Democrats Probe Trump ‘Favoritism’ of Oil Industry in Shutdown

(Bloomberg) -- Lawmakers are intensifying their scrutiny of the Interior Department’s decision to keep churning out drilling permits and restart work on offshore oil leasing despite the government shutdown.

At best the activity represents unfair favoritism for the oil industry, Democrats argued Thursday, and at worst it’s a violation of federal laws that generally bar agencies from spending money they don’t have except in emergencies.

“People are struggling and our neighbors are suffering,’’ Representative Alan Lowenthal, a Democrat from California, said during a House forum on the issue Thursday. “The oil and gas industry has remained unscathed.”

Thursday Forum

House Natural Resources Committee Democrats hosted the forum on “the Trump administration’s blatant favoritism towards the oil and gas industry,” as the shutdown entered its 34th day. There is no sign of an end to the political impasse that has starved funding from roughly a quarter of the federal government. Although the U.S. Senate is set to vote Thursday on dueling Democratic and Republican bills to fund the government, neither is expected to pass.

The forum, not technically a hearing because the committee has not been formally reconstituted since the start of the new Congress, included witnesses representing Native Americans, environmental groups and conservation-minded organizations. Administration representatives were not asked to testify, though several oil industry officials were invited to participate.

Legal experts say there’s not much ordinary Americans can do to stop questionable shutdown spending. The responsibility for prosecuting violations of the 1870 Antideficiency Act, which bars agencies from spending money they don’t have, falls to the Justice Department -- and no one’s ever been taken to court to account for flouting the law.

The Interior Department, which oversees oil and gas development on federal lands and waters, has taken pains to ensure that the permits and other initiatives are immune from the shutdown -- even as it closes parks, halts work on endangered species initiatives and cancels meetings on a proposed renewable energy project off the Massachusetts coast.

For instance, Interior’s Bureau of Land Management has issued permits to drill on public land and is preparing to sell new oil and gas leases -- a reversal of the approach taken during the 2013 shutdown, when the Obama administration halted work on drilling permits and canceled at least one auction.

And now Interior’s Bureau of Ocean Energy Management is summoning 11 furloughed employees back to work to prepare documents necessary for upcoming oil lease sales in the Gulf of Mexico. According to an agency contingency plan updated Jan. 8, bureau personnel also are on call to help develop a new five-year plan for selling drilling rights in U.S. coastal waters from mid-2019 through mid-2024.

All of that activity was excluded from the ocean energy bureau’s earlier, December 2018 contingency plan.

Interior Department spokeswoman Faith Vander Voort rejected the allegation the agency is “playing favorites,” and stressed that it is conducting “much more” than just oil and gas permit processing during the lapse in appropriations. That includes keeping open nearly 200 Bureau of Indian Education schools serving some 42,000 children, ensuring approximately 36,000 retired miners would receive health insurance benefits on time, processing grazing permits and caring for wild horses, she said in an email.

“During the partial lapse, tens of thousands of people have the opportunity to visit national parks and national wildlife refuges while we keep them maintained, clean, and safe,” she said. “To say that we are playing favorites is fake news.”

Appropriate Discretion

Industry leaders say the administration is appropriately using its discretion to continue some agency operations during the shutdown.

“Just because the government is shut down doesn’t mean private-sector economic activity grinds to a halt,” Kathleen Sgamma, president of the Western Energy Alliance, a Denver-based industry group, said in an emailed statement. “Since oil and natural gas is overwhelmingly the largest source of revenue on BLM lands and for certain energy tribes, it simply doesn’t make sense to cut off that revenue completely.”

Fourteen Senate Democrats on Tuesday demanded to know what prompted Interior’s move to recall employees to work on offshore oil leasing as well as the legal justification for it. And Representative Betty McCollum, a Democrat from Minnesota who heads the House appropriations subcommittee that sets funding for the Interior Department, said “there are serious questions about the legality of these and other actions by the administration.”

‘Troubling Picture’

“The newfound characterization of these projects as essential paints a troubling picture of an agency dedicated to mitigating the consequences of the shutdown for a powerful and well-connected corporate lobby at the expense of the American people,” the senators, led by Bob Menendez of New Jersey and Ed Markey of Massachusetts, said in a letter to Interior Department officials.

“While the oil industry might view a delay in the approval of new offshore drilling as an emergency, the American people deserve regulators who prioritize safety and environmental protection over political expediency and the wishes of moneyed special interests,” the senators said.

Under the 1870 Antideficiency Act, agencies generally are barred from spending money Congress hasn’t awarded them, except where there are imminent threats to “the safety of human life or the protection of property.”

Legal Debate

Democrats and environmental advocates argued Thursday that threshold hasn’t been cleared.

“We’re only beginning to count how many laws are potentially being broken right now,” said Matt Lee-Ashley, senior director of environmental strategy at the Center for American Progress and a previous deputy chief of staff at the Interior Department.

McCollum said she has asked the U.S. Government Accountability Office to testify about Interior Department spending decisions, “so my fellow appropriators and members of the public can determine whether Trump administration actions constitute a misuse of taxpayer dollars under the Antideficiency Act or other provisions of law.”

‘Intent of Congress’

Antideficiency Act experts say it’s not clear anyone would have standing to challenge agency spending and activities that continue despite a broad government shutdown.

One possible exception: Congress, which could mount its own legal battle by voting to file a lawsuit challenging the constitutionality of agencies spending money it hasn’t appropriated. Even without that step, intensifying congressional scrutiny of Interior shutdown decisions could signal trouble for the agency in getting spending approval down the road.

At one point, Lowenthal mused about the legal options. ‘’Do we have a legal case?’’ he asked. 

Conservationists and tribal representatives testifying Thursday did not recommend that strategy, but there was widespread agreement that activities undertaken during the shutdown could be thrust into legal jeopardy.

Representative Ed Case, a Democrat from Hawaii, was blunt: “This is a lot of litigation waiting to happen,” he said.

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