After collecting revenue from natural resource extraction, the Office of Natural Resources Revenue distributes that revenue to different agencies, funds, and local governments. This process is called "disbursement."
Companies pay bonuses, rents, and royalties to extract natural resources on federal lands and waters. The result is revenue collected by the Office of Natural Resources Revenue (ONRR). ONRR then disburses that revenue according to federal laws and regulations. These laws and regulations govern how, when, and to whom disbursements are paid.
ONRR disburses revenue to six main funds, recipients, or groups:
- U.S. Treasury: The federal government’s basic operating fund pays for roughly two-thirds of all federal expenditures, including the military, national parks, and schools.
- State and local governments: Funds disbursed to states fall under the jurisdiction of each state, and each state determines how the funds will be used.
- Reclamation Fund: Supports the establishment of critical infrastructure projects like dams and power plants.
- Native American tribes and individuals: ONRR disburses 100% of revenue collected from resource extraction on Native American lands back to tribes, nations, and individuals.
- Land and Water Conservation Fund: Provides matching grants to states and local governments to buy and develop public outdoor recreation areas across the 50 states. How this fund works
- Historic Preservation Fund: Helps preserve U.S. historical and archaeological sites and cultural heritage through grants to state and tribal historic preservation offices. How this fund works
- Other funds: A portion of funds goes back to federal land management agencies to help cover operational costs or special projects. "Other funds" also include disbursements to the Ultra-Deepwater Research Program and the Mescal Settlement Agreement.
Disbursements and location
The distribution of disbursements often depends on the geographic source of the revenue. The largest geographic categories that govern disbursements are onshore and offshore.
Disbursements from onshore revenues
Federal onshore revenue is generated from leases on federal land within a given state or on Native American land.
Except for Alaska, states receive 49% of extractive revenues paid to the federal government from leases on federal land in that state. Alaska receives 90%, dating back to the Alaska Statehood Act.
ONRR disburses 40% of onshore revenues to the Reclamation Fund to be used for infrastructure projects, such as dams and power plants. Another 10% goes to the general fund of the U.S. Treasury, where Congress can appropriate it for programs and services. The remaining 1% of revenue is used for administrative purposes.
Native American disbursements
ONRR disburses 100% of revenue collected from resource extraction on Native American lands back to tribes, nations, and individuals. Learn more about natural resources on Native American land.
Disbursements from offshore revenues
Most offshore areas are under the jurisdiction of the federal government, so offshore revenues make up the majority of disbursements to the U.S. Treasury. The Land and Water Conservation Fund and Historic Preservation Fund receive disbursements exclusively from offshore revenues.
A portion of revenue generated from offshore leases within three miles of a given state's shoreline is shared with that state. This three-mile region is called the 8(g) zone.
Most offshore revenue comes from oil and gas production in the Gulf of Mexico. The Gulf of Mexico Energy Security Act (GOMESA) of 2006 requires a portion of that revenue be shared with four states that border the Gulf of Mexico: Alabama, Louisiana, Mississippi, and Texas.
Revenue and disbursement totals
The timing and frequency of disbursement payments depend on the laws and regulations that govern the disbursement.
ONRR disburses some revenues the same month they are received, others at the end of the fiscal year, and some the following fiscal year. Because some disbursements are paid out the following fiscal year, the revenue and disbursement totals for a given fiscal year may not match up.
Sometimes, companies send payments to ONRR before sending the report documenting the details of the payments. Without the report, ONRR cannot account for and disburse that revenue. The revenue may show up in one fiscal year, with the disbursement coming the next fiscal year when ONRR processes the report.