Natural Resource Transparency Must Include Local Governments

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June 21, 2013

The federal government is part of a global effort that promotes transparency at the local level. So it stands to reason that states, tribes, and other local U.S. communities would play a big role in this process.

They don’t yet. But they may soon.

Groups that represent the interests of citizens, investors, unions, and others are championing greater openness from local governments as the United States implements the Extractive Industries Transparency Initiative (EITI).

EITI is a voluntary set of international standards that aim to increase transparency of government revenues from oil, gas, and mining companies. The standard requires governments and companies to disclose payment information, which must be reconciled by a third party and made publicly available, allowing citizens to better understand how companies use and pay for resources from public lands.

President Obama told the United Nations in 2011 that the United States is committed to implementing EITI, and, this year, the Department of the Interior and representatives from industry and civil society came together to form a multi-stakeholder group that will determine the scope of U.S. EITI implementation.

When the multi-stakeholder group met last week to discuss which resources, lands, and revenues to include in U.S. EITI scope, civil society groups called for the federal government to collect data from states, tribes, and other local communities.

The civil society groups presented its findings on states’ public disclosure of oil, gas, and mining data. Turns out, many states already publish numbers on production and revenues on public websites. In order for the United States to become compliant with the EITI standards, the least the federal government has to do is gather and publish this existing data.

States, tribes, and local communities would have the option of providing even more data to the federal government, and the reason for them to get involved is simple: EITI helps ensure that they get every dollar owed them.

For instance, last year, the federal government collected nearly $12 billion in natural resources revenues from public lands. All revenue from Indian lands was returned to tribes or individual Indians, half of all revenue from onshore federal leases was returned to the states, and about one-third of revenue from offshore federal leases was allocated to the states.

The EITI reconciliation process helps capture any underpayments from the oil, gas, and mining industries, and it ensures local governments aren’t shortchanged.

Local governments gain a lot from natural resources and could gain even more. For instance, Alaska made nearly $3 billion in revenues from oil and gas in 2012. Enough gold is mined in Nevada alone to make the state the sixth largest producer of gold in the world. And natural gas production increased 69 percent in Pennsylvania between 2011 and 2012.

Revenues from these industries play a major role in many state budgets, helping fund schools, roads, conservation, and economic development.

The United States already performs oversight of the oil, gas, and mining industries. But that doesn’t mean existing oversight is perfect. Earlier this year, the Government Accountability Office called the Department of the Interior’s management of oil and gas revenues a “high risk” for waste, fraud, and abuse. The EITI standard will reduce that risk so local governments can be confident in the federal government’s natural resources revenue collection.

What’s more, the United States is uniquely positioned to create a transparency blueprint for other countries to follow. With the United Kingdom, France, and Canada all recently announcing their intention to implement the EITI standard, it’s especially important for the U.S. version of EITI to be as robust as possible, including input and participation from state, tribal, and local governments.

The multi-stakeholder group’s meetings are open to the public. Representatives of state, tribal, and other local governments, as well as organizations that follow these issues, are encouraged to attend. The next meetings are on July 23 and 24 from 9:30 a.m. to 5 p.m. at the Department of the Interior, 1849 C Street NW, Washington, DC 20240. The public can also make comments during appointed times and listen to meetings by calling 1–866–707–0640 (Passcode: 1500538).

Topics: Energy and Natural Resources

Related Content: Information Access, Oil & Gas Royalty Revenue, Open Government

Authors: Mia Steinle

Project On Government Oversight (POGO)

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