Las Cruces Sun Times: NM taxpayers lose out on millions from oil and gas

In the NewsLas Cruces Sun Times: NM taxpayers lose out on millions from oil and gas

This article by Dan Bucks first appeared in Las Cruces Sun Times on July 25, 2019

In my time as director of Montana’s Department of Revenue and as executive director of the Multistate Tax Commission, it became clear that our current federal mineral leasing system is among the most deeply mismanaged and scandal-plagued source of public revenues. These decades-old policies are designed to favor industry instead of the American people who own the landscapes and natural resources leased to oil and gas companies in New Mexico and across the West. And so long as they remain stuck in the past, the federal government will continue to operate behind closed doors and fail taxpayers — all to the benefit of industry.

Taxpayers own significant oil and natural gas reserves on public lands throughout New Mexico, which is also the third-largest oil producing state in the country, and are supposed to receive “fair market value” whenever oil and gas is developed on public lands. The Bureau of Land Management within the Department of the Interior manages these reserves and is directed by law to routinely evaluate and strengthen its fiscal policies — including updating royalty rates, rental rates, minimum bids — to ensure that the taxpaying public, and not private interests, receive a full and fair return from federal minerals.

But this is not the reality. A recently released report from Taxpayers for Common Sense found that the BLM’s low onshore royalty rate and permissive approach to natural gas waste has cost taxpayers more than $5 billion in the last decade — half of which would have gone into New Mexico’s coffers. While leasing in New Mexico is often more competitive than other oil and gas regions, the increased production falls dramatically short at providing a fair return to taxpayers.

To make a bad situation worse, the Trump Administration has attacked several existing common sense oil and gas safeguards. Case in point, watering down the 2016 methane and waste prevention rule, which was originally put in place to protect taxpayers and hold industry accountable for wasting methane during production and development.

The framework for oil and gas leasing that was established decades ago has led to billions of dollars in lost taxpayer revenue and simultaneously saddled taxpayers with associated pollution, public health costs, and long-term reclamation liabilities. Our public lands and the vast resources they offer are precious assets for taxpayers. The weight of the public trust and the current federal budget picture demand that the Bureau of Land Management maximize the fiscal return — after covering all adverse costs of production–by administering oil and gas development strategically on public lands in New Mexico and across the country.

The Bureau of Land Management is not beholden to the decisions from decades past. The agency has existing authority to independently change each of the policies —including royalty rates, rental rates, and treatment of natural gas waste. By updating lease terms for federal oil and gas development now, the Bureau of Land Management can substantially increase the returns to the Treasury, and the amounts disbursed to the state of New Mexico, in the years to come.

For decades these flawed policies have allowed oil and gas companies to waste publicly owned natural resources and deny taxpayers billions of dollars worth of revenues from production on public lands. It’s time the federal government start putting the public’s interest ahead of the oil and gas industry and end the needless waste of taxpayer resources by bringing these onshore oil and gas leasing policies into the 21st century.

Dan Bucks served as director of Montana’s Department of Revenue from 2005-2013, and executive director of the Multistate Tax Commission from 1988-2004.