Ryan Flynn (photo credit: House Committee on Natural Resources)

Bureaucratic hurdles imposed by the federal government are discouraging oil and natural gas development on federal lands and resulting in deferred or lost revenues for states, witnesses told a House committee hearing this week.

“The greatest challenge today is regulatory uncertainty at [Bureau of Land Management],” Ryan Flynn, executive vice president of the New Mexico Oil and Gas Association, explained in testimony to the committee. “[D]elays for approving permits and rights of way is costing New Mexico and the federal revenue millions of dollars each day.”

At a hearing held by the House Natural Resources Subcommittee on Energy and Mineral Resources yesterday, officials from the West discussed how bureaucratic hurdles in the federal permitting process discourage companies from bidding for the opportunity to explore for energy resources on federal lands, resulting in revenue that is lost or deferred.

According to Flynn, daily deferred federal royalty and state severance revenues in New Mexico could amount to $1,473,000 and $831,325, respectively. In New Mexico, the oil and natural gas industry contributed approximately a quarter of the state’s budget in 2016.

Utah also depends on energy revenues, testified Dr. Laura Nelson, energy advisor to Utah Gov. Gary Herbert (R). Nelson explained that the state’s energy revenues – through federal mineral leases, severance taxes, property taxes, and sales taxes, and other channels –support the state school system, police, fire, and other essential services.

But since the federal government owns 70 percent of the land in Utah, hurdles in the federal permitting process prevents the state from reaping the benefits of energy development. “[T]he ability to access and responsibly develop our natural resources is dramatically impeded by complex processes and lengthy timelines for leasing and permitting, resulting in a general reduction in leasing activity,” Nelson said.

Long wait times are common in BLM offices across the country, the witnesses said.

“Operators working through BLM’s Farmington Field Office … which regulates all production in New Mexico’s San Juan Basin, have seen drilling permit wait times approach the 500-day mark, with an average wait time of nearly one year for a standard application,” Flynn told the panel.

“In one extreme case, a permit application was pending for over 18 years,” he said.

Because of permitting delays, energy development on federal lands has lagged, even as production on state and private lands continues to set new records.

“[N]onfederal production far outpaces federal production figures, due, in large part, to the overwhelming administrative burdens of the federal mineral development process,” subcommittee chairman Paul Gosar (R-Ariz.) noted in his opening statement. “Not only has the new administration inherited a backlog of three thousand drill permit applications, but an incredibly burdensome regulatory scheme that discourages investment and development.”

Addressing the concerns brought up by the witnesses, Katherine MacGregor, Deputy Assistant Secretary for Land and Minerals Management at the Department of the Interior, told the panel that the agency intends to eliminate regulatory hurdles going forward.

“The BLM’s oil and gas leasing program is a critical component of the Nation’s energy infrastructure and is an important Federal revenue generator,” said MacGregor. “The Department is committed to the Administration’s priority of eliminating unnecessary or duplicative regulations, thereby reducing burdens that may unnecessarily encumber responsible energy production.”