Seven Governors Set Legislative Strategy For Revenue Sharing From Offshore Energy

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By Alan Kovski

Feb. 20 — Seven coastal governors agreed Feb. 20 to push Congress for a bill to set a multi-state strategy for revenue sharing from federal offshore energy development, North Carolina Gov. Pat McCrory (R) said after the governors' meeting.

The agreement was reached with the support of a group of House and Senate staff as well as the seven members of the Outer Continental Shelf Governors Coalition, McCrory said. Sen. Mitch McConnell (R-Ky.), the Senate majority leader, also is supportive of the coalition's efforts, McCrory said.

The coalition met Feb. 20 during the National Governors Association meeting in Washington, D.C. The coalition was created as a forum for state-federal discussion of OCS energy resource planning and development.

The governors have not yet settled on a model for the sharing of federal revenues with states—whether it should follow the established pattern of the Gulf Coast region or another approach, he said.

“Right now we've got all these different bills on revenue sharing, and we would like to consolidate those into one bill,” McCrory said, referring to separate bills in Congress for Virginia, North Carolina and South Carolina.

Another piece of legislation, introduced by Sen. David Vitter (R-La.) and co-sponsored by Sen. Bill Cassidy (R-La.), would have set one level of revenue sharing for Gulf Coast states, another level for Alaska, and another level for Virginia, North Carolina and South Carolina. It was offered in January as an amendment to S. 1, a bill to approve the Keystone XL pipeline.

The governors would prefer to see either one system of sharing revenues or at least regional approaches rather than state-by-state approaches, he said.

Economic Benefits Wanted 

McCrory expressed no reluctance to see offshore oil and gas development near his state, despite the importance of coastal tourism and fishing to North Carolina.

He spoke of jobs and economic benefits and even said it might be necessary to allow drilling and production a little closer to the coast than what was recently proposed by the Interior Department in a draft leasing plan for the years 2017-2012.

Interior's draft plan included a 50-mile coastal buffer within which no oil or gas wells would be allowed. McCrory said there might need to be adjustments—a buffer of maybe 40 or 45 miles—if oil or gas fields are found closer to the coast.

The use of energy revenues for coastal community benefits might help reduce concerns about offshore industrial development, McCrory indicated. He mentioned harbor dredging and beach re-nourishment as prime examples of activities that could benefit from revenue sharing.

“The federal government's dredging funds are quite limited for smaller ports like we have in Morehead City and Wilmington,” McCrory said, referring to two North Carolina port towns. He added that beach re-nourishment is important to tourism.

Looking Decade Ahead 

McCrory said the governors are thinking in terms of about 10 years of planning and preparations, including legislation, seismic surveys and infrastructure development, before the start of Atlantic Ocean offshore oil and gas production.

Along with McCrory, the OCS governors group includes Virginia Gov. Terry McAuliffe (D) and five other Republicans—Alabama Gov. Robert Bentley, Louisiana Gov. Bobby Jindal, Maine Gov. Paul LePage, Mississippi Gov. Phil Bryant and South Carolina Gov. Nikki Haley.

State governments typically control offshore waters as far as three miles out, beyond which the outer continental shelf is under federal control.

To contact the reporter on this story: Alan Kovski in Washington at akovski@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com