Mary McGann: Utah deserves fair value for oil and gas leases

Rick Egan | The Salt Lake Tribune An overlook in the Book Cliffs area in Uintah and Grand County, Thursday, October 28, 2010. The Book Cliffs are a relatively remote part of Utah that face increasing encroachments from oil, gas and tar sands developments.

The city of Moab, in Grand County, Utah, has a steadily growing outdoor recreation economy that depends on the health of the public lands that surround our community. The development of oil and gas can be of great value to the county and help diversify the economy. But oil and gas activity, though it has an important place within our economy, must be managed in a manner that will not threaten our beautiful desert landscapes and consequently put the outdoor recreation industry and the Moab brand at risk.

In addition to being mindful of where oil and gas is extracted, it is time to update the outdated rates and fees for onshore oil and gas. In exchange for the extraction of our publicly owned natural resources, it’s only reasonable that oil and gas companies pay a fair market price for the impact they have on our world-renowned public lands.

The Federal Land Policy and Management Act of 1976 stipulates a “multiple use” approach to managing our public lands. Yet our current federal fiscal program for onshore oil and gas leasing has not been updated for decades, despite inflation and increased production. These outdated rates and fees favor oil and gas companies, while negatively affecting communities impacted by the industry.

The Taxpayer Fairness for Resource Development Act of 2019 seeks to modernize these fiscal policies by updating the archaic rates, and has the potential to generate as much as $38 million in additional revenue for American taxpayers every year, with a negligible impact on production, according to the U.S. Government Accountability Office and Congressional Budget Office.

Moreover, a study by Taxpayers for Common Sense shows that if the federal onshore royalty rate for oil and gas development had been 18.75%, as proposed in this bill, and not the current rate of 12.5%, Utahns would have received an additional $700 million in revenue between 2008 and 2017 from drilling on public lands. That is $70 million dollars a year that could have helped fund after-school programs, crumbling roads or other vital public services and infrastructure.

The federal onshore program fiscal policies determine the cost of purchasing a lease for the land, the rate companies pay each year to rent the land, and the percentage of profits companies pay to the government for extracting resources. The low rates outlined in the current policies allow large swaths of federal land to be tied up in oil and gas leasing, rather than being managed for recreation, conservation or other uses.

Grand County is a world class recreation destination and, as such, the region has seen steady economic growth for the past 40 years. The outdoor industry generates $887 billion in consumer spending annually, as well as supports 7.6 million jobs that can’t be outsourced or automated.

Utahns have expressed support for these important reforms. Colorado College’s Conservation in the West poll found that 66% of Utahns want to update the federal royalty rate to 25%, which is well above the increase proposed in Rep. Ben McAdams’ legislation, H.R. 4364.

Without the common sense changes proposed in the bill, American taxpayers are not receiving an equitable return on investment for onshore oil and gas activity. Public lands belong to all of us, and federal laws guarantee that they are managed in our best interests. That’s not possible without some amendments to the Mineral Leasing Act to reform the fiscal terms for energy development on federal lands.

We deserve a fair market price charged for their use. Today’s culture and outlook on managing public lands embraces many types of uses both for our livelihoods and enjoyment.

Fossil fuel extraction and a thriving outdoor recreation industry are pillars of many local Western economies and there is room for both, but we can’t hope to sustain either without modern policies in place to protect the landscape and taxpayers.

I urge Congress to take up and pass H.R. 4364 to secure a fair price for public land and public resources.

Mary McGann

Mary McGann is chair of the Grand County Council and contributor to Western Leaders Voices, a program of Western Leaders Network that helps amplify the voices of local and tribal elected leaders on conservation issues in the West.