Good morning Mr. Chairman and Members of the Subcommittee. Your letter requested that we provide a specific description of our costs. However, I would first like to briefly review the background of NRS and the requirements of the 1993 legislation which permanently enacted it. In FY 1991, Congress decided that States should share in the costs the Federal Government incurs in managing onshore mineral leases and revenues.
States share in the revenues and, in most cases, get half of most revenues.
Therefore, full cost sharing would require that they share 50 percent of the costs. However, to reduce the full impact of NRS, Congress provided that States pay only 25 percent. We use these figures, merge them with our own, and then allocate costs according to methodologies authorized in statute. This amount, along with BLM and FS estimates, was then allocated to each State in the same proportion as that State's revenues to total revenues. Several states objected to this method arguing that costs allocated to them were too high and not representative of the actual costs expended in managing leases within their State.