Flaws in Heinrich’s Revenue Stabilization Bill Could Worsen Oil and Gas Dependence

WASHINGTON – Senator Heinrich announced the Schools and State Budgets Certainty Act today, which intends to stabilize revenue for states and local governments that rely on unreliable revenue from the federal fossil fuel leasing program to fund public services. 

 While Friends of the Earth heartily endorse the bill’s stated goals, the legislation contains flaws that could worsen dependence on fossil fuel extraction at a time when the industry is entering structural decline. Instead of decoupling state and local government revenue from the leasing program, Heinrich’s legislation would use the federal budget to subsidize oil and gas–dependent states during downturns while allowing these states to continue collecting windfall profits when oil prices are high, creating a perverse incentive to increase extraction. 

In response, Nichole Ghio, Friends of the Earth Senior Fossil Fuels Program Manager, issued the following statement:

Friends of the Earth shares Senator Heinrich’s goal of providing reliable revenue to help states and local governments transition away from their dependence on insecure oil and gas leasing. Unfortunately, without changes his legislation could create a perverse incentive for states to double down on their dependence on oil and gas to fund public services. Instead of using the federal budget to subsidize select states when oil and gas revenue is down while allowing them to keep windfall profits if revenue rises, any excess revenue should be held in trust to help offset downturns. State and local government revenue needs to be decoupled from the unpredictable leasing program and resources devoted to building more sustainable economies.