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Senate Votes to Proceed With Revenue Sharing Bill

Lawmakers in the U.S. Senate convened Thursday to resume consideration of a bill that calls for revenue sharing among states involved in existing, new or future energy production from both onshore and offshore leasing areas.

A motion to proceed with the bill -- S 3110, also known as the American Energy and Conservation Act of 2016 -- passed on a 51-47 vote. The bill was introduced by Rep. Bill Cassidy (R-LA) in June and placed on the Senate's legislative calendar in July. A motion to proceed was entered into the Congressional record on Wednesday.

"This bill would create 280,000 new jobs and generate $51 billion in government revenue," Cassidy said in a statement. "This makes sense for our economy and for the well-being of middle-class Americans. Getting today's floor vote was a victory. The majority of the Senate supports this. The fight for this pro-American legislation will continue."

S 3110 would, among other things, establish a 37.5% revenue sharing agreement for Alaska and the Mid-Atlantic states of Virginia, North Carolina, South Carolina and Georgia, beginning in 2027. It would also maintain the current 37.5% revenue sharing agreement between the Gulf states under the Gulf of Mexico Energy Security Act of 2006 (GOMESA). S 3110 also calls for increasing the limit of Gulf state revenue sharing under GOMESA above $500 million.

"That cap right now is completely arbitrary and far too low," said Sen. David Vitter (R-LA), a co-sponsor of the bill. "Revenue sharing is vital when it comes to adequately compensating states that help provide so much U.S. energy. It needs to be adequate if we are going to continue to incent those states to play that very important role in our U.S. economy.

"This legislation would help bring that objective to reality, and it is a critical component of a robust, strengthened revenue sharing regime for those major energy-producing states."

But Sen. Bill Nelson (D-FL) said he opposes the bill because it could harm Florida's $50 billion tourism industry and affect the nation's military readiness.

"We are talking about [the tourism industry] generating some $700 million in sales tax revenue for the state, and it helps support more than 450,000 jobs throughout the state," Nelson said, according to the Congressional record. "Why would you risk destroying a state's economy as well as our military preparation? It is not as if we don't have other places that we want to produce oil. Think of the oil shale that has been tapped in the Dakotas, in Oklahoma, and in Texas that is not producing at maximum capacity."

Karen Harbert, CEO of the U.S. Chamber of Commerce's Institute for 21st Century Energy, said the bill was particularly important after Donald Trump's election to the White House.

"America has tremendous untapped offshore energy potential, and this important legislation will ensure that coastal states have the opportunity to experience the same economic boost from energy exploration that we've seen in other parts of the country," Harbert said. "This legislation is particularly important now that we will have an administration interested in expanding areas open to exploration, which we look forward to working on in the coming months."

A coalition of energy groups -- including the American Petroleum Institute, the National Ocean Industries Association, the Independent Petroleum Association of America, the American Exploration & Production Council, the International Association of Drilling Contractors, the International Association of Geophysical Contractors, Western Energy Alliance and the U.S. Oil & Gas Association -- issued a joint statement applauding the Senate's decision to discuss the bill.

"We know that forward thinking policy decisions made today will play a key role in our energy stability for years to come and revenue sharing is a critical component to our future energy production," the coalition said.

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