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 May 27, 1997 "Secret" Information Surfaces On Unpaid Oil Royalties |
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 For Immediate ReleaseContact: Lisa Baumgartner or Danielle Brian (202) 347-1122 WASHINGTON, DC-- The Project On Government Oversight (POGO), today releases its fourth report on oil royalty underpayments, Drilling for the Truth: More Information Surfaces on Unpaid Oil Royalties. It exposes the Department of the Interior's (DOI) violation of the public trust and its hard work to keep the truth hidden. Danielle Brian, POGO's Executive Director, stated, "One look at the final documents we received from DOI clarifies why they worked so hard to keep information on oil royalties hidden from anyone's view." She continued, "A government agency that refers, internally, to its own actions as `California Royalty Secret Deals,' generally isn't working to protect and further public interests." After years of POGO's prodding, in the fall of 1996, DOI sent out bills for $385 million in unpaid royalties to oil companies. Yet, up to $2.4 billion remains unbilled -- and there is no evidence that DOI has any intention to try to collect this money. Despite numerous internal DOI warnings that significant amounts of money owed to the public were being compromised, DOI moved forward with its "Secret Deals," by signing global legal settlements with Mobil, Exxon and Chevron. Representative Carolyn Maloney (D-NY) stated, "The Department of the Interior owes American taxpayers an explanation. The Congress just clamped down on welfare for the poor. Welfare for rich oil companies should be their next target." Representative George Miller (D-CA) stated, "Sadly, as the POGO report illustrates, the Department (DOI), while red flags were evident, chose to first ignore the problem and then compound it by negotiating away the ability to collect potentially hundreds of millions of unpaid royalties -- some of which was earmarked for California's schools." An internal DOI phone log described an "anonymous" phone call to a staff member. The call warned of ongoing "secret deals" with CA oil companies, calling them "not the sort of deals you or I would make." Four days before the Chevron settlement was signed, DOI policy makers met specifically about the CA royalty problem. POGO obtained the notes from this meeting through FOIA, but most of the text had been blacked-out. POGO's latest oil report, however, contains the uncensored version of this document. This proves that top-level MMS policy makers all claimed the government had retained the right to collect money from Chevron. If, in fact, it is now the case that DOI cannot collect this money--the system has completely broken down. As an interagency task force examined the issue of underpayment of oil royalties, the Director of MMS appears to have tried to curtail the evaluation of how much money was owed by the oil industry--primarily to keep the public from finding out. A November, 1995 memo from a task force representative to the Chair of the task force revealed this effort: "According to your message, her [Cynthia Quarterman's] main concern is preventing disclosure of our findings under the FOIA. . . .The only logic I can put to this is that Ms. Quarterman wants deniability. That is, she wants to be able to say that she and other management never saw what we created. . . .the fact that DOI seems to be attempting to pull down the shades on this issue indicates that the fix may be in again . . ." The DOI hasn't willingly begun to collect unpaid royalties, and is still not billing for all the money owed to it. In fact, DOI has made a public spectacle of its foot-dragging -- a message that is not being lost on the oil industry. In light of these findings, POGO makes the following recommendations: 1) creation of a new task force to collect the unpaid billions of dollars owed to the public; 2) passage of Rep. Maloney's legislation on royalty collection and management; and 3) enactment of a new rule under which royalty payments will be based on NYMEX spot prices as the primary benchmark. Danielle Brian, concluded: "We will maintain pressure on the DOI by continuing to release, publicly, as much information as possible. Unfortunately, the DOI has proven that permanent policy changes to correct past wrongs and prevent future handouts to the oil industry will not be enacted without continued scrutiny and public pressure." ###
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