By ALEX BAUMHARDT/Oregon Capital Chronicle

The Oregon Department of State Lands is proposing for the first time to charge multinational telecommunications and tech companies for using the seafloor off the state’s Pacific Coast for fiber-optic cables used to transmit internet data and international calls.

Since 1989, when Oregon got its first trans-Pacific fiber optic cable spanning from Pacific City to Alaska to Japan, the state lands department has only mandated companies pay an application fee that, since 2001, has been frozen at $5,000.

Now, Oregon could join its West Coast neighbors in California and Washington in requiring companies also pay compensation fees based in part on the amount of cable extending along the states’ near-coast seabed. The proposal, which could bring in millions of dollars, comes as the tech industry has made Oregon a hot spot for data centers and among the top 10 states for housing massive server farms.

The Oregon lands department is proposing tripling new application fees from $5,000 to $15,000, increasing application renewals from $5,000 to $7,500 while extending the renewal period from 20 years to 25 years and charging a one-time compensation fee of $3 per foot of fiber optic cable laid within the three miles of coastal, “territorial seas” that the state has jurisdiction over.

That could bring in more than $1 million per new cable laid, according to Dana Hicks, a planning and policy manager at the department.

The application fees would help the agency cover the costs of technical reviews, surveys, inspections, public outreach and other coordination and administrative work while the compensation fees would flow to the Common School Fund and Oregon’s public K-12 schools.

The department is also proposing new rules requiring companies to submit more information in their applications, including plans for replacing or decommissioning the cable infrastructure and for responding to emergencies, such as the anticipated Cascadia Subduction Zone earthquake.

The State Land Board, made up of Gov. Tina Kotek, Secretary of State Tobias Read and State Treasurer Elizabeth Steiner, will vote on the rules at one of its monthly meetings before the end of the year.

There are 16 active undersea cables off Oregon’s Coast, transmitting internet data and international calls via pulses of light through thin glass fibers packed in cords about 3 inches in diameter.

The bulk of the state’s undersea leases for cables were permitted in recent years. The state approved three new easements for cables in the 1990s, which grew to 13 in the last two decades and two in just the last few years, Hicks said. Most connect Asian countries with American tech and telecommunications companies.

A boom in new data centers in Oregon spurred by the state’s lack of sales tax and enterprise zone tax incentives that have saved multi-billion-dollar companies like Amazon, Google and Microsoft hundreds of millions of dollars in property taxes during the last two decades are among the reasons for more cable in recent years. All three companies have an ownership stake in undersea cables off the Oregon coast, and representatives from Google and Amazon were on the state’s committee tasked with providing input on the rules.

Other factors include Hillsboro being one of just two places on the West Coast where landing stations bring the cables even further inland. The other is in Los Angeles, which has higher electricity prices and more regulatory burdens. California charges companies annual rent fees for their fiber-optic cables based on the value of the property and the length of the cable, with fees generally coming out to about $5 per foot.

The new updates to Oregon’s rules and fees come in response to a 2020 incident in which a Facebook subsidiary executed a disastrous new cable construction project off the coast at Tierra Del Mar. Workers broke drilling equipment while boring into the seafloor and were unable to retrieve it, ultimately abandoning 1,100 feet of pipe and 6,500 gallons of drill fluid in the ocean. State regulators didn’t find out about the incident until county officials alerted them two months later.

A year later, the drilling caused another leak, followed by two sinkholes along the cable route. The company paid $250,000 to the state lands department for the earlier breaches and about $135,700 for permission to leave the broken equipment in the ocean for 50 years.

The 2021 Legislature passed a bill requiring an advisory council propose updates to the Oregon Territorial Sea Plan, which governs regulations over Oregon’s seafloor. It had not been updated in more than two decades. Those updates came in 2023, which set off new rule-making processes, including the now-proposed updates to fees and rules for undersea cables.