By Mia Steinle and Halle Zander, Project on Government Oversight
If public lands are owned by the American people, shouldn’t taxpayers get a fair return on gas, oil, and minerals that private companies pull out of that ground and sell on global markets?
That’s the premise of the Project On Government Oversight’s work on holding the government accountable for the way it does business with companies that extract natural resources from public lands. Over the past eight years, Congress and the executive branch together have made some welcome progress on getting taxpayers more bang for the buck from natural resources, but there is still a long way to go.
Let’s look at one reform that was achieved in the past eight years and one that still needs to be made.
VICTORY: The 2010 Dodd-Frank Act required companies to disclose natural resource payments
In a long-overdue victory for transparency, the Securities and Exchange Commission (SEC) recently stood up to U.S. oil and gas companies who were trying to prevent a portion of the Dodd-Frank Act from going into effect. Dodd-Frank, among other things, prevents banks and other financial institutions from taking the types of excessive risks that led to the financial crisis in 2007. Section 1504 of the Act states that oil, gas, and mining companies must disclose any payments they make to U.S. or foreign governments in exchange for drilling or mining on public lands.
Unfortunately, the oil and gas industry fought to overturn this section by filing a lawsuit against the SEC. This tactic allowed companies to continue keeping their payments confidential for years. However, good government groups fought back, and on July 27, 2016, the SEC announced that it will uphold and enforce this section of Dodd-Frank moving forward, a momentous step in the right direction.
WHAT’S NEXT? Ensure coal companies pay to clean up after themselves
In an attempt to safeguard public lands from the repercussions of extraction, coal companies are required to prove to the government that they can provide the funds necessary to restore the land after they have completed their mining operations. This proof can be in the form of cash or collateral.
However, the Office of Surface Mining Reclamation and Enforcement (OSMRE), which oversees this restoration process, may allow a company to “self-bond.” A self-bond is supported by the company’s name and overall financial health, not by pledges of collateral that are set aside for specific projects. As a result, when companies file for bankruptcy, local communities absorb the cost of damages. With coal prices plummeting, these self-bonds become more unstable, putting Americans at a much greater financial and environmental risk. Recently, OSMRE recommended that regulatory authorities should reevaluate existing self-bonds and exercise discretion. Looking forward, OSMRE must take another step forward and prevent this self-bonding practice from continuing, or risk placing undue burdens on already disenfranchised communities.