Energy Policy – Functional Government Initiative

Big Oil Lobbied to Avoid Liability for Clean-up Costs; Given Regular Audience Among Senior Biden Officials

Agency Records Show New Rule May Stem from Big Oil Ask.

(Washington, DC) – Today, government watchdog Functional Government Initiative (FGI) released newly obtained records showing a series of private meetings early in the Biden administration between Interior officials and representatives from the major oil companies. While not unusual in itself, the private meetings represent a stark contrast from public perceptions pushed by the administration of its principled opposition to the oil and gas industry.

President Biden made clear in his 2020 campaign that he intended to restrict all new oil and gas development on public lands. However, access to his senior decision-makers at the Department of the Interior (DOI) and its sub-agency, the Bureau of Ocean Energy Management (BOEM), appears to have been business-as-usual for the world’s largest oil producers. The newly obtained records also reveal that a complex but consequential set of government bonding requirements was of primary interest to the major oil companies. They sought regulatory changes that could shield their bottom line from the potential decommissioning liability of independent oil producers and small businesses operating in the Gulf of Mexico, while foisting additional costs to the small oil and gas operators. They also appeared to recognize the danger of their coordination being exposed, with one of their representatives asking BOEM officials at one point whether their comments would be made available to public scrutiny.

Big Oil’s wish appears to have been granted by the Biden administration. On June 29, 2023, BOEM published a proposal to amend bonding requirements in a way that many believe creates a new scheme to relieve the world’s biggest oil producers from billions in potential liability for clean-up costs under the leases. The proposal may also accomplish the President’s goals of restricting, as some small business advocates project that it may have the effect of putting many of these same smaller independent oil and gas producers who make up 76 percent of oil and gas operators in the Gulf out of business. The proposed rule would force non-publicly traded operators to incur more than $6 billion in insurance costs that even the surety industry itself claims would not be financially viable.

The public comment period on the new rules closed in September, and the Interior Department is currently reviewing comments from various stakeholders. The strange bed fellows in favor of the rules include major oil companies and their trade association, the American Petroleum Institute (API), along with a variety of large environmental NGOs who have generally been supportive of Interior’s efforts to reduce or eliminate all oil and gas production.

Peter McGinnis, spokesman for FGI, issued the following statement:

“These records paint a picture of the Biden Administration saying one thing publicly while appearing to do another behind closed doors. Ironically, in this instance it seems that coziness between senior political appointees at Interior and representatives of Big Oil may be the driver of BOEM’s latest rule on offshore bonding. Given the devastating impact projected by the BOEM bonding proposal on small oil and gas operators in the Gulf, the latest salvo may also be hitting two birds with one stone. Beyond just fulfilling Big Oil’s goal of crushing smaller competitors with new surety costs, the environmentalist lobby opposed to all drilling also appears to come out a winner since the rule could mean total dysfunction in the long-term viability of the Gulf’s energy industry.”

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Interior Secretary Haaland MIA While Staff Looked at Ways to Kill Federal Oil and Gas Leasing

Neutered final report scrubs evidence of climate radicalism at Department of the Interior.

June 23, 2023

(Washington, DC) – Interior Secretary Haaland was completely out of the loop for months as subordinates schemed to cease energy development on federal land and water, according to documents obtained through Freedom of Information Act requests by government watchdog, Functional Government Initiative.

On January 27, 2021, President Biden issued an executive order directing the Secretary of the Interior to “pause new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices….” Interior was to evaluate “potential climate and other impacts” of oil and gas leasing and recommend whether to adjust royalties paid for oil and gas production to account for “climate costs.” There was no suggestion that the cessation of oil and gas leasing on federal lands was an option.

Interior Secretary Haaland initially said the report, so consequential for the nation’s energy supply at a time when gas prices were beginning to climb, would be available by early summer 2021.

However, the records show that she was intentionally left out of the discussion by Interior Department political appointees. Meanwhile, Interior performed an economic analysis that reveals it was contemplating the elimination of all oil and gas leasing on federal lands. In the analysis, DOI asked what the impact would be to revenues if there were to be zero acres leased for fossil fuel production. This analysis came mere months after the United States had effectively obtained energy independence.

Secretary Haaland seems to have had no idea what her subordinates were up to. On June 9, Interior’s top legal officer Robert Anderson sent the report to the White House, noting it was “the product of a tremendous amount of staff work and outreach. We have not provided it to Secretary Haaland for her review because we first want to get your comments and edits.”

Six weeks later, on July 27, appearing before the Senate Committee on Energy and Natural Resources, Haaland apparently was still in the dark about the substance of the report and was unable to discuss the report in any meaningful way. Appearing confused by questioning by Senators on the issue, she merely said an “interim report,” was “set for release … and will be released soon.”

No interim report was released to the public, and the final report was not issued until November 2021. By then, gas prices had made Interior’s “zero acres” plan unworkable and likely politically dangerous. The final product was far weaker than the no-leasing scenario put forth by Interior, stating that royalties should be higher while energy development should be deprioritized.

Peter McGinnis, spokesman for FGI, issued the following statement:

“While every American should be grateful Interior’s radical plan to cripple U.S. energy production ultimately did not see the light of day, the fact that it got as far as it did, apparently without Secretary Haaland’s oversight or even input, is troubling. Her subordinates felt comfortable going around the secretary, and she had such a limited understanding of what was happening at her own department that she was unable to provide meaningful answers to questions posed at a Senate committee hearing. This was no typical government report but one mandated by the president, with nothing less than American energy independence at stake. Interior’s actions represent the epitome of government dysfunction.”

DOE Withholds Records on Strategic Petroleum Reserve Release

FGI files suit to discover if politics played a role

July 7, 2022

(Washington, DC) – Today, the Functional Government Initiative (FGI) announced transparency litigation against the Department of Energy (DOE) seeking records on the Administration’s decision to release millions of barrels of oil from the Strategic Petroleum Reserve (SPR).

In November 2021, amidst skyrocketing gas prices, the Biden Administration announced it was going to tap into the Strategic Petroleum Reserve and withdraw 50 million barrels of oil. The SPR was created by Congress following the Arab oil embargo of the early 1970s with the intent to maintain a reserve to address severe disruptions in supply. As the administration draws from the reserve, there has been no major disruption in the oil supply that would have warranted such a withdrawal. By contrast, the Colonial Pipeline hacking attack in May of last year, which disrupted fuel supplies to the East Coast, did not trigger a release from the SPR.

FGI’s document request was triggered by concerns the decision to drawdown was in response to the Administration’s falling approval numbers, due in part to rising gas prices, rather than disruptions in supplies. The Administration has since made additional releases from the SPR following the Russian invasion of Ukraine. These releases have depleted the reserve to dangerous levels not seen since the 1980s.

In January 2022, FGI opened up an investigation into the decision to release the first 50 million barrels from the SPR. Despite repeated efforts by FGI to work with DOE during this investigation, the agency has not complied with its obligations under the Freedom of Information Act and FGI believes this lawsuit is the only way to force DOE to release the records that could show the true basis for this unprecedented drawdown of the SPR.

Peter McGinnis, spokesman for FGI, issued the following statement:

“With each release from the Strategic Petroleum Reserve, we weaken our ability to respond to a legitimate supply crisis. The SPR was created to respond to real emergencies, a category that does not include falling poll numbers caused by a failed energy policy. Americans deserve to know if political motives are behind moves that put their security at risk.”

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Interior Cancels Another Lease Sale While Gas Prices Continue to Skyrocket

Dysfunctional energy policy could be driving Americans’ pain at the pump

May 13, 2022

(Washington, DC) – Yesterday, the Department of the Interior announced it was canceling planned oil and gas lease sales in Alaska and the Gulf of Mexico in the middle of a heightened energy crisis at home and abroad. A Department spokesperson blamed the cancellation of part of the proposed sale on the “lack of interest” from oil and gas companies to drill. Critics of the move were quick to attribute this lack of interest to the federal government’s energy policy.

As one of its first actions, the Biden Administration issued an executive order halting oil and gas lease sales on public lands and waters. Months later a federal judge ordered them resumed. Earlier this year, FGI began an investigation into the federal government’s oil and gas policy, seeking records related to a request for the Federal Trade Commission (FTC) to investigate oil and gas companies for price gouging and records from a variety of relevant agencies around offshore leases. A month into the investigation, the administration announced that leasing sales would resume, though with an 80 percent reduction in acreage and a more than 50 percent increase in royalties. Industry insiders claimed these changes could result in lower production, hampering efforts to reduce prices.

Interior’s decision comes during a time of crisis at the pump, where Americans are paying nearly double what they were two years ago. FGI will continue to press for answers about the federal government’s oil and gas policy.

Peter McGinnis, spokesman for FGI, issued the following statement:

“If there is a better example of the impact of government dysfunction on the lives of Americans, I can’t think of one. No matter how hard they try, the government cannot repeal the laws of supply and demand. It is more than a little puzzling that, at a time of skyrocketing fuel prices and international turmoil involving energy supply, the federal government would make a series of decisions, culminating in the latest cancellation of lease sales, that could serve to restrict energy supply.”

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Functional Government Initiative: ‘Nothing of substance has been done’ about high gas prices in North Carolina

By David Hutton (Cabarrus Today)

April 18, 2022

The Biden administration’s latest move concerning high gas prices has been to invoke the Defense Production Act, which concerns electric vehicles, not American energy production.

This is drawing the ire of the Functional Government Initiative (FGI) and is fueling its latest government investigation.

According to FGI, “The Functional Government Initiative is a new organization dedicated to improving the American public’s awareness about the officials, decisions and priorities of their government.”

‘Nothing of substance has been done’: FGI criticizes Biden’s energy policy

By John Kelly (Houston Daily)

April 18, 202 2

The Biden administration’s latest decision pertaining to high gas prices has been to invoke the Defense Production Act, which pertains to electric vehicles, not American energy production.

This is the newest area of concern for the Functional Government Initiative (FGI), and has prompted their most recent government investigation.

“Exploring the expansion of domestic extraction of minerals is a good step because it may create jobs for the next generation of American workers, but it does not tackle the current fuel crisis,” Functional Government Initiative Spokesman Peter McGinnis said. “We are on month two of ‘We will do everything we can to lower gas prices,’ yet nothing of substance has been done to accomplish that – as you can see every time you fill up your tank. Either the administration is hoping the problem will fix itself or that Americans will surrender to astronomically high gas prices. Neither scenario appears plausible. Along with inflation in general, energy prices are crushing the American dream. FGI will continue its investigation of which special interests are dictating the government’s handling of this energy crisis.”

‘Energy prices are crushing the American dream’: Functional Government Initiative discontent with Biden’s handling of high prices at Wisconsin’s pumps

By Andy Nghiem (Northwoods Reporter)

April 18, 2022

The Functional Government Initiative (FGI) is questioning the motives behind the Biden administration’s latest actions to address soaring gas prices in Wisconsin and across the U.S.

In the midst of the U.S. experiencing the highest gas prices in history for the second month in a row and inflation being at a 40-year high, President Joe Biden has announced that the administration will be invoking the Defense Production Act, according to a release from the FGI. This move is said to be an attempt to ease potential supply chain issues for electric vehicle components. The FGI has voiced its discontent regarding this announcement and pointed out this move is just another way for the administration to move the American public away from gasoline and toward electric vehicles.

FGI criticizes Biden administration’s ‘perplexing’ move to invoke Defense Production Act

By Bob Martin (Keystone Today)

April 15, 2022

With gas prices the highest they have been since 2008 and inflation at the highest it’s been since 1981, the Biden administration recently announced that it will invoke the Defense Production Act (DPA).

The decision comes as the administration is trying to ease potential supply chain concerns for electric vehicle parts, according to the Functional Government Initiative website.

The move is another way for the Biden administration to move the public away from gasoline and toward electric vehicles, FGI reported. The order reportedly will move funds to private projects surrounding the extraction of minerals used for building electric car batteries. This includes lithium, cobalt, graphite, nickel, and manganese.

FGI: ‘Nothing of substance has been done’ to lower Nevada’s gas prices

By Art Benavidez (NW Clark News)

April 15, 2022

The Functional Government Initiative (FGI) has released a report contending that the introduction of the Defense Production Act by the Biden administration has more to do with its stake in the production of electric vehicles (EVs) than remedying the country’s lagging energy efforts.

The move comes on the heels of inflation in the country being at a 40-year high and is rooted in the Biden administration’s efforts to move the country to renewable energy, the recent report said. Invoking the act facilitates money for private developments geared toward removing lithium and cobalt, which are critical components to the manufacturing of EV batteries.

Should the initiative become successful, it could lead to less U.S. reliance on China; the report said. But that would not present a clear pathway to remedy the current inflation surge or lower energy prices in the short-term.

Critical Minerals Order Continues “Great Transition” Approach; Ignores Pain at Pump

The Federal government reiterates that the only way to lower gas prices is not to use gas at all.

April 7, 2022

(Washington, DC) – Last Thursday, President Biden announced that the Administration would be invoking the Defense Production Act in an attempt to ease potential supply chain issues for electric vehicle components. This order will move funds to private projects for feasibility studies surrounding the extraction of minerals that are essential to building electric vehicle batteries such as lithium, cobalt, graphite, nickel, and manganese. The invocation of this act is the latest attempt from the Administration to move the American public away from gasoline and towards electric vehicles.

This decision comes as the United States is experiencing the highest gas prices in history for the second month in a row. While the Administration continues to point the finger at Russia and the invasion of Ukraine, inflation and rising gas prices preceded Russian tanks rolling toward Kyiv. If the Administration’s effort to encourage more supply of essential minerals is successful, it could reduce America’s reliance on China, but it remains uncertain how this move would ease any inflation concerns or alleviate energy prices in the short-term.

FGI has repeatedly expressed concerns over the federal government’s perplexing response and actions taken attempting to reduce gas prices. Opening up the Strategic Petroleum Reserve and calls to hostile dictators have formed the crux of their approach while requests to reconsider opposition to pipeline infrastructure and oil and gas leases and financing have repeatedly been rejected. The question of which special interests are influencing the government’s anti-fossil fuel policy amid an energy crisis remains the focus of several of FGI’s ongoing investigations and requests for government records. This latest effort only confirms the public interest in finding more answers about how the Administration is functioning.

Peter McGinnis, spokesman for FGI, issued the following statement:

“Exploring the expansion of domestic extraction of minerals is a good step because it may create jobs for the next generation of American workers, but it does not tackle the current fuel crisis. We are on month two of ‘we will do everything we can to lower gas prices,’” yet nothing of substance has been done to accomplish that – as you can see every time you fill up your tank. Either the Administration is hoping the problem will fix itself or that Americans will surrender to astronomically high gas prices. Neither scenario appears plausible. Along with inflation in general, energy prices are crushing the American dream. FGI will continue its investigation of which special interests are dictating the government’s handling of this energy crisis.”

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