Trump administration cuts royalty rates for oil and gas

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Energy companies are getting temporary breaks on royalties and rent they pay to extract oil and gas from leases on public lands because of the coronavirus pandemic.

The move by the Trump administration drew quick criticism as a handout to industry that will mean less money for state governments. A Democratic lawmaker called for an investigation into whether the breaks were justified.

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Government data shows companies in Utah receiving steep cuts in the standard 12.5 percent royalty rate, to as low as 2.5 percent of the value of the oil and gas they produce. More reductions are expected in the coming days.

The Interior Department’s Bureau of Land Management said last month that royalty-rate cuts were possible if companies could show they could not successfully operate public energy leases economically or can’t maintain enough employees at drilling sites.

Half the money that comes in through royalty payments is typically disbursed to the states where the oil or gas was extracted. The payments totaled $2.9 billion nationwide in 2019, including $94 million in Utah.

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The rate cuts in Utah included 76 leases on tens of thousands of acres of public lands.

In a related action in recent days, bureau officials in 85 cases suspended rent payments that companies pay on their oil and gas leases on federal lands, according to government data. The suspensions to date have all been in Wyoming and were linked by agency officials to the pandemic.

Other states with federal oil and gas leases that generate significant amounts of revenue include New Mexico, North Dakota, California, Colorado, Alaska and Montana.

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All royalty relief will be temporary and last a maximum of 60 days.

The Associated Press contributed to this article.