October 17, 2019 at 5:21 am ET
Since assuming office, the Trump administration has pursued several policies that undermine protections for public lands in Utah and throughout the country. Recently, the Trump administration rolled back rules regulating methane emissions on public lands, despite strong pleas from leading oil and gas producers that the rules made sense. Now a new report by the nonpartisan organization Taxpayers for Common Sense highlights another way that Utahans are being impacted by outdated fiscal policies.
The report examines federal onshore oil and gas leasing in Utah under the Department of the Interior’s Bureau of Land Management and finds that this program is failing taxpayers. The core problem is that outdated rates do not adequately compensate American taxpayers for the market value of the publicly owned resources being extracted from federal lands, or for the significant opportunity costs that arise when lands are managed for oil and gas rather than things like outdoor recreation.
The report highlights that the onshore royalty rate falls far below equivalent state rates, and that rental rates for oil and gas leases have not changed in more than 30 years. As a result, the report finds that from 2008 to 2017, lost royalty revenues from energy developed on federal lands in Utah amounted to about $1.4 billion. And because states are entitled to half the revenue generated on their land, the state of Utah has lost out on $700 million.
It is critical that the federal government put an appropriate price on the oil and gas industry’s use of these public resources because, increasingly, public lands are a huge economic driver for their non-energy producing value. In Utah, an exciting trend is emerging: Innovative companies are increasingly moving to the state to take advantage of the benefits it has to offer. As a venture capitalist who has invested in companies here, I know firsthand that the state’s high quality of life, and specifically its access to beautiful recreational opportunities, is a key incentive that encourages companies to put down roots here.
When venture capitalists like myself analyze an investment opportunity, or fast-growing company executives are searching for a place to locate their next facility, the ability to recruit top-quality employees to help the company grow is central to the decision. Access to first-class outdoor recreational opportunities is extremely important to these target employees and so becomes a critical part of any decision-making process.
Moreover, outdoor recreation helps inspire, recharge and refocus new and existing employees alike. These outdoor opportunities fuel teamwork and innovation. But you don’t have to take my word for it: A national survey of over 4,000 employees of fast-growing companies recently published by The Muse found that nearly 70 percent said that these opportunities were either important, very important or extremely important to their lives outside the office. Even more striking, 25 percent said it was important in making their decision to accept their current job.
Moving forward, I hope the Trump administration will understand the delicate trade-off that residents of Utah and other states are making. Fortunately, bipartisan legislation, known as The Taxpayer Fairness for Resource Development Act, has been introduced, led by Rep. Ben McAdams of Utah, that would update royalty and rental rates for oil and gas production to mirror market rates. This legislation recognizes that public lands are a valuable resource, not only because of the energy that lies beneath them, but, increasingly, the jobs, prosperity, and quality of life that can be derived above.
Enacting better management practices on our public lands, including a balanced and fair royalty system, will more appropriately compensate the citizens of Utah while keeping sight of the overall importance of protecting our public lands for generations of Utahans to come.
Nancy Pfund is the founder and managing partner of DBL Partners, a venture capital firm, and the co-chairwoman of the Conservation for Economic Growth Coalition.
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This piece has been updated to remove extended background information on the BLM Methane Waste Prevention Rule and to include reference to new polling data on outdoor recreation, additional findings that illustrate taxpayer losses due to outdated federal onshore oil and gas leasing policies, and new legislation introduced by U.S. Rep. Ben McAdams (D-Utah) that would update federal onshore oil and gas leasing policies to prevent additional losses to taxpayers.