A federal royalty-rule change could shortchange the states and tribes it's owed to

When oil, gas, or coal comes out of public and tribal land, the royalties are supposed to flow back to the people who own it — states, tribes, and individual Native mineral owners, who receive 100 percent of the revenue from their own lands.

A federal proposal to change how those royalties are calculated has watchdogs warning that less of that money could actually make it through.

The Office of Natural Resources Revenue, the Interior Department bureau that collects and distributes those royalties — more than $10 billion in the current fiscal year alone — wants to simplify how the value of extracted minerals is calculated. The agency says the change would cut compliance costs for industry and government and, in its words, "incentivize production to unleash energy dominance."

A January audit by Interior's own inspector general found the agency was already failing to properly identify and collect the penalties owed when companies underpay.

Simplifying the valuation rules without first closing that enforcement gap, watchdog groups argue, could leave even more money owed to the public uncollected — money that would otherwise reach state treasuries, conservation funds, and tribal and Native mineral owners.