A report released this morning by the Government Accountability Office (GAO), originally requested by Rep. Raúl M. Grijalva (D-Ariz.) and Sen. Tom Udall (D-N.M.), highlights billions of dollars in lost public royalty revenue from oil and gas extraction on federal lands and describes glaring shortfalls in the data publicly available on hardrock mineral extraction on those lands. The report examined available data on minerals extracted from land administered by the Department of Interior, which includes 700 million acres of federal land, 57 million acres of Indian lands, and 1.8 billion acres below offshore water.
The first section of the report details the value of minerals -- including oil, natural gas, and coal -- subject to lease and administered by the federal Office of Natural Resource Revenue. Although royalties are paid on these minerals, the report details a discrepancy between the amounts actually paid in royalties -- which GAO calls theeffective royalty rate -- and the rates set out in existing law.
The report also concludes that that there is no available data on the amounts, types or values of so-called locatable minerals -- such as gold, silver, copper and uranium -- that are mined from federal lands each year. The 1872 Minig Law, which still governs hardrock mineral extraction, provides no royalties for the public even for multi-billion-dollar mining operations conducted on federal land. Mining companies are not required to disclose how much they extract, where such minerals are sold or what the overall value of each mining operation is.
The full report is available at http://1.usa.gov/UScbwM. The original request from Grijalva and Udall is reviewable at http://1.usa.gov/R4NGuK.
"We've been hearing from conservatives that we need fewer hours at national parks, less reclamation of valuable lands, fewer services for park visitors and a whole gamut of supposedly necessary cutbacks," said Grijalva, the ranking member on the House Subcommittee on National Parks, Forests and Public Lands. "Well, now we know we've been leaving a huge pot of money on the table that could change all that. There's no reason to keep these extraction and royalty laws out of date. At the very least we need disclosure so American taxpayers know what is being taken from their lands. Keeping the public and Congress in the dark any longer about what's going on with federal property doesn't serve any public purpose, and it should end.
"This report confirms what we've been saying all along -- that we need to reform the mining law of 1872," Udall said. "Hardrock minerals are natural resources that belong to the American people, and we need to make sure we are getting the best return on what should be an investment -- not a giveaway."
Grijalva is a cosponsor of H.R. 3446, formally known as the Fair Payment for Energy and Mineral Production on Public Lands Act, which would set a 12.5 percent royalty rate on hardrock minerals. He has said he looks forward to supporting and strengthening an updated version in the upcoming Congress.
"There's a simple legislative fix for this big hole in the federal government's revenue stream, and it's only fair that companies benefiting from access to public lands pay their fair share," he said. "The Department of Interior should continue to implement the Extractive Industries Transparency Initiative and Congress should make sure disclosure a priority, and then we can talk about how to make sure the American people financially benefit from the sale of public minerals the way they should have been all along."
"I hope this report can be a catalyst for discussion about reform, but at a minimum it shows we need better disclosure on extraction of our natural resources, "Udall said. "Both parties want to solve our economic challenges and make government more efficient for the taxpayers -- here's an opportunity to do both. We should be able come together on this issue, and I look forward to making that case to my colleagues in the next Congress."
The Obama administration has included mining royalty rate reform in the last two budget requests.