Oregon to charge undersea cable operators per linear foot, directing millions to state school fund

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 Fee Structure

The existing fee system, established in 2001 (25 years ago), 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 the Oregon Department of State Lands (DSL), on a 20-year lease, this would generate millions of dollars per undersea cable over that period. Using Amazon's Bifrost cable as an example, the DSL calculated a total of $1,450,380 for two decades, paid in one 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 on an annual basis.

Oregon aims to continue attracting investment to its tech sector, which includes:

• Approximately 140 datacenters
• 16 undersea cables of various types

The state also benefits from no sales tax and enterprise zoning incentives, making it an appealing location for major players such as Amazon, Microsoft, and Google.

Cost Context

Spending $1–2 million over two decades is minimal compared to the initial investment required to lay an undersea cable, particularly one spanning oceans. Typical costs include:

• $250 million for a transatlantic connector
• $400 million for a transpacific connector

Exemptions and Existing Contracts

Although not finalized, already-approved cables may be almost entirely exempt from the new fees. Some recent contracts, such as 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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