Issue in Focus
Nov 22 2019
There are many things unique to life in Western states. One of the special benefits is of our beautiful lands and landscapes. Unfortunately, these same lands are also often subject to federal ownership, which means that the federal government often controls how and who can enjoy it.
For many years, the federal government has collected royalties from onshore oil and gas development on public lands. At first, the federal government split this revenue 50/50 with the host states where the development of this land takes place.
But in 1993, the federal government began to take away 2% from the states and imposed it as a “collection fee” – meaning that the federal government now receives 52% of the revenue from these mineral royalties, and the states receive only 48%.
This might seem like a relatively small sum, but it adds up in western states like Utah, Wyoming, and New Mexico, to name a few. In fact, this surcharge shortchanges our states to the tune of millions of dollars each year – money that was promised to and rightfully belongs to the states. For example, in just FY2019, Utah lost about $3 million in revenue due to this surcharge. This robs us of precious funds needed for local schools, infrastructure, law enforcement, and various needs in our local communities.
That’s why this week, during a bill markup by the Energy and Natural Resource Committee, I offered an amendment that would remove eliminate the 2% surcharge so that the original ratio is restored and states can collect their own mineral royalties, fair and square.
Some of my Democratic colleagues were concerned by the phrasing of my proposed amendment, which required the Secretary of the Interior to convey “right, title, and interest” to the 2% percentage to the states. Because this terminology often is used for the transfer of property itself, they were worried that the amendment would therefore not just transfer money to the states, but would allow transfer of federal land as well.
Thankfully, we were able to work together to draft new phrasing to assuage my colleagues’ fears. While I expected the amendment to adopted along party lines, because we were able to collaborate on the new language, it was in the end adopted with bipartisan support.
The federal government should not be snatching up mineral royalties that rightfully belong to the states. States are best equipped to collect these mineral revenues, and to determine how those funds should be spent for the good of their communities. If our amendment is included with this bill and passes through Congress, it will mean millions of dollars for states across the West that can help them do just that. I’m grateful that our work in the markup this week was a step in the right direction.