Cover-up on unpaid royalties from Big Oil?

January 15, 2007

In almost every instance, whenever an energy company drills for oil or gas on federal property, it’s supposed to pay a royalty or tax to the government. Last month, CBS News reported that the Interior Department’s diligence in collecting those royalties is little more than a bad joke.

As the investigative report explained, the Interior Department has basically been letting Big Oil do whatever the industry wants. A CBS source said the Interior Department’s Minerals Management Service, the vast majority of the time, simply allows royalties to be paid on the “honor system.” Earl Devaney, Interior’s Inspector General, noted in September, “Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior.”

But what if there were a crime?

The Interior Department’s Minerals Management Service claimed it conducted audits of unpaid royalties on about 20% of the energy companies who drill on federal property. Unfortunately, for reasons that were unclear, the agency “could not accurately count” its own oil and gas audits — and as a result, it reported audits that never occurred. The scheme has cost taxpayers as much as $10 billion in lost revenue.

Today, the story got considerably more interesting. Congressional Quarterly’s Jeff Tollefson found that Interior officials may have known about the unpaid royalties all along — and may have also intentionally hid the problem.

Justin Rood noted, “One official may even have lied to Congress about when she knew things were screwy with her agency’s energy contracts, which have allowed companies like ExxonMobil and Shell to pay billions less than they should have to extract oil and gas from federal lands.”

Here’s an excerpt from CQ’s report:

A much-anticipated report to Congress will allege that Interior Department officials covered up a problem with oil and gas leases after it was discovered in 2000, according to congressional aides.

The Interior Department inspector general (IG) also has been investigating whether Johnnie Burton, head of the agency that collects royalties, might have been told about the problem earlier than she said in congressional testimony last fall.

This news comes shortly after we learned that the Justice Department is “investigating whether the director of a multibillion-dollar oil-trading program at the Interior Department has been paid as a consultant for oil companies hoping for contracts.”

Which comes shortly after we learned that former Interior Secretary Gale Norton has sailed through the revolving door to become a lawyer for Royal Dutch Shell.

Which comes shortly after revelations that officials at Bush’s Interior Department tried to hide information that federal incentives for oil drilling in the Gulf of Mexico isn’t cost effective, doesn’t produce a lot of oil, and is generally just a massive give-away to oil companies.

You know, I’m starting to get the impression that Bush’s Interior Department might be beholden to Big Oil. I can’t wait to see what Henry Waxman does to these guys.

“Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior.”

If the people involved in this were Islamic, black or Mexican and used in the gun taking this money from the American people, it would be a crime of the highest order. But because the folks were white (most likely), Republican and used the facade of incompetence as a weapon, the only crime the Bush adminsitration sees is that they got caught.

There are only so many Waxmans to go around and this is the tip of one hell of an iceberg of graft, corruption and criminal negligence.

  • But just look at the results — gas less than $2.00 per gallon! This is a huge tax cut to America! And building yachts creates jobs too! Plus, it is not right to tax all those dead sea organisms. (I know it is goofy as hell, but this is America!)

  • .. and this is the tip of one hell of an iceberg of graft, corruption and criminal negligence.

    “negligence”, petorado? You’re too kind.

  • Dear America,

    How do you feel about the facts?

    – Record profits for Big Oil
    – Billions of dollars in delinquent fees for drilling
    – A government cover-up of the delinquent fees
    – Americans pay record prices of gasoline
    – Tax cuts to the rich
    – Reduced services and increased costs for the middle class

    Love,
    The free market & Neoconservatism

    Can I let go of my ankles now? I’m starting to get a cramp.

  • $10 billion. That would have paid for the war in Iraq, with change left over for invading Syria AND Iran.

    This admin doesn’t want a “death” tax because it benefits poor people by taking away money from rich people.
    It doesn’t want Social Security, supported by taxing ALL Americans, because the rich can fund their own retirements.
    It doesn’t want single payor health care, because the rich can pay their own way at the hospital.

    And now, they won’t “tax” the oil companies by charging the royalties we as Americans are obligated to receive (public resources belong to the American citizenry) to pay for a war to get oil because regular Joe American will pay, if they believe it is a matter of National Security.

    Truly despicable…and impeachable.

  • Now it’s our turn. Remember how thay investigated Clinton every time he picked his nose to see if he use a tissue? Well now we have some real investigating to do. And if we are smart and collect the money owed,and use it to help the American people (schools, roads, tax breaks for the middle class, reductions in cost for medicines for the elderly, R&D for clean/renewable energy that makes us less dependent on other nations and more self-reliant, etc) rather than to stuff the pockets of the corporations and the millionaires, then we can look at the investigations and say ‘Yes, they needed to be done, they were done, the criminals paid, and the American people benefitted”. Let’s hope the Democratic and legal process in this country has not been suffocated to the point of ineffectiveness by bu$$h, dickless cheney, et al.

  • This is the sort of thing you can use to turn around the ship of state. The Democrats need to fix the problem, beat the Republicans into the ground with it, and use it to write a new and much fairer social contract, with more competence by government, more oversight of business, and less corruption all around.

  • The scheme has cost taxpayers as much as $10 billion in lost revenue.

    That would pay for how many weeks in the Quagmire? Five?

    As Woody Guthrie sang in “Pretty Boy Floyd” (and which Bob Dylan quoted in “Talking New York”): Some men rob you with a six-gun, others rob you with a fountain pen.

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