Top Committee Democrats Request Documents, Express Concern Over EnergyNet’s Sweetheart Deal on Oil and Gas Leasing

Washington, D.C. – Ranking Member Raúl M. Grijalva (D-Ariz.) and Rep. Alan Lowenthal (D-Calif.), ranking member of the Energy and Mineral Resources Subcommittee, sent a letter to Bureau of Land Management (BLM) Deputy Director Brian Steed today raising financial and legal questions about a company called EnergyNet, which exclusively manages the agency’s online leasing program for oil and gas leases. The lawmakers request a copy of the contract BLM signed with EnergyNet, among other documents, and express serious concern about whether the company is profiting without competition at taxpayer expense.

Among other features of the company’s agreement, the lawmakers write,

[I]t is notable that EnergyNet charges bidders a 1.5 percent ‘buyer premium’ on top of each bonus bid. In addition to being a windfall for EnergyNet, the premium potentially drives down the amount that companies are willing to bid, which effectively takes money that should be going to the American taxpayer and directs it to EnergyNet. In the context of the hydraulic fracturing rule, which is intended to improve protections for the environment and public health, BLM found that an increase of 0.2 percent to the cost of a well was unjustly burdensome, but BLM has not expressed any similar concerns about this 1.5 percent buyer premium that potentially lowers taxpayer revenue.

Just as problematically, the lawmakers write, EnergyNet’s leasing program keeps bidders anonymous, making it unnecessarily difficult to know who is leasing public property. The picture painted by the program so far, the authors write, is one of a windfall for EnergyNet, a hit to taxpayer revenue and a secretive bidding process that protects private entities more than the public interest.

As the authors note, BLM is nearly a year overdue on its legally mandated analysis of the impact of online lease sales. The authors request the report be prepared and released without delay.

From fiscal year 2004 to fiscal year 2016, the federal government received an average of $205 million in bonus bids, 1.5 percent of which is $3.08 million.

The full letter is available at http://bit.ly/2Dp55h9

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