Trump administration faulted over breaks for oil companies

Politics

FILE – This Feb. 21, 2012, file photo, shows equipment in the oil fields of the Uintah Basin, southeast of Vernal, Utah. The Trump administration has started giving energy companies temporary breaks on royalties they must pay for oil and gas extracted from federal lands because of the coronavirus pandemic, government data shows. Royalty rate cuts so far have been authorized for at least 76 energy leases in Utah. (Trent Nelson/The Salt Lake Tribune via AP, File)

BILLINGS, Mont. (AP) — A U.S. government watchdog agency faulted the Trump administration Tuesday for its handling of a COVID-19 relief effort that awarded companies breaks on payments for oil and gas extracted from public lands in Western states in more than 500 cases.

The Government Accountability Office, a nonpartisan arm of Congress, said haphazard rules for the program left the administration unable to say how much relief was given or if it would ultimately benefit taxpayers, as was intended.

The Bureau of Land Management gave breaks on royalty payments from companies in at least five states due to workforce problems or other issues after the pandemic shut down much of the economy and helped drive a collapse in oil prices.

The Trump administration also gave breaks to companies that extract oil in the Gulf of Mexico but has released scant details of that effort.

Offering royalty relief to companies had been done before the pandemic and is intended to boost the profitability of oil and gas wells so they can still be profitable. The idea is to protect against companies being forced to shut down wells permanently, rendering them unable to generate future government revenue.

But it’s unknown if that happened as the Trump administration approved at least 581 relief requests during its scrambled early response to the pandemic. Most of the approvals were in Wyoming, with cases also approved in Utah, Colorado and by a bureau office that covers Montana, North Dakota and South Dakota.

The land bureau “did not follow its directives manual,” GAO’s natural resources branch director, Frank Rusco, said in Tuesday’s report.

He added that the bureau “does not know whether the temporary policy accomplished its goals of conserving oil and gas for future recovery and … ensuring the government gets a fair return from allowing companies to use its resources.”

The report estimated lost revenues of about $4.5 million from the land bureau program, but said that was a conservative figures that does not include all forgone revenues. Revenue from oil and gas production is collected by the federal government and later split with the state where the fuel was extracted.

Administration officials were asked for comment by the GAO on its findings but did not say if they agreed with recommendations to evaluate the costs and effectiveness of the relief program.

Bureau of Land Management spokesman Derrick Henry said in response to questions from The Associated Press that the GAO “did not work with the department in good faith.”

“No special circumstances were granted to anyone,” Henry said in an emailed statement. “The (Bureau of Land Management) State Offices only approved suspension of operations and royalty rate reduction applications for up to 60 days when it was legally permissible, in the best interest of the United States, and when it would encourage the greatest ultimate recovery of our natural resources.”

Critics have characterized the royalty relief as an unnecessary industry handout. In some cases, the breaks benefited companies with histories of environmental violations or past failures to pay royalties.

A subcommittee of the U.S. House Natural Resources Committee was scheduled to hear testimony from the GAO on its findings later Tuesday.

A spokesman for committee Chairman Raul Grijalva, an Arizona Democrat, said lawmakers also are interested in the administration’s handling of royalty relief in the Gulf of Mexico, where relief was awarded to companies through Interior’s Bureau of Safety and Environmental Enforcement.

“There are rules on the books and it looks as though some of those weren’t being followed,” Grijalva spokesman Adam Sarvana said of the GAO’s findings. “What they seem to have done is just handed them out because people asked for them.”

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