Certainty Act Would Power Clean Energy Transition, Stabilize State, Tribal Budgets

New Mexico Senator Martin Heinrich is soon expected to introduce the Schools and State Budgets Certainty Act of 2021. The Act would stabilize state, county, and Tribal revenues from oil and gas production on federal public lands to provide time to transition budgets toward sustainable, diversified revenue streams and away from their current, volatile overdependence on federal fossil fuel revenue.

The Act sets a baseline revenue amount calculated on the basis of the average of federal mineral revenue payments received by states, counties, and Tribes between fiscal years 2016 and 2020. In fiscal year 2021, states, counties, and tribes would be guaranteed that baseline revenue amount, receiving an "energy transition payment" if actual fossil fuel revenue falls short of the baseline. In fiscal year 2022 and each fiscal year thereafter, the baseline revenue amount would decline by 5% from the preceding year.

"We applaud Senator Heinrich for his leadership," said Erik Schlenker-Goodrich, executive director of the Western Environmental Law Center, based in Taos, New Mexico. "This legislation would provide revenue stability and predictability for states, counties, and Tribes. Yet as written, the legislation also preserves the temptation for boom time revenue. This would serve to drive policies and political positions to maintain or increase production and thereby compromise revenue diversification efforts. The legislation could be substantially strengthened by directly decoupling states, counties, and Tribes from their dependence on federal oil and gas revenue."

"This can be done in a straightforward fashion: Save federal fossil fuel revenue that, in boom years, exceeds the baseline to fund energy transition payments in lean years," said Thomas Singer, senior policy advisor with the Western Environmental Law Center. "We need to break states, counties, and Tribes free of their dependence on federal fossil fuel revenue--revenue that is plagued by chaotic boom and bust cycles caused by instability in global oil markets."

"Senator Heinrich's introduction of this legislation creates a critically important space for dialogue to address the interwoven complexities of revenue diversification and stabilization with the imperative to take action on climate," added Schlenker-Goodrich. "We look forward to working with Senator Heinrich and other leaders as this promising legislation works its way through Congress."