This week, the Royalty Policy Committee, which was established to advise the Department of the Interior on natural resources management, is meeting in Albuquerque, New Mexico. President of Taxpayers for Common Sense, Ryan Alexander addressed the committee during its public comment period.
Her full comments (in PDF format) can be accessed here.
Find her remarks as delivered below:
Good morning. I am Ryan Alexander, president of Taxpayers for Common Sense. If it were not my daughter’s 10th birthday, I would be in New Mexico to join you today.
Since 1995, TCS has produced detailed research and analysis documenting billions of dollars in lost taxpayer revenue, due to a largely opaque leasing and royalty collection system that frequently undervalues our natural resources.
The Royalty Policy Committee has a unique opportunity to address the longstanding problems plaguing our system and propose reforms that will help get taxpayers what we are due. Today, I will touch on few of the places we think the committee should turn its focus.
Ninety percent of the natural gas vented or flared on all federal lands in the last decade did not incur a royalty. The newly proposed BLM rule to address the royalty treatment of lost gas could make matters worse. We urge the committee to fully examine the issue of methane waste and taxpayer losses.
Appropriately valuing our resources is also of great concern to TCS. Last year, ONRR repealed a valuation rule, resulting in reduced royalty collections. Yet at the last meeting, this committee endorsed recommendations that exclusively represent the industry’s objections to the rule. We urge the committee to revisit this issue.
At the meeting in Houston, I raised concerns with the RPC’s recommendation to lower offshore royalty rates and we were pleased to see that DOI has not pursued lower rates. We urge the RPC to focus instead on applying an 18.75 percent royalty rate across all offshore and onshore leases.
At the end of fiscal year 2017, half of all onshore acres leased for oil and gas production, and 70 percent of offshore oil and gas leases sat idle. Some lag between a lease’s issuance and exploration and development activities is expected. But allowing companies to hold on to parcels of land prevents its use for other economically valuable purposes. The RPC should examine how the BLM could alter its rental pricing and practices to discourage the stockpiling of federal land.
We are not opposed to another review of the adequacy of the oil and gas measurement standards, as the RPC is recommending today. But, more justification is needed to explain why a review is necessary when current standards are based on 2007 RPC recommendation that included extensive reference to the API and GPA standards. The committee must demonstrate need before automatically reverting to industry standards.
Finally, the committee’s new recommendation that DOI’s review of the royalty relief process should examine how new technologies could factor into the justification for royalty relief makes sense. It is imperative, however, that any review of the royalty relief process, or any subsequent changes made to that process, should not lower the standards for granting royalty relief.
We hope going forward the committee will be able to fully address these and many other important resource development issues and the royalty policies related to them. I will submit our full comments for the record and I am happy to answer any member questions.