WASHINGTON, Oct. 18, 2017 - The House Subcommittee on Energy and Mineral Resources heard testimony on a discussion draft of the “Opportunities for the Nation and States to Harness Onshore Resources Act.” The bill, known as the “ONSHORE Act,” would allow states with established regulatory programs to seek primacy for the implementation of federal permitting responsibilities for oil and gas development on federal lands.

Permitting processes currently discourage development on federal lands. Even despite lower royalty rates on federal lands, producers often opt to do business on state and private lands.

“Inefficiencies and redundant requirements imposed by the federal government have discouraged oil and gas production on federal land,” Subcommittee Chairman Paul Gosar, R-Ariz., said. “Not only do they (the states) already perform many of the regulatory functions performed by the BLM, but they do so more efficiently and with less cost.”

In 2016, the Bureau of Land Management (BLM) took an average 257 days to process Applications for Permits to Drill. By contrast, state agencies took an average of 30 days. 

Such delays “deter companies from wanting to operate on federal lands, translating into lost federal revenue from the royalties generated,” said Dan Naatz, with the Independent Petroleum Association of America (IPAA).

Not only does the current inefficient and duplicative federal regime forfeit federal revenue, it also deprives states of millions of dollars that would otherwise flow into their own treasuries, he said. “This is critical funding for Western states who rely on oil and gas revenues to fulfill budget priorities for local communities,” Naatz added.

Virtually all oil- and gas-producing states have developed rigorous, effective and responsive regulations that are aggressively enforced, according to some witnesses.

“[State regulatory regimes] are more comprehensive because they are local, they are the people, neighbors and friends, who do live there, that care about the land, that care about the water and want to be able to see responsible energy development,” Rep. Scott Tipton, R-Colo., stated.

“The more participation the people have, the better,” said Rep. Louie Gohmert, R-Texas. “And nowhere do you have more participation than the local level. The closer to the local level the decisions are made, the more input there is from people. And that’s why I’m a big fan of getting these decisions back to state and local levels.”

Cathy Foerster, commissioner of the Alaska Oil and Gas Conservation Commission, argued that state regulatory regimes are superior, and described the difficulties caused by federal duplication.

“Another problem with redundant oversight is that the federal regulations tend to be a one-size-fits-all approach, while the states develop their regulations to suit the geology, geography and other circumstances specific to their states,” Foerster said. 

The bill would also allow states to collect their share of federal revenue – thereby eliminating the administrative fee charged by BLM.

“This draft bill will also ensure that the states receive their fair share of oil and gas revenues produced on federal land,” Gosar stated. “[It] provides states with a path to maintain stewardship over their share of mineral revenue and utilize it for the benefit of their citizens.” 

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