Interior Secretary Ryan Zinke’s pursuit of “energy dominance” on federal lands is looking a lot like the 2015 “Hot Lotto” scandal.
For those who may not have heard of this boondoggle, it’s widely regarded as the largest lottery heist ever. Eddie Tipton, mastermind of the Hot Lotto scandal, rigged lotteries in Colorado, Iowa, Oklahoma, Wisconsin and Kansas. Eddie was cybersecurity chief for the Multi-State Lottery Association. He turned “fox in the chicken coop” by writing secret software code to pick pre-determined winning numbers on certain days. Eddie, along with family and friends, bought tickets with those numbers and made off with $2.5 million in fraudulent claims.
At first blush, energy dominance and the Hot Lotto scandal would appear unrelated. But a closer look reveals they both:
• rig outcomes in violation of the law, and
• unfairly hand over the American people’s wealth to only a favored few.
Interior is now picking coal, oil and gas companies as the predetermined winners and ceding control of our public lands to them. It is rushing to sell coal, oil and gas to companies at bargain basement prices and under lax rules—shortchanging the American people both now and for years to come. Several lawsuits from states and public interest groups are challenging the legality of these actions.
Fixing lotteries and energy leases share two similar tricks, but a third is unique to leasing.
Trick # 1: Pick the Winners First
The Trump Administration is trampling laws requiring public lands to be managed for multiple uses.
Multiple use decision-making is supposed to be run like an honest lottery where each number has a fair chance of winning. Under multiple use, all competing uses for land—grazing, wildlife habitat, clean water and air, recreation and scenic qualities, wilderness, mining, renewable and fossil fuel energy development—are fairly and fully considered and served in balance with each other. Decisions should not be rigged so that coal, oil and gas get picked first to win the prize most of the time.
Unfortunately, that is what the Trump/Zinke “energy dominance” strategy does. Tilting the system to favor fossil fuels violates the multiple use law and is unfair to the public, other businesses and future generations who benefit from sustainably managed public lands.
Trick # 2: Deliver and Hide the Loot
Zinke is foolishly rushing to give away coal, oil and gas leases when energy supplies are plentiful, prices are low, and unused leases abound. Interior is also irresponsibly re-opening royalty loopholes and cutting royalty rates for new, offshore leases. Consequently, public wealth will be given to private companies in violation of the law requiring payment of fair value for these minerals.
For Wyoming and Montana coal alone, the failed policies Zinke is reinstating already cost the American people a billion dollars annually from 1983 through 2011. Extended to all federal fuels, public losses—and ill-gotten corporate gains—will be enormous. Eddie Tipton’s lottery sin pales in comparison.
Just as Eddie tried to keep his scheme secret, complexity and secrecy have kept Americans from knowing how much wealth they are losing to these giveaways. We know more about what oil companies pay to Nigeria than we do about what they pay our own government. The first rule Congress and Trump repealed would have required companies to report publicly what they pay on each lease. That repeal keeps the public further in the dark.
Trick # 3—Cede Power to Corporations.
Companies gain more than undeserved wealth. They also get power to interfere with other uses of federal lands, especially conservation and recreation. Leases, whether active or dormant, discourage sustainable management. Thanks to lease suspensions, decades-old ghost leases haunt and drive out conservation and other productive uses of the public landscape.
Corporate stockpiling of leases is “stealth privatization” of public lands. Corporations gain not only wealth, but also power over federal lands that should rightfully remain in public hands.
Energy dominance on federal lands rewards corporations with wealth and power, but does not create jobs. Jobs are limited by too little demand relative to supply, not by too few leases. More leasing does not create more demand.
Meanwhile, Eddie Tipton is going to jail. It appears he gamed the wrong system.
Dan Bucks served as Montana Director of Revenue from 2005-2013.