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This file contains materials on alternatives for sharing revenues from outer-continental shelf oil drilling leases.
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Revenue Sharing - Meeting with the President, March 13, 1975
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Revenue Sharing - Meeting with the President, March 13, 1975
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This file contains materials on alternatives for sharing revenues from outer-continental shelf oil drilling leases.
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James M. Cannon Files (Ford Administration)
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The original documents are located in Box 31, folder "Revenue Sharing - Meeting with the
President, March 13, 1975" of the James M. Cannon Files at the Gerald R. Ford
Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
JAMES M. CANNON - 3PM
Thursday, March 13
OCS Leasing Meeting with the
PRESIDENT
FORD is LIBRARY 078870
Digitized from Box 31 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
7th
THE WHITE HOUSE
WASHINGTON
March 3, 1975
780m
MEMORANDUM FOR:
JIM CANNON
FROM:
Jelan GLENN SCHLEEDE
SUBJECT:
Sharing Outer Continental Shelf (OCS)
Revenue with States
Enclosed at Tab A is a copy of our February 21, 1975 memorandum to
the President on this subject.
We were notified by Jerry Jones that the President selected alternative 1
(page 6).
Enclosed at Tab B is a copy of a memorandum we have sent to Secretary
Morton asking that a decision paper be developed to permit selection of
the best alternative for sharing revenues.
Dich Druhava
cc: Jim Cavanaugh
Mike Duval
ACTION
THE WHITE HOUSE
WASHINGTON
February 21, 1975
LIBRARY
MEMORANDUM FOR
THE PRESIDENT
FROM:
JIM CAVANAUGH
SUBJECT:
Sharing Outer Continental Shelf (OCS) Revenue
with States
Secretary Morton's memorandum at Tab A proposes sharing a portion of
OCS revenues with all states (with extra payments to coastal states) --
thus changing the current Administration position on this issue. Your
advisers are divided as to the merits of this and other proposals for
sharing OCS revenues.
This memorandum (a) reviews the current opposition to the Administration's
accelerated OCS leasing program, (b) summarizes our current response to
critics and opponents, (c) reviews the arguments for and against OCS
revenue sharing proposals, and (d) presents for your decision the issues of
whether and when there should be a change in position.
Current Situation
Issues Raised by Opposition. Briefly, the principal issues being
raised by opponents of the Administration plans to accelerate OCS
development involve (a) adequacy of government knowledge of the
oil and gas resources being leased, (b) environmental impact,
(c) liability for damages from spills, (d) fiscal burden of providing
public facilities--roads, schools, hospitals, etc. --in onshore areas
impacted by offshore development, (e) state and local government
participation in the decision process, and (f) lack of development
planning information that can be fit into local planning processes.
Response. The Administration's response has been that: (a) know-
ledge of the resources is adequate to assure a fair return to the
government, (b) no decision to hold a lease sale in a particular
area will be made until environmental studies are completed and
acceptability of environmental risk determined, (c) a comprehen-
sive oil spill liability bill will be proposed (about April 1, 1975),
- 2 -
(d) existing Federal programs can assist in mitigating local fiscal
burden, (e) state and local governments and the public will be kept
informed and have opportunity to comment on leasing plans, and
(f) additional planning assistance for coastal states with potential
offshore development is being provided through the coastal zone
management grant program.
Confrontation. A decision by the Supreme Court favorable to the
Federal government in the U.S. VS. Maine case involving ownership
of the seabeds is expected in the spring. Other points of confronta-
tion include (a) challenges during public hearings on Interior's draft
impact statement and court suits under NEPA, (b) planned use of
the Coastal Zone Management Act to force the Federal government
to get coastal state approval of leasing plans, and (c) numerous
bills which would require sharing of OCS revenue with coastal
states, expand the Federal government role -- ranging from
FORD LIBRARY &
Federally funded exploratory drilling before leasing to a Federal
oil and gas development corporation, and delay leasing until
coastal zone planning is completed.
Current Position on Sharing of OCS Revenue. The Administration
has opposed sharing OCS revenue with coastal states on grounds
that (a) OCS resources belong to all the Nation and revenues should
benefit all citizens, (b) OCS revenues shared with coastal states
would have to be replaced in the Federal Treasury through
additional taxes or result in greater deficits, and (c) onshore
development from offshore activities will provide a tax base to
permit raising revenue at the State or local level to finance public
facilities. Following the news stories on February 7 that the
Interior Department was reconsidering its opposition to sharing of
OCS revenues, you approved reiteration of the Administration's
position but asked for a reevaluation of the revenue sharing idea.
Principal Revenue Sharing Alternatives (including Rog Morton's)
All your advisers agree that, should you decide to propose revenue sharing,
additional work is needed to select and develop the best approach. Three
principal alternatives for sharing OCS revenues have emerged and there
are others which need further analysis:
1.
Share a portion of OCS revenues with those coastal states affected
by OCS development. For example, a comprehensive OCS bill
sponsored by Senator Jackson which passed the Senate last September
called for deposit of 10% of Federal OCS revenues or 40¢ per barrel
(whichever is greater) in a coastal state fund for use as grants for
anticipated or actual economic, social and environmental impacts,
including public facilities and services.
- 3 -
Those favoring this alternative argue that it (a) links payments
to potential need or impact, and (b) provides incentives for a
State to look more favorably upon development off its coast.
Arguments against it are that it (a) runs counter to the principle
that OCS resources belong to all the Nation, (b) it is difficult to
determine which states are or will be impacted so that sharing
is fair, and (c) provides no incentive for inland states to support
OCS leasing.
2. Earmark 37 1/2% of all OCS revenues for sharing with all States
through General Revenue Sharing. (37 1/2% of revenues -- or about
$50 million annually over the past five years -- is now given to
states under current law. The same percentage applied to OCS
revenues would involve several billion dollars.)
Principal arguments for this are that it (a) carries out the
principle that OCS resources belong to all the Nation, (b) provides
an incentive for all states to encourage OCS development, (c)
provides a potential alternative to head off sharing only with
coastal states, and (d) strengthens general revenue sharing, if
revenues are significant.
Arguments against are that it (a) provides no special incentive
to coastal states to reduce opposition to development off their
coasts since all share, (b) complicates general revenue sharing
if payments vary widely from year to year, (c) greatly exceeds
needs related to energy development, and (d) probably does not
reduce potential for litigation.
3. Provide a bonus of 5% of the value of all oil production (i. e., a
royalty) to the coastal state through which the oil flows ashore, and
then earmark the difference between this share and 37 1/2% of all
OCS revenue for distribution to all states on a per capita basis.
(Rog Morton's proposal)
Arguments made for this approach are that it (a) compensates for
impact in coastal states, (b) provides a financial incentive for a
coastal state to have oil come ashore in its state and locate refinery
there, (c) reduces opposition to offshore development, (d) provides
all states a visible incentive to favor OCS development, and (e)
strengthens general revenue sharing if revenues are significant.
Arguments against it are that (a) variability in revenues could
complicate general revenue sharing, (b) greatly exceeds needs
related to energy development, and (c) probably does not reduce
potential for litigation.
- 4 -
Issue: Do you wish to change your position on OCS revenue sharing?
The issue for your consideration is whether you want to propose at this
time a change in current Administration position against sharing OCS
revenue. Considerations bearing on this issue are:
1.
Effectiveness in reducing opposition to OCS development. Those
favoring some form of OCS revenue sharing believe that it would be
a critical factor in reducing opposition to OCS development. It would
(a) compensate for onshore public facility and service requirements
and, (b) to the extent funding exceeds needs, provide an added
incentive for supporting OCS development. Some opponents of OCS
development principally at the state government level --are
calling for sharing revenues.
Others argue that (a) sharing funds addresses only one of the five
major issues raised by opponents of OCS development (noted on page 1),
and (b) the added revenue may be attractive to state and some local
elected officials but many who will litigate against leasing and
development will not be influenced (e.g., those at local rather than
state level and those concerned about environmental impact or
changes in a locality's economic structure and way of life).
2. Relationship of funds to needs resulting from OCS development. The
principal funding needs identified by those favoring new funding are
(a) public facilities -- (e.g., schools, hospitals, roads) and services
which must be provided before there is an expanded tax base, and (b)
potential economic or environmental impact from a spill -- which the
Administration would cover under its proposed liability statute. A
survey now underway indicates that there may be short term "front
end" money problems for rural areas should they experience OCS
development impact, but that this should not be a serious problem in
other areas. The survey also shows that the "front end" money
problem may be more serious in sparsely populated areas in the
Northern Great Plains and Southwest that are faced with coal or oil
shale development.
Those opposing sharing of OCS revenue point out that most any
alternative would provide funds greatly exceeding needs relating to
offshore development. A preliminary OMB analysis indicates a
maximum short term "fiscal burden" of $200 million over ten years.
Sharing OCS revenue would involve several billion dollars and would
be a long term answer to a short term problem. Revenue sharing
would provide funding far ahead of actual needs which would not
occur for another 2-10 years.
3.
Alternative sources of funds. Two principal sources are:
a. Taxation of onshore facilities and operations. Generally, the
expanded economic base resulting from onshore development
-- which tends to be capital rather than employee intensive --
should provide revenue sources more than offsetting State and
- 5 -
local government costs. Two states (Texas and Louisiana)
indicate that tax income has not exceeded costs but those states
do not tax corporations (largely because of revenue from oil
and gas development within the 3-mile limit).
b. Other Federal programs. Existing Federal programs should be
adequate to meet most needs for Federal assistance; e. g.,
planning grants, rural development program loan guarantees,
loans and grants. OMB points out that the 1976 budget includes
103 programs budgeted at $43 billion that can be applied toward
meeting some energy induced impact. If state and existing
Federal assistance leave a residual need, a new Federal response
targeted to the specific need should be considered.
4.
Federal budget impact. Opponents of earmarking OCS revenue for
sharing point out that it would add to the Federal budget deficit and
to the uncontrollable share of the budget. Others argue that the
level of revenue expected from OCS leasing will not materialize
unless some way is found to overcome opposition. Opponents also
argue that a move to share OCS revenue now could result in a
Congressional decision to require retroactive payments from OCS
revenues collected since 1953 or encourage earmarking of other
revenues.
5. Potential variability in OCS revenues. Interior estimates that bonuses
paid when leases are sold and royalties paid when oil is produced will,
together, result in Federal revenues in the range of $4 to $12 billion
in each of the next five years if the previously announced schedule
is maintained and there are not significant changes in emphasis on
royalties VS. bonuses. Interior is considering the possibility of
increasing royalties from the current 16 2/3% to 40% as a means to
reduce front-end costs and encourage exploration. If this were done,
bonus revenues would drop by 55% resulting in halving the total OCS
revenues expected in near term years and increasing them in later
years as oil is produced and royalties paid. OCS revenues have
fluctuated widely over the past few years:
Est.
F.Y.
68
69
70
71
72
73
74
75
76
$B
1.0
0.4
0.2
1.1
0.3
4.0
6.7
2.7
8.0
Revenues are increasingly difficult to predict as much greater acreage
is offered and leasing moves to areas that are less well known
geologically. Variability in revenue available for sharing would make
State and local planning difficult. However, variability could be
reduced by an arrangement to deposit the earmarked share in a fund --
with payments to states set at a fixed annual level low enough to
permit offsetting low and high revenue years.
- 6 -
6.
Incentive for siting energy facilities. Those favoring sharing of
revenues with states point out that formulas could be designed to
provide a financial incentive for prompt siting of refineries and
granting pipeline rights-of-way.
7. Potential for Congressional action. An important and potentially
controlling consideration is the prospect for Congressional action
to require sharing OCS revenue. The Senate Interior Committee
will open hearings in mid-March on OCS bills, including Senator
Jackson's comprehensive bill which passed the Senate last year by
a vote of 64-23. The House Interior Committee has not yet
scheduled hearings on the subject but is expected to do so shortly.
The Congressional Relations staff believes the chances are better
than even that the Congress will pass a bill this year requiring
sharing of revenues -- at least with coastal states.
Alternatives, Recommendations and Decision:
1. Decide now to propose sharing of revenue. Begin
Morton,
concentrated effort to identify and develop the best
Zarb,
alternative sharing approach (say by April 1). Seek to
Simon,
arrange some quid pro quo before signalling a change
Seidman,
in position. (There would be high risk that the change
Friedersdorf
in position will become known publicly.)
2. Maintain current position. Reiterate opposition to
Lynn,
sharing of OCS revenues and act to communicate
Greenspan,
arguments against sharing. Indicate willingness to
Buchen,
consider targeted assistance (including a new program)
Cavanaugh
to meet actual needs for assistance that cannot be met
reasonably from other sources. Consider proposing
sharing of revenue only if it becomes clear that Congress
will act to require sharing and a veto override appears
likely or, in the longer run, a quid pro quo is identified
that justifies sharing revenue. (OMB and Domestic
Council staff work quietly with Interior and Treasury to
identify and develop alternatives that might be proposed
in this case.)
A
STATEMENT OF THE INTERIOR
United States Department of the Interior
OFFICE OF THE SECRETARY
March 3
CAEL
WASHINGTON, D.C. 20240
Memorandum
To:
The President
Subject: OCS Revenue Sharing
We have embarked upon an accelerated leasing program on the Outer
Continental Shelf to open up frontier oil and gas prospects and
provide a badly needed supplement to domestic onshore production.
The policy poses a dilemma in that its benefits--increased availa-
bility of secure oil and gas supplies--would accrue to the entire
nation while the potential costs of development--oil spills and
onshore demands for land, public facilities and public services--
would be faced by the coastal States off whose shores the drilling
and production actually take place.
These States are understandably troubled by the prospect of
accelerated OCS leasing and development. In response to these
concerns, I propose the following actions:
-- maintain our commitment to enactment of the "Comprehensive
Oil Pollution Liability and Compensation Act," currently
being drafted by CEQ;
-- continue to provide funds through the Coastal Zone
Management Act for planning to mitigate onshore impacts;
allocate 5 percent of the value of all OCS oil production
to States on the basis of barrels of oil brought ashore;
-- allocate 37.5 percent of all OCS revenues (including the
bonus revenues and the federal royalty which is currently
16.67 percent of all production), less the special
coastal State allotment, to all the States on the basis
of population and with no strings attached.
Danger of oil spills is one of the environmental risks associated
with OCS development. The liability legislation addresses the
problem in terms of consolidating the mechanism for assessing damage
claims against polluters and promptly compensating injured parties.
CONSERVE
AMERICA'S
ENERGY
Save Energy and You Serve America!
2
Funds provided under the Coastal Zone Management Act are available
to all coastal States potentially affected by OCS development and
are available early enough to facilitate necessary land use planning.
Sharing a portion of OCS revenues with all the States emphasizes
the point that the rights to OCS oil and gas are a national asset
and provides all States with a visible financial stake in prompt
OCS development. The 37.5 percent figure has standing in that it
is used for sharing revenues with the States from onshore leasing
of mineral rights on Federal lands.
Sharing royalties with coastal States on the basis of barrels of
OCS oil brought onshore focuses Federal assistance for onshore
impacts at the time and place of their most likely occurrence.
All these actions, along with consultation with the States throughout
the leasing and lease monitoring process, would provide a comprehensive
response to the understandable concerns of the States. It is a
balanced approach that builds from existing methods for dealing with
the risk of oil spills and increased need for land use planning,
recognizes the national character of OCS oil and gas resources, and
provides for the potential onshore impacts that coastal States will
face if we proceed with the accelerated leasing program.
I understand fully any misgivings you may have about taking actions
that could further increase Federal deficits. However, the proposed
efforts are an integral component of the overall task we face in
getting the accelerated OCS leasing program going. Failure to
respond to State concerns and gain their cooperation implies a
postponement of Federal revenues and needed domestic energy supplies
that far outstrips the cost of what I have proposed.
Rogers Morton
Secretary of the Interior
ADMINISTRATIVELY/CONFIDENTIAL
THE WHITE HOUSE
WASHINGTON
February 28, 1975
MEMORANDUM FOR: HONORABLE ROGERS C.B. MORTON
THROUGH:
JIM CAVANAUGH
FROM:
MIKE DUVAL
SUBJECT:
OCS REVENUE SHARING
The President has reviewed this matter and decided that
a concerted effort should be undertaken to develop the
various alternatives so that a decision can be made on
OCS revenue sharing.
Please develop a decision paper for the President in
coordination with Treasury and other appropriate members
of the ERC. I suggest we aim for a completed paper by
March 10 which will give the President sufficient time
to consider this prior to the March 17 Senate hearings.
Thanks. Let us know if we can help.
CC: Honorable William Simon
Honorable James Lynn
Honorable Frank Zarb
bcc: Jerry Jones
Bill Seidman
Alan Greenspan
ACTION MEMORANDUM
WASHILGTON
LOG NO.:
Date: March 12, 1975
Time: 8:00 p.m.
Bill Baroody
Phil Buchen
FOR ACTION:
CC (for information):
Jim Cannon
Jack Marsh
Bill Seidman
Alan Greenspan
Max Friedersdorf
FROM THE STAFF SECRETARY
DUE: Date: Thursday, March 13, 1975
Time: 10:00a.m.
SUBJECT:
FORD & LIBRARY GERALD
ACTION REQUESTED:
For Necessary Action
X For Your Recommendations
Prepare Agenda and Brief
Thaft Renly
X
For Your Comments
Draft Remarks
REMARKS:
We apologize for the short time return requested but
as you will note the President's decision is needed by
tomorrow in order for HEW to prepare testimony and
draft legislation. Unfortunately, we received the
memorandum at 8:00 p. m., March 12.
Thank you.
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you onticipate a
delay in submitting the required moterial, please
Jerry H. Jones
telephone the Stall Secretary immediately.
Staff Secretary
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
DECISION
MAR 12 1975
MEMORANDUM FOR THE PRESIDENT
SUBJECT: HEW Support for Training of Biomedical
and Behavioral Researchers
In the attached memorandum (Attachment A), Secretary
Weinberger appeals your 1976 Budget decisions on Federal
subsidies for training biomedical and behavioral
researchers. The 1976 Budget called for:
-- in 1975, no new predoctoral support programs
and a limit on institutional training grants--
as opposed to individual fellowships--to
FORD is LIBRARY GERALD
"instances in which there is a need to create
training environments that do not currently
exist"; and
--- in 1976. support limited to 1,100 individual
postdoctoral fellowships, and no new predoc-
toral support or institutional training grants.
HEW needs your decisions by Thursday, March 13, in order to
draft legislation and prepare testimony for Senate hearings
on March 17.
Background. The appropriations authorization for HEW pro-
grams that subsidize the training of biomedical and behav-
ioral researchers expires June 30, 1975. This legislation
was the response of Congress to the Administration's pro-
posal in 1974 to eliminate completely all HEW support for
training researchers.
The 1974 budget decision was based on the still valid
concerns of:
-- the inequity of providing substantial Federal
subsidies ($200 million annually) for students
in the life sciences, but not in other fields;
2
-- the apparent surplus of qualified researchers
as shown by increasing numbers of "approved
but unfunded" research proposals;
-- the absence of specific programming objectives
for training in relation to research needs;
and
-- the existence of general predoctoral student
support programs in the Office of Education.
While other agencies have gotten out of the support for
training researchers, HEW has not. Attachment B contains
a more detailed staff paper on this issue.
The 1976 Budget limit of 1,100 new fellowships was selected
because it brings the number of trainees roughly in line
with the number of new researchers supported annually on
research grants. Individual fellowship support was chosen
as consistent with the Administration's general higher edu-
cation policy of concentrating support on students, with
tuition to reflect institutional training costs. Moreover,
postdoctoral support does not further increase the already
excess supply of researchers. This approach also avoids
institutions' becoming as directly dependent on Federal
funds for faculty salaries.
Options: We see three options:
-- Option 1: Reaffirm the 1976 Budget decision--no
new predoctoral training support in 1975 and 1976, 1,100
individual postdoctoral fellowships in 1976 and no institu-
tional training grants.
-- Option 2: Fund training programs on the same basis
as in prior years in both 1975 and 1976-HEW will determine
levels of predoctoral and postdoctoral support and the ex-
tent to which institutional training grants are employed.
-- Option 3: Fund training programs on the same basis
as in prior years in 1975 only. For 1976, limit Federal
support to the 1,100 individual postdoctoral fellowships.
3
Considerations: We believe the following considerations
bear upon your decision:
-- for 1975, Congress has apparently rejected
your $32 million rescission proposal which
reflected no new predoctoral support and
limiting institutional training grants, and
the appropriations will have to be spent;
-- Secretary Weinberger's memorandum indicates
his desire to use predoctoral support and
institutional training grants as "excellent
mechanisms for having an influence over the
"
flow of researchers into priority areas.
The 1,100 postdoctoral awards limit "prevents
me from managing our training efforts in the
most efficient manner" and " it is totally
unrealistic to expect Congress to accept this
restrictive approach";
-- in the past, HEW's "shortage specialties"
have been practically the same as before the
shortage concept was introduced. This re-
flects lack of agreement on a meaningful con-
copt of "chortages"; and
--- the supply of Ph.D. life scientists is growing
at an unprecedented rate. The Labor Department
has tentatively forecast a surplus of Ph.D.'s
in the life sciences for the 1976 - 1980 period
ranging from 15% to 25%.
Recommendation: We recommend that you approve Option 3,
largely reflecting:
-- a desire to cooperate, in light of the re-
jection by Congress of the Administration's
rescission proposals affecting support of
research training;
-- the program merits, i.e., the considerations
of equity and supply, underlying the 1976
budget are still valid; and
--- submission of an Administration bill for
1976 may force a discussion in Congress of
the issue on the substantive program merits
and equity considerations.
4
Decision:
Option 1: Reaffirm the training decisions
announced in the 1976 Budget.
Option 2: Allow HEW discretion in 1975 and
1976 within the final appropria-
tion levels (HEW request) -
Option 3: Allow HEW discretion within the
1975 appropriation level. In
1976, reaffirm the training de-
cision to limit support of 1,100
postdoctoral fellowships (OMB
recommendation)
June Lynn J.Ly
Attachments
FORD i LIBRARY 078839
Attachment A
THE SECRETARY OF HEALTH, EDUCATION, AND WELFARE
WASHINGTON, D. C. 20201
ENDANI
MAR 5 1975
MEMORANDUM FOR THE PRESIDENT
The Department of Health, Education and Welfare's biomedical and
behavioral research training programs are authorized by The National
Research Service Award Act. This Act, which was enacted in July 1974,
authorizes appropriations in only FY 1975 for pre- and post-doctoral
fellowships and institutional awards. Consequently, the Department
will be requesting an extension of the appropriation authorization for
FY 1976 and beyond. Mr. Ash's legislative directive to the Department
specified-that we seek amendments in this Act to support only post-
doctoral research fellows through national competition. This legislative
directive was consistent with current FY 1975 budget policy to eliminate
pre-doctoral fellowships and to limit new institutional awards, and with
the FY 1976 budget proposal of making new awards only for 1100 post-
doctoral fellows.
While I agree that we should restrict the Federal effort in research
training, the OMB directive seriously damages the Department's ability
to manage the programs efficiently and to assure the necessary number
of qualified biomedical and behavioral researchers. Over the last few
years, I have been restructuring the Department's research training
support. The Department, particularly through the National Institutes
of Health, has emphasized post-doctoral fellowships and increasingly
has targeted institutional awards and pre-doctoral fellowships in those
research areas in short supply.
This redirection was in response to our perception of changing research
manpower needs. In the 1960's the rapid growth in research grants
necessitated substantial and wide-spread institutional research training
development awards. While an insufficient total number of researchers
is no longer the problem, we believe some institutional awards are
still needed to develop research training capacity in new and very
promising research areas and in areas of chronic short supply of
qualified researchers such as epidemiology, genetics and nutritional
science. These are crucial areas for a comprehensive Federal research
effort. However, as they are less attractive to young researchers and
training institutions, special-Federal institutional awards are warranted.
Likewise, we believe that pre-doctoral training support is an important
2
component of the total research training program. Since the Alcohol,
Drug Abuse and Mental Health Administration supports pre-doctoral
fellows for their thesis research, such support provides an excellent
mechanism for having an influence over the flow of researchers into
priority areas.
Institutional awards and pre-doctoral fellowships should be directed
only for those research areas for which it can be shown that additional
training capacity is needed. Post-doctoral fellowships should not be
so restricted. They should be awarded on merit through national com-
petition with priority given to shortage areas. On this latter point
we have no disagreement with the OMB guidance in any respect.
While we have no argument in general with OMB's objective to restrict
substantially pre-doctoral training and institutional awards, their
request that we submit to Congress legislative amendments that would
limit research training awards only to post-doctoral fellowships and
the related budget decision to restrict new awards in FY 1976 to post-
doctoral fellows prevents me from managing our training efforts in the
most efficient manner. In addition, it is totally unrealistic to expect
the Congress to accept this restrictive approach. Accordingly, I re-
quest that you permit the Department to submit amendments that allow
institutional awards and pre-doctoral fellowships limited to those
scientific areas in which existing training capacity is substantially
inadequate and in which we cannot expect rapid improvement without
Federal support.
Both the legislative and appropriations committee in Congress have in-
dicated continuously their intent to maintain such funding. If we do
not present a realistic position, we are unlikely to make progress
toward agreed objectives. The Senate Subcommittee on Health has invited
us to testify on March 11 as to our position on the extension of this
legislation. I believe my approach represents a method of constraining
the Federal role and Federal training expenditures.
Finally, I request that as a result of this legislative decision the
Department be permitted to allocate the FY 1976 budget between the various
research training programs in order to assure the most efficient use of
Federal dollars. I emphasize that no additional funds are being requested.
Secretary
GENATO FORD LIBRAR,
Department of Health, Education, and Welfare
Subject: Biomedical and Behavioral Research Training
Background. In the 1974 Budget, the Administration pro-
posed to phase out Federal support for the training of
biomedical and behavioral researchers by the National
Institutes of Health (NIH) and the Alcohol, Drug Abuse,
and Mental Health Administration (ADAMHA). This decision
was based on several considerations, including:
-- the inequity of providing Federal subsidies
for students in the biomedical or behavioral
sciences while graduate students in other
fields do not benefit from special Federal
support;
-- the lack of programming objectives for training,
e.g., need or "shortages" in relation to research
plans;
---- the inappropriateness of federally subsidizing
medical clinical specialty training which
increases personal income potential of physician
specialists. when the Federal priority is on pri-
mary care;
-- the apparently adequate supply of research
scientists as shown by the continuing surplus
of "approved, but unfunded" research proposals;
and
--- the existence of general graduate student support
programs in the Office of Education.
Training programs were begun in 1947, but expanded sharply in
the 1960s. Because of their large institutional support com--
ponents, they are considered vital by most research institu-
tions and medical schools. Since 1967, NIH and ADAMHA
research training support has averaged about $200 million
annually. Support is made to the pre- and post-Ph.1 D and M.D.
levels in all fields--life sciences, physical sciences,
social sciences and the arts and the humanities. Generally,
it is concentrated in life sciences disciplines and takes
the form of institutional grants or individual fellowships.
Congress responded to the Administration proposal by
introducing specific mandatory authorizing legislation
for the research training programs. Ostensibly, in an
2
attempt to "head off" the legislation, HEW initiated a new
more limited program of postdoctoral individual fellowships
in designated "shortage" specialties. The selection of
individual postdoctoral support was based on the existence
of other sources of predoctoral student support and the
lower attrition rate of students from research careers,
once they have made a career commitment signified by a
doctorate. Individual support is consistent with the
Administration's higher education policy of concentrating
support on students; it costs less than institutional awards;
and it maintains greater Federal flexibility, since institu-
tions do not become dependent on these funds directly for
faculty salaries.
Congress was, however, not deterred by the new fellowship
program and enacted the "National Research Service Award
Act," which was approved on July 12, 1974. It authorized
pre- and postdoctoral individual and institutional support
for 1975 only and added a number of program reforms such
as a three-year limit on support and a service or payback
requirement. The Act also limited the award of training
grants or fellowships after July 1, 1975, to specialty
fields designated as "in need of training" by the National
Academy of Science according to a required study of the
research manpower situation.
Key Facts. The 1976 Budget proposes to limit support in
1975 to postdoctoral fellowships, i.e., no more predoctoral
training grants, and, in 1976, to limit the program to 1,100
postdoctoral fellowships as a "national prize" program for
the most meritorious applicants, as determined through
nation-wide competition. In 1975, Congress added $32 million
in research training funds to the Administration's request.
Although the Administration requested Congress to rescind
these increases, Congress has declined to do so, thereby
forcing the obligation of these funds. HEW was advised of
the budget decision not to make new predoctoral training
support and to limit institutional, as opposed to individual
fellowship awards, but Secretary Weinberger will apparently
appeal the predoctoral and institutional awards decisions.
The National Research Service Award Act expires on June 30,
1975. The National Academy of Science's study is behind
schedule and it will probably merely endorse the old programs,
by field, as being in need of training. The 1976 legislative
program includes a proposal to modify the legislation in
accord with the Administration's budget proposal for a
national program of 1,100 postdoctoral awards.
3
Current Position. No new arguments have been advanced to
rationalize the need or appropriateness of Federal research
training support. In fact, recent data about the research
scientist supply indicate that the supply of biomedical
researchers is growing significantly, despite the decline
in NIH support from $171 million in 1969 to $152 million in
1974. While graduate enrollments in the sciences and
engineering have declined in total from 1971 to 1973,
graduate enrollment in the life sciences has increased and
is projected to increase at a faster rate in 1974. The
attached table shows some of the relevant indicators.
At a review of Federal research and development programs
for the 1976 budget, the Science Advisor acknowledged the
budgetary pressures for research funding that are created
by subsidizing the growth in the supply of scientists. He
also considered it appropriate to reassess the need for
further Federal research training subsidies in view of the
apparently ample supply of researchers in the life and social
sciences.
In the near future, HEW will be presenting legislation to
extend and modify expiring research training laws and pos-
sibly a budgetary proposal to reallocate the increased 1975
funds for institutional and predoctoral support. In view
of the already severe budgetary pressures on the NIH and
ADAMHA research budgets, and the promising picture of the
supply of researchers, the effect of perpetuating such
subsidies would be to increase the supply of researchers
further and thereby make the future problem worse or to
supplant private expenditures by individual students with
Federal subsidies.
Attachment
FORD is LIBRAR 077835
Ati
Indicators of the Supply of Research Scientists
1969
1970
1971
1972
1973
19
U.S. Medical School Graduates
8,059
8,367
8,974
9,551
10,391
11,5
Ph.D's Granted in Sciences
All Sciences
15,993
17,822
19,005
19,035
18,938
N/
Life Sciences
4,116
4,564
5,051
4,984
5,068
N/
Number of Biomedical Scientists
58,800
62,300
66,800
75,661
79,800
N,
Medical School Faculty Salaries:
Clinical Departments:
Professor
N/A
N/A
$33,500
$35,200
$36,900
$39,
Associate Professor
27,500
29,100
30,500
32,
Assistant Professor
23,100
24,900
26,000
26,
Average, all ranks
27,300
29,100
30,300
32,
Nonclinical Departments:
Professor
23,600
24,400
25,700
28,
Associate Professor
19,000
19,500
20,400
22,
Assistant Professor.
15,500
16,000
16,500
17,
Average, all ranks
19,100
19,600
20,300
23,
New Approved NIH Research
Grants
Funded (Percent)
63%
51%
50%
57%
37%
Unfunded (Percent)
32%
49%
50%
43%
63%
[3/13/75]
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[3/13/75]
On OCS Revenue Sharing
The President said he favors more percentage
of the states.
Give it to the Governors and require them
to give it to those areas that are in need.
The major concerns are
Impact on the state payments among states.
COMPARISON OF OCS REVENUE SHARING OPTIONS
Table.1
SUMMARY
IMPACT AID &
FORMULA
IMPACT AID AND FORMULA GRANTS
GRANTS TO
FORMULA GRANTS TO COASTAL
TO COASTAL STATES,
ALL STATES
AND ALL STATES
#1
IMPACT zapozlyny AID'
#3
Scokman
#5
mm
#6
07
tor
0% Shared in
10% for Impact
Coastal States
+
'roportion to
Grants plus 5%
Targeted
Sharing with all
Same as #6
$600M
Grants and Loans
Impacts
Royalty to
Needs +
States to Total
Plus $500M
Targeted Needs
Targeted and
(Senator Jackson
Coastal
37-1/2% of
37-1/2%
Nationwide
Program
Limited to Need
S.521)
States
Royalties
(Sec. Morton)
Impact Fund
PROGRAMMATIC CRITERIA
Shares enough at time of need
Yes
Yes
Yes
Yes
Yes
No
Possibly no
Size of sharing in relation to need-
Equal
Equal
8 times
17 times
12 times
30 times
30 times
Triggered by actual need
Yes
Yes
Not required
No
In part,
No
In part,
yes, largely
yes, largely
no
no
Assurance of receipts by impacted
localities
Yes
Yes
No
No
Yes
No
Possibly
Subsidizes state taxpayer at expense
of Federal
No
No
Substantially
Greatly
Substantially Greatly
Greatly
Creates revenue sharing instabilities
or sharp declines
No
No
Severe
Severe
No
Severe
Severe
STRATEGIC CRITERIA
Coastal opposition:
- Reduces state political
Yes, but demand Yes, but demand
opposition
for sharing not
for sharing not
Yes
Yes
Yes
Yes
Yes
met
met
- Reduces local political
Not
opposition
Yes
Yes
Not necessarily
Not necessarily
Yes
Probably no
necessarily
Reduces environmental political
No, may
No, may
opposition
Slightly
Slightly
GERALDIR
No, may increase Slightly
increase
increase
FORD
Congressional opposition and risks:
LIBRARY
- Risk of being increased by
Congress
Yes, at low
Yes, at low
Yes, at high
Yes, at high
Yes, at high No
No
cost
cost
cost
cost
cost
- Helps avoid legislation delaying
OCS development
Possibly
Possibly
No
No
Possibly
Possibly
Possibly
Type of precedent for inland energy
impact problems
Desirable
Desirable
Undesirable
Undesirable
Possibly
Undesirable
Undesirable
undesirable
BUDGETARY CRITERIA
[SLIE1/E]
Table
Total proposed 11-year costs
$0.68
$0.6B
$5.0B
$10B
$7.1B
$17.8B
$17.8B
Year of initial outlays
1978
1978
1975
1975
1975
1975
1975
THE WHITE HOUSE
Ru
WASHINGTON
in
March 13, 1975
MEETING ON OCS REVENUE SHARING
Thursday, March 13, 1975
3:30 p.m. (30 minutes)
I
Oval Office
FROM: Jim Cannon
over
I.
PURPOSE
To discuss alternatives for sharing Outer Continental Shelf (OCS)
revenue and the position that Secretary Morton should take on this
issue during comprehensive hearings on OCS legislation which
begin tomorrow in the Senate Interior Committee.
II. BACKGROUND, PARTICIPANTS AND PRESS PLAN
A. Background: This meeting was requested by Jim Lynn and
Rog Morton. There are three issues that warrant attention
during the meeting:
What substantive OCS revenue sharing proposal should
be put forward by the Administration?
When and by whom should it be announced?
How should the issues be handled by Rog Morton when
he testifies tomorrow?
1. What should the Administration propose?
Your decision on a February 21, 1975 memorandum on this
subject from Jim Cavanaugh (Tab I A) indicated that (a) the
Administration position of opposition to sharing of revenue
should be changed, (b) that the best alternative be identified
and developed by about April 1, and (c) a quid pro quo should
be sought before signalling a change in position.
Secretary Morton's staff has explored a series of alternative
proposals (Tab I C). Jim Lynn's staff has also done a study
of the issue covering seven wide ranging alternatives (Tab I B).
Jim Lynn's memo at Tab I summarizes the complex alterna-
tives and requests your decision. The alternatives range
from targeted categorical grants and loans (costing $200 to
$600 million over 10 years) to sharing of 37 1/2% of all OCS
revenues (amounting to about $18 billion).
- 2 -
I do not believe that adequate work has been done to permit
selection of a specific revenue sharing proposal. I
recommend that you use the meeting to discuss, and
perhaps describe, general principles which would help
guide the development of a specific proposal. For example:
Should the Administration try to limit assistance to a
categorical grant or loan program for public facilities
onshore that are required because of OCS development
(strongly favored by Lynn)?
Should payments instead be genuine sharing of OCS
revenues with coastal states (by formula and non-
necessarily related to impact?
Should sharing also extend to inland states -- and be
used to strengthen general revenue sharing?
2. Who should announce decision and when?
I believe a change in position on the OCS revenue sharing
issue warrants Presidential announcement, with carefully
thought-through timing.
3. What position should Rog take in tomorrow's hearings?
The six bills being considered are comprehensive and there
will be plenty to cover in testimony. On the revenue sharing
question, Rog can announce that you have directed that the
issue be studied intensely and the current Administration
position opposing sharing of OCS revenue is under review.
B. Participants:
Rog Morton, Jim Lynn, Frank Zarb, Jim Cannon and Paul
O'Neill.
Staff: Mike Duval
C. Press Plan: Press Office has announced the meeting but not
the specific subject.
III. TALKING POINTS
(Discussion of OMB and Interior recommendations)
I want an opportunity to consider this more broadly, in the
context of other energy and general revenue sharing decisions.
When I decide on a specific proposal, I want to think through
carefully when and how I announce it.
I understand the Supreme Court may decide the U.S. VS. Maine
case within the next month, and certainly by the end of June.
- 3 -
Also, we are almost certain to win. We could have more
political impact by announcing a sharing proposal after
winning the case than we would by playing the chip now.
Rog, in your testimony tomorrow, you should announce that
we are reviewing our position on OCS revenue sharing,
that I have not made a decision, and that the alternatives
include no sharing, sharing with coastal states, and sharing
with all states.
I
9mg
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
MAR 12 1975
MEMORANDUM TO THE PRESIDENT
FROM:
Jim Lynn
SUBJECT: Possible sharing of Outer Continental Shelf
revenues with the States
Issue:
In response to Mr. Cavanaugh's decision memorandum of
February 21 (Tab A), you directed that an immediate effort
should be undertaken to identify and develop the alterna-
tives for final selection, and that an acceptable quid pro
quo should be sought for the proposal.
This memorandum and its attachments (a) present the findings
from the review of alternatives, (b) present the recommenda-
tions of your advisers, and (c) request your decision on the
revenue sharing issue. Your early decision is requested
because Senate Interior Committee hearings on this subject
are scheduled for Friday, March 14.
Context of decision: Concern by coastal States, local offi-
cials, and environmental groups about OCS development is
based on -
1. possible environmental damages, including oil
spills;
2. esthetic impacts, including possible disorderly
development; and
3. economic effects, including possible injury to
existing industry, and the burden of providing
additional public services.
FORD & 639470 LIBRARY
2
They are also concerned that -
4. the Government's leasing decisions are being made
without adequate Government exploration to develop
sufficient knowledge about the value of resources;
5. the Government is not clearly separating decisions
to lease from decisions to develop;
6. the current process does not provide information
for State or local government planning nor for
their input into Federal and industry decisions
on how to develop the OCS. They do have an input
at the leasing stage.
To address points 1-3, the Administration has already pro-
posed increased planning grants to States under the Coastal
Zone Management Act and is developing a comprehensive oil
spill liability bill. Government exploration (point 4)
would be tremendously expensive and inefficient since the
industry already has the necessary expertise and spreads
the costs and risks among many companies. Interior can
obtain industry information. Initiating Government explora-
tion could delay OCS development by several years.
Interior is currently looking at points 5 and 6 at the urging
of the CEQ and EPA. Requiring a company to prepare a devel-
opment plan subsequent to leasing but prior to development,
and then providing States, localities and environmental
groups opportunity to influence and react to the development
plan would ameliorate what now appears to be their greatest
concern. This can be done under existing law.
In the total context, assuming the environmental and process
concerns are taken care of, revenue sharing may become a
lesser issue.
This Administration, as have past Administrations, opposed
coastal States sharing of OCS revenues on the grounds that -
OCS revenues belong to all of the Nation;
sharing OCS revenues would require compensating
adjustments in the Federal budget; i.e. increased
borrowing or higher taxes;
3
the adverse impact (need) in any given coastal
area bears little direct relationship to the
revenues generated;
onshore development related to OCS activities
provides increased tax base for State and local
governments; and
existing Federal programs can provide financial
assistance to States.
Additional background is set forth in Mr. Cavanaugh's memo-
randum of February 21, 1975 (Tab A).
Summary of analysis: Against the above background we have
analyzed several options for sharing OCS revenues with State
and local governments. The study reports are attached at
Tab B and C.
We have defined two "need" levels - $600 M total cost and
$200 M residual need.
Our studies indicate that the total cost of providing public
facilities related to the future development of the OCS is
about $600 million, and these funds will be required between
approximately 1980 and 1985. Most States and localities
should be able to meet these costs through normal financing
channels such as bonding, in addition to taxing OCS produc-
tion that comes through their area. About $200 million is
our maximum estimate of that portion of total facilities
cost that States and localities may not be able to finance
without Federal assistance in the form of loans or grants.
Need or economic impact are not the sole reasons underlying
proposals for sharing OCS revenues. Some believe that shar-
ing of revenues with States will be an effective means of
increasing support for OCS leasing and development.
Our analysis of the various options are summarized in table 1.
Their Federal costs range from $200 M to $18 B over an 11-
year period, 1975-1985. Total OCS revenues during this period
are estimated to be $47 B but could be higher or lower.
Several of the options would continue revenue sharing beyond
this period.
4
The options are developed from three basic approaches to
revenue sharing:
1. Impact aid to finance public facilities related
to OCS development. This can be grants, loans
or both.
2. Unrestricted formula grants to coastal States
to use as they wish.
3. Unrestricted formula grants to all of the States
to provide an "ownership" stake in OCS development
and possibly mitigate adverse effects of inland
energy development.
All three approaches provide incentive for States to support
OCS leasing. The formula approaches provide greater incen-
tive than the impact aid approach. The formula approaches
provide minimum direct Federal role and are consistent with
our posture on General Revenue Sharing.
Only the impact aid approach can assure that Federal funds
will be available to meet impacts where they occur and when
they occur, but it implies a greater degree of direct Fed-
eral responsibility for financing them than do the other
options. Impact aid outlays would not occur until about
1978 while the formula grant outlays begin immediately.
The unrestricted formula grants to coastal States would prob-
ably be preferred by coastal State governments because of
the flexibility allowed, but they would remove more funds from
Treasury than necessary to meet needs. Bonus sharing would
put funds in State hands sooner than most OCS development-
generated needs can be identified. In new areas, production
or royalty shares do not become available until after onshore
investments must be made. The unrestricted formula grants
to all States would be preferred by inland State governments,
and may have some mitigating effect on impacts of inland
energy developments, but they have the same timing and Fed-
eral cost-related-to-need characteristics as formula grants
to coastal States. It would be less acceptable to coastal
States unless the coastal States got a special break on the
formula.
5
Seven specific options have been identified by Interior
and OMB and compared in the attached staff papers (Tabs B and C).
While various percentages for formula grants are specified
in several of the options, any percentage could be used. The
options are summarized as follows.
Impact aid
Catigonil great m are
The Dream way,
Option #1: ($200 M - $600 M) For six years, $100 M per year
of OCS revenues would be deposited in a special account.
Fund would provide 5.0% grant and 50% loan to communities
for public facilities cost whenever impact occurs. Fund
would be available for 15 years.
Option #2: ($200 M - $1.1 B) 21/2% of OCS revenues would be
deposited in a special fund for 10 years and available for
15 years. These amounts would be allocated equally among
the 22 coastal States but the communities would receive
grants and loans only as needed to meet public facilities
cost.
Bond on oil that your ashore
Impact aid plus formula grants to coastal States
Option #3: ($5 B) 10% of OCS revenues or $0.40 per barrel,
whethy
whichever is greater, would be deposited in a special
account. Funds would be granted to coastal States in pro-
portion to environmental, social and economic impacts of
OCS activities with consideration also given to OCS acreage
N
leased and volume of production.
Option #4: ($10 B) (1) 10% of OCS revenues would be
granted to coastal States for impact aid, and (2) 5% of the
value of OCS oil and gas which is brought ashore within a
State's boundary would be granted as an extra incentive.
Impact aid to coastal States plus formula grants for all States
Option #5: ($6.8 B) (1) Same as Option #1 (impact aid),
plus (2) 37½ of OCS royalties granted to all States based
on population for an "ownership" stake.
BERALD FORD LIBRARY
6
Formula grants to both coastal States and all States
Option #6: ($17.9 B) (1) 5% of the value of OCS production
would be allocated to coastal States on the basis of bar-
rels of oil brought ashore, and (2) 37½ of all OCS revenues,
less the coastal States production-based allocation, would
be allocated to all of the States based on population for
an "ownership" stake.
Option #7: ($17.8 B) Same as Option #6 plus grants for
nation-wide energy impact aid for OCS coal, oil shale,
and other energy development on Federal lands.
Congressional Attitudes
The known congressional attitudes to date reveal a committee
jurisdiction issue with the Commerce Committeeshandling NOAA
tending to support planning and impact aid, and Interior com-
mittees tending to prefer formula distribution.
Senator Hollings strongly opposes formula revenue sharing
and says that "all of the signals from States themselves
clearly oppose the formula grant/ revenue-sharing concept. "
He advocates impact aid as in his bill, S. 586, (with support
from Kennedy, Mathias, Tunney and Williams) and says this is
supported by a policy statement of the National Governor's
Conference.
Congressman Forsythe (H.R. 3637) supports impact aid grants
based on need to coastal States. Funds would come from the
Treasury rather than OCS revenues.
Senator Magnuson has orally advised that he favors impact
aid to coastal States and opposes formula grant revenue sharing.
Senator Jackson (with Johnston, Metcalf and Randolph) (S. 521)
support "comprehensive assistance in order to assure adequate
protection of the onshore social, economic and environmental
conditions of the coastal zone. 11 The bill requires develop-
ment of a grant formula by the Secretary of the Interior.
Senator Johnston has orally advised that he prefers a legis-
lative formula to distribute funds to coastal States, plus
returning 5% of the value of oil brought ashore to the receiv-
ing State (first half of option #6). He does not support sharing
with all States.
7
Senator Stevens (S. 130) advocates formula grants (25% to
coastal States and 25% to inland States).
Recommendations
Rog Morton recommends Option #6.
Bill Simon supports distribution of 5% of the oil and gas
production value with those coastal States where it is
brought ashore (the first half of option #6 only). He
does not support that part of option #6 which allocates
the balance of the revenues to all States.
Frank Zarb recommends Option #2.
Jim Lynn prefers not to establish any fund because of
appropriation and impoundment control problems. However,
if a fund must be established, he would recommend option #1
or option #2 - impact aid. Can compromise upward later.
Max Friedersdorf recommends formula sharing with coastal
States on the basis of value of oil brought ashore plus
some additional sharing with coastal States only (part
of option #6).
Bill Seidman recommends impact aid to coastal States plus
some formula sharing with \ States (option #4).
Coastal
Alan Greenspan recommends Option #2.
Bob White (NOAA) favors impact aid based on need not only
for OCS development but when there is a production close-
down. He prefers this be done through annual appropriations
from general revenues. The option closest to his position
is #3.
Phil Buchen recommends Option # .
Jim Cannon recommends Option #
.
A
FORDS LIBRARY
is
GIV850
ACTION
THE WHITE HOUSE
WASHINGTON
February 21, 1975
MEMORANDUM FOR
THE PRESIDENT
FROM:
JIM CAVANAUGH
SUBJECT:
Sharing Outer Continental Shelf (OCS) Revenue
with States
Secretary Morton's memorandum at Tab A proposes sharing a portion of
OCS revenues with all states (with extra payments to coastal states) --
thus changing the current Administration position on this issue. Your
advisers are divided as to the merits of this and other proposals for
sharing OCS revenues.
This memorandum (a) reviews the current opposition to the Administration's
accelerated OCS leasing program, (b) summarizes our current response to
critics and opponents, (c) reviews the arguments for and against OCS
revenue sharing proposals, and (d) presents for your decision the issues of
whether and when there should be change in position.
Current Situation
Issues Raised by Opposition. Briefly, the principal issues being
raised by opponents of the Administration plans to accelerate OCS
development involve (a) adequacy of government knowledge of the
oil and gas resources being leased, (b) environmental impact,
(c) liability for damages from spills, (d) fiscal burden of providing
public facilities--roads, schools, hospitals, etc. --in onshore areas
impacted by offshore development, (e) state and local government
participation in the decision process, and (f) lack of development
planning information that can be fit into local planning processes.
Response. The Administration's response has been that: (a) know-
ledge of the resources is adequate to assure a fair return to the
government, (b) no decision to hold a lease sale in a particular
area will be made until environmental studies are completed and
acceptability of environmental risk determined, (c) a comprehen-
sive oil spill liability bill will be proposed GREAT (about April 1, 1975),
- 2 -
(d) existing Federal programs can assist in mitigating local fiscal
burden, (e) state and local governments and the public will be kept
informed and have opportunity to comment on leasing plans, and
(f) additional planning assistance for coastal states with potential
offshore development is being provided through the coastal zone
management grant program.
Confrontation. A decision by the Supreme Court favorable to the
Federal government in the U.S. VS. Maine case involving ownership
of the seabeds is expected in the spring. Other points of confronta-
tion include (a) challenges during public hearings on Interior's draft
impact statement and court suits under NEPA, (b) planned use of
the Coastal Zone Management Act to force the Federal government
to get coastal state approval of leasing plans, and (c) numerous
bills which would require sharing of OCS revenue with coastal
states, expand the Federal government role -- ranging from
Federally funded exploratory drilling before leasing to a Federal
oil and gas development corporation, and delay leasing until
coastal zone planning is completed.
Current Position on Sharing of OCS Revenue. The Administration
has opposed sharing OCS revenue with coastal states on grounds
that (a) OCS resources belong to all the Nation and revenues should
benefit all citizens, (b) OCS revenues shared with coastal states
would have to be replaced in the Federal Treasury through
additional taxes or result in greater deficits, and (c) onshore
development from offshore activities will provide a tax base to
permit raising revenue at the State or local level to finance public
facilities. Following the news stories on February 7 that the
Interior Department was reconsidering its opposition to sharing of
OCS revenues, you approved reiteration of the Administration's
position but asked for a reevaluation of the revenue sharing idea.
Principal Revenue Sharing Alternatives (including Rog Morton's)
All your advisers agree that, should you decide to propose revenue sharing,
additional work is needed to select and develop the best approach. Three
principal alternatives for sharing OCS revenues have emerged and there
are others which need further analysis:
1.
Share a portion of OCS revenues with those coastal states affected
by OCS development. For example, a comprehensive OCS bill
sponsored by Senator Jackson which passed the Senate last September
called for deposit of 10% of Federal OCS revenues or 40 ¢ per barrel
(whichever is greater) in a coastal state fund for use as grants for
anticipated or actual economic, social and environmental impacts,
including public facilities and services.
- 3 -
Those favoring this alternative argue that it (a) links payments
to potential need or impact, and (b) provides incentives for a
State to look more favorably upon development off its coast.
Arguments against it are that it (a) runs counter to the principle
that OCS resources belong to all the Nation, (b) it is difficult to
determine which states are or will be impacted so that sharing
is fair, and (c) provides no incentive for inland states to support
OCS leasing.
2. Farmark 37 1/2% of all OCS revenues for sharing with all States
through General Revenue Sharing. (37 1/2% of revenues -- or about
$50 million annually over the past five years -- is now given to
states under current law. The same percentage applied to OCS
revenues would involve several billion dollars.)
Principal arguments for this are that it (a) carries out the
principle that OCS resources belong to all the Nation, (b) provides
an incentive for all states to encourage OCS development, (c)
provides a potential alternative to head off sharing only with
coastal states, and (d) strengthens general revenue sharing, if
revenues are significant.
Arguments against are that it (a) provides no special incentive
to coastal states to reduce opposition to development off their
coasts since all share, (b) complicates general revenue sharing
if payments vary widely from year to year, (c) greatly exceeds
needs related to energy development, and (d) probably does not
reduce potential for litigation.
3. Provide a bonus of 5% of the value of all oil production (i. e., a
royalty) to the coastal state through which the oil flows ashore, and
then earmark the difference between this share and 37 1/2% of all
OCS revenue for distribution to all states on a per capita basis.
(Rog Morton's proposal)
Arguments made for this approach are that it (a) compensates for
impact in coastal states, (b) provides a financial incentive for a
coastal state to have oil come ashore in its state and locate refinery
there, (c) reduces opposition to offshore development, (d) provides
all states a visible incentive to favor OCS development, and (c)
strengthens general revenue sharing if revenues are significant.
Arguments against it are that (a) variability in revenues could
complicate general revenue sharing, (b) greatly exceeds needs
related to energy development, and (c) probably does not reduce
potential for litigation.
BERREA FORD
- 4 -
Issue: Do you wish to change your position on OCS revenue sharing?
The issue for your consideration is whether you want to propose at this
time a change in current Administration position against sharing OCS
revenue. Considerations bearing on this issue are:
1.
Effectiveness in reducing opposition to OCS development. Those
favoring some form of OCS revenue sharing believe that it would be
a critical factor in reducing opposition to OCS development. It would
(a) compensate for onshore public facility and service requirements
and, (b) to the extent funding exceeds needs, provide an added
incentive for supporting OCS development. Some opponents of OCS
development -- principally at the state government level --are
calling for sharing revenues.
Others argue that (a) sharing funds addresses only one of the five
major issues raised by opponents of OCS development (noted on page 1),
and (b) the added revenue may be attractive to state and some local
elected officials but many who will litigate against leasing and
development will not be influenced (e. g., those at local rather than
state level and those concerned about environmental impact or
changes in a locality's economic structure and way of life).
2. Relationship of funds to needs resulting from OCS development. The
principal funding needs identified by those favoring new funding are
(a) public facilities -- (e. g., schools, hospitals, roads) -- and services
which must be provided before there is an expanded tax base, and (b)
potential economic or environmental impact from a spill -- which the
Administration would cover under its proposed liability statute. A
survey now underway indicates that there may be short term "front
end" money problems for rural areas should they experience OCS
development impact, but that this should not be a serious problem in
other areas. The survey also shows that the "front end" money
problem may be more serious in sparsely populated areas in the
Northern Great Plains and Southwest that are faced with coal or oil
shale development.
Those opposing sharing of OCS revenue point out that most any
alternative would provide funds greatly exceeding needs relating to
offshore development. A preliminary OMB analysis indicates a
maximum short term "fiscal burden" of $200 million over ten years.
Sharing OCS revenue would involve several billion dollars and would
be a long term answer to a short term problem. Revenue sharing
would provide funding far ahead of actual needs which would not
occur for another 2-10 years.
3.
Alternative sources of funds. Two principal sources are:
a. Taxation of onshore facilities and operations. Generally, the
expanded economic base resulting from onshore development
-- which tends to be capital rather than employee intensive --
should provide revenue sources more than offsetting State and
- 5 -
local government costs. Two states (Texas and Louisiana)
indicate that tax income has not exceeded costs but those states
do not tax corporations (largely because of revenue from oil
and gas development within the 3-mile limit).
b. Other Federal programs. Existing Federal programs should be
adequate to meet most needs for Federal assistance; e. g.,
planning grants, rural development program loan guarantees,
loans and grants. OMB points out that the 1976 budget includes
103 programs budgeted at $43 billion that can be applied toward
meeting some energy induced impact. If state and existing
Federal assistance leave a residual need, a new Federal response
targeted to the specific need should be considered.
4. Federal budget impact. Opponents of earmarking OCS revenue for
sharing point out that it would add to the Federal budget deficit and
to the uncontrollable share of the budget. Others argue that the
level of revenue expected from OCS leasing will not materialize
unless some way is found to overcome opposition. Opponents also
argue that a move to share OCS revenue now could result in a
Congressional decision to require retroactive payments from OCS
revenues collected since 1953 or encourage earmarking of other
revenues.
5. Potential variability in OCS revenues. Interior estimates that bonuses
paid when leases are sold and royalties paid when oil is produced will,
together, result in Federal revenues in the range of $4 to $12 billion
in each of the next five years -- if the previously announced schedule
is maintained and there are not significant changes in emphasis on
royalties vs. bonuses. Interior is considering the possibility of
increasing royalties from the current 16 2/3% to 40% as a means to
reduce front-end costs and encourage exploration. If this were done,
bonus revenues would drop by 55% -- resulting in halving the total OCS
revenues expected in near term years and increasing them in later
years as oil is produced and royalties paid. OCS revenues have
fluctuated widely over the past few years:
Est.
F.Y.
68
69
70
71
72
73
74
75
76
$B
1.0
0.4
0.2
1.1
0.3
4.0
6.7
2.7
8.0
Revenues are increasingly difficult to predict as much greater acreage
is offered and leasing moves to areas that are less well known
geologically. Variability in revenue available for sharing would make.
State !and local planning difficult. However, variability could be
reduced by an arrangement to deposit the earmarked share in a fund --
with payments to states set at a fixed annual level low enough to
permit offsetting low and high revenue years.
GERALD AUGUST
- 6 -
6. Incentive for siting energy facilities. Those favoring sharing of
revenues with states point out that formulas could be designed to
provide a financial incentive for prompt siting of refineries and
granting pipeline rights-of-way.
7. Potential for Congressional action. An important and potentially
controlling consideration is the prospect for Congressional action
to require. sharing OCS revenue. The Senate Interior Committee
will open hearings in mid-March on OCS bills, including Senator
Jackson's comprehensive bill which passed the Senate last year by
a vote of 64-23. The House Interior Committee has not yet
scheduled hearings on the subject but is expected to do so shortly.
The Congressional Relations staff believes the chances are better
than even that the Congress will pass a bill this year requiring
sharing of revenues -- at least with coastal states.
Alternatives, Recommendations and Decision:
1. Decide now to propose sharing of revenue. Begin
Morton,
concentrated effort to identify and develop the best
Zarb,
alternative sharing approach (say by April 1). Seek to
Simon,
arrange some quid pro quo before signalling a change
Seidman,
in position. (There would be high risk that the change
Friedersdorf
in position will become known publicly.)
2. Maintain current position. Reiterate opposition to
Lynn,
sharing of OCS revenues and act to communicate
Greenspan,
arguments against sharing. Indicate willingness to
Buchen,
consider targeted assistance (including a new program)
Cavanaugh
to meet actual needs for assistance that cannot be met
reasonably from other sources. Consider proposing
sharing of revenue only if it becomes clear that Congress
will act to require sharing and a veto override appears
likely or, in the longer run, a quid pro quo is identified
that justifies sharing revenue. (OMB and Domestic
Council staff work quietly with Interior and Treasury to
identify and develop alternatives that might be proposed
in this case. )
FORD LIBRET
I
TAB
B
FORD i LICENSE 076229
OUTER CONTINENTAL SHELF REVENUE SHARING OPTIONS
Summary Comparison of OCS Revenue
Sharing Options (1 page)
Option Papers #1-7 (26 pages)
Assumptions (5 pages)
Detailed Comparison of OCS Revenue
Sharing Options (5 pages)
OMB Staff Study
3-12-75
COMPARISON OF DCS REVENUE SHARING OPTIONS
SUMMARY
IMPACT AID &
FORMULA
IMPACT AID AND FORMULA GRANTS
GRANTS TO
FORMULA CRANTS 70 COASTAL
IMPACT AID
TO COASTAL STATES
ALL STATES
AND ALL STATES
#1
#2
03
#4
05
#6
F7
5% Royalty to
2-1/2%
10% Shared in
10% for Impact
Coastal States +
Allocation with
Proportion to
Grants plus 5%
Targeted
Sharing with all
Same as #6
$600M
Crants and Loans.
Impacts
Royalty to
Needs +
States to Total
Plus SECOM
Targeted Needs
Targeted and
(Senator Jackson
Coastal
37-1/2% of
37-1/2%
Nationwide
Program
Limited to Need
S.521)
States
Royalties
(Sec. Morton)
Impact Fund
PROGRAMMATIC CRITERIA
Shares enough at time of need
Yes
Yes
Yes
Yes
Yes
No
Possibly no
Size of sharing in relation to need
Equal
Equal
8 times
17 times
12 times
30 times
30 times
Triggered by actual need
Yes
Yes
Not required
No
In part,
No
In part,
yes, largely
yes, largely
no
no
Assurance of receipts by impacted
localities
Yes
Yes
No
No
Yes
No
Possibly
Subsidizes state taxpayer at expense
of Federal
No
No
Substantially
Greatly
Substantially Greatly
Greatly
Creates revenue sharing instabilities
or sharp declines
No
No
Severe
Severe
No
Severe
Severe
STRATEGIC CRITERIA
Coastal opposition:
- Reduces state political
Yes, but demand
Yes,
but demand
opposition
for sharing not
for
sharing not
Yes
Yes
Yes
Yes
Yes
met
met
- Reduces local political
Not
opposition
Yes
Yes
Not necessarily
Not necessarily
Yes
Probably no
necessarily
Reduces environmental political
No, may
No, may
opposition
Slightly
Slightly
No
No, may increase
Slightly
increase
increase
Congressional opposition and risks:
- Risk of being increased by
Congress
Yes, at low
Yes at low
Yes, at high
Yes, at high
Yes, at high No
No
cost
cost
cost
cost
cost
- Helps avoid legislation delaying
OCS development
Possibly
Possibly
No
No
Possibly
Possibly
Possibly
Type of precedent for inland energy
impact problems
Desirable
Desirable
Undesirable
Undesirable
Possibly
Undesirable
Undesirable
undesirable
BUDGETARY CRITERIA
Total proposed ll-year costs
$0.6B
$0.68
$5.0B
$10B
$7.1B
$17.8B
$17.83
Year of initial outlays
1978
1978
1975
1975
1975
1975
1975
Option #1: Targeted Need Fund
Description: From bonus receipts, establish a grant and loan
fund of $600 million to be built up at a rate of $100 million
a year and to remain available for 15 years. Fund would be
drawn down for public capital investment on a 50% grant and
50% loan basis by communities experiencing rapid growth which
is induced by OCS development. (Part of the fund could be
used for loan or bond guarantees).
Distribution of revenues
11-Year Estimated Revenues in $B
Total
Atlantic
Gulf
Pacific
Inland
All
Coast
Coast
Coast
Alaska
States
States
Treasury
.1
.2
.2
.1
0
.6
46.9
Programmatic Impact
- Timing of need:
Funds set aside now, but expended only when needed
for actual impacts.
Solves lead-time financing problems.
Cuts off after needs are met. Balance reverts to
Treasury.
- Size of need
Outflow of funds would be triggered by and directly
related to the magnitude of actual need.
- Jurisdictions in need
Would go directly to those jurisdictions experiencing
need.
- Economic efficiency
Loan feature reduces likelihood of overbuilding
public facilities.
1
2
-
Equity
Federal taxpayers absorb half the costs of the on-shore
development, but eventual fiscal benefits accrue to
specific States and localities.
-
Other fiscal effects
Significantly reduces fiscal risks to States and
localities.
- Administration
Would require more complex eligibility regulations
than straight revenue sharing.
Strategic Impact
-
Coastal Opposition
Mitigates that State & local opposition which is
based on concern about on-shore development.
-
Environmental Opposition
Mitigates that part of environmentalist's opposition
which stems from quality-of-life concerns about on-shore
development.
-
Congressional Opposition
Avoids pressures for retroactivity.
Less chance of 100% earmarking OCS receipts because
outflows are based on needs rather than percentage
of receipts.
Fund level would likely be increased by Congress.
-
Inland views
Less acceptable to inland states.
May result in pressure for similar program for coal &
oil shale or an increase in Mineral Leasing revenue
sharing.
2
3
Budgetary Impact
Proposed amounts: Total is $.6B over 11 years
Fiscal Years
Outlays ($B)
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
.05
.05
.1
.1
.1
.1
.1
0
Note: If such a fund were extended to pay for all coal and oil
shale public facilities on the same 50% grant and 50% loan
basis, the size of the fund would have to be increased
approximately fourfold. Such an extension would further
discourage the private sector from participating and
communities from raising capital through traditional means.
And it may stimulate rapid growth where it might not otherwise
occur. A loan, credit guarantee and interest grant program
would be a much more appropriate Federal role, given such a
magnitude.
3
Option #2
Formula Allocation With Outlays Targeted to Needs
Description: For a period of 10 years, place in a Treasury
deposit account 2 1/2% of annual OCS receipts to be
allocated by a formula of equal shares to the 22 OCS Coastal
States, but with funds not to be paid out until needed.
Funds from the account would be made available for loans
and grants (including grants for matching shares) for
rapid growth which is induced by OCS development. The
balance in the fund at the end of 15 years would revert
to the Treasury.
Distribution of revenues:
11 Year Estimated Revenues in $B
Total
All
Atlantic
Gulf
Pacific
Alaska
Inland
States
Treas.
Allocated
at 2 1/2%
.66
.25
.15
.05
0
1.12
46.33
NOTE: Expected outlay over the 11 years would run
between $200M to $600M.
Programmatic Impact
- Timing of Need
Funds set aside now but expended only as needs occur.
Solves lead time financing problems.
Cuts off after need ends.
- Size of Need
Related to, triggered by, and limited to need.
- Jurisdiction in Need
Available to jurisdictions in need.
Equal shares are more beneficial to the less populous
States, where impacts will be more pronounced.
4
3
- Inland Views
No financial stake for inland States to support
speedy OCS development.
This option as a precedent for similar programs for
coal & shale development is more desirable than other
options.
Budgetary Impact
- Proposed Amounts
Total Outlay is $.6B over 11 years
Fiscal Years' *
(Outlays $B)
1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985
Outlays
.05 .05 .1 .1 .1 .1 .1
*
Estimate of most likely timing, but funds would be available until 1989.
6
2
-
Economic Efficiency
Grants pass development costs onto Federal taxpayer,
not end user of energy; but use of loans can pass
some costs onto end user.
Loan feature reduces likelihood of overbuilding
public facilities. Grants reduce use of bonding & taxation.
- Equity
Shares only to meet legitimate needs; remainder of
receipts continue to benefit Federal taxpayers.
- Other Fiscal Effects
Reduces State & local fiscal risks.
- Administration
Would require more complex eligibility regulations
than straight revenue sharing, but this could be
reduced if the funds were transferred into existing
appropriate Federal programs earmarked for use by
impacted jurisdictions in the Coastal States.
Strategic Impact
- Coastal Opposition
Would mitigate that State and local opposition
which stems from concern about on-shore impacts.
- Environmental Opposition
Would mitigate that part of the opposition which
stems from quality-of-life concerns about on-shore
development, but wouldn't risk possible backlash
as sizeable revenue sharing does.
- Congressional Opposition
Avoids pressures for retroactivity.
Less chance for 100% earmarking because outflows
are based on need rather than percentage of receipts.
Fund level might be increased by Congress, but per-
centages and outflows are less than current Congressional
proposals, unlike Secretary Morton's other options
which include percent sharing.
5
Option # 3: 10 Percent of OCS Revenues (or $.40/Bar.)
for impact grants (Jackson's proposal)
(S. 521)
Description
Allocate 10 percent of Federal OCS revenues or $.40/barrel
whichever is greater (but limited to $200 million in FY 1976
and FY 1977) for grants to coastal States.
Distribution of revenues
10-Year Estimated Revenues
($ in billions)
Gulf
Atlantic
of Mexico
Pacific
Inland
Total
Coastal
Coastal
Coastal
Alaska
States
States
Treas.
0.4
3.2
1.0
0.4
0
5.0
42.3
Monies would be distributed in proportion to environmental,
social, and economic impacts caused or expected to be caused
by leasing operation. Acreage leased and volume of production
would be considered. Actual distribution to States will hinge
on not only where leasing has and will occur but also upon the
Secretary's value judgement of how significant impacts really
are. The above table shows the distribution of funds based on
the assumption that impacts are directly related to quanity of
oil produced.
Programmatic Impact
- Timing of need:
Sharing from bonuses would occur earlier than any
front-end infrastructure investment needs and would
likely be spent before such needs occur
(except
possibly for new areas sold first).
General sharing from royalties would be available
at time of any infrastructure investment needs.
- Size of need:
Sharing of receipts would vastly exceed any possible
need for public investments in infrastructure except
possibly for Alaska
-
Jurisdictions in need:
None of the sharing in this option is triggered by and
directly targeted to meet needs of specific jurisdictions.
7
2
All sharing under this proposal goes to the States,
while fiscal impacts are most likely to affect a
highly selected group of local jurisdictions.
Pass-through to those jurisdictions is
uncertain
since the big money would come in well before the
occurrence of significant OCS development and, therefore,
would likely be
committed to other statewide
purposes.
Economic Efficiency
Option spends vast sums to meet very limited fiscal need.
Funding to States is in proportion to environmental,
social, and economic impacts (paying for damages) and
is not based on ameliorating impacts (need). In some
cases, funding would likely far exceed need. (Adminis-
tration favors liability fund to pay for damages).
Puts costs on Federal taxpayer rather than oil and gas
consumers.
Since sharing is a grant, not a loan, it doesn't encourage
impacted jurisdictions to choose projects wisely.
Equity
Requires Federal taxpayers to pay for the onshore costs
of development rather than consumers.
Requires Federal taxpayers to pay coastal States funds
over and above cost of mitigating damages.
-
Other Fiscal Effects
Since actual bonus receipts are highly variable from
year to year the general sharing would make State fiscal
operation very difficult and generate pressure for a
guaranteed annual minimum at a high level.
Would assist States little in raising capital in private
markets because of uncertainties of receiving Federal
grants. Would reduce somewhat State risks because
facilities would be built and paid for but States could
be left with cost of maintaining excessive facilities.
Option does not solve problems of other energy impacts
such as coal and shale development.
8
3
Administration -- Would be very difficult to calculate
cost of environmental, social and economic impacts so
as to compare all coastal States to determine each States'
proportional share. Split responsibilities between Interior
and Commerce for administering the fund as required by the
bill would be cumbersome.
Strategic Impact
- Coastal opposition -- State officials are likely to favor.
Local officials would not necessarily favor because of
question of whether the States will pass through their
share.
Environmental opposition -- Could create further
opposition if it is interpreted to be a buy-out of State
opposition
to promote rapid OCS development.
- Congressional Opposition and Risks
Would reduce opposition to extent it's based on State
opposition rather than local or environmental opposition.
Could generate pressure for retroactivity on 1953-1974
receipts from Gulf of Mexico offshore.
Would increase pressures to earmark OCS receipts for
other purposes; such claims could total 100%.
Inland Views
Could lead to inland State claims to share in revenues.
Could lead to greater claims on onshore mineral leasing
revenues.
Budgetary Impact
- Proposed Amounts: Total 1s$5.0 B over 11 years.
Fiscal Years
($ in billions)
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
0.4
0.2
0.2
0.7
0.7
0.3
0.4
0.4
0.5
0.6
0.6
9
4
-
Total amounts earmarked and shared could be substantially
higher due to:
Pressures to earmark for other purposes.
Greater sharing than proposed including minimum annual
amounts at a high floor level.
Receipts and therefore payments to States beginning
in 1981 are grossly underestimated if oil is found
in the frontier areas and leasing is continued past
1980.
FORD I LIBRARY
10
Option #4: 10% of Revenues for Impact Grants plus 5% value
of oil & gas landed.
Description
Allocate 10% of OCS revenues for impact grants to Coastal
States as in Option 3, and from royalties pay Coastal States
5% of the value of OCS oil and gas brought onshore within
their boundaries.
Distribution of revenues
11-Year Estimated Revenues in $B
Total
Atlantic Gulf
Pacific
Alaska
Inland
All
Treasury
Coast
Coast
Coast
States
States
Grants.
.4
3.
1
.4
4.8
5%
.4
3.5
1.1
.2
5.2
Total
.8
6.5
2.1
.6
0
.
10
37.5
- Timing of Need
Grants to States preceed need and could be spent on
Statewide projects and therefore not available as
local OCS needs arise.
Allocation of 5% value of oil landed is too late to meet
front end OCS needs.
Sharing from production royalties continues long after
needs are met.
- Size of Need
Neither grants nor 5% allocation are triggered by or
scaled to needs.
- Jurisdiction in Need
Grants and 5% allocation targeted to States, not local
jurisdictions where the actual needs arise. Pass-through
is uncertain.
65% of sharing will primarily go to Texas and Louisiana,
the two states with perhaps the least need and the most
available alternate sources of revenue (e.g., corporate
income tax).
FORD is LIBRARY GERALD
11
2
-
Economic Efficiency
Spends vast sums to meet limited fiscal needs.
Passes costs of development onto Federal taxpayer, not
end user of oil & gas.
Grants discourage use of bonding and taxation to recover
development costs.
May encourage excess number of landing facilities.
- Equity
Requires Federal taxpayer, not consumer, to pay for
development costs.
Shares national OCS revenues with just Coastal States.
5% allocation is approximately equal to the 37 1/2%
Minerals Leasing revenue sharing.
- Other Fiscal Effects
Variability in receipts will complicate State fiscal
planning and generate pressure for a high guaranteed
floor.
Doesn't significantly reduce State fiscal risk or enhance
State access to capital markets since receipts are variable
and sharing with any one State will be small.
Does not apply to coal & shale impacts.
- Administration
Determination of formula for impact grants would be
difficult, but 5% allocation would be simple.
Strategic Impact
- Coastal Opposition
State officials likely to favor. Local officials won't
favor unless a pass-through is guaranteed.
- Environmental Opposition
Could increase opposition if perceived as a buy-out of
State Houses to speed OCS development.
12
3
- Congressional Opposition & Risks
May generate pressure for retroactivity and earmarking
100% of OCS receipts.
Proposes larger sharing than current Congressional proposals.
- Inland Views
Could lead to inland State pressure for similar program
for coal & shale or increases in Mineral Leasing sharing.
May be viewed as sharing national asset with just Coastal
States.
Budgetary Impact
Proposed Amounts: Total is $10B over 11 years
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
.9
.9
1.0
1.
1.1
.6
.7
.8
.9
1.0
1.1
5)
GERALD
13
Option #5: Targeted Need plus 37 1/2% of Royalties
Description: From bonus receipts, establish a grant and loan fund of
$600 million to be built up at a rate of $100 million a year and to
remain available for ten years. Fund would be drawn down for public
capital investment on a 50% grant and 50% loan basis by communities
experiencing rapid growth which is induced by OCS development.
(Part of the fund could be used for loan or bond guarantees.) Addition-
ally, 37 1/2% of royalties would be shared with all States based on
population or the general revenue sharing formula.
Distribution of revenues
11 Year Estimated Revenues in $B
Total
Atlantic
Gulf
Pacific
Alaska
Inland
All
Treasury
Coast
Coast
Coast
States
States
Fund
.1
.2
.2
.1
0
.6
Royalty
1.9
.9
.8
:01
2.9
6.5
Total
2.0
1.1
1.0
1.01
2.9
7.1
40.4
Programmatic Impact
--Timing of Need
Bonus fund available as needs occur. Royalty sharing dis-
bursed before needs arise.
Bonus fund solves lead-time financing problems.
Bonus fund cuts off after need ends. Royalty sharing continues
long after needs are met.
Size of Need
Bonus fund related to and triggered by need. Royalty sharing
unrelated to size of need and increases over time.
-Jurisdiction in Need
Bonus fund available to jurisdictions in need. Royalty
sharing unrelated to jurisdictional needs.
14
2
- Economic Efficeincy
Bonus fund grants pass development costs onto Federal
taxpayer, not end user of energy.
No-strings royalty sharing can be used for infrastructure
costs, and therefore more of the bonus fund could be
dedicated for loans rather than grants.
- Equity
Sharing royalties with all states is more equitable than
sharing with just Coastal States. Sharing by population
is more equitable than sharing which is dominated by oil-
landed on-shore incentive.
- Other Fiscal Effects
Bonus fund eliminates State and local fiscal risks.
Royalty sharing has no relationship to such risks.
Royalty sharing is an incentive for States to support
a change to 40% royalty rate.
- Administration
Would require more complex eligibility regulations than
straight revenue sharing.
Strategic Impact
- Coastal opposition
Bonus fund would mitigate that State and local opposition
which stems from concern about on-shore impacts.
Royalty sharing would eliminate some opposition at State
level, but not necessarily at local level.
15
3
- Environmental Opposition
Would not be reduced further than under bonus fund option.
- Congressional opposition and risks
Would generate pressure for retroactive sharing with
Texas and Louisiana, the two States which have the least
need and the most alternative sources of financing.
May generate pressures for 100% earmarking.
Liklihood of being increased by Congress.
- Inland views
Acceptable to inland States.
o
Would not necessarily lead to pressure to increase
Mineral Leasing revenue sharing.
Budgetary Impact
-- Proposed Amounts: Total is $6.7 billion over 11 years.
Fiscal Years ($B)
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
Fund
.05
.05
.1
.1
.1
.1
.1
Royalty
.3
.3
.3
.4
.5
.5
.6
.7
.8
.9
1
Total
.3
.3
.3
.45
.55
.6
.7
.8
.9
1.0
1.0
NOTE: If such a fund were extended to pay for all coal and oil shale
public facilities on the same 50% grant and 50% loan basis, the size
of the fund would have to be increased approximately fourfold. Such
an extension would further discourage the private sector from participating
and communities from raising capital through traditional means. And,
it may stimulate rapid growth where it would not otherwise occur. A
loan, credit guarantee and interest grant program would be a much more
appropriate Federal role, given such a magnitude.
16
Option #6: Secretary Morton's Proposal
Description: (1) Allocate 5% of the value of OCS production
to coastal states on the basis of barrels of oil brought
ashore, and (2) allocate 37.5% of all OCS revenues, less the
coastal state production-basis allocation, to all states on
the basis of population.
Distribution of revenues:
ll-Year Estimated Revenues in $B
Total
Atlantic Gulf of Mexico Pacific
Inland
to
U.S.
Coastal
Coastal
Coastal
Alaska
States
States
Treasury
4.0
5.2
2.7
0.2
5.6
17.8
29.7
Programmatic impact
- Timing of need:
General sharing from bonuses earlier than OCS fiscal
needs. Probably spent before such needs occur.
General sharing from royalties available at time of
fiscal needs. However, probably committed to other
state needs before OCS needs arise.
Coastal state allocation from oil landed too late to
meet front end OCS needs.
All sharing from royalties continues long after OCS
fiscal needs 20 to 30 years.
- Size of need:
None of sharing is triggered and scaled to actual need.
General sharing from bonuses and royalties vastly
exceeds any possible OCS fiscal need except possibly
for Alaska.
For most new oil areas OCS needs are at a time when only
general sharing from royalties available; this generally
not adequate in size to meet needs.
Coastal allocations from oil landed large enough to
compensate for fiscal impacts but they won occur until
after impacts.
GERALD
1/ See Table 1.
17
2
- Jurisdictions in need:
None of the sharing triggered by and directly targeted
to meet needs of specific jurisdictions.
Of the general sharing, 45% ($5.6B) would go to non-
coastal states, 10% ($1.2B) to California, and 9% ($1.1B)
to New York. Only $20M would go to Alaska.
Coastal state allocation for barrels landed would match
impacts from landing and refining the oil, but impacts
from location of offshore personnel and industry servicing
the offshore development could be located elsewhere.
All sharing under proposal goes to the states, while
fiscal impacts likely to affect a highly selected group
of local jurisdictions. Pass-through to those jurisdictions
is highly uncertain since big money comes in well before
significant OCS development and probably will be committed
to other statewide purposes.
- Economic efficiency:
Option spends vast sums to meet very limited fiscal needs.
Does not target sharing to impacted jurisdictions.
Puts costs on Federal taxpayer rather than on oil and
gas consumers.
Since sharing is a grant, not a loan, it doesn't encourage
impacted jurisdictions to bond and recover by taxation
over the life of the development.
Gives states an incentive to oppose bidding options which
reduce bonuses.
Gives coastal states incentive to bid for oil landing
facilities potentially giving funds to companies and
causing inefficient siting.
- Equity
Requires Federal taxpayers to pay for the onshore costs
of development rather than consumers.
Requires Federal taxpayers to support State activities
and reduces state taxpayer control.
18
3
- Other fiscal effects:
2/
Bonus receipts variability will make State fiscal
operation very difficult and generate pressure for a
guaranteed annual minimum at a high level.
Sharing level drops sharply in 1981 -- from $3B to
$600M.
Little impact on enhancing state and local access to
capital markets since longer term sharing from royalties
would be small for any one state.
Doesn't reduce fiscal risks to states and localities
since general royalty sharing is small for any one state.
- Administration:
Administratively simple since determination of actual
impacts and needs is unnecessary.
Strategic impact
- Coastal opposition:
Would eliminate much opposition to leasing at State level.
Would not necessarily eliminate local opposition to
leasing.
Would provide states with incentives to site facilities
for landing and processing oil but wouldn't eliminate
local opposition.
Wouldn't reduce problems of siting other types of
facilities unless they were located in state where oil
would be landed.
- Environmental opposition: Would not be reduced.
- Congressional opposition and risks:
Would reduce opposition to extent it's based on state
opposition rather than local or environmental opposition.
Would generate pressure for retroactivity on 1953-1974
receipts from Gulf of Mexico offshore.
2/ See Table 2.
19
4
Would increase pressures to earmark OCS receipts for
other purposes; such claims could total 100%.
Would have a high likelihood that Congress would
increase the level shared beyond that proposed.
- Inland views:
Would be acceptable to inland states.
Could lead to greater claims on onshore mineral leasing
revenues.
Budgetary impact
17.8
- Proposed amounts: Total is $21B over 11 years
Fiscal years ($B)
1975 1976 1976T 1977 1978 1979 1980 1981 1982 1983 1984 1985
0.2 3.3 0.8 3.3 3.4 3.4 2.7 0.6 0.7 0.8 0.9 1.0
- Total amounts earmarked and shared could be substantially
higher (up to $56B) due to:
Pressures to earmark for other purposes.
Greater sharing than proposed including minimum annual
amounts at a high floor level.
Payments to states could be seriously underestimated,
if discoveries from 1975 to 1980 leasing justify
additional large sales in the 1981 to 1985 period.
20
Table 1
General Sharing with all States
$M
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
North Atlantic States
(*)
(**)
Maine
11.4
11.4
11.5
11.5
11.6
0.5
0.6
0.7
0.8
0.9
1.0
New Hampshire
8.6
8.6
8.6
8.6
8.7
0.4
0.5
0.5
0.6
0.7
0.8
Massachusetts
64.2
64.3
64.4
64.8
65.1
2.9
3.5
4.1
4.7
5.2
5.8
Rhode Island
10.7
10.8
10.3
10.8
10.9
0.5
0.6
0.7
0.8
0.9
1.0
Connecticut
34.2
34.2
34.3
34.5
34.7
1.6
1.9
2.2
2.5
2.8
3.1
*
North Atlantic sale 1976.
** First production 1980.
*** Peak production 1987.
Middle Atlantic States
(*)
(**)
(***)
New York
203.7
204.1
204.4
205.6
206.7
9.3
11.2
13.0
14.8
16.6
18.4
New Jersey
81.7
81.9
82.0
82.5
82.9
3.8
4.5
5.2
5.9
6.7
7.4
Delaware
6.3
6.3
6.3
6.3
6.4
0.3
0.3
0.4
0.5
0.5
0.6
Maryland
45.0
45.1
45.2
45.4
45.7
2.1
2.5
2.9
3.3
3.7
4.1
Virginia
52.8
52.9
53.0
53.3
53.6
2.4
2.9
3.4
3.8
4.3
4.8
21
*
Middle Atlantic sale 1976.
** First production 1979.
*** Peak production 1985.
South Atlantic States
(*)
(**)
North Carolina
57.8
57.9
58.0
58.4
58.7
2.7
3.2
3.7
4.2
4.7
5.2
South Carolina
29.6
29.6
29.7
29.8
30.0
1.4
1.6
1.9
2.2
2.4
2.7
Georgia
52.4
52.5
52.5
52.8
53.1
2.4
2.9
3.3
3.8
4.3
4.7
* South Atlantic sale 1976.
** First production 1980.
*** Peak production 1987.
(*)
(**)
Alaska
3.6
3.6
3.6
3.6
3.7
0.2
0.2
0.2
0.3
0.3
0.3
* First Alaska sale 1976.
First production 1982.
Peak production 1987.
Oregon-Washington
(*)
(**)
Oregon
24.2
24.2
24.3
24.4
24.6
1.1
1.3
1.5
1.8
2.0
2.2
Washington
38.2
38.3
38.3
38.5
38.8
1.8
2.1
2.4
2.8
3.1
3.5
* Northern California-Oregon-Washington sale 1978.
** First production 1982.
*** Peak production ?.
2
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
(*)
(*)
(***)
California
227.1
227.5
221.8
229.1
230.4
10.4
12.5
14.4
16.5
18.5
20.5
* Southern California sale 1975 (Dec.).
**
First production 1977.
*** Peak production 1981.
Gulf of Mexico States*
Florida
80.5
80.7
80.8
81.3
81.7
3.7
4.4
5.1
5.9
6.6
7.3
Alabama
38.9
39.0
39.1
39.3
39.5
1.8
2.1
2.5
2.8
3.2
3.5
Mississippi
25.1
25.1
25.2
25.3
25.5
1.2
1.4
1.6
1.8
2.0
2.3
Louisiana
41.3
41.3
4.4
41.6
41.9
1.9
2.3
2.6
3.0
3.4
3.7
Texas
129.2
129.4
129.7
130.4
131.1
5.9
7.1
8.2
9.4
10.5
11.7
* Initial sales have been held in all areas.
Inland
1038.3
1040.1
1041.9
1047.8
1053.6
47.6
57.1
66.1
75.5
84.5
93.9
22
3/5/75
Table 2
Historical Instability in OCS Receipts
Est.
FY
68
69
70
71
72
73
74
75
76
$B
1.0
0.4
0.2
1.1
0.3
4.0
6.7
2.7
8.0
23
Option #7: 37 1/2% of Revenues for Nationwide Impact Grants,
Revenue Sharing, and Coastal State Production Shares
Description: Divide 37 1/2% of all OCS revenues three
ways: (1) 5% of the value of OCS production with coastal
States, (2) up to $500M annually for a nationwide impact
grant fund, and (3) the remainder with all States based
on population or the General Revenue Sharing formula.
Distribution of Revenues:
11 Year Estimated Revenues in $B
Total
Atlantic
Gulf
Pacific
Inland
All
Coast
Coast
Coast
Alaska
States
States
Treasury
5%
.4
3.5
1.1
.2
0
5.2
Fund
.1
.8
.2
.1
2.3
3.5
Remainder 2.6
1.2
1.1
.1
4.1
9.1
Total 3.1
5.5
2.4
.4
6.4
17.8
29.7
Programmatic Impact
-- Timing of Need
Impact grants preceed need.
National revenue sharing not available at time of
OCS need because it drops to zero after 1979, but
is available for near-term inland impacts.
5% allocation too late for front end OCS needs.
- Size of Need
Sharing is not triggered by or scaled to needs.
.
Greatly exceeds needs, even when coal & shale
impacts are included.
- Jurisdictions in Need
Targeted to States, but not localities where the
needs arise. Pass-through is uncertain.
About 30% of the revenue shared will go to Texas
and Louisiana.
24
2
- Economic Efficiency
Grants pass costs of development onto Federal
taxpayer, not consumer.
Spends large sums to meet limited needs.
Grants discourage use of bonding and taxation to
recover development costs.
May encourage excess number of landing facilities.
- Equity
Federal taxpayer pays for local development costs.
Shares national asset with all States.
- Other Fiscal Effects
Variation in annual OCS receipts will complicate
State fiscal planning, particularly since National
sharing drops to zero after 1979.
Applies to inland energy impacts.
- Administration
Determination of formula for impact grants would
be difficult, but other features are administratively
simple.
Strategic Impact
- Coastal Opposition
State officials likely to favor. Local officials
wouldn't favor unless pass-through was guaranteed.
- Environmental Opposition
Could increase opposition if seen as an attempt to
buy-off State officials' opposition to OCS development.
- Congressional Opposition & Risks
May generate pressures for retroactivity and ear-
marking 100% OCS receipts.
Proposes much larger sharing than current Congressional
proposals.
25
3
- Inland Views
Acceptable because some sharing goes to all States.
Acceptable because also applicable to inland
energy impacts.
- Budgetary Impact
Proposed Amounts: Total is $17.8B over 11 years.
1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985
2.6
2.6
2.6
2.7
2.7
.5
.6
.7
.8
.9
1.1
26
ASSUMPTIONS FOR ANALYSIS OF OCS POPULATION IMPACTS
Production
Millions of Barrels Per Year (BPY)
Year
Total
Gulf
Pacific
Atlantic
Alaska
1975
447
425
22
0
0
1976
476
1977
506
450
50
0
5
1978
601
1979
696
1980
791
530
166
47
47
1981
944
1982
1,097
1983
1,250
1984
1,403
1985
1,557
763
420
187
187
Employment
Each additional 250,000 BPD (91,250,000 BPY) requires:
200- - 400 workers in exploration phase;
1000-2000 workers in construction phase;
300- 400 workers in operation phase.
(These estimates based on North Sea techmology, as
quoted in Oil & Gas Journal, 1-8-73, and Shell estimates
quoted by Rand in their California OCS study.)
ADDITIONAL EXPLORATION AND PRODUCTION EMPLOYEES-
Year
Total
Gulf
Pacific
Atlantic
Alaska
1977
192
81
93
0
18
1980
939
264
381
156
138
1985
2517
765
834
459
459
3648
1110
1308
615
615
ADDITIONAL CONSTRUCTION EMPLOYEES
2/
1977
960
405
465
90
1980
3735
915
1440
780
600
1985
7890
2505
2265
1515
1605
12585
3825
4170
2295
2295
SUM OF DIRECT EMPLOYMENT: EXPLORATION. CONSTRUCTION & PRODUCTION
1977
1152
486
558
0
108
1980
4674
1179
1821
936
738
1985
10407
3270
3099
1974
2064
16233
4935
5478
2910
2910
1/ (Incremental production in MBPY/91MBPY) X (300 employees)
2/ (Marginal increase in incremental production in
MBPY/91MBPY) X (1500 employees)
This formula assumes that construction workers will
move with the jobs, SO that the population impact
will stem from net addition to construction force
due to the marginal increase in OCS development.
Population (1975-1985) and Public Infrastructure Costs
Ratio of direct to indirect and secondary
1:3
Ratio of Employment to population
1:2.5
Total
Gulf
Pacific
Atlantic
Alaska
Direct
16500
5000
5500
3000
3000
Indirect and
secondary
49500
15000
16500
9000
9000
Population
123750
37500
41250
22500
22500
Public
Infrastructure
$619
$188
$206
$112
$112
in millions at
$5000 per capita
ANALYSIS OF LOCAL CAPITAL EXPENDITURE REQUIREMENTS
FROM ENERGY DEVELOPMENT INCURRED GROWTH
($ per capita)
1. Water (170 gpd/capita)
Source development
$ 43ᵃ
Treatment Facilities
130
Distribution and Storage
450
Total
623*
2. Sewage and Solid Waste
(100 gpd/capita)
b
Treatment
$168
Collection System
720
Out Flow Lines
7
Solid Waste
15
Total
910*
3. Fire Service
$180ᶜ*
4. Libraries
$ 46*
5. Recreation
Neighborhood Park and
Playgrounds
$ 50ᵈ
District Park ($.60sq.ft.)
200ᵉ
Regional Park ($500/acre)
50
300*
6. Police and Security
$ 60*
7. Health
$344 f
8. Education
Elementary
$6458
Secondary
429h
Vocational
61i
1136
9. Community and Social Services
$176*
10. Local Government
$
7
11. Transport (Roads and Streets) $ 400-1200
GRAND TOTAL W/OUT HOUSING $4182-4982
12. Housing
$ 5000-8000 k
*Estimates from report prepared by R.L. Lindauer, EXXON Corporation,
for the Wyoming Select Committee, November 1974.
a) $43 per capita is based on $75 per acre foot; City spread
out to average of only 1.3 living units per acre but
capital costs per individual must meet the standards of
EPA, National Fire Underwriters, National Education organization:
etc.
b) Up to 80% available from EPA if time permits
c) 12 pumpers & 5 ladder trucks within 5 miles for each 10,000 pop
d) Land donated; $50 assumes 8.5 acres/1000 with $50,000 in
facilities
e) 2 acres per 1000 plus swimming or other similar facilities
f) Number of beds needed per 50,000 pop. = =203; Cost of 203 bed
facility=$17 200, 000; Operating costs=Unknown (not included
in health costs)
g) Number of pupils pcr 50,000 pop.=7,450;0 Cost of construction
$23,989,000; Cost of maintenance, operation, instruction=$8.314
200; data provided by HEW
h) Number of pupils per 50,000 pop.=3,350; Cost of construction=
$17, 721, 500; Cost of maintenance, operation, instruction=
$3,738,600; data provided by HEW
i) Number of people served per 50,000 pop. =2,100:300 students
in 1/2 day shifts: 1,500 adults in night classes; Cost
of facility=$2, 376, 000; Cost of instruction=$672,00 data
provided by HEW
j) A "most probable" scenario range of road costs to account
for geographic variation
k) 3,300 families per 10,000 pop. "Most probable" scenario
ranges from an carly development pattern of 2 person
families per mobile home (cost=$10,000 or $5,000/capita)
to later development patterns of 3+person families
per conventional home (cost=$25,000 or $8,000/capita)
with some mobile homes; data provided by a housing
economist in USDA.
FORD is LIBRARY 078820
COMPARISON OF OCS REVENUE SHARING OPTIONS
IMPACT AID &
FORMULA
IMPACT AID AND FORMULA GRANTS
GRANTS TO
FORMULA GRANT., TO COASTAL
IMPACT AID
TO COASTAL STATES
ALL STATES
AND ALL STATES
#1
#2
#3
#4
#5
#6
07
5% Royalty to
2-1/2%
10% Shared in
10% for Impact
Coastal States +
Allocation with
Proportion to
Grants plus 5%
Targeted
Sharing with all
Same as #6
$600M
Grants and Loans
Impacts
Royalty to
Needs +
States to Total
Plus $500M
Targeted Needs
Targeted and
(Senator Jackson
Coastal
37-1/2% of
37-1/2%
Nationwide
Program
Limited to Need
S.521)
States
Royalties
(Sec. Morton)
Impact Fund
PROGRAMMATIC CRITERIA
Timing of sharing:
- Sharing prior to need
No
No
Yes
Yes
Yes, modest
Yes, very large
Yes, very
large
- Shares enough at time of need
Yes
Yes
Yes
Yes
Yes
No
Possibly no
- Cuts off at end of need
Yes
Yes
No
No
No
No
No
Size of sharing in relation to need:
- In total
Equal
Equal
8 times
17 times
12 times
30 times
30 times
- At time of need
Adequate
Adequate
Adequate
Adequate
Adequate
Inadequate
Possibly
inadequate
Triggered by actual need:
Yes
Yes
Not required
No
In part,
No
In part,
yes, largely
yes, largely
no
no
Targeted to right jurisdictions:
- Sharing with non-impacted states- No
No
No
No
Yes,
Yes, very large
Yes, very
significant
large
- Sharing with potentially
Adequate in
Adequate in
impacted states
Adequate
Adequate
Adequate
Adequate
Adequate
total, too
total, too
large in some
large in
cases
some cases
2
COMPARISON OF OCS REVENUE SHARING OPTIONS
IMPACT AID &
FORMULA
IMPACT AID AND FORMULA GRANTS
GRANTS TO
FORMULA GRANTS TO COASTAL
IMPACT AID
TO COASTAL STATES
ALL STATES
AND ALL STATES
#1
#2
#3
#4
#5
#6
07
5% Royalty to
2-1/2%
10% Shared in
10% for Impact
Coastal States +
Allocation with
Proportion to
Grants plus 5%
Targeted
Sharing with all
Same as #6
$600M
Grants and Loans
Impacts
Royalty to
Needs +
States to Total
Plus $500M
Targeted Needs
Targeted and
(Senator Jackson
Coastal
37-1/2% of
37-1/2%
Nationwide
Program
Limited to Need
S.521)
States
Royalties
(Sec. Morton)
Impact Fund
PROGRAMMATIC CRITERIA (Continued)
- Assurance of receipts by
impacted localities
Yes
Yes
No
No
Yes
No
Possibly
Economic efficiency:
- Encourages overbuilding
No
No
Possibly
Possibly
No
Probably
Probably
- Costs put on consumers
In part
In part
No
No
Largely no
No
No
- Funds programs state taxpayers
might not find worthwhile if
Yes, to limited
Yes,
Yes, very
they had to pay for them
Slightly
Slightly
degree
Yes
Slightly
substantially
substantially
Equity:
- Subsidizes state taxpayer at
expense of Federal
No
No
Substantially
Greatly
Substantially Greatly
Greatly
- Increases Federal taxpayer
burden
Very modestly
Very modestly
Substantially
Very much
Modestly
Very much
Very much
Other Fiscal effects:
- Improves state and local access
to capital markets
Some
Some
No
No
Some
No
No
- Exposure of states and localities
to risks from expected develop-
No, if passed
No, if passed
ment not taking place
Some
Some
No
No
Some
through
through
3
COMPARISON OF OCS REVENUE SHARING OPTIONS
IMPACT AID &
FORMULA
IMPACT AID AND FORMULA GRANTS
GRANTS TO
FORMULA GRANTS TO COASTAL
IMPACT AID
TO COASTAL STATES
ALL STATES
AND ALL STATES
#1
#2
#3
#4
#5
#6
47
5% Royalty to
2-1/2%
10% Shared in
10% for Impact
Constal States +
Allocation with
Proportion to
Grants plus 5%
Targeted
Sharing with all
Same as #6
$600M
Grants and Loans
Impacts
Royalty to
Needs +
States to Total
Plus $500M
Targeted Needs
Targeted and
(Senator Jackson
Coastal
37-1/2% of
37-1/2%
Nationwide
Program
Limited to Need
S.521)
States
Royalties
(Sec. Morton)
Impact Fund
PROGRAMMATIC CRITERIA (Continued)
- Creates revenue sharing
instabilities or sharp declines-
No
No
Severe
Severe
No
Severe
Severe
Administratively complexity:
Workable
Workable
Very vague
Vague criteria
Workable
Simple
Workable
criteria
criteria
criteria & split
criteria
formula
criteria
authority
STRATEGIC CRITERIA
Coastal opposition:
- Reduces state political
Yes, but demand
Yes, but demand
opposition
for sharing not
for sharing not
Yes
Yes
Yes
Yes
Yes
met
met
- Reduces local political
Not
opposition
Yes
Yes
Not necessarily
Not necessarily
Yes
Probably no
necessarily
- Help resolve onshore siting
Yes, for all
Yes, for all
Not necessarily
Not necessarily
Yes, for all
Only for land-
Only for
problems
OCS facilities
OCS facilities
OCS
ing facilities
landing
facilities
facilities
- Speeds OCS development by
improving U.S. legal position
No
No
No
No
No
No
No
Environmental opposition:
- Reduces environmental political
No, may
No, may
opposition
Slightly
Slightly
No
No, may increase
Slightly
increase
increase
COMPARISON OF OCS REVENUE SHARING OPTIONS
4
IMPACT AID &
FORMULA
IMPACT AID AND FORMULA GRANTS
GRANTS TO
FORMULA GRANTS TO COASTAL
IMPACT AID
TO COASTAL STATES
ALL STATES
AND ALL STATES
#1
#2
#3
#4
#5
#6
#7
5% Royalty to
2-1/2%
10% Shared in
10% for Impact
Coastal States +
Allocation with
Proportion to
Grants plus 5%
Targeted
Sharing with all
Same as #6
$600M
Grants and Loans
Impacts
Royalty to
Needs +
States to Total
Plus $500M
Targeted Needs
Targeted and
(Senator Jackson
Coastal
37-1/2% of
37-1/2%
Nationwide
Program
Limited to Need
S.521)
States
Royalties
(Sec. Morton)
Impact Fund
STRATEGIC CRITERIA (Continued)
- Speeds OCS development by
improving U.S. legal position
No
No
No
No
No
No
No
Congressional opposition and risks:
- Raises retroactivity issue
No
No
Yes
Yes
To a limited Yes
Yes
extent
- Risks additional earmarking for
To a limited
other purposes
Least risk
Least risk
Yes
Yes
extent
Yes
Yes
- Risk of being increased by
Congress
Yes, at low
Yes, at low
Yes, at high
Yes, at high
Yes, at high No
No
cost
cost
cost
cost
cost
- Helps avoid legislation delaying
OCS development
Possibly
Possibly
No
No
Possibly
Possibly
Possibly
Inland views:
- Acceptable to inland officials
Yes
Yes
Possibly no
Possibly no
Yes
Yes
Yes
- Type of precedent for inland
energy impact problems
Desirable
Desirable
Undesirable
Undesirable
Possibly
Undesirable
Undesirable
SERALD
undesirable
BUDGETARY CRITERIA
- Total proposed 11-year costs
$0.6B
$0.6B
$5.0B
$10B
$7.1B
$17.8B
$17.8B
- Year of initial outlays
1978
1978
1975
1975
1975
1975
1975
5
COMPARISON OF OCS REVENUE SHARING OPTIONS
IMPACT AID &
FORMULA
IMPACT AID AND FORMULA GRANTS
GRANTS TO
FORMULA GRANTS TO COASTAL
IMPACT AID
TO COASTAL STATES
ALL STATES
AND ALL STATES
#1
#2
#3
#4
#5
#6
#7
5% Royalty to
2-1/2%
10% Shared in
10% for Impact
Coastal States +
Allocation with
Proportion to
Grants plus 5%
Targeted
Sharing with all
Same as #6
$600M
Grants and Loans
Impacts
Royalty to
Needs +
States to Total
Plus $500.1
Targeted Needs
Targeted and
(Senator Jackson
Coastal
37-1/2% of
37-1/2%
Nationwide
Program
Limited to Need
S.521)
States
Royalties
(Sec. Morton)
Impact Fund
BUDGETARY CRITERIA (Continued)
- Risk of minimum sharing floor
None
None
High
High
None
High
High
- Risks of greater OCS sharing
including for other purposes
Low
Low
High
High
Probably
Probably some
High
some
- Potential induced increase in
costs of meeting coal and
shale impact problems
Small
Small
Very large
Very large
Large
Very large
Possibly
large
TAB
C
GERALD ANYMOIT p FORD
OPTION PAPER
Sharing Outer Continental Shelf Revenues with States
()
An accelerated leasing program has been initiated on the Outer Continental
Shelf (OCS) to open up frontier oil and cas prospects and provide a badly
needed supplement to domestic onshor 3 production. Coastal States are
troubled by the prospect of accelerated leasing off their shores because
they would have to bear the brunt of certain costs of development while
the entire Nation receives the benefit of increased domestic supplies of
oil and gas.
Coastal State concerns about OCS development involve:
- environmental damages, including possible oil spills
- esthetic impacts
- economic effects, including possible disorderly development,
injury to existing industry, and the burden of providing new
public services.
To meet these concerns, the Federal Government has already proposed
increased planning money for the Coastal Zone Management Act, and is
developing a Comprehensive Oil Spill Liability bill.
It has, however, up to now opposed providing Coastal States with a share
of OCS revenues on the grounds that -
- OCS revenues belong to all the Nation, and their revenues should
benefit all citizens
- a number of Federal programs already exist which provide assistance
to States in ameliorating impacts of development
- sharing CCS revenues with Coastal States would reduce the amount
of revenues available to support other Federal expenditures and
require compensating adjustment elsewhere in the Federal budget
- onshore development induced by offshore activities will eventually
provide State and local governments with an increased tax base
to finance necessary public facilities, so that there may be no
need for a long-term sharing program for impact aid
- States' rights to revenues from offshore minerals leasing were
legislatively determined in the Submerged Lands Act of 1953
which gave States complete jurisdiction over the first three
miles of seabed, but nothing bayond
- sources of opposition to OCS leasing are varied, and not all
might be eliminated by sharing of revenues
However, there are reasons for reconsidering this position.
- failure to respond to State concerns could solidify opposition
which would postpone leasing in frontier OCS areas and delay
receipt of the National benefits of accelerated development.
In Federal revenues alone, the loss in discounted-value terms
of even a one-year delay would be about $2.9 billion
- there may be a valid need for Federal assistance now that frontier
OCS areas will be opened. For example, "front-end" money would
help State and local governments begin building public facilities
before OCS developments provide an increased tax base on which to
finance such expenditures
- the three-mile state jurisdiction is of little revenue value to
States in frontier areas such as the Atlantic Coast, where oil and
gas reserves are all located farther offshore
- shared revenues could give Coastal States a financial stake in
prompt OCS development
- sharing OCS revenues would be consistent with various onshore
sharing precedents, notably the Minerals Leasing Act which gives
affected States 37 1/2 percent of Federal leasing revenues
- Congressional action on shared revenues is possible regardless
of the Administration position
There are three general approaches to providing funds to States:
- provide mone/ for impact-amelioration projects. tie use of funds
to specific purposes which underwrite costs faced by States as
a result of CCS activity
- provide formula-based, no strings money to States affected by
OCS activity make funds available which are sufficient to keep
Coastal States from being worse off on balance as a result of OCS
activity, and distribute these revenues generally in accordance
with expected impacts, but leave to the States the decision as to
how to use the money
- provide an "ownership" stake in OCS development through a share
of Federal revenues--distribute a proportion of revenues without
direct regard to expected impacts, perhaps to both inland and
Coastal States
2
Option I: Coastal State Impact Aid
Description
This option provides funds to Coastal States to ameliorate negative impacts
of OCS development
- some modest proportion of Federal OCS revenues, would fund grants
to Coastal States
- funds would be made available soon enough for "front-end" costs,
not delayed until actual offshore production starts
- grants could be distributed either by formula based on general
indices of impacts, or by project after a showing of specific
impacts, or both
- grants could either require State matching or provide full Federal
funding, and could be limited to needs not met by existing Federal
grant programs
Program Effects
Favorable:
- the option would focus specifically on ameliorating onshore impacts
of OCS development, and reduce them as a barrier to accelerated
leasing in frontier areas
- the use of grant funds would be tied directly to impacts
- budget outlays would be modest by comparison with the other options
considered
Unfavorable:
- mere amelioration of impacts might be insufficient to lead Coastal
States to accept OCS development
- the grants might be opposed on grounds that OCS revenues are a
National asset and should not be disbursed only to Coastal States
- clear identification and measurement of impacts for purposes
of awarding grants would be administratively difficult
3
- the impact rationale focuses assistance efficiently on future
impacts but makes no allowance for past impacts, which may seem
inequitable to States where OCS leasing has already occurred
- the option would not address the energy imcact concerns of inland
States, and might appear to single out Coastal States for special
treatment, although inland States already receive 37 1/2 percent
of Federal revenues from minerals leasing within their boundaries
Three specific variants of this option warrant particular attention.
Option Ia: Formula Impact Aid
Description
This variant would distribute among Coastal States a fixed percentage of Federal
OCS revenues without time limit or annual dollar ceiling
- 10 percent of Federal OCS revenues would be deposited in the impact
aid fund
- alternatively, as in a current congressional proposal, the fund would be
financed by 10 percent of Federal OCS revenues or 40 cents per barrel of
oil, whichever is greater, although the structure of Federal revenues
(bonus plus royalties) would complicate the 40 cents per barrel calculation
- grants would be distributed by formula based on general indicators of
impact
Program Effects
Favorable:
- 10 percent funding as long as Federal revenues continued would provide
a continuing source of funds to meet Coastal State impact needs whenever
they arose
- 10 percent funding would be ample to meet currently anticipated needs
thereby reassuring Coastal States that their impact concerns would be
sufficiently provided for
Unfavorable:
- 10 percent funding might result in distributing more money than strict
impact accounting would require
4
Budget Outlays
Impact aid for Coastal States equal to 10 percent of Federal revenues
would range between $141 million and $724 million per year between 1975
and 1985, based on current production estimates. Revenue distribution by
State would depend on the project eligibility rules or the distribution
formula adopted, but if properly administered would closely approximate
the distribution of actual impacts. More detailed projections of the budget
outlays under this option and those that follow are provided in the
attached tables.
Option Ib: Targeted Impact Aid
Description
This variation would provide impact aid to Coastal States under terms that
would link the aid directly to the alleviation of negative impacts:
- the fund would be limited to a total of $600 million to be
built up from bonus receipts at $100 million per year
- aid to impacted communities for public capital investment would
be made in the form of 50 percent grant and 50 percent loan funds
- the balance of the fund not spent on actual, demonstrated impacts
would revert to the Treasury after 15 years.
Program Effects
Favorable:
- the timing and jurisdictions receiving aid would be directly tied
to impacts
- the loan feature would reduce the likelihood of overbuilding public
facilities
- the aid would be cut off after 15 years, which should be ample time
to meet impact needs
Unfavorable:
- clear identification and measurement of impacts for purposes of
awarding grants would require complex eligibility criteria and
administrative review
- grant amounts might appear to Coastal States to make inadequate
provision for their anticipated needs
5
Budget Outlays
Impact aid under this variation of Option I would be limited to $100 million
annually or less. The distribution by state would depend on the distribution
of demonstrated impacts.
Option Ic: Combination Impact Aid
Description
Under this variation of Option I, funds would be allocated to Coastal States
by formula but allocated funds would be paid out only for demonstrated need.
- the fund would be built by a deposit of 2 1/2 percent of annual
OCS lease revenues for a period of 10 years
- revenues in the fund would be allocated to the 22 Coastal States by
formula, giving an equal share to each state
- aid payments would be made to states out of this allocation when
triggered by a showing of need
- aid payments would be available as grants and loans
- the balance of funds not expended on need would revert to the
Treasury after 15 years.
Program Effects
Favorable:
- equal shares would provide more aid per capita to the less populous
states, where impacts could be more pronounced
- formula aid would determine, in an administratively easy way, the maximum
amount a state could get
Unfavorable:
- equal sharing by Coastal States could lead to a misallocation of
resources because of impacts in rural areas of large, populous states
Budget Outlays
The outlays under Option Ic, as projected by OMB, would reach $100 million a
year, totalling $600 million. At 2 1/2 percent of OCS revenues, $1,120 million
would be available if needs exceeded that projection.
6
Option II: Coastal State Impact Aid and Production Shares
Description
In addition to the impact grants of Option Ia, this option includes
payment to Coastal States of 5 percent of the value of OCS oil and gas
which is brought shore within their boundaries.
- the 5 percent share of the value of oil and gas would be
approximately equal to 37 1/2 percent of the minimum allowable
OCS royalty; thus setting production shares at 5 percent would
assure that those shares never constituted a higher proportion
of Federal OCS revenues than the proportion of leasing revenues
currently paid to States for onshore minerals
- basing the payment on the value of oil and gas rather than on
the Federal royalty income itself is intended to prevent the
level of royalties from becoming a political issue, and retain
needed flexibility in financial terms for leases
- the base for figuring the 5 percent payments could be limited,
if desired, to "new oil" only, or to production above the level
of a base period, say 1974
Program Effects
Favorable:
- the 5 percent production share adds to the front-end program of
Option I a continuing source of funds for the effects of bringing
OCS oil ashore
- making payments dependent on taking oil ashore would give the
States an increased stake in OCS development off their shores,
while it still targets payments on the areas which would feel
impacts
Unfavorable:
- like Option I, this Option is subject to the objection that
revenues from a National resource would be distributed only to
selected States
- outlays under this Option would be substantially greater than
under Option I
7
Budget Outlays
()
This Option would add to the costs of Option Ia an amount equal to 5
percent of the value of oil produced, or between $240 million and
$834 million per year over. the years 1975 to 1985. The total amount
shared would reach $1112 million per year by the end of the period
Option III: Coastal State Production Shares plus Nationally Shared
Revenues
Description
This Option would combine the 5 percent Coastal State production shares
of Option II with an additional sharing of Federal OCS revenues with all
States.
- the additional National sharing would be 37 1/2 percent of all
Federal OCS revenues minus the 5 percent Coastal State production
share. Thus, total revenues shared in the two parts of the
program would amount to 37 1/2 percent of all Federal OCS
revenues, the same proportion that is now shared with States in
onshore leasing programs
- the National shares could be distributed among States on 2 per
capita basis, or by the General Revenue Sharing formula. The
per capita basis emphasizes the idea that OCS reserves belong to
all citizens, while the General Revenue Sharing formula makes use
of an existing method for distributing Federal funds to States,
although that method could itself become a source of controversy
in the future
Program Effects
Favorable:
- this Option would extend a direct financial stake in OCS leasing
and production to inland as well as Coastal States
- it would provide some front-end money to Coastal States through
their National share, which would become available to them well
before the 5 percent payments started as oil was brought onshore
- shared revenues would be of maximum value to States since they
would not be tied to any particular use and could be applied as
States saw fit
8
- the Option would feature a set of sharing formulas which, once
established, would be relatively easy to administer
Unfavorable:
- it would use a substantial amount of Federal funds, perhaps
more than strictly necessary to encourage prompt CCS development
400 it would not recognize any special front-end money needs of
OCS-affected Coastal States, but would give them only the same
National share as other States until their 5 percent production
share became available
- it would not require that money shared with Coastal States be
used by them to ameliorate impacts, which could work against
the Federal interest in smooth development both on and offshore
and might not satisfy the impact concerns of some particular
groups who could still delay leasing
- it would result in a variable, and to a degree, unpredictable
flow of funds to States, since OCS bonus revenues fluctuate
considerably from sale to sale, though by averaging over more
than one year this problem can be eliminated
Budget Outlavs
This Option would distribute 37 1/2 percent of all Federal OCS revenues
to States, or between $530 million and $2717 million per year over the
period 1975 to 1985. The 5 percent Coastal production share of this
total would be $240 million to $834 million per year. The remainder to
be distributed among all States would amount to between $106 million and
$2344 million per year.
Option IV: Coastal State Production Shares, Nationally Shared Revenues,
and Nationwide Energy Impact Aid
Description
This Option combines the 5 percent production shares and the 37 1/2 percent
nationally shared revenues of Option III with a program of impact aid like
that in Option I but available to all States to meet the front-end costs
of energy development, both off and onshore.
- the total amount paid out would equal 37 1/2 percent of OCS
revenues, as in Option III, but this sum would be divided chree
ways: 5 percent of the value of the oil to Coastal States, up
to $500 million (or a like amount) for a nationwide impret grant
KYBRARI
fund, and the remainder of the 37 1/2 percent for National per
capita or General Revenue Sharing distribution
9
- front-end grants would be available to all States on a project
or formula basis for all types of energy-related impacts
- grants could be limited to needs not met by existing Federal
grant programs
Program Effects
Favorable:
- this Option has the advantages of Option III, plus the beneficial
effects of impact-related front-end money for all States
- it would treat all energy-related impacts consistently, without
singling out OCS impacts for special consideration
- it would use OCS revenues, which are substantial, to ameliorate
energy impacts inland where needs may also be significant
- it permits taking advantage of the good features of both project
assistance and no-strings-attached revenue sharing
- it addresses expressed concerns of Western States about front-end
energy development costs, and encourages them to undertake energy
developments of National interest
Unfavorable:
- the timing of the flow of OCS revenues into the nationwide impact
aid fund would bear no necessary relationship to the demands on
that fund from inland energy development activities
- the impact aid fund would have the same administrative problems
as the fund in Option I, but on a larger, nationwide scale
- combining all three elements in one proposal may make it too
complex to be appealing
Budget Outlavs
The total amount to be shared with States would be identical to
Option III. The only difference would be that some percent of Federal
revenues, perhaps up to a ceiling such as $500 million per year, would
be earmarked for States experiencing energy development impacts. An
impact fund of 10 percent of Federal revenue up to $500 million per year
would leave between $0 and $1844 million per year for nationally shared
revenues.
10
Table 1
PROJECTIONS OF CCS PRODUCTION, VALUE AND FEDERAL REVENUES
Value of Oil
Federal Revenues
Oil Production
Production
(millions of dollars)
(millions of
(millions of
Year
barrels)
dollars)
Bonus
Royalty (16-2/3%)
Total
1975
447
$ 4,792
$6,000
799
$6,799
1976
476
5,103
6,000
851
6,851
1977
506
5,424
6,000
904
6,904
1978
601
6,443
6,000
1,074
7,074
1979
696
7,461
6,000
1,244
7,244
1980
791
8,480
-
1,413
1,413
1981
944
10,120
-
1,687
1,687
1982
1,097
11,760
-
1,960
1,960
1983
1,250
13,400
-
2,234
2,234
1984
1,403
15,040
-
2,507
2,507
1985
1,557
16,691
-
2,782
2,782
Assumptions:
1.
Production at levels corresponding to Project Independence Report.
2.
Oil priced at $8 per barrel and gas priced at $0.70 per thousand
cubic feet, giving a total value 1.34 times the value of oil
production.
3. 16-2/3 percent royalty collected on all production from Federal
OCS lands.
Table 2
SUMMARY OF PAYMENTS TO STATES UNDER FOUR OPTIONS
(millions of dollars)
Option Ia
Option II
Option III
Option IV
Coastal
Coastal
Pro-
Pro-
Pro-
Nationwide
State
State
duction
duction
National
duction
Energy
National
ear
Impact Aid
Impact Aid
Shares
Total
Shares
Shares
Total
Shares
Impact Aid
Shares
Total
975
680
680
240
920
240
2310
2550
240
500
1810
2550
976
685
685
255
940
255
2314
2569
255
500
1814
2569
977
690
690
271
961
271
2318
2589
271
500
1818
2589
978
707
707
322
1029
322
2331
2653
322
500
1831
2653
979
724
724
373
1097
373
2344
2717
373
500
1844
2717
980
141
141
424
565
424
106
530
424
106
--
530
981
169
169
506
675
506
127
633
506
127
--
633
982
196
196
588
784
588
147
735
588
147
---
735
983
223
223
670
893
670
168
838
670
168
--
838
984
251
251
752
1003
752
188
940
752
188
is
940
985
278
278
834
1112
834
209
1043
834
209
--
1043
efinition of options:
ption Ia
-- Coastal State Impact Aid at 10 percent of Federal OCS revenues.
ption II
- Coastal State Impact Aid at 10 percent of Federal OCS revenues.
-- Coastal State Production Shares equal to 5 percent of the value of oil landed in each State.
ption
Coastal State Production Shares equal to 5 percent of the value of oil landed in each State.
National Shares to all States equal to 37.5 percent of OCS revenues less 5 percent of the value
ofooil landed.
ption IV Coastal State Production Shares equal to 5 percent of the value of oil landed in each State.
Nationwide Energy Impact Aid equal to 10% of OCS revenues not to exceed $500 million per year.
-- National Shares to all States equal to 37.5 percent of OCS revenues less 5 percent of the value
of oil landed and less 10% of OCS revenues not to exceed $500 million per year (no negative
payments to States).
Table 3
SUMMARY OF PAYMENTS UNDER VARIANTS OF OPTION I
Option Ia
Option Ib*
Option Ic*
1975
680
--
--
1976
685
--
--
1977
690
--
--
1978
707
50
50
1979
724
50
50
1980
141
100
100
1981
169
100
100
1982
196
100
100
1983
223
100
100
1984
251
100
100
1985
278
*Note: Payments for Options Ib and Ic are limited to OMB projection
of $600 million in expected impacts. Option Ib would have
$600 million available whereas Option IIb would have a
total of $1120 million.
Table 4
SUMMARY OF STATES' AND FEDERAL
SHARES UNDER FOUR OPTIONS
(millions of dollars)
OPTION I
OPTION II
OPTIONS III & IV
Total
Federal OCS
States'
Federal
States'
Federal
States'
Federal
Year
Revenues
Share
Share
Share
Share
Share
Share
1975
6799
680
6119
920
5879
2550
4249
1976
6851
685
6166
940
5911
2569
4282
1977
6904
690
6214
961
5943
2589
4315
1978
7074
707
6367
1029
6045
2653
4421
1979
7244
724
6520
1097
6147
2717
4527
1980
1413
141
1272
565
848
530
883
1981
1687
169
1518
675
1012
633
1054
1982
1960
196
1764
784
1176
735
1225
1983
2234
223
2011
893
1341
838
1396
1984
2507
251
2256
1003
1504
940
1567
1985
2782
278
2504
1112
1607
1043
1739
Table 5
REGIONAL DISTRIBUTION OF
PRODUCTION SHARE
(millions of dollars)
Total OCS Production
Year
Total
Gulf of Mexico
Pacific
Alaska
Atlantic
1974
224
215
9
0
0
1975
240
226
14
0
0
1976
255
235
20
0
0
1977
271
247
24
0
0
1978
325
267
48
0
10
1979
373
287
67
0
19
1980
419
305
89
0
25
1981
505
334
116
15
40
1982
589
359
147
24
59
1983
670
382
174
40
74
1984
752
406
203
53
90
1985
844
434
234
67
109
OCS Production Above 1974 Levels Only
Year
Total
Gulf of Mexico
Pacific
Alaska
Atlantic
1974
0
0
0
0
0
1975
16
11
5
0
0
1976
31
20
11
0
0
1977
47
32
15
0
0
1978
101
52
39
0
10
1979
149
72
58
0
19
1980
195
90
80
0
25
1981
281
119
107
15
40
1982
365
144
138
24
59
1983
446
167
165
40
74
1984
528
191
194
53
90
1985
620
219
225
67
109
FORD & LIBRARY 938870
Table 6
DISTRIBUTION OF NATIONAL REVENUE SHARES
BY STATES (OPTION III)
1975
Amount by
Share by
General
Amount by
General
Revenue
Share by
Population
Revenue
Sharing
Population
(millions of
Sharing
(millions of
State
(percent)
dollars)
(percent)
dollars)
Alabama
1.686
39.058
1.601
37.084
Alaska
0.157
3.642
0.144
3.332
Arizona
0.981
22.713
1.020
23.634
Arkansas
0.971
22.481
1.039
24.063
California
9.817
227.361
10.355
239.833
Colorado
1.161
26.896
1.084
25.099
Connecticut
1.466
33.948
1.346
31.176
Delaware
0.274
6.357
0.302
6.997
D.C.
0.355
8.233
0.422
9.772
Florida
3.659
84.738
3.134
72.587
Georgia
2.281
52.820
2.087
48.336
Hawaii
0.396
9.182
0.437
10.115
Idaho
0.367
8.498
0.395
9.157
Illinois
5.354
124.005
5.079
117.632
Indiana
2.533
58.670
2.033
47.090
Iowa
1.384
32.050
1.324
30.666
Kansas
1.086
25.152
0.922
21.350
Kentucky
1.593
36.884
1.627
37.680
Louisiana
1.794
41.541
2.166
50.157
Maine
0.490
11.345
0.634
14.685
Maryland
1.939
44.918
1.987
46.013
Massachusetts
2.772
64.210
3.256
75.420
Michigan
4.310
99.813
4.203
97.337
Minnesota
1.857
43.009
2.096
48.535
Mississippi
1.087
25.174
1.470
34.045
Missouri
2.267
52.500
1.923
44.538
Table 6
(continued)
DISTRIBUTION OF NATIONAL REVENUE SHARES
BY STATES (OPTION III)
1975
Amount by
Share by
General
Amount by
General
Revenue
Share by
Population
Revenue
Sharing
Population
(millions of
Sharing
(millions of
State
(percent)
dollars)
(percent)
dollars)
Montana
0.344
7.957
0.369
8.535
Nebraska
0.735
17.018
0.668
15.464
Nevada
0.261
6.048
0.231
5.353
New Hampshire
0.377
8.730
0.315
7.291
New Jersey
3.508
81.239
3.133
72.549
New Mexico
0.527
12.206
0.628
14.537
New York
8.704
201.580
11.340
262.641
North Carolina
2.513
58.195
2.432
56.318
North Dakota
0.305
7.063
0.306
7.083
Ohio
5.114
118.432
4.082
94.542
Oklahoma
1.269
29.390
1.106
25.609
Oregon
1.060
24.556
1.052
24.357
Pennsylvania
5.672
131.355
5.321
123.233
Rhode Island
0.464
10.738
0.433
10.032
South Carolina
1.299
30.085
1.407
32.587
South Dakota
0.326
7.560
0.400
9.255
Tennessee
1.966
45.536
1.861
43.093
Texas
5.620
130.164
4.853
112.403
Utah
0.551
12.769
0.590
13.664
Vermont
0.221
5.121
0.309
7.145
Virginia
2.293
53.096
2.015
46.663
Washington
1.634
37.844
1.458
33.764
West Virginia
0.855
19.799
0.905
20.966
Wisconsin
2.177
50.425
2.545
58.934
Nyoming
0.168
3.896
0.158
3.656
FORD in LIBRARY GERALD