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TechOregon to impose new fees on undersea cables, directing millions to state school fund
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Oregon lawmakers are implementing a new fee structure for undersea cables using the state's sea floor within three miles of its coastline, replacing a decades-old $5,000 one-time application fee. The new pricing, still under discussion, includes $3 per linear foot of cable plus $7 per section of bore pipe. The Oregon Department of State Lands estimates this will generate millions per cable over a 20-year lease, with Amazon's Bifrost cable projected to cost $1,450,380. Revenue will be funneled into the state's Common School Fund. The revised rates are considered competitive compared to California's $5 per foot annual charge. Oregon aims to remain attractive for tech investment, hosting about 140 data centers and 16 undersea cables. Already-approved cables may be largely exempt, though some contracts like Amazon's included a clause allowing new fees with a $300,000 buyout option.
Source report
After charging only a one-time fee for undersea cables along its coast for decades, Oregon lawmakers are now addressing what they see as a missed opportunity for tax revenue. The state plans to introduce a new fee structure for cable installations within three miles of its coastline, with proceeds directed to the Common School Fund.
Current and Proposed Fees
The existing fee structure, established in 2001, consists of a simple $5,000 application fee. The new pricing—still under discussion—would be:
- $3 per linear foot of cable
- $7 per section of bore pipe (the protective structure covering the portion closest to shore)
According to Oregon's Department of State Lands (DSL), on a 20-year lease, this would generate millions per undersea cable. Using Amazon's Bifrost cable as an example, the DSL calculated a total of $1,450,380 over two decades, paid in a single lump sum.
Revised from Earlier Proposal
The current rates were revised from an earlier, more expensive proposal that would have factored in bore cross-section. That calculation was dismissed as too complicated and, presumably, too onerous.
Competitive Positioning
The DSL describes the revised rate as "competitive-to-low," emphasizing Oregon's effort to remain attractive compared to its southern neighbor, California, which charges an estimated $5 per cable foot annually.
Oregon aims to continue attracting investment in its tech sector, which includes approximately 140 data centers and 16 undersea cables of various types. The state also benefits from no sales tax and enterprise zoning incentives, making it a favorable location for major players such as Amazon, Microsoft, and Google.
Context: Cable Costs
Spending $1–2 million over two decades is minimal compared to the initial investment required for undersea cable deployment. Transatlantic connectors reportedly cost around $250 million, while cables crossing the Pacific can reach $400 million.
Exemptions for Existing Cables
Although not finalized, already-approved cables may be almost entirely exempt from the new fees. Some recent contracts, including the one for Amazon Bifrost, included a clause requiring payment of any fees imposed by new state laws. However, the contract also contained a specific $300,000 "out" for this clause, which Amazon paid at the time.
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Oregon to Charge Undersea Cable Operators New Fees, Directing Millions to State Schools