Royalties: In Kind or in Value?
The royalty-in-kind program that Minerals Management Service administers in Lakewood is fairly new on the national scene, although Wyoming saw this arrangement in its trial stages in the mid-1990s and other places—Texas, Canada—have had their own versions for more than 20 years. Still, “royalty in kind” has an economically primitive, barter-ish air about it; writing in the April 2009 Harper’s magazine, David Bryant likened the practice to a landlord’s leasing a building to a grocer and letting him pay the rent in “fruit and steaks.” In this instance, the “landlord” is the citizenry, who have no way of knowing if the “grocer” is paying what’s due because he largely determines the quality and quantity of the fruit and beef he hands over.
It’s a mechanism designed and promoted by the energy companies to satisfy their obligations to the American people, and to the states where they do their inevitably destructive work of mining, drilling, pumping, and transporting the non-renewable resources that they sell back to us so we can live our lives and run our country. The alternative to royalty-in-kind payment is paying royalty “in value,” i.e. money, an old-fashioned method the federal government has been trying—and failing—to handle competently since the passage of the Mineral Lands Leasing Act of 1920.vi
The scandal at the royalty-in-kind program at Minerals Management Service is certainly not the only ethical problem the agency has encountered. There have been many, so many that one could be forgiven for laughing at the public-relations blurb that today opens the Ethics Office page of the Minerals Management website: “Welcome to the Home Page of the MMS Ethics Office! MMS Employees are Dedicated Stewardsvii for America; demonstrating Integrity and Excellence.”viii