Using the money to plug oil wells? Surely not… Right?
A treatment that benefits only one industry in North Dakota is a tough pill to swallow for thousands of the state’s citizens who have lost their jobs due to the coronavirus pandemic. In fact, it shouldn’t go down easy for any U.S. taxpayer.
James MacPherson of the Associated Press reported last week that the all-Republican North Dakota Emergency Commission approved $33.1 million of the $1.25 billion the state received in coronavirus stimulus funding from the federal government to plug “orphaned” oil wells.
The funding came to the state as a result of the CARES Act, passed by Congress in March, which provided states financial assistance to help them deal with coronavirus pandemic-related expenses such as aid for hospitals and emergency response teams, purchases of medical and protective equipment and payroll support for healthcare providers. It also is intended to help states recover economically.
A Greasy Take on Coronavirus Stimulus Funds
Before we get to the CARES Act, let’s talk about the use of public money to prop up or bail out oil companies that orphaned wells.
The AP story reported many of these wells “…have been abandoned by companies financially disrupted amid low energy prices and sparse demand brought on by the pandemic.” (Emphasis mine.)
Setting aside the fact that low oil prices have been due as much to a price war between Russia and Saudi Arabia as to the pandemic, what does “financially disrupted” really mean?
Does it mean they’re struggling but remain in business? That they’ve filed for bankruptcy? Or that they’ve ceased to exist altogether? An inquiry to the AP on that question is pending.
Meanwhile, North Dakotans should not take the word of Lynn Helms, the director of the North Dakota Department of Mineral Resources who seems more like an oil industry cheerleader, at face value when he tells the AP that oil companies “…don’t have the money needed to plug and reclaim the sites.”
Yeah… Um… Show us the documentation, please.
While we’re waiting, there are more important questions:
- Even if these companies truly cannot afford to plug the wells right now, which has not yet been proven, might they recover and have the financial wherewithal to do it in the future?
- If that’s even a remote possibility, why is the state being so hasty in using our coronavirus stimulus funds for this purpose?
- Can North Dakota take legal action to either force those companies to plug the wells or pay the state to plug them? Again, if that’s a possibility, then the state needs to take those actions first, before spending our coronavirus stimulus money.
To put it simply, the state should either wait and see or take legal action on a company-by-company basis.
What the Republican-controlled state government should not do is use coronavirus stimulus funds to address lingering problems that it has not dealt with through other available means.
Finally, coronavirus or no coronavirus, the state should not bail out oil companies that already received an extraction tax break in 2015 and have pulled millions of dollars of profit out from under our state.
North Dakota CARES?
Now let’s talk about the CARES Act.
According to the U.S. Department of the Treasury –
The CARES Act requires that the payments from the Coronavirus Relief Fund only be used to cover expenses that –
- are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19);
- were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and
- were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.
Is the cost of plugging oil wells a “necessary” expense in the context of the pandemic?
However, unfortunately, the Treasury Department says “necessary” means “…the expenditure is reasonably necessary for its intended use in the reasonable judgment of the government officials responsible for spending Fund payments.”
In other words, it’s necessary if Gov. Burgum and the all-Republican Emergency Commission say so.
I respectfully disagree.
North Dakota is in the midst of a public health emergency that is far from over or even under control. Coronavirus stimulus dollars should therefore be used for expenses directly related to the pandemic or held in reserve to deal with resurgences of infections and deaths that medical experts and scientists tell us are coming.
Another question is whether these wells were orphaned prior to March 1, 2020. If so, using coronavirus stimulus funds to plug them is not an eligible expense. That, at least, is clear.
Optics & Ethics
There’s a bigger picture, as well.
North Dakota is attempting to justify this misuse of coronavirus stimulus funds by suggesting it is a “jobs program” for unemployed oil industry workers, saying it will employ 550 people.
Helping workers financially is laudable. They’re simply people who, prior to the pandemic, were working hard to earn a living, just like the rest of us. However, they’re eligible for expanded unemployment insurance, just like the rest of us.
So why is state government singling them out?
Helms told the AP, “It’s primarily to support a skilled workforce for the next six months … and keep them here.”
Ron Ness, president of the North Dakota Petroleum Council, added it’s important to keep the workforce ready so the oil companies can ramp back up quickly.
So it’s not about the workers, after all; it’s about the industry.
But what of the thousands of North Dakotans who have lost jobs in other industries due to coronavirus?
How about the small businesses that employ them? Fact is, thousands of businesses have been “financially disrupted” by the pandemic. Why isn’t the state directing coronavirus money specifically to them, too?
What about people who have been forced to work throughout the pandemic, risking their lives to ensure the rest of us can get groceries and gasoline and whatever else the government deemed “essential”? How about giving them retroactive hazard pay?
State government could use the money to keep renters whose jobs have evaporated from getting evicted.
Hazard pay for first responders and healthcare workers who also have been risking their own lives for the rest of us seems to be in order, as well.
People who rely on SNAP benefits could use a boost; the state could supplement what the federal government provides.
Or state government could use the funds to stock up on medical equipment and personal protective equipment (PPE) that will be needed to tackle coronavirus resurgences or the next pandemic.
Point is, there are hundreds of fairer, more necessary and more ethical needs that should be met with coronavirus stimulus funds.
Ensuring rich oil companies can get hit the ground running and continue sucking profits out of North Dakota at a reduced tax rate?
That is a bitter, filthy, ugly pill indeed.
* Featured image from pexels.com
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