The Politicized World of Public Lands As Revealed in Hearings of the U.s. House Committee on Natural Resources

The Natural Resources committee of the U.S. House of Representatives recently held three hearings addressing oil and gas resources on federal lands and waters.

The proposed bills reveals the conflicting attitudes involved in federal lands resource management. The “Enhancing State Management” bill would push authority out to the states, putting decisions nearer the areas affected by oil and gas development. There is some evidence states are more effective stewards of oil and gas resources on state lands relative to federal management of federal lands. While the proposal would not eliminate federal political control, it would spread some of it out among the states.

The two bills from the third hearing would likely enhance the already high level of politicization of public lands management. The Yellowstone Gateway act continues the longstanding practice of Congress acting as dispensers of special favors to politically organized groups. There is nothing inherently wrong here, but protections ought to work by rule rather than by special favor. The Education and Energy Act would treat federal resources as a slush fund to be dispensed by Congressional largesse rather than as a public resource which Congress is responsible for managing.

The first hearing was stacked with three conservative and/or GOP speakers in favor of “Enhancing State Management,” and one GOP speaker against at least parts of the act. Myron Ebell of the Competitive Enterprise Institute offered support for several sections of the proposal. After describing a proposal to share more revenue with coastal states when resources offshore are developed, Ebell said:

As well as providing a powerful incentive to the states, the discussion draft also includes provisions designed to give coastal states veto authority over offshore oil and gas production off their coasts. Under current law, coastal states cannot stop offshore drilling. At the same time, most coastal state governments currently oppose offshore drilling. These states are left with trying to exert political pressure, as in the case of Florida Governor Rick Scott, or making empty threats, as in the case of California Governor Jerry Brown. The discussion draft would give these states the legal right to prevent drilling off their coasts for a period of their choosing by paying a lost production fee to the federal treasury. The size of the payment would be calculated according to several factors.

Such a proposal seems consistent with the suggestions I made in the post: “Should the Trump administration get to play politics with offshore federal oil and gas resources?” Rather than the White House or the Congress feeling empowered to play politics with federal resources, the federal government should be acting as prudent steward of public resources. A proposal to boost revenue sharing while granting some veto authority to states seems a move in the right direction.

Mayor Ben Cahoon of Nags Head, North Carolina spoke in opposition to changes that involve potential offshore oil and gas development, including that states pay federal taxpayers a fee if the state vetoes development of offshore oil and gas. Cahoon said, “Coastal states should not be penalized for protecting their existing economic interests.” My response to him is the same as my response to the Trump administration granting favors to Florida or environmental groups seeking protections of their interests at the expense of benefits to the public more generally: let’s open the auction process, and let the entity or group willing to best compensate the public hold development rights.

I’m not opposed to coastal states protecting their economic interests, but the retiree living in South Dakota has an equal interest in the value of the offshore development rights as the owner of a beachfront mansion in Nags Head, North Carolina. If development rights are worth more to coastal state tourism and other uses that require blocking oil and gas development – that is fine – but the South Dakota retiree (and everyone else) should be compensated for the loss of value of public resources.

Matthew Anderson of the Utah-based Sutherland Institute spoke primarily to dispel the view that states want to exploit federal lands at the expense of environmental values. While Anderson favored reforms along the lines proposed, he advocated for a broader delegation of federal authority to state governments. Why just delegated authority for oil and gas resources, and not authority for recreational, logging, grazing, and other environmental resources? A broader grant of responsibility would avoid creating a one-sided interest in state management.

Nicolas Loris of the Heritage Foundation spoke generally in favor of the draft proposal, suggesting it would boost the energy industry’s ability to respond to market conditions and promote more effective government management of oil and gas resources on federal lands. Loris also took note of the idea that Shawn Regan and I put forward in comments submitted to the U.S. Department of the Interior in 2015. Loris said:

Restricting who bids and requiring the winner develop the parcels eliminates competition and fails to assess the relative value of the land. Conservationists, recreationists, alternative energy companies, ranchers, or environmentalists may value the land more for their intended use than for oil and gas development. As economist Michael Giberson and research fellow Shawn Regan write in their public comment on federal oil and gas royalties, “No method reliably integrates the variety of diverse, predominantly subjective, and sometimes conflicting values into a single, uncontroversial auction reserve price.”* Opening the leasing process to all interested parties would not only create more competition but also potentially more cooperation. An environmental organization could pair up with a grazer to bid on a block of land. An energy company could coordinate conservationist groups to use the land in which both parties can benefit. [Footnote omitted; find our comments here.]

Loris offers several suggestions for improving the proposed bill, including the expansion of the ability to delegate resources to all energy resources. With this expansion, decisions over geothermal projects or solar farms in Nevada or California, for example, would see greater state oversight not just federal oil and gas resources.

Again, the broader delegation of authority would likely improve policymaking as the states would be better positioned to consider tradeoffs among multiple uses of the resource. Giving states a stronger economic interest in some activities on federal lands while lesser interest in others seems a recipe for distortion and further conflict.

Some of the tensions at play concerning oil and gas resources on federal lands emerge from political shifts in Washington. As the White House shifted from Clinton to Bush, from Bush to Obama, and from Obama to Trump, the political coalitions of most influence shifted from environmental groups to industry groups and back. Shifts in Congress are more subtle in some respects, but potentially more powerful. Each temporary coalition seeks to claim long term gains from the great prize presented by federal resources.

Prudence might better be served by less politicized management of the public’s government-managed resources.