Gulf of Mexico: Ranking Member Grijalva Asks GAO to Investigate Trump Administration’s Latest Taxpayer Rip-off

Washington, D.C. – Ranking Member Raúl M. Grijalva (D-Ariz.) today requested a Government Accountability Office (GAO) investigation of how much public revenue may have been lost due to changes in the way the Interior Department (DOI) leases parcels for oil extraction in the Gulf of Mexico. The request comes shortly after DOI increased the size and frequency of its lease sales as part of the 2017-2022 oil and gas leasing program.

GAO found in 1985 that DOI’s move from a parcel nomination system – in which a company informs federal officials about each specific parcel it wishes to lease, driving up bids for high value areas – to an “area-wide” leasing system, in which large swaths of territory are made available during each lease sale, decreased competition and drastically reduced government revenue from competitive bids for leasing rights. Grijalva is concerned that DOI’s recent move to a “Gulf-wide” leasing approach, with potentially even less competition for individual lease parcels, will have a similar effect.

Grijalva’s request letter, available at http://bit.ly/2xRZsWL, reads in part:

In 1985, GAO reported that the shift to area-wide leasing was responsible for an average reduction in bids of about $540 per acre leased. More than two decades later, in 2008, an American University study found that switching from nominations to area-wide leasing reduced government revenues on a per-acre basis as much as $1,300.

Grijalva asks GAO to examine four questions:

1 – The effect on government revenues of the 1983 switch to area-wide leasing.

2 – The anticipated impacts on government revenues of a switch from area-wide to Gulf-wide leasing.

3 – The potential effects of the 2017-2022 oil and gas leasing program in terms of small company participation, land to be leased, economic and environmental impacts, taxpayer receipt of fair market value for leased lands, and level of competition in lease sales.

4 – The benefits and challenges of switching back to the pre-1983 nomination leasing system.

Press Contact

Media Contacts: Adam Sarvana                                                                 

(202) 225-6065 or (202) 578-6626