Energy & Environment

Land management bureau grants 75 royalty rate cuts for oil and gas production in Utah

The Bureau of Land Management (BLM) has approved every request it received from companies to reduce the rates they need to pay to the government to lease public lands in Utah for oil and gas drilling, according to available data.

The bureau’s reporting system shows 75 filed requests for rate cuts between March 1 and May 20 and 75 approvals.   

The system, however, only showed data for leases located in Utah, so it is not clear if there is a similar pattern for leases located in other states.

A BLM spokesperson told The Hill in a statement that BLM’s state offices were handling the reductions and only approving them “when it is in the best interest of conservation to do so or when it would encourage the greatest ultimate recovery of our natural resources.”

“Applications for relief are reviewed by career experts at the Bureau following longstanding procedures and its laws and regulations,” the spokesperson said. Any relief granted is temporary, for up to 60 days. Numerous organizations, stakeholders and elected officials asked for blanket relief, and we have maintained our position of following current practices and providing guidance in how producers would apply within existing regulations.”

Critics told The Hill that the apparent 100 percent approval rate indicated a lack of rigor in evaluating the royalty cut requests and expressed concern that taxpayers would ultimately be the ones paying the price. 

“I think it shows that there is no criteria,” said Aaron Weiss, the deputy director of the Center for Western Priorities. “They’re just handing out royalty reductions to anyone who asks.”

“You’re basically giving away an asset that’s owned publicly … at the lowest possible price and undercutting a source of revenue,” said David Jenkins, the president of Conservatives for Responsible Stewardship. “From a fiscal responsibility standpoint it makes no sense. From a market standpoint it makes no sense.”

On Wednesday, House Natural Resources Committee Chairman Raúl Grijalva (D-Ariz.) requested a Government Accountability Office probe of the royalty cuts. 

“I am concerned that in its haste to approve huge numbers of royalty cuts, BLM may not be fully following the requirements in the regulations,” he wrote in his request letter. 

Some industry groups, meanwhile, have pushed for royalty cuts, citing what were sinking oil prices due to the coronavirus pandemic. However, those prices have been on the rebound in recent days as parts of the country begin to reopen. 

Asked last month whether they would be implementing royalty cuts, an Interior spokesperson told The Hill that companies that want such measures should apply for it through “established processes.”

“Entities who believe such relief may be appropriate to promote continued energy production and development can submit an application for relief to the appropriate bureau program,” the spokesperson said. 

And the news comes amid the recent ending of a two-year rent pause for wind and solar projects on federal lands. Reuters reported this week that those companies have faced retroactive bills.

Weiss says this shows a difference in treatment between fossil fuels and renewables under the Trump administration. 

“It truly is working actively to hurt renewable energy production while helping oil and gas extraction,” he said.

Tags Bureau of Land Management oil industry
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