OVERNIGHT ENERGY: Democrats allege EPA plans to withhold funding from ‘anarchist’ cities | Montana asks court to throw out major public lands decisions after ousting BLM director | It’s unknown if fee reductions given to oil producers prevented shutdowns

by Rachel Frazin - 10/06/20 5:27 PM ET

HAPPY TUESDAY! Welcome to Overnight Energy, The Hill’s roundup of the latest energy and environment news. Please send tips and comments to Rebecca Beitsch at rbeitsch@digital-staging.thehill.com. Follow her on Twitter: @rebeccabeitsch. Reach Rachel Frazin at rfrazin@digital-staging.thehill.com or follow her on Twitter: @RachelFrazin.

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BEING WITHHOLDING? Senate Democrats’ top Environmental Protection Agency (EPA) watchdog is warning that the agency plans to withhold funds to clean contaminated land and drinking water sources in Seattle, Portland, New York and Washington, D.C. citing a directive from President Trump to withhold federal funds from “anarchist” jurisdictions.

“We have learned that EPA, in its internal meetings related to the policy, has begun to identify funding sources that could be subject to the directive, some of which are vital for the provision of safe drinking water and the remediation of contamination,” Environmental and Public Works Committee Ranking Member Tom Carper (D-Del.) wrote in a letter to EPA Administrator Andrew Wheeler.

“Setting aside the legally questionable and abhorrent nature of the President’s directive, EPA’s implementation thereof could endanger human health and the environment,” he continued in the letter, which was signed by six other Democrats. “We strongly urge you not to take any action that could result in the collective loss of more than a billion dollars of funding intended to clean up contamination and drinking water in these American cities.”

The Sept. 2 directive from Trump said the administration would “not allow federal tax dollars to fund cities that allow themselves to deteriorate into lawless zones” — a nod to protests on racial inequalities taking place in major cities.

EPA has already pushed ahead with the directive in New York.

A late September letter from Wheeler to New York Gov. Andrew Cuomo (D) and New York Mayor Bill de Blasio (D) characterized summer protests in the city as a danger to the EPA’s Manhattan office.

“If you cannot demonstrate that EPA employees will be safe accessing our New York City offices, then I will begin the process of looking for a new location for our regional headquarters outside of New York City that can maintain order. I have an obligation to our employees, and if the city is unwilling or incapable of doing its job, I will do mine and move them to a location that can competently fulfill the basic mission of a local government,” Wheeler wrote.

Carper called the move a “retaliatory threat [that] would waste taxpayer dollars and endanger the jobs of the nearly 600 people who work there.”

EPA accused Carper and others of “peddling a false narrative to diminish the accomplishments of the Trump Administration.”

“EPA will continue to follow guidance from the White House in accordance with its statutory obligations,” agency spokeswoman Molly Block said in an email.

OBJECTION! THAT’S IRRELEVANT! The state of Montana is asking the courts to throw out some major Bureau of Land Management (BLM) decisions after a federal judge ousted the agency’s acting director from his post.

Interior argues, however, argued that former BLM acting head William Perry Pendley took “no relevant acts” to be thrown out by the court during his tenure.

A Montana-based U.S. District Court judge ruled last month that Pendley “served unlawfully … for 424 days,” giving the Department of the Interior 10 days to justify why it shouldn’t throw out many of the decisions Pendley has made during his tenure.

In a filing late Monday, Montana argued the court should toss some of the biggest land management plans Pendley has overseen, which open up hundreds of thousands of acres to oil and gas drilling.

Montana argues other states could make similar claims, opening the door to undoing plans in other states.

“Although the plaintiffs limit their present request to the Montana resource management plans and plan amendment for which there is unassailable evidence of Pendley’s unlawful involvement, the plaintiffs do not intend to suggest that other actions should not be similarly set aside where a proper party can identify and challenge them,” Montana wrote in its brief.

In Montana alone, one of the plans would open 95 percent of 650,000 acres of BLM land to resource extraction such as mining and drilling. Environmentalists have identified similar plans elsewhere that they say are lopsided, opening up the vast majority of lands for drilling while leaving little for conservation and wildlife protection.

“It’s a pretty long list,” said Aaron Weiss, deputy director of the Center for Western Priorities, a public lands watchdog group, adding there are at least 30 land management plans produced under Pendley’s watch that states or environmental groups could seek to overturn.

A coalition of 60 environmental groups has sent a letter to Interior Secretary David Bernhardt asking him to scrap many of those decisions made by Pendley.

“BLM must review and restart any action in which Mr. Pendley’s involvement renders the action invalid given his absence of authority,” the groups wrote.

Bernhardt has tried to dispel environmentalists of the hope for any major victories.

“I think we’ll find any action Perry took was consistent with the law,” Bernhardt said in an interview with Colorado Politics. “I know there are advocacy groups that have hypothesized about how things will happen. What I would say to them is their hopes and dreams are about to be crushed.”

Interior has argued those decisions should stand because Pendley delegated authority to other BLM officials to oversee the development of resource management plans in Montana.

THE COST OF DOING BUSINESS…OR MAYBE NOT: It’s not clear whether the federal government’s moves to reduce fees paid by oil and gas producers for leasing public lands actually prevented any of them from shutting down wells amid the coronavirus pandemic, according to a nonpartisan watchdog.

The congressional Government Accountability Office (GAO) determined that the Bureau of Land Management (BLM) did not design its royalty relief policy to determine whether such relief was necessary to keep oil and gas wells operating.

“Royalty relief may have gone to companies that would not have shut down their wells without the relief,” the GAO report stated. “In such cases, BLM’s temporary royalty relief cost the federal government and states in forgone revenues but may not have had the effect of keeping wells operating and preventing the loss of unrecoverable oil and gas resources.

“As a result, the benefits of the temporary royalty relief are unknown,” it concluded.

Oil and gas producers pay royalties to the federal government to lease public lands and waters for drilling activity, and that money goes back toward funding government activities.

The GAO report estimated that cuts to these royalties granted by the BLM cost the government $4.5 million for May and June.

It said that the agency cut the fees from the typical 12.5 percent of revenue to an average of less than 1 percent over a 60-day period.

An early guidance from the agency said that companies applying for royalty cuts had to show that their leases were “uneconomic at the current royalty rate, but would be economic with a royalty rate reduction.”

However, changes made in June only required them to show that the leases are “uneconomic at the current royalty rate.”

The GAO determined that royalty cuts were approved “inconsistently” across different BLM offices and said that “because BLM’s temporary policy on royalty relief did not supply sufficient detail to facilitate uniform decision-making among the offices.”

In response to the report, BLM spokesperson Derrick Henry said in an email that agency 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.”

“Applying for royalty relief or suspension of operations and/or production is allowable under the law and has been available to operators for decades across multiple administrations,” he added. “No special circumstances were granted to anyone.”