New royalty rates proposed for federal lands

By Joshua Mantell

The Department of Interior’s Office of Natural Resources Revenue (ONRR) is proposing to reform the royalty rates oil, coal, and gas companies pay to extract resources from public lands. This is a much needed step in the right direction. These current policies, which were put in place decades ago, represent an antiquated outlook at how Americans value our shared public lands.

The current royalty rates paid have real loopholes and allow deductions that ensures industry can pay lower than market rate for the lands they develop. Our lands are being severely undervalued, at the expense of the American taxpayer. When development occurs lands are no longer able to be used for other purposes, like recreation and for important wildlife habitat. But the prices industry pays do not reflect this real lost opportunity. Instead, these prices represent a skew in the favor of development on our public lands – which also decreases the scenic, recreational, and other values of the lands. Furthermore, these polices are out of touch with American thinking – polling consistently shows that American’s value the lands for many other uses above energy development.

Energy development is important, but the value of public land is changing in favor of conservation and recreation. Since the inception of these policies recreational usage has more than doubled, to over 59 million visitors annually on BLM lands alone. Recreation and tourism have become strong business drivers in communities adjacent to public lands. In fact, the recreation industry contributes more than $646 billion annually to the economy. The low rates charged on oil and gas development threaten to encroach on other, more sustainable land uses. It’s past time for the federal government to put a similar value on federal lands, as the American people have.

 

The federal government must modernize the way industry pays royalty rates for oil, gas, and coal developed on public lands. These rates were put in place when there was a problem of access for the energy industry. That is no longer the case. These low rates reflect an attitude of the past – we must bring energy development on our public lands into the 21st century. 

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