As Americans across the country continue to struggle during the economic crisis caused by the coronavirus pandemic, the Trump administration is extending financial relief to oil companies that drill on public lands. Among those oil leases that have received aid, hundreds are owned by political megadonors or have close ties to senior Interior officials’ former clients, according to a new Campaign Legal Center (CLC) analysis.
This appears to be yet another instance of pandemic relief flowing to wealthy special interests that have spent years rigging the political system in their favor.
At issue are the royalties that oil and gas companies pay to drill on federal lands and the terms of their leases, which are overseen by the Interior Department’s Bureau of Land Management (BLM).
After the pandemic caused a drop in global demand and a plunge in oil prices, top BLM officials developed two policies to aid struggling oil companies.
First, BLM invited eligible companies to reduce their rates of royalty payments, which are effectively the taxes oil companies pay for the profits they make by drilling on publicly owned lands. Last year, oil companies paid a total of $3 billion in royalty payments, which are also important revenue sources for the states and localities where drilling occurs. BLM has cut some companies’ rates from 12.5% to 0.5%.
Second, BLM allowed companies to apply for lease suspensions, which allow oil companies to halt production and stop the clock on a lease, giving companies more time to develop them.
Together, both forms of relief offer a lifeline to a struggling industry that President Trump promised to protect. And the aid has flowed to those companies whose executives are generous political donors—and it has continued to flow, even as oil prices have rebounded.
As of June 23, 2020, BLM had disclosed royalty rate reductions for 227 oil leases and lease suspensions for 360 oil leases, according to the Center for Western Priorities’ (CWP’s) analysis of BLM data up until that point. Using CWP’s public database of those approvals, CLC crosschecked the data with campaign finance reports and other public records, and found that hundreds of those leases that secured royalty rate reductions or lease suspensions are tied to major political donors, former clients of the Secretary of Interior or acting director of the Bureau of Land Management, or both.
The companies that received this relief, their parent companies, relevant subsidiaries, and their top executives have given at least $11 million to super Political Action Committees (PAC) since 2015, according to CLC’s review of federal campaign finance records. More than $10 million of those contributions have gone to just two super PACs: Congressional Leadership Fund and Senate Leadership Fund, the major super PACs affiliated with House and Senate Republican leadership.
Millions more in contributions from these corporations and executives have flowed to party, campaign, and joint fundraising committees. Some politicians who received those contributions were signatories to a March 30 letter that urged Interior Secretary David Bernhardt to “reduce, delay, or suspend the federal royalty payments for oil, gas, and coal to the U.S. Treasury” and to “consider lease term extensions of production requirements.”
The political connections do not only arise from political contributions. Interior Secretary Bernhardt used to be a registered lobbyist for Samson Resources, which has been granted lease suspensions on more than 50 of its leases so far. Another six companies receiving lease suspensions or royalty rate reductions have executives who are current board members or directors at the Independent Petroleum Association of America, which Bernhardt also used to lobby for.
And at least 45% of the companies represented on the board of directors of the Petroleum Association of Wyoming received lease suspensions or royalty rate reductions. Before joining government, acting BLM director William Perry Pendley represented the Petroleum Association of Wyoming.