Today i am in houston Texas, to present remarks at the second meeting of the Royalty Policy Committee of the Department of the Interior. The committee, formed in the spring of 2017, is alleged to have made recommendations to the Secretary of the Interior to secure a fair price and return for oil, gas, and other resources developed from US taxpayer and taxpayer-owned land on coal. Has been accused of
As the committee takes charge with the taxpayer’s goals for Common Sense, we are paying close attention. We were pleased that the new administration, at the beginning of its term, was expressing a commitment to achieve fair returns for taxpayers. Unfortunately, as I reported here When the members were announced last fall, we found that the committee had well represented the energy interests prepared to benefit from the committee’s recommendations, but No independent taxpayer lacks voice. (I took that voice voluntarily, as did other deserving people.) Even some of the members included as public interest representatives have close ties to the industry.
What we can see so far is bad news for taxpayers. Spoiler Alert: The committee appears to have been prepared to recommend lowering royalty rates for certain resources.
Over the years my organization has documented that lost revenue has cost taxpayers billions of dollars in royalties and leasing policies. Is from natural gas Leaked, vengeful and flared, Leasing millions of acres and Undeveloped oil and gas leases To produce no royalties Undeclared coal This skirts substantial royalty payments Wind and solar development On public lands, we have dug into several divisions of internal energy leasing programs. In many cases, policies that conduct preventive activities on federal land and water are decades old and have not kept pace with changing markets or technology. And we are not alone in pointing out the department’s failure to protect taxpayers: Different The General Accountability Office reported that oil, gas and Coal companies They are also underpaid under current rules.
The Royalty Policy Committee should dig into these programs and make unbiased recommendations for federal taxpayers on how to get the best deal. After all, they are accused. But in the last four months, the Royalty Policy Committee has been holding closed-door meetings for three subcommittees. First meeting In October: Tribal Affairs; Fair price and return; And planning, analysis, and competition. Sorting of notes from these private sessions began over the last several weeks and in some cases included very disturbing recommendations for the full committee. The notes showed that the proposed reforms often relied almost entirely on industry input and even used language derived from industry comments. Talk about the fox guarding the hen house.
If the proposed recommendations are implemented, the taxpayers will have to bear heavy costs. One of the recommendations of the working groups of the Royalty Policy Committee is to reduce the royalty rates for outer continental shelf offshore oil and gas development from 18.75 percent to 12.5 percent. Offshore oil and gas royalty rates were raised to 18.75 percent in 2008 by Interior Secretary Dirk Campthorne under President Bush. The new proposal from the Royalty Policy Committee will not provide any benefit to taxpayers in producing valuable royalty revenue. According to the Department of Interior’s own records, when rates were raised about 10 years ago, interest in offshore development did not diminish.
The recommendations state that acreage for leasing should be increased and royalty rates for “expensive farms” should be addressed. But if a lease is non-economic using existing technology and current prices, federal taxpayers cannot step in and make it profitable. Fast tracking more leasing makes no fiscal sense when the industry already has undeveloped leases on millions of acres that are currently generating no royalties. Let’s start getting those to get revenue.
Unless we see some dramatic changes, the Royalty Policy Committee could be an echo for the industry on track to rapidly derail the Trump administration’s agenda, reduce royalties, and favor federal taxpayers. When we are facing a budget crisis again and again, leaving money on the table is just a bad business. That argument should be explained to both the president and industry.
The energy industry does not need any help in searching for its interests. If the Royalty Policy Committee continues on the current path of closed-door, industry-driven meetings, it will become a case study in crony capitalism.
The good news is that the Royalty Policy Committee still has time to start the process. The Committee on Administration and Royalty Policy has a duty to the American taxpayer. Let’s hope they remember that before it’s too late.