The U.S. Interior Department has dropped claims that the Chevron Corp. (NYSE CVX) underpaid the government for natural gas produced in the Gulf of Mexico, the New York Times reported on Tuesday.

The decision could have far-reaching impacts, allowing energy companies to avoid paying hundreds of millions of dollars in royalties, the Times reported.

The Interior Department had ordered Chevron to pay $6 million in additional royalties but could have sought tens of millions more if it prevailed.

The decision sets a precedent that could make it easier for oil and gas companies to lower the value of what they pump each year from federal property and thus their payments to the government, the Times reported.

The agency notified Chevron of its decision in a letter on August 3, which the Times obtained under the Freedom of Information Act.