues currently deposited into the LWCF to projects that secure recreational public access to federal land for hunting, fishing, and other recreational purposes.
Current law stipulates that revenue shared among Gulf states and deposited into the LWCF shall not exceed $500 million for each of fiscal years 2017 through 2055. This section maintains this revenue sharing cap for each of fiscal years 2017 through 2026; lifts it to $835 million for each of fiscal years 2027 through 2036; and lifts it to $705 million for each of fiscal years 2037 through 2055.
Section 102 – Distribution of revenue to Alaska
This section provides that for all rentals, royalties, bonus bids, and other OCS revenues received by the U.S. from offshore oil and gas leases for the Alaska OCS region for fiscal year 2027 and each fiscal year thereafter:
- 50 percent shall be deposited into the Treasury’s general fund;
- 6.25 percent shall be directed to the Payment in Lieu of Taxes program established by section 6902 of title 31, U.S. Code;
- 6.25 percent shall be directed to the Tribal Resilience Program established by section 106(a) of this title;
- 28 percent shall be deposited in a special Treasury account to be distributed by the secretary of state;
- 7.5 percent shall be deposited in a special Treasury account to be distributed to coastal political subdivisions; and
- 2 percent shall be deposited in the general account of the Denali Commission.
Section 103 – Disposition of revenues to Atlantic states
This section provides that of all rentals, royalties, bonus bids, and other OCS revenues received by the U.S. from offshore oil and gas leases for the Atlantic planning region for fiscal year 2027 and each fiscal year thereafter:
- 50 percent shall be deposited into the Treasury’s general fund;
- 12.5 percent shall be allocated to Energy Department programs for energy efficiency, renewable energy, and nuclear energy; to the National Park Service Critical Maintenance and Revitalization Conservation Fund; and to the Transportation Department’s Transportation Investment Generating Economic Recovery grant program; and
- 37.5 shall be deposited into a special Treasury account for distribution to Virginia, North Carolina, South Carolina, and Georgia. Of the amounts received, each state is authorized to use:
- 10 percent to enhance state land and water conservation efforts; to improve state public transportation projects; to establish alternative, renewable, and clean energy production and generation within each state; and to enhance beach nourishment and coastal dredging; and
- 2.5 percent to enhance geological and geophysical education for the energy future of the U.S.
Section 104 – Limitations on amount of qualified revenues
This section limits the total amount of qualified revenues made available to Alaska under section 102 and to Atlantic states under section 103 to: $75 million for each of fiscal years 2027 through 2036; $205 million for each of fiscal years 2037 through 2055; and $410 million for each of fiscal years 2056 through 2067.
Section 105 – Tribal Resilience program
This section establishes the Tribal Resilience program to: improve the resilience of Indian tribes to the effects of a changing climate; support Native American leaders in building strong, resilient communities; and ensure the development of modern cost-effective infrastructure. It funds adaptation grants in amounts not to exceed $200 million per fiscal year to Indian tribes for eligible adaptation activities.
Section 106 – Tribal Resilience Fund
This section establishes a Tribal Resilience Fund in the Treasury consisting of appropriated funds and amounts deposited into the fund under section 102. Authorizes annual appropriations in such amounts as are necessary to make the income of the fund not more than $200 million for fiscal year 2027 and each fiscal year thereafter. Requires that funds only be obligated or expended to carry out the Tribal Resilience program established under section 105.
Section 107 – Restoring equity in state mineral revenue sharing
Current law provides 50 percent of all money received from sales, bonuses, and royalties collected from onshore mineral production to states but directs 2 percent of those revenues to the Interior Department for administrative overhead costs. Beginning in fiscal year 2027, this section scales back the 2 percent reduction in state mineral revenue sharing, only imposing it on any administrative overhead costs incurred by the U.S. in an applicable fiscal year that exceed $38 million.
Section 108 – Parity in offshore wind revenue sharing
This section provides for the payment of revenues received by the federal government from offshore wind energy projects that are located wholly or partially within an area extending three nautical miles seaward of state submerged land. Payments are made according to a formula to be established by rulemaking to states that have a coastline located within thirty miles of the geographic center of the project. Payments are made in the amount of 27 percent for each fiscal year through 2026, and 37.5 percent for fiscal year 2027 and each fiscal year thereafter. Payments shall not exceed $11 million for any fiscal year.
Title II – Development of Geothermal, Solar, and Wind Energy on Public Land
Section 202– Land use planning; supplements to programmatic EISs
Provides for the establishment of priority areas on federal land for geothermal, solar, and wind energy projects identified by the Bureau of Land Management’s land use planning process.
Section 203– Environmental review on covered land
Prohibits requirement of additional environmental review under the National Environmental Policy Act if the secretary of the interior determines that a proposed renewable energy project has been sufficiently analyzed by a programmatic environmental impact statement. Requires the secretary to rely on the analysis in the programmatic environmental impact statement to the maximum extent practicable if the secretary determines additional environmental review under NEPA is necessary.
Section 204– Program to improve renewable energy project permit coordination
Establishes a program to improve federal permit coordination with respect to renewable energy projects on federal land. Authorizes the secretary to establish additional BLM renewable energy coordination offices and to assign staff to a state, district, or BLM field office to expedite permitting of renewable energy projects.
Section 205– Disposition of revenues from federal land
Provides that for fiscal year 2027 and each fiscal year thereafter, of the amounts collected as bonus bids, rentals, fees, or other payments for the development of wind or solar energy on federal land:
- 25 percent shall be paid to the state within the boundaries of which the revenue is derived;
- 25 percent shall be paid to the one or more counties within the boundaries of which the revenue is derived, and shall be in addition to a payment in lieu of taxes received by a county;
- 15 percent shall be made available to the secretary to carry out the program to improve renewable energy project permit coordination;
- 25 percent shall be deposited in the Renewable Energy Resource Conservation Fund; and
- 10 percent shall be deposited in the Treasury’s general fund.
Limits the total amount made available to these priorities to no more than $40 million for any fiscal year.
Establishes in the Treasury the Renewable Energy Resource Conservation Fund for the purposes of restoring and protecting: fish and wildlife habitat and corridors; water resources in areas affected by wind, geothermal, or solar energy development; and preserving and improving recreational access to federal land and water through an easement, right-of-way, or other instrument acquired from willing landowners to enhance public access to existing federal land and water that is inaccessible or significantly restricted.
Title III – Conservation
Section 301– National Park Service Maintenance and Revitalization Conservation Fund
Establishes in the Treasury the National Park Service Critical Maintenance and Revitalization Conservation Fund, consisting of such amounts as are deposited pursuant to the Outer Continental Shelf Lands Act. Funds shall be used for high-priority deferred maintenance needs of the National Park Service. Funds shall not be used for land acquisition.
The administration has not taken a position on this bill at this time.
The Congressional Budget Office has not issued a formal cost report at this time.
The amendment situation is unclear at this time.
RPC Staff Contact: Matt Leggett, (202) 224-2763
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