Let the States Manage Resources on Federal Lands

COMMENTARY Climate

Let the States Manage Resources on Federal Lands

Jun 20, 2018 2 min read
COMMENTARY BY
Nicolas Loris

Former Deputy Director, Thomas A. Roe Institute

Nick is an economist who focused on energy, environmental, and regulatory issues as the Herbert and Joyce Morgan fellow.
The “to drill or not to drill” dilemma can be resolved if we focus first on the true source of the problem: federal control of the lands and the resources they contain. pandemin/Getty Images

Key Takeaways

As gas prices climb, some are reviving the mantra “Drill, baby, drill.” But not everyone is on board.

The bill would also offer states a greater share of the revenue collected from winning bids, rents and royalties.

The House Natural Resources Committee should be commended for trying to inject the important principles of federalism into the energy policy discussion.

As gas prices climb, some are reviving the mantra “Drill, baby, drill.” But not everyone is on board.

When the Interior Department unveiled its plan to open federal offshore territory to energy development, many coastal states lashed out, voicing concerns about environmental risk and related economic problems.

The “to drill or not to drill” dilemma can be resolved if we focus first on the true source of the problem: federal control of the lands and the resources they contain.

Federal management has proved neither nimble nor responsive to dynamic energy markets. States, on the other hand, have had remarkable success — both economically and environmentally — overseeing natural resource development.

The difference shows in even the simplest management tasks. States process applications for drilling permits in a matter of days or weeks. The feds take several months. The record is clear: Where states have authority over the regulatory process, oil and gas production has soared.

The economic advantages of state management have been most readily apparent in the fracking revolution. But it’s been able to manifest itself offshore as well, even under the current broken system.

Exhibit A: Louisiana, a state that is actively engaged in energy production and recognizes the benefits of economic diversity. The Pelican State boasts strong commercial fishing, seafood and tourism industries, as well as robust oil and gas production. The waters off its coast contain more than 80 percent of the nation’s offshore rigs and accommodate 30 percent of all commercial fishing in the continental U.S. Clearly, these industries can thrive together under management that intelligently aligns economic and environmental incentives.

States are far better suited than Washington to get that alignment right. They are better situated to form policies that reflect local knowledge of potential drilling sites, other activities and opportunities existing in the same area and the priorities of nearby communities.

Devolving authority for resource management to the people who live and work there places the responsibility in the hands of those who have the most to gain by wise management and the most to lose if they are poor stewards of the land and resources.

Last week, the House Natural Resources Committee conducted a hearing on draft legislation that would do just that. The Enhancing State Management of Federal Lands and Waters Act would transfer to the states responsibilities for energy extraction on federal lands. States could have complete control of their energy programs and choose where to develop those resources.

The bill would also offer states a greater share of the revenue collected from winning bids, rents and royalties. They could use this money to close deficits, fund coastal restoration and conservation, or invest in education.

Lawmakers would do well to consider opening lease auctions to all interested parties. Currently, only energy companies can bid on tracts of land, and the federal government requires leaseholders to demonstrate the intent to develop the resources. Opening up the auction would invite more competition and help truly assess the value of the land and the resources beneath it.

A more inclusive bidding process could also create more economic and environmental cooperation. For example, an environmental organization could pair up with a grazer to bid on a parcel of land. An energy company could coordinate with a conservationist group to use the land in ways that would benefit both parties.

The Enhancing State Management of Federal Lands and Waters Act is still a work in progress. But the current version would accomplish two important objectives: delegating more authority to the states, and using financial incentives to inform states’ decisions.

The current Washington-centric approach to resource management stifles creative, collaborative solutions to competing interests that could be resolved at local, state or regional levels. The House Natural Resources Committee should be commended for trying to inject the important principles of federalism into the energy policy discussion.

This piece originally appeared the Washington Times