As the coronavirus pandemic upended the U.S. economy, the head of the oil and gas sector’s leading trade association declared that fossil fuel companies weren’t looking for government handouts to stay afloat.
“This is an industry that believes in the free market, it believes in supply and demand as the best arbiter of price,” Mike Sommers, CEO and president of the American Petroleum Institute, told Yahoo Finance in an April 23 interview. “So we’re not asking for any extra help from the federal government. We’re not interested in any bailouts.”
But API had already sent a letter to Interior Secretary David Bernhardt, a former fossil fuel lobbyist, a month earlier, outlining two dozen temporary actions it wanted the Interior Department to take to help the industry through the pandemic. These included waiving “non-essential compliance obligations,” conducting remote site inspections and delaying penalties for failing to meet enforcement deadlines.
The corporate watchdog group Documented obtained API’s March 25 wish list for the Interior Department through a public records request and shared it exclusively with HuffPost.
The letter to Bernhardt from API policy executive Frank Macchiarola includes a four-page attachment with numerous requests for the Interior bureaus that permit and manage oil and gas development, including the Bureau of Land Management, the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement.
Among other things, Macchiarola urged Bernhardt to automatically extend the terms of offshore leases in the Gulf of Mexico and, perhaps most significantly, give companies up to a year of additional time to safely shutter defunct and abandoned wells if facing contractor limitations or supply chain disruptions.
“We look forward to partnering with you to help ensure that energy resources are available, so that we as a nation can continue to respond to this crisis,” Macchiarola wrote.
News reports and other publicly available information indicate the Interior Department implemented some of API’s requests, postponing certain onsite inspections and approving applications for lease suspensions, which stops the clock on set lease terms if circumstances affect a company’s production. It’s unclear whether other wish list items have been fulfilled.
Critics say the Interior Department has not been transparent about actions it has taken to assist domestic producers amid the ongoing pandemic. The department did not respond to specific questions about the API list. Instead, Interior Department spokesperson Conner Swanson accused HuffPost of attempting “to manufacture correlations and controversy where there is none.”
The API letter to the Interior Department is further evidence that the oil, gas and petrochemical industries are “exploiting” the COVID-19 crisis to obtain subsidies and regulatory relief, the true costs of which are still being tallied, said Carroll Muffett, president and CEO of the Center for International Environmental Law, an environmental nonprofit.
“While they may say that they weren’t going to the government for handouts, the truth is they’ve gone to the government repeatedly and often in ways that are invisible to anyone outside the industry or the government itself,” Muffett said. And from most outside indications, the administration has “bent over backwards” to assist, he said.
In a statement after publication, API spokesperson Scott Lauermann noted that the oil and gas sector was one of many industries that received temporary government relief.
“In no way did this temporary flexibility – which has already begun to expire – exempt companies from their obligations to uphold environmental standards and regulatory requirements, and pollution control technology and equipment has always remained in place,” he said. “Temporary compliance flexibility to ensure operators can prioritize the health and safety of their employees is not a handout, it’s about putting safety first.”
No Special Favors, Trump Administration Says
In more than 500 cases since the pandemic began, the Bureau of Land Management gave energy companies breaks on royalty payments they owed for drilling on public lands. That relief policy drew fire from the nonpartisan Government Accountability Office, which concluded that BLM reduced fees without first determining if such relief was needed to keep wells from shutting down.
In its March letter to the Interior Department, API specifically requested that BLM “extend the life of existing federal permits, extension of current leases or a pause on the timing of leases, and grant requests for suspension of production.”
In response to the critical GAO report, bureau spokesperson Derrick Henry told The Hill that BLM’s 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.”
Swanson told HuffPost the same thing.
“While numerous organizations, stakeholders, and elected officials asked for blanket relief in response to the COVID-19 pandemic, the [Interior] Department continued to fulfill its obligations under the law and provided guidance for how operators could apply within existing regulations,” Swanson said. “No special circumstances were granted to anyone.”
API’s wish list also called for the Bureau of Safety and Environmental Enforcement to conduct facility inspections virtually rather than onsite to reduce offshore workers’ risk of exposure to COVID-19.
The Interior Department’s internal watchdog, the Office of Inspector General, concluded in a September report that BSEE did adapt its inspection process for blowout preventers, a device designed to automatically seal a well in the event of an uncontrolled release of oil and gas, to allow for remote testing, but that it failed to provide inspectors with guidance on how to witness the test in real time via the operators’ software systems.
“While they may say that they weren’t going to the government for handouts, the truth is they’ve gone to the government repeatedly.”
Fighting For An Ailing Industry
Trump’s first term promised an imperious new era for American oil and gas companies, with its focus on deregulating everything from methane emissions to offshore drilling safety to fuel mileage in new cars. Yet 2020 has revealed how much the fossil fuel industry’s economic strength depended on its political might. A sudden plunge in oil prices ― the result of an overseas price war and a drop in demand due to the coronavirus lockdowns ― sent a shockwave through the industry, prompting a wave of bankruptcies among smaller U.S. drillers.
At the end of July, Exxon Mobil Corp. and Chevron Corporation, the country’s top two oil giants, reported unprecedented quarterly losses. In October, the market value of clean energy giant NextEra briefly surpassed Exxon Mobil, marking what financial analysts saw as a milestone in the shift away from climate-changing energy sources.
In response, the Trump administration went all out to boost the ailing industry. In March, the Department of Homeland Security deemed all energy sector work, including the construction of pipelines and compressor stations, critical for the pandemic response.
After the Treasury Department publicly weighed a direct bailout of troubled drillers, the Federal Reserve bought up a disproportionate share of distressed oil and gas debt. A recent report from environmental and consumer groups calculated those corporate bonds issued since late March to be worth nearly $100 billion.
And more than 7,000 oil, gas and petrochemical companies have received a total of $3 billion to $7 billion in coronavirus relief through the Paycheck Protection Program, according to an analysis Documented conducted for Sierra Magazine.
Industry watchdogs and climate advocates have certainly noticed the lavish help extended to Trump’s favored industry.
“One would be hard-pressed to find another sector in the U.S. economy that has requested and received more in taxpayer-funded bailouts and other giveaways from the Trump administration than Big Oil,” Jayson O’Neill, director of Western Values Project, told HuffPost.
And Alan Zibel, research director at Public Citizen’s Corporate Presidency Project, said the fossil fuel industry “has been seizing on the pandemic as a convenient excuse to fulfill longstanding deregulatory objectives.” He stressed that it makes no sense to grant special favors to the industry most responsible for driving the climate crisis.
This week, the president publicly called on the industry’s biggest players to return the backscratch. During a campaign stop in Arizona on Monday, the president joked about how, if he wanted to, he could easily outraise Democratic presidential contender Joe Biden by shaking down the CEOs of oil majors like Exxon Mobil.
“So I call some guy, the head of Exxon. I call the head of Exxon. I don’t know,” Trump said hypothetically. “Hi, how are you doing? How’s energy coming? When are you doing the exploration? Oh, you need a couple of permits, huh? OK. But I call the head of Exxon, I say, ‘You know, I’d love [for you] to send me $25 million for the campaign.’ ‘Absolutely sir. Why didn’t you ask? Would you like some more?’”
Exxon, one of hundreds of API members, responded to the president’s hypothetical suggestion of corruption and quid pro quo a few hours later.
“We are aware of the President’s statement regarding a hypothetical call with our CEO…and just so we’re all clear, it never happened,” the company wrote.
Read API’s March 25 wish list for the Interior Department below.