Democrat urges WH to reject proposal for delaying oil and gas lease payments

by Rachel Frazin - 05/27/20 12:09 PM ET

Natural Resources Committee Chairman Raúl Grijalva (D-Ariz.) is urging the White House not to approve a proposal that would delay payments for companies that drill on public lands.

Last week, a possible final rule from the Office of Natural Resources Revenue (ONRR) titled “ONRR Reporting and Royalty Payment Delay Related to Coronavirus Disease 2019 (COVID-19),” was sent to the White House for review.

In his letter, Grijalva stated that the administration has “refused” to give staffers information about the rule.

The department also did not immediately respond to The Hill’s request for comment. However, industry sources have told Argus Media that the rule would allow companies to postpone paying royalties for three months.

“There is no need to provide an additional benefit to oil and gas companies by giving them three additional months to pay their royalties,” the chairman wrote.

“It is not clear why the coronavirus pandemic would make it difficult to pay royalties,” he added. “Royalty payments are made electronically, and coronavirus does not make it more difficult to comply with current payment standards. ONRR’s silence makes it impossible to understand the administration’s position on this issue.”

Grijalva called on the White House’s Office of Management and Budget to reject the proposal, which he characterized as “blatant favoritism.”

Some industry players have called for lessening royalties they pay on oil and gas extracted from leased lands and waters as oil prices fell during the pandemic.

Last month, the administration said that companies could apply for relief 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,” an Interior Department official said at the time.

Since then, the department has granted at least 75 requests for royalty cuts, or all of those that were requested, according to the data that is currently available.