The House Natural Resources Committee voted 23-18 Wednesday to send the “Offshore Energy and Jobs Act” (H.R. 2231) to the House Floor. The bill would expand offshore drilling in Alaska, the Gulf of Mexico, and open areas off both the Atlantic and Pacific coasts and at the same time alter federal-state revenue shares. While expanding areas of production could generate more revenues from royalty collections, the currently broken royalty collection system and proposed revenue sharing provisions within the bill would cost federal taxpayers billions of dollars in foregone revenue.

The bill, introduced last week by Committee Chairman Doc Hastings (R-WA), would direct 37.5 percent of the royalties collected from proposed expanded offshore drilling on the Outer Continental Shelf to the nearest coastal states. This includes revenues from bonus bids, rentals, and royalty payments.

States already receive revenue from royalties collected within state waters (within 3 miles of their coast) and the transitional area between state and federal waters (3-6 miles from shore).  But the federal government manages and secures operations off our coasts and the taxpayer bears the cost of these services.

TCS opposes any provisions that would allow states to receive a greater percentage of oil and gas revenues than is allowed under existing federal-state revenue-sharing provisions for royalty payments.

The bill will likely be voted on by the full House in late June.