Critics Say Trump Is Giving Oil Industry a Bye in Shutdown



(Bloomberg) -- The partial U.S. government shutdown has docked fishing boats in Alaska, delayed public meetings on a proposed wind farm off the Massachusetts coast and blocked pharmaceutical companies from seeking approval for new drugs.

But the Trump administration is working overtime to make sure the shutdown doesn’t halt oil drilling too -- in ways critics say may flout federal law.

“One of the principles of government is that you serve everybody equally,” but that’s not what’s happening here, said Matt Lee-Ashley, a former deputy chief of staff at the Interior Department. “The oil industry is still getting business as usual and everybody else is getting shut out, so it’s fundamentally not fair and it may be illegal too.”

To be sure, some government work on energy projects is at a standstill now. For instance, the shutdown appears to have halted environmental reviews of Dominion Energy Inc.’s $7 billion Atlantic Coast pipeline and TransCanada Corp.’s Keystone XL pipeline. Interior Department permits to conduct seismic surveys to help find oil in the Atlantic Ocean also have been held up by the impasse.

But the Interior Department is still issuing permits for oil companies to drill wells on federal land and in the Gulf of Mexico. It is also moving forward on oil development in the Arctic National Wildlife Refuge and other parts of Alaska, going so far as to convene public meetings over whether to allow pipelines and drilling rigs near wetlands that sustain caribou and threatened birds.

The department’s Bureau of Land Management, which conducted those meetings Friday and Saturday -- and has two more planned this week -- says it is using fiscal 2018 “oil and gas management appropriations” to keep the work going amid a standoff between Congress and Trump over fiscal 2019 spending. And the bureau asserts that onshore drilling permits are an exempted activity.

A separate agency -- the Bureau of Safety and Environmental Enforcement -- is keeping staff on the job to process new permits to drill in coastal waters, by relying on user fee revenue and non-appropriated funds. Applications to modify drilling permits are being considered on a case-by-case basis, with the agency focusing on those needed to ensure safe operations. “The permitting and enforcement activities that continue would allow industry to function during a government shutdown,” the offshore safety bureau says in its formal contingency plan.

“To this point, we have not seen any major effects of the shutdown on this industry,” Mike Sommers, president of the American Petroleum Institute, said Tuesday on the sidelines of an event in Washington. “Many of the things we deal with are fee-based, and those have continued to go on as planned.”

It was a far different scene in 2013, when a funding dispute suspended work across the federal government for 16 days. During that shutdown, the Bureau of Land Management canceled at least one auction of oil and gas leases in New Mexico and stopped processing permits for drilling on federal land. (Just as is happening now, the offshore safety bureau kept processing permits for coastal drilling -- drawing ire from environmental groups that protested the action).

Former President Barack Obama even highlighted the threat to the oil industry, pointing out at the time that the shutdown was hurting an industry Republicans are typically “very concerned about.”

The blueprint for which agency functions can keep going amid a shutdown is a 19th century law that bars the government from incurring new financial obligations in the absence of congressionally appropriated funding. In practice, that means the government can continue functions that don’t depend on annual appropriations from Congress, such as activity financed by user fees or multi-year funds. Activities deemed necessary for the “safety of human life or protection of property” also are allowed.

But the decisions are subjective. For instance, during the 2013 shutdown, the Obama administration largely closed national parks and briefly erected barricades around some open-air monuments. This time, the Trump administration has kept more of those sites open.

“Under the Obama administration, it was in their interest to make the shutdown as conspicuous and as ugly as possible,” said Gordon Gray, director of fiscal policy at the American Action Forum. “In this case, the interest is clearly to mitigate as much as possible.”

Federal agencies have some latitude to decide what passes muster, but that discretion comes with risk for employees on the front lines. Federal employees who “knowingly and willfully” violate the 135-year-old Antideficiency Act face fines of as much as $5,000 and up to two years in prison.


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