[Senate Report 117-201]
[From the U.S. Government Publishing Office]


                                                      Calendar No. 552
117th Congress       }                           {          Report
                                 SENATE
 2d Session          }                           {          117-201

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                       ALASKA OFFSHORE PARITY ACT

                                _______
                                

               November 17, 2022.--Ordered to be printed

                                _______
                                

             Mr. Manchin, from the Committee on Energy and
               Natural Resources, submitted the following

                              R E P O R T

                         [To accompany S. 2996]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 2996), to provide for the distribution of 
certain outer Continental Shelf revenues to the State of 
Alaska, and for other purposes, having considered the same, 
reports favorably thereon with amendments and recommends that 
the bill, as amended, pass.

                               AMENDMENTS

    The amendments are as follows:
    1. On page 4, strike lines 1 through 6 and insert the 
following:
          (2) 30 percent of qualified revenues in a special 
        account in the Treasury, to be distributed by the 
        Secretary to the State;
          (3) 7.5 percent of qualified revenues in a special 
        account in the Treasury, to be distributed by the 
        Secretary to coastal political subdivisions; and
          (4) 12.5 percent of qualified revenues in the 
        National Oceans and Coastal Security Fund established 
        under section 904(a) of the National Oceans and Coastal 
        Security Act (16 U.S.C. 7503(a)).
    2. On page 6, after line 20, add the following:
    (f) Reporting Requirement for Fiscal Year 2023 and 
Thereafter.--
          (1) In general.--Beginning with fiscal year 2023, not 
        later than 180 days after the end of each fiscal year 
        in which the State receives amounts under subsection 
        (a)(2), the State shall submit to the Secretary a 
        report that describes the use of the amounts by the 
        State during the preceding fiscal year covered by the 
        report.
          (2) Public availability.--On receipt of a report 
        required under paragraph (1), the Secretary shall make 
        the report available to the public on the website of 
        the Department of the Interior.
          (3) Limitation.--If the State fails to submit the 
        report required under paragraph (1) by the deadline 
        specified in that paragraph, any amounts that would 
        otherwise be provided to the State under subsection 
        (a)(2) for the succeeding fiscal year shall be withheld 
        for the succeeding fiscal year until the date on which 
        the report is submitted.
          (4) Contents of report.--Each report required under 
        paragraph (1) shall include, for each project funded in 
        whole or in part using amounts received under 
        subsection (a)(2)--
                  (A) the name and description of the project;
                  (B) the amount received under subsection 
                (a)(2) that is allocated to the project; and
                  (C) a description of how each project is 
                consistent with the authorized uses under 
                subsection (d).
          (5) Clarification.--Nothing in this subsection--
                  (A) requires or provides authority for the 
                Secretary to delay, modify, or withhold payment 
                under this subsection, other than for failure 
                to submit a report as required under this 
                subsection;
                  (B) requires or provides authority for the 
                Secretary to review or approve uses of funds 
                reported under this subsection;
                  (C) requires or provides authority for the 
                Secretary to approve individual projects that 
                receive funds reported under this subsection;
                  (D) requires the State to obtain the approval 
                of, or review by, the Secretary prior to 
                spending funds disbursed under subsection 
                (a)(2);
                  (E) requires or provides authority for the 
                Secretary to issue guidance relating to the 
                contents of, or to determine the completeness 
                of, the report required under this subsection;
                  (F) requires the State to obligate or expend 
                funds disbursed under subsection (a)(2) by a 
                certain date; or
                  (G) requires or provides authority for the 
                Secretary to request the State to return 
                unobligated funds.

                                PURPOSE

    The purpose of S. 2996, as ordered reported, is to modify 
the distribution of certain outer Continental Shelf revenues by 
providing for revenue sharing of Federal oil and gas revenue to 
the State of Alaska, coastal political subdivisions of the 
State of Alaska, and the National Oceans and Coastal Security 
Fund.

                          BACKGROUND AND NEED

    The Outer Continental Shelf Lands Act (OCSLA), Public Law 
95-372, governs federal mineral exploration and development on 
the Outer Continental Shelf (OCS), generally defined by the 
Submerged Lands Act (SLA) as the submerged lands seaward of the 
state-managed submerged lands. The Energy Policy Act of 2005, 
Public Law 109-58, amended the OCSLA to authorize the Secretary 
of the Interior to issue leases, easements, and rights-of-way 
to allow for renewable energy development on the OCS. As 
amended, OCSLA now governs both renewable and fossil energy 
development in federal waters.
    The Department of the Interior (DOI), through the Bureau of 
Ocean Energy Management (BOEM), manages energy development of 
the Outer Continental Shelf (OCS). Development in the OCS has 
been a significant source of domestic oil and natural gas 
production and federal revenues.
    The revenues generated from energy and mineral leasing are 
currently distributed in a variety of ways, often with a 
revenue sharing component, whereby federal revenues are 
disbursed directly to states or localities. Onshore leasable 
mineral development, including coal and oil and gas, on federal 
lands generally results in 48 percent of the revenues produced 
being shared with the State they are located within (50 percent 
less a 2 percent deduction for administrative and other costs), 
to be used by the State for general public purposes.
    Under current law, with the exception of certain qualifying 
leases in the Gulf of Mexico, the revenue from OCS energy 
production is retained by the U.S. Treasury. The Gulf of Mexico 
Energy Security Act (GOMESA) of 2006 (Public Law 109-432) 
created a revenue sharing program in which the four Gulf states 
(Alabama, Louisiana, Mississippi, and Texas) receive a portion 
of the revenue generated from oil and gas production offshore 
in the Gulf of Mexico. Under the Act, 37.5 percent of all 
revenues are shared among the four states and 12.5 percent is 
dispersed into the Land and Water Conservation fund. The 
remaining 50 percent of the revenue is deposited into the U.S. 
treasury. GOMESA funds are to be used for coastal conservation, 
restoration, and hurricane protection.
    Since the passage of GOMESA, providing for new forms of 
revenue sharing, or modifying the conditions of existing 
revenue sharing programs, has been a frequent topic of 
legislation before this Committee. In the recent past, much of 
the focus has been the disposition of OCS revenue under the 
existing revenue sharing frame work for oil and gas in the Gulf 
of Mexico, as well as the creation of similar revenue sharing 
frameworks for either offshore wind or the OCS offshore of 
Alaska.
    Unlike the Gulf producing States, under current law, Alaska 
does not receive any revenue sharing payments from the 
development of Federal offshore oil and gas leases (outside of 
the littoral areas designated under section 8(g) of the Outer 
Continental Shelf Lands Act). S. 2996 establishes a revenue 
sharing program whereby Federal oil and gas revenues are 
disbursed to the State of Alaska, similar to that of GOMESA.
    S. 2996, as amended, directs the Secretary of the Treasury 
to deposit 50 percent of all revenues from rentals, royalties, 
bonus bids, and other sums from energy development in the 
Alaska outer continental shelf region into the general fund of 
the Treasury and 12.5 percent of revenue in the National Oceans 
and Coastal Security Fund established under section 904(a) of 
the National Oceans and Coastal Security Act, while the 
Secretary of the Interior would disburse 30 percent percent of 
all revenue to the State of Alaska and 7.5 percent of all 
revenue to the coastal political subdivisions of the State. Of 
the revenue disbursed to the State of Alaska, the bill would 
restrict the authorized uses of the amounts to a variety of 
enumerated uses. Finally, the bill requires the State to submit 
a report to the Secretary detailing each project and the 
associated funding and how the project is consistent with the 
purposes of the Act.

                          LEGISLATIVE HISTORY

    Senator Murkowski and Senator Sullivan introduced S. 2996 
on October 19, 2021. The Subcommittee on Public Lands, Forests, 
and Mining held a hearing on S. 2996 on June 7, 2022.

                        COMMITTEE RECOMMENDATION

    The Senate Committee on Energy and Natural Resources, in 
open business session on July 21, 2022, by a voice vote of a 
quorum present, recommends that the Senate pass S. 2996, if 
amended as described herein.

                          COMMITTEE AMENDMENTS

    During its consideration of S. 2996, the Committee adopted 
two amendments. The first amendment reduces the amount of 
revenue distributed to the State from 40 percent to 30 percent 
and distributes 12.5 percent to the National Oceans and Coastal 
Security Fund. The second amendment requires the State to 
submit a report that details the uses of funding and a 
description of each proposed project. The amendments are 
described in further detail in the section-by-section analysis 
below.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    Section 1 provides the short title for the bill.

Sec. 2. Definitions

    Section 2 provides key definitions for the bill.

Sec. 3. Disposition of qualified revenues in Alaska

    Subsection (a) directs the Secretary of the Treasury to 
deposit 50 percent of the revenues from energy development in 
the Alaska Outer Continental Shelf region into the general fund 
of the treasury; 30 percent into a special account to be 
distributed to the State by the Secretary of the Interior; 7.5 
percent into a special account to be distributed to coastal 
political subdivisions of the State by the Secretary of the 
Interior; and 12.5 percent in the National Oceans and Coastal 
Security Fund.
    Subsection (b) requires that of the 7.5 percent of all 
revenue dedicated to the coastal political subdivisions, 90 
percent must be allocated based on a formula to be determined 
by a Secretary of the Interior based on distance from each 
subdivision to the leased tract and excluding those 
subdivisions more than 200 miles from the center. The remaining 
10 percent shall be equally divided among each coastal 
political subdivision.
    Subsection (c) states that the qualified revenues from an 
applicable fiscal year will be made available in the succeeding 
fiscal year.
    Subsection (d) provides the authorized uses of funding that 
is disbursed to the State under subsection (a). Authorized uses 
include the following purposes: coastal protection, 
conservation, and restoration projects, onshore infrastructure 
and relocation of communities directly affected by coastal 
erosion, melting permafrost, or climate change-related losses; 
projects that mitigate damage to fish, wildlife and natural 
resources, installing and operating energy systems that reduce 
costs and greenhouse gas emissions, aiding communities in 
adaptation planning and emergency preparedness, university 
programs, and other purposes approved by the State Legislature 
and the Governor. No more than 3 percent of the amounts 
received may be used for planning assistance and administrative 
costs.
    Subsection (e) provides that disbursements to the State and 
coastal political subdivisions will: be made available without 
further appropriation, remain available until expended, and be 
in addition to any amounts appropriated under any other 
provision of law.
    Subsection (f) requires the State of Alaska to submit a 
report an annual report that describes each project funded, in 
whole or in part, using amounts received under this section, 
The report is required to be submitted to the Secretary of the 
Interior within 180 days of the end of each fiscal year, 
starting with fiscal year 2023. If the report is not submitted 
by the deadline, the Secretary shall withhold the succeeding 
fiscal year disbursement until the report is submitted. The 
Secretary shall make the report publicly available on the 
website of the Department of the Interior. Subsection (f) also 
provides that the Secretary does not have the authority to 
withhold payment for any other reason other than failure to 
submit the report, to review or approve uses of funds, approve 
individual projects, issue guidance relating to the contents or 
completeness of the report, or require a State to expend the 
funds by a certain date or return unobligated funds.

                    COST AND BUGETARY CONSIDERATIONS

    The Committee has requested, but has not yet received, the 
Congressional Budget Office's estimate of the cost of S. 2996 
as ordered reported. When the Congressional Budget Office 
completes its cost estimate, it will be posted at www.cbo.gov.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 2996. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses. No personal information would be collected in 
administering the program. Therefore, there would be no impact 
on personal privacy. Little, if any, additional paperwork would 
result from the enactment of S. 2996, as ordered reported.

                   CONGRESSIONALLY DIRECTED SPENDING

    S. 2996, as ordered reported, does not contain any 
congressionally directed spending items, limited tax benefits, 
or limited tariff benefits as defined in rule XLIV of the 
Standing Rules of the Senate.

                        EXECUTIVE COMMUNICATIONS

    The testimony provided by the Department of the Interior at 
the June 7, 2022, hearing on S. 2996 follows:

    Department of the Interior Statement, Nada Wolff Culver, Deputy 
Director, Policy & Programs, Bureau of Land Management, U.S. Department 
                            of the Interior


                              introduction


    Thank you for the opportunity to provide testimony on the 
following bills related to Bureau of Land Management (BLM).
    The BLM manages approximately 245 million surface acres, 
located primarily in 12 western states, as well as 30 percent 
of the nation's onshore mineral resources across 700 million 
subsurface acres, overlain by properties managed by other 
Federal agencies such as the Department of Defense and the U.S. 
Forest Service (USFS) as well state and private lands.
    The BLM manages public lands under the Federal Land Policy 
and Management Act (FLPMA), passed by Congress in 1976. The BLM 
remains committed to its core mission of multiple use and 
sustained yield, which provides for a careful balancing across 
many uses and resources to steward the public lands for all.
    Under the BLM's multiple use mandate, the BLM manages 
public lands for a broad range of uses, such as renewable and 
conventional energy development, livestock grazing, timber 
production, hunting and fishing, recreation, and conservation--
including protecting cultural and historic resources. Lands 
managed by the BLM also provide vital habitat for more than 
3,000 species of wildlife and support fisheries of exceptional 
regional and national value. In addition, the Biden 
Administration's America the Beautiful initiative emphasizes 
the conservation of the nation's natural resources recognizing 
that many uses of our lands and waters, recognizing that that 
many uses of our lands and waters, including working lands, can 
be consistent with the long-term health and sustainability of 
natural systems.
    Overall, the BLM estimates that commercial activities on 
public lands, support nearly 524,000 jobs in timber, 
recreation, grazing, nonenergy minerals and the energy sector. 
That activity is the economic driver for communities across the 
West. It is also a significant generator of tax revenues that 
support state and local governments.
    We appreciate the Sponsors' work on the bills under 
consideration today. A review of each of the bills follows.


                  s. 2996, alaska offshore parity act


    The Department, through the Bureau of Ocean Energy 
Management, manages energy and mineral resources located in 
Federal waters of the Outer Continental Shelf (OCS) with 
authority granted by the Outer Continental Shelf Lands Act 
(OCSLA). Under Section 8(g) of OCSLA, a portion of Federal 
offshore oil and gas revenues generated from leases located in 
the first three nautical miles of Federal waters past the 
boundary with state waters is shared with the adjacent coastal 
states. S. 2996 proposes expanding revenue sharing provisions 
to areas of the Alaska OCS not already subject to Section 8(g) 
of OCSLA. As part of this bill, 50% of Alaska OCS oil and gas 
revenues generated from leases outside of the 8(g) zone, other 
than revenues from the forfeiture of financial security 
instruments, would go to the Treasury, with the remaining split 
between the State of Alaska (42.5%) and coastal political 
subdivisions within the State (7.5%). The bill lists allowable 
uses for revenues received by the State of Alaska, including 
coastal protection and restoration, funding onshore 
infrastructure projects, installation of energy systems to 
reduce energy costs and greenhouse gas emissions, other 
purposes approved by the Governor and State legislature, and 
more.
Analysis
    The Department is committed to ensuring that American 
taxpayers receive a fair return from the development of 
offshore mineral resources, which are owned by all Americans. 
The Department also recognizes the importance of increasing 
investments in coastal protection and other climate change 
mitigation funds for the State of Alaska. However, the 
Administration has concerns that any re-direction of OCS 
revenues from the Treasury reduces the net return to taxpayers 
and funding available for other priorities, and fosters 
dependence on an uncertain and unpredictable source of revenue. 
The Administration also has concerns with the scope of eligible 
uses for State revenues under the legislation, which does not 
ensure that the funding will be committed to mitigating coastal 
damage or protecting communities and natural resources that are 
at the highest risk of harm due to climate change. We look 
forward to further discussion with the Sponsor and the 
Committee.


                               conclusion


    Thank you for the opportunity to provide testimony on these 
bills, and I look forward to your questions.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill as ordered 
reported.

                                  [all]