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Project on Government Oversight

POGO's Letter to Bruce Babbitt, Secretary of the Interior, regarding major oil companies trying to reopen the comment period for the proposed crude oil valuation rule

Related Content: Oil & Gas Royalty Revenue
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July 1, 1998

Secretary Bruce Babbitt
Department of the Interior
Washington DC, 20240

via fax: (202) 208-6956

Secretary Babbitt,

I am writing to determine whether you are supporting Assistant Secretary Bob Armstrong's current back room dealings with the major oil companies to reopen the comment period for the proposed crude oil valuation Rule. The simple reason for these discussions is to allow the majors to craft the Rule more to their liking. I don't need to remind you that their interests are in direct contradiction with the interests of the public -- including the school children who would otherwise be benefitting from the royalties these companies are stubbornly trying to avoid paying.

Why, after a two and a half year comment period, should DOI be deferring to the major oil companies now? The majors are claiming they didn't have adequate opportunity to have their say. At first, it was odd that the majors were not participating significantly during the public comment period. In fact, however, Assistant Secretary Armstrong was notified over a year ago in the attached letter from a former Independent Petroleum Association of America (IPAA) Board Member's attorney, that the majors were always dictating industry's positions on the Proposed Rule, they were simply using the independents as their more politically palatable front men.

This fact is made even more apparent by the second attachment, a memo dated last week from the General Counsel's Office of the American Petroleum Institute. This memo dictated to IPAA and the Domestic Policy Council what they will be doing -- and saying -- as they enter into the new "post-comment period" negotiations. Apparently the majors were not satisfied with the IPAAs efforts to represent their interests, and so they now want to start the game from scratch with their "A" team at the table after pouring another $7.4 million into Congressional campaign coffers.

Why is the Department of Interior acquiescing to the major's demands? The entire two and a half year Rulemaking process was performed in accordance with the Administrative Procedures Act and other relevant laws. If a coalition of environmental groups petitioned DOI to reopen the comment period on an environmental Rule, would they be met with such open arms and weak knees?

Plain and simple, Secretary Babbitt, your department is engaging in the worst kind of pandering to special interests, which is all the more disappointing after DOI made such a remarkable turnaround in its pursuit of unpaid oil royalties. It is precisely these kinds of back room deals, which have been orchestrated by two of the biggest recipients of oil industry campaign contributions -- Senators Hutchison and Breaux -- that make the American public disdain its own government.

When I asked Secretary Armstrong's office why they are bending over backwards for the major oil companies, they weakly replied that they were asked to do so by two Democratic Senators, at the time Senator Breaux was joined by Senator Bingaman, and felt they had to oblige. Yet I know of at least three Congressional Democrats who have called Secretary Armstrong demanding that he stop these unethical, and possibly illegal, discussions. They are currently taking place between the DOI and the major oil companies, yet no other interested parties -- including the American public -- have access to these meetings, nor do they have the opportunity to influence the direction of the Rule the way the majors currently do.

This is why I turn to you to put a stop to the preferential treatment being given to the major oil companies. They make a mockery of the entire Rulemaking process and bring shame on the Department of the Interior.


Danielle Brian
Executive Director

Assistant Secretary Bob Armstrong
Representative Carolyn Maloney
Representative George Miller
Senator Barbara Boxer
Senator Dale Bumpers
Senator Richard Durbin
Senator Jeff Bingaman
Senator John Breaux
Senator Kay Bailey Hutchison

(The pdf version of this letter also includes the following attachments: 1) February 26, 1997 letter to Armstrong by former IPAA member attorney. 2) June 26, 1998 letter to IPAA and Domestic Policy Council by API.)

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