Oregon to Implement New Fees for Undersea Cables, Funding State Schools

New Fee Structure for Undersea Cables

Oregon is changing its fee structure for undersea cables installed within three miles of its coastline. Previously, the state charged a one-time $5,000 application fee, a policy that has been in place for 25 years. The new proposal introduces a charge of $3 per linear foot of cable and an additional $7 for each section of bore pipe, which protects the near-shore portion of the cable.

Revenue Generation for Education

The Department of State Lands (DSL) estimates that this revised pricing could generate millions of dollars per undersea cable over a 20-year lease period. For example, the DSL calculated that Amazon's Bifrost cable would accrue approximately $1,450,380 over two decades under the new rates. All funds collected from these fees will be allocated to Oregon's Common School Fund.

Balancing Competitiveness and Revenue

The new rates were adjusted from an earlier, more complex proposal to ensure Oregon remains competitive in attracting tech investment. The state, which hosts around 140 data centers and 16 undersea cables, aims to balance revenue generation with its appeal to companies like Amazon, Microsoft, and Google. The DSL describes the revised rate as "competitive-to-low" compared to neighboring California, which charges an estimated $5 per cable foot annually.

Impact on Existing and Future Installations

While not finalized, it appears that most already-approved cables may be exempt from these new fees. However, some recent contracts, such as the one for Amazon Bifrost, included clauses requiring payment of new state-mandated fees. Amazon reportedly paid a $300,000 "out" clause at the time of its contract to address potential future fee changes.