Producing states continue devolvement push

A group of U.S. oil and gas producing states continues to press for regulatory authority over operations on U.S. federal lands.

The 29 states of the Interstate Oil & Gas Compact Commission (Iogcc) have given unanimous support to major pieces of legislation designed to assume regulatory authority over oil and gas operations on federal lands.

The action came in a resolution this month at Iogcc's annual meeting in Santa Fe, N.M.

The show of solidarity by the states that produce virtually all U.S. onshore oil and gas sets the stage for the development of draft legislation for congressional consideration.

The topic has been the subject of several congressional hearings in the House subcommittee on energy and mineral resources. Rep. Barbara Cubin (R-Wyo.) chairs the subcommittee, which has shown strong support for state regulation of minerals.

Iogcc efforts

Iogcc has been working for 2 years with the U.S. Bureau of Land Management on a voluntary transfer of authority to oversee certain inspection and enforcement activities on federal lands.

Iogcc has pushed BLM to devolve some of its powers to the states (OGJ, Nov. 25, 1996, p. 33; Oct. 14, 1996, p. 30).

After 2 years of repeated attempts by Iogcc to bring about regulatory transfer to the states-with no positive responsive efforts by BLM-no alternative appears to exist at this time other than the legislative initiative, Iogcc said in a resolution establishing its official position.

The resolution will be forwarded to Interior Sec. Bruce Babbitt, to whom the BLM reports. Copies will also be directed to President Bill Clinton and Vice President Al Gore.

Iogcc has formed a working committee to prepare the draft legislation.

Leadership views

Iogcc's 1998 chairman, Wyoming Gov. Jim Geringer, said, "It is time to pursue federal legislative action to dictate the change."

The majority of land in Wyoming is controlled by the federal government.

Key members of Congress will receive copies of draft legislation, the goals of which are "to improve efficiency, reduce costs, maintain high standards, and reduce regulatory bodies," Geringer said.

He was elected chairman at the annual meeting, taking over from Oklahoma Gov. Frank Keating.

Kansas Gov. Bill Graves was chosen as Iogcc's 1999 chairman-elect.

"The focus of the Iogcc proposal is that consolidation of regulatory programs will result in substantial savings both to the taxpayers and to the states," said James Carter, director of Utah's department of natural resources and head of a work group on this issue for the commission. He was elected vice-chairman of the Iogcc during its annual meeting.

"The states are entitled to 50% of the royalties from federal lands within their boundaries," he said, "but BLM deducts a portion of its administrative costs from the state's share.

"The states are contending that the BLM regulatory program is too expensive and that they don't want to continue to pay for an expensive program when they believe they could do the same thing a lot cheaper," Carter said.

RIK program

Geringer's action plan for Iogcc during the coming year concentrates on ensuring that states have a voice in a royalty-in-kind (RIK) program for oil and gas produced on federal lands, as well as in regulatory issues such as the National Environmental Policy Act, endangered species, air quality and regional haze, water quality, and public lands management.

He offered support for the development of a program that would permit states to market part of the oil and gas produced from federal lands. Under the current system, states receive royalty payments for their share of production.

An RIK program would allow states the option of taking title to their share of production.

"I believe a well-planned program could eliminate oil and gas valuation disputes while at the same time decrease administrative costs," Geringer said.

"However, it is crucial to the outcome of royalty in kind that states must be involved in the design of the process, rather than just being informed of the outcome."

Other business

Meanwhile, Iogcc added Nova Scotia and Newfoundland as international affiliates.

They join Alberta and Venezuela in Iogcc's international program, which may ultimately serve as a forum for discussing an energy policy for the Americas.

Elsewhere, an Iogcc resolution urges the governments of Mexico, Canada, and the U.S. to agree immediately to eliminate import tariffs on natural gas.

Iogcc said that a Mexican import duty discourages competitive access to the Mexican gas market by U.S. producers.