Wyoming’s U.S. Rep Cynthia Lummis responded to WyoFile questions on Royalty in Kind via e-mail through her press secretary Ryan Taylor.
Here are the WyoFile questions and Lummis’ responses:
WyoFile: What is Rep. Lummis’ opinion of draft legislation that would eliminate Royalty in Kind? Was she aware it was in the works?
Answer: Rep. Lummis has not had a chance to review the draft bill in detail, though making domestic energy production more expensive is in opposition to her philosophy of promoting energy security.
WyoFile: Does she think that the new Asst. Interior Secretary Wilma Lewis, a former Dept. of Interior Inspector General, is right for the job overseeing Mineral Management Services?
Answer: Rep. Lummis has not met with Ms. Lewis.
WyoFile: When Rep. Lummis’ earliest dealings with Royalty in Kind?
Answer: In her capacity on the Board of Land Commissioners and dealing with the Wyoming Royalty in Kind natural gas pilot program in 2005.
WyoFile: Is it fair to call her a strong advocate for RIK? Or only in specific areas, i.e., offshore?
Answer: That is not an accurate statement. Rep. Lummis is neither an advocate nor opponent for RIK.
As a member of the bipartisan Kerry-Garn Committee (The Subcommittee on Royalty Management), established by DOI Secretary Dirk Kempthorne to perform a performance audit of MMS (Mineral Management Services) and the BLM (Bureau of Land Management) relating to royalty collection and enforcement, information was relayed to her that on-shore areas were not as successful as offshore areas. That information contributed to her decision to sign the report that recommended a review of the on-shore program for possible elimination. The onshore program has since shown revenue improvement.
WyoFile: In 2005 when Rep. Lummis was Wyoming state treasurer (see attached letter (pdf)) she voted with the 4-1 majority (Gov. Freudenthal dissented) of the land commissioners to allow Mineral Management Services to commit Wyoming’s 50% interest in federal land royalties to its Royalty in Kind program that is still in effect. Knowing what she knows now, would she still vote the same way?
Answer: In certain cases, the program works well. The program has, to date, been stronger for offshore areas because of excess pipeline capacity in the Gulf of Mexico. The U.S. is in a stronger position to get a better return on its oil and gas in places where there is a greater pipeline capacity.
Further, there are instances where there has been a better return to the American people for on-shore areas as well.
WyoFile: Is Rep. Lummis satisfied that the Dept. of Interior is moving quickly and effectively on the reforms recommended by the Kerry-Garn committee?
Answer: The report recommended various short-term, medium-term, and long-term goals. The Department of Interior was making progress toward these goals at the time of transition between the Bush Administration and the Obama Administration. It is unclear at this time whether Secretary Salazar has continued working toward these recommended goals.
WyoFile: Does Rep. Lummis think Royalty in Kind remains a viable method for royalty collection?
Answer: Yes
WyoFile: What does Rep. Lummis see as its advantages over the historic Royalty in Value system?
Answer: In certain scenarios, royalty-in-kind offers a better return to American taxpayers. It also avoids controversy over how to value the produced oil and gas when producers remit royalty in kind.
In other words, when the U.S. sells its own gas, Americans can be sure they are getting its full market value.
WyoFile: Given the problems in the Denver Royalty in Kind office of Mineral Management Services does Rep. Lummis feel that a government agency/department is capable of performing effectively and honestly as a quasi-private marketing and sales operation?
Answer: Rep. Lummis attended an oil and gas Royalty in Kind bid opening at the Denver Mineral Management Services office while serving on the Kerry-Garn Committee. The committee reviewed its processes carefully. She came away convinced that the MMS is capable of performing honestly and effectively in selling America’s oil and gas.
Her attendance to the bid opening came after the problems in the Denver office had already been addressed.
The scandalous behavior by certain staff in the MMS-RIK office was addressed quickly and thoroughly after it was discovered. Rep. Lummis has seen no evidence that the wrongdoing continued after it had been discovered and addressed.
WyoFile: Should the whole operation be privatized as it is in Alberta?
Answer: The Kerry-Garn Committee, of which Rep. Lummis was a member, did not look at the Alberta model. However, Rep. Lummis feels it is always worthwhile to look at alternative systems.
WyoFile: Does Rep. Lummis support newly appointed Dept. of Interior Sec. Ken Salazar’s pledge to reopen the investigation into the Mineral Management Service leases and Royalty in Kind programs?
Answer: There were multiple investigations prior to Secretary Salazar’s confirmation. With that being said, the federal government should always do its best to ensure ethical and appropriate behavior by employees on the federal payroll.