The employees could have joined in POGO's suit under the False Claims Act -- a type of "private attorney general" or qui tam action that has been around in the U.S. since colonial times -- and received a bigger chunk of the eventual settlement. And it was a big settlement -- Mobil settled for $45 million in 1998, and eventual settlements from all oil companies reached $440 million, according to POGO. POGO received $1.2 million of the initial settlement, and shared an unspecified portion of it with the two whistleblowers.

The federal case, along with other subpoenas and threats of contempt sanctions from the government, make it hard to believe this was anything other than retaliation for effective, independent oversight of how the government does its job. POGO deserves to get this case thrown out on appeal.

POGO Alert - POGO's Day In Court: No Good Deed Goes Unpunished, February 12, 2008.

Interior Seeks Repeal of Offshore Royalty Relief in FY '09 Budget, Natural Gas Intelligence, February 11, 2008.
As part of its proposed $10.7 billion budget for fiscal year (FY) 2009, the Department of Interior (DOI) last Monday called on Congress to repeal provisions in the Energy Policy Act of 2005 that extend royalty relief for offshore oil and natural gas producers for five years. … In a related development, three oversight groups last Wednesday criticized Interior's request for a "paltry increase of four additional audit staff" in the budget for FY 2009. Project On Government Oversight, Taxpayers for Common Sense and Friends of the Earth called on Congress to restore the level of Interior's audit and compliance staff responsible for recovering oil and natural gas royalties to the same level it was at in fiscal year (FY) 2000.

"We urge your committee, at the very least, to restore the number of audit and compliance staff to their FY 2000 level, and to consider further increases commensurate with the DOI's expanded leasing and drilling activities. Doing so will undoubtedly increase revenue recoveries by tens and even hundreds of millions of dollars annually at a time of fiscal constraint," the groups wrote in a letter to the House Appropriations' Subcommittee on Interior, Environment and Related Agencies.

They cited a December 2006 report by the Interior inspector general that said MMS has made "deep cuts" in the number of oil and gas auditors since 2000, with the total number of auditors dropping to 242 from 287.

"A variety of increasingly troubled reports have pointed to the need for more accountability. For instance, auditors have come forward to blow the whistle, complaining that their efforts to collect from oil companies have been ignored by DOI higher ups. In addition, criminal investigations are under way into conflicts of interest with the oil companies," the groups said.

"MMS auditors function in the same ways that IRS [Internal Revenue Service] employees do; they ensure that oil companies pay what they owe. With fewer watchdogs minding the store, oil and gas companies have fewer incentives to pay up."

Interior's proposed FY 2009 budget "demonstrates a continued pattern of doing the least amount possible to address what are now widely confirmed shortcomings in the government's efforts to hold oil companies accountable for royalty payments." They noted the agency requested only four additional audit staff in FY 2008.

While "we applaud the DOI's announced increase of deepwater royalty rates to 18.75%...this announced rate increase is an empty promise without effective auditing and enforcement functions to ensure that oil companies pay these royalties," the groups said.

Groups Press for More Interior Oil, Gas Auditors, NGI’s Daily Gas Price Index, Intelligence Press, February 8, 2008.
Three oversight groups Wednesday called on Congress to restore the level of the Department of Interior's (DOI) audit and compliance staff responsible for recovering oil and natural gas royalties to the same level it was at in fiscal year (FY) 2000. "We urge your committee, at the very least, to restore the number of audit and compliance staff to their FY 2000 level, and to consider further increases commensurate with the DOI's expanded leasing and drilling activities. Doing so will undoubtedly increase revenue recoveries by tens and even hundreds of millions of dollars annually at a time of fiscal constraint," wrote Project On Government Oversight, Taxpayers for Common Sense and Friends of the Earth in a letter to the House Appropriations' Subcommittee on Interior, Environment and Related Agencies. The groups cited a December 2006 report by the DOI inspect or general that said Interior's Minerals Management Service (MMS) has made "deep cuts" in the number of oil and gas auditors since 2000, with the total number of auditors dropping to 242 from 287.

Letter to House Subcommittee on Interior, Environment, and related Agencies Appropriations regarding accountability for royalty collections, February 6, 2008.

Steward to head royalty-in-kind program at MMS; ran agency records projects, Inside Energy, by Jean Chemnick, January 21, 2008.
The Minerals Management Service last week named Jim Steward, a records manager at the agency, as director of its royalty-in-kind program. Steward succeeds Gregory Smith, who retired from MMS in May after having been reassigned to another office when MMS asked the Interior Department's inspector general to look into concerns about the RIK program's management. The report was due out in December, according to an MMS source. MMS said at the time that Smith retired voluntarily. Steward will be responsible for a program that accepts oil and natural gas as payment for federal royalties, instead of cash. The program has grown rapidly in recent years, bringing in more than 75 million barrels of oil in fiscal 2006. Figures for fiscal 2007 are not available yet. … "Jim Steward will face a great challenge as the new program director for the Minerals Management Service's royalty-in-kind program. This program remains under investigatio n by the Department of Interior inspector general's office," said Marthena Cowart, a spokeswoman for the government watchdog group Project on Government Oversight. "POGO is hopeful that Mr. Steward will do his utmost to meet the challenge before him and improve RIK collections and reporting."

POGO letter to Daniel Riemer, chair of the Royalty Policy Committee (RPC), addressing the Subcommittee on Royalty Management's recommendations to improve Department of Interior royalty collections, January 8, 2008.

POGO Alert - Oil Companies Billed $66 Million In Late Interest Payments, October 2, 2007.

POGO Supports Rep. Maloney's Legislation to Study Oil/Gas Royalty Collections, August 2, 2007.

POGO Supports Accountability and Honest Provisions in Energy Bill along with Taxpayer for Common Sense and Friends of the Earth, August 1, 2007.

Interior Department unveils new ethics plan, GovExec.com, by Anika Gupta, July 6, 2007.
Interior Secretary Dirk Kempthorne outlined a new ethics plan recently that would include more comprehensive training and standards for all department employees, including political appointees. An Interior Department spokesman confirmed that Kempthorne had proposed a "10-Point Plan to Make the Department of the Interior a Model of an Ethical Workplace" in a June 27 memo to employees. The plan designates a senior-level agency ethics officer, whose responsibilities include reviewing and implementing ethics practices. The agency also will expand the ethics briefings and training it requires for Senior Executive Service and presidential appointees, create a panel to ensure "fairness in the management of conduct" and impose harsher penalties for inappropriate Internet use by employees. ... Beth Daley, a spokeswoman for the Project on Government Oversight, recommended greater transparency, a call that Ruch echoed. "Transparency in the ethics process helps keep people in line in a way that a government agency simply can't," Daley said. "Congress and journalists should be able to participate in holding Interior employees to high ethical standards." Daley said additional training -- on top of the annual ethics training all department employees receive -- won't help. "When there's a scandal, everyone's first response is 'more training'," she said. "Sometimes you also need to fire people. There's hasn't been enough of that at Interior." Daley did commend Kempthorne for addressing the lobbying loophole. "Interior was the nexus of all the Abramoff issues," she said. "A lot of [the issues] rose out of that loophole."

POGO Alert - U.S. Government Among Lowest Recipients of Oil Drilling Fees, June 1, 2007.

POGO Alert - Under Cloud of Scandal, Minerals Officials Flee Interior Department, May 23, 2007.

Watchdog Group: Burton Exit First Step Toward Systemic Reform of MMS, National Gas Intelligence, May 14, 2007.
The announced departure of embattled Minerals Management Service (MMS) Director Johnnie Burton last week is a good first step, but much more needs to be done to improve the integrity of the agency, said a Washington, DC-based independent watchdog group. The MMS, which oversees offshore oil and natural gas activity and is charged with collecting royalties, is in "dire need of systemic reform. Burton's departure is a step in the right direction, but [it] will not be enough to restore integrity to oil and gas royalty collections," said the Project on Government Oversight (POGO). "The agency needs to go back to the old formula for conducting audits. It needs to do [royalty] audits instead of relying on oil and gas company calculations," said POGO spokeswoman Jennifer Porter Gore. Because of its lax auditing, MMS collected an average of $48 million annually in royalties between 2002 and 2005, a sharp drop from the $115 million it collected annually in its first 20 years of existence, POGO contends. The watchdog group believes the resignation of Burton is the right move for MMS. "It gives them the opportunity to put someone in the position that will be stronger in controlling the companies that they regulate," Porter noted.

The Royalty Treatment, Now by PBS, May 11, 2007.
When veteran government auditor Bobby Maxwell learned oil giant Kerr McGee was not paying the $10 million he says it owed in oil royalties, he prepared an order to Kerr McGee to pay up...."I felt very strongly that the American taxpayers just had $10 million stolen out of their pocket," Maxwell tells NOW Senior Correspondent Maria Hinojosa. "And that needed to be remedied."

Controversial head of Interior’s minerals agency resigns, Federal Times, by Tim Kauffman, May 8, 2007.
The head of the Interior Department’s Minerals Management Service, under fire from lawmakers and watchdog groups for failing to collect billions of dollars in revenues from energy companies, has resigned. Johnnie Burton, director of the bureau for the past five years, will leave at the end of May, Interior Secretary Dirk Kempthorne said May 7. Kempthorne praised Burton for her service, saying she “confronted challenges head on with great purpose to do what was right.” Others were less kind. The Project on Government Oversight said decisions and policies carried out by Burton impaired the government’s ability to collect royalties for drilling on federal land. “Johnnie Burton’s leadership at the agency was defined by repeated instances of capitulating to industry interests at the expense of taxpayers and Native American tribes,” POGO investigations director Beth Daley said in a statement.

POGO Alert - POGO Cheers MMS Director’s Resignation, May 8, 2007.

Democrats Taking Closer Look at Agency Oversight of Oil, Gas Leases, Politico, by Jean Chemnick, April 17, 2007.
With the advent of a Democratic Congress, public interest groups that have long complained that the U.S. Minerals Management Service is too lax in its oversight of oil and natural gas leases on public lands have found some kindred spirits on Capitol Hill. The agency, an arm of the Interior Department, has been in charge of issuing leases for oil, gas and other resources on both the outer continental shelf (undersea) and on-shore federal and Indian lands for the last quarter of a century. Critics have accused the agency, which collects more than $8 billion a year in revenue, of being overly cozy with the extractive industries that it supervises. ... Beth Daley, an investigator for Project on Government Oversight, said there has been a fundamental change at the agency since 2001, with auditors being told not to audit oil companies that hold federal leases. "It was never a great culture, but it has taken a turn for the worse," she said. ... Both the Project on Government Oversight and Taxpayers for Common Sense point to a drop in revenue recovered by enforcement activities at the agency since compliance review became the standard operating procedure. Between 2002 and 2004, the agency brought in less than a third of the annual average for the 1990s. While there was a slight increase in 2005, the amount still remained below average. C. Stephen Allred, assistant interior secretary for land and mineral management at the agency, told the resources committee that these returns looked small only when compared with unusually high collections gathered between 1998 and 2001.

Senators Seek Way to Mend Faulty Oil and Gas Contracts, Politico, March 27, 2007, By Jean Chemnick.
Getting oil and gas companies to renegotiate their leases in the Gulf of Mexico could require a carrot, a stick -- or both. The House opted for both in January, and the companies were not happy. The Senate is still weighing its options, including giving the industry the carrot it wants. The government has leased 8,000 sites in the gulf, which supplies 30 percent of the nation's crude oil and 21 percent of its natural gas. ... Some watchdog groups were not convinced. Beth Daley of the Project on Government Oversight said Allred and Feinstein seemed to have swallowed the industry position "hook, line and sinker." "For decades, Congress has been caving to the industry," she said. "As a result, the wealthiest companies on Earth have their hands in the taxpayers' pocket." The approach the senators are considering stands in contrast to a bill the House passed in January that wou ld make companies that refused to renegotiate or pay fees ineligible for future leases. That legislation spurred intense opposition from the oil and gas lobby.

Lubrigate: Oil co. cheated U.S. out of millions, TPMMuckraker.com, January 24, 2007, by Justin Rood.
A federal jury has ruled that the Kerr-McGee oil company cheated the United States out of millions in royalty payments for pumping oil from public lands, the New York Times reports. The suit against Kerr-McGee was brought by a former Interior Department auditor who sued on behalf of the U.S. government. … The Justice Department, the FBI, the Interior Department's own Inspector General and Congress have launched a barrage of investigations into how the agency has mismanaged the nation's oil and gas resources in ways that appear to have benefited the energy industry to the tune of several billion dollars. Thanks to the Project on Government Oversight (POGO) for following this closely; visit their blog for more information.

Former Government Auditor Wins Lawsuit: $7.5 Million Underpaid by Oil Company, January 22, 2007. Final judgement could be 2x-3x.

Transcript: CNN’s Anderson Cooper 360, “Taking a swipe at big oil,” January 18, 2007.
… JOE JOHNS, CNN CORRESPONDENT (voice-over): House Democrats wrapped up their first 100 hours rush ahead of schedule with a big finish, taking a swipe at big oil, voting to end taxpayer subsidies that they say the industry doesn't need and consumers reeling from price at the pump can't afford. … One watchdog group says the problem lies in the Interior Department agency responsible for the leases. BETH DALEY, PROJECT ON GOVERNMENT OVERSIGHT: The big picture problem that is we have an agency that's totally captured by the oil industry and does its bidding, even if it compromises its mission to protect the taxpayer.

POGO Alert - POGO Disgusted by DOI’s ‘Honor System’ for Big Oil Companies, January 18, 2007.

Oil royalties slip-sliding away, Marketplace, January 16, 2007.
BOB MOON: A federal trial kicks off in Denver today. At issue: Whether or not big oil companies slipped out of paying royalties on oil they drilled out of public land. It may have been an oversight by the overseers: Interior Department officials may not have looked carefully enough at their own contracts. Or did they? Marketplace's Jeff Tyler takes a look: JEFF TYLER: The so-called loophole is really a bureaucratic mistake in some old leases for oil exploration in the Gulf of Mexico. Congressional auditors estimate that the error could cost the federal government as much as $10 billion in lost revenues. BETH DALY: In addition to that problem, there's an uprising of auditors who are claiming that the agency is failing to collect on audit findings. That's Beth Daly, with The Project on Government Oversight. She says Interior Department auditors have filed false claims lawsuits against companies for allegedly defrauding the government by underpaying royalties. DALY: These auditors felt it was the only thing left that they could do because their managers were refusing to collect the money that was owed by these oil companies. The oil and gas companies are being sued — just not by the Feds. Daly says that, over the past 15 years, states and private citizens have recovered around $11 billion related to underpaid royalties.

Letting oil companies say ‘Trust us,’ Marketplace, January 15, 2007.
ASHLEY MILNE-TYTE: Auditor Bobby Maxwell worked for years for the Minerals Management Service, part of the Interior Department. His job was to make sure that oil companies were paying the government the royalties they owed. A few years ago, he claims, he discovered oil company Kerr-McGee was underpaying by millions, but he couldn't do anything about it. Beth Daley is with the Project on Government Oversight. BETH DALEY: We have a really serious problem right now. It's clear that the auditors are not being allowed to collect money that's owed to the taxpayers. Not allowed, she says, because Maxwell put his findings before his government bosses, but says they discouraged him from pursuing Kerr-McGee for the money. … Beth Daley of the Project on Government Oversight says over the years, there's been a steady stream of accusations by individuals, Indian tribes and other parties of underpaid oil royalties. DALEY: Nationwide, we've looked at lawsuits and we've found that there are billions and billions of dollars in lawsuit settlements over these exact same kinds of allegations.

Report: Billions of Dollars in Drilling Write-offs "Barely Help U.S.," January 8, 2006. The Department of Interior has refused to make publicly available on the web this study reported on by the New York Times, January 8, 2007. Follow the links - the report is in three portions: Volume 1, Volume 2, Note to Reviewers.

A billion here, a billion there, U.S. News and World Report, December 10, 2006, by Edward T. Pound.
For years the Department of Interior's Minerals Management Service operated pretty much in the backwaters of the nation's capital, drawing little scrutiny from the press or Capitol Hill. Such obscurity, however, is a thing of the past. Last summer, congressional investigators discovered that the agency had bungled its job so badly that energy companies legally avoided paying an estimated $2 billion in royalties on oil and natural gas extracted from federal waters. The final tab to taxpayers could reach $10 billion. Lawmakers, to put it mildly, are incensed. … As congressional investigators dig deeper, they have an important ally in the Interior Department's chief watchdog, Inspector General Earl Devaney. He has been snapping at the heels of MMS officials for years. Last week, he issued a tough, 50-page report warning that the minerals agency's audit and compliance program on royalty payments for federal and Indian properties is so flawed that there is a high risk that the agency "may not detect underpaid royalties." Agency officials defended the program but promised to fix any problems. Devaney's conclusion came as no surprise to investigators at the Project on Government Oversight, a watchdog group that has long criticized the minerals agency for lax oversight of energy producers. "If you don't have a policeman in the neighborhood," Beth Daley, POGO's chief investigator says, "the thief is going to steal a loaf of bread from the bakery." The watchdog group has helped the government recover hundreds of millions of dollars in royalty underpayments.

Agency bills BP in fee dispute, Houston Chronicle, December 8, 2006, by Brett Clanton.
Only a day after a report slammed federal regulators for being lax in collecting drilling fees from oil companies, the government office that monitors the practice slapped BP with a $32 million bill for underpaying the fees during the last 15 years. The British oil giant was charged for royalties and interest related to coalbed methane production in New Mexico from June 1991 through May 2006, the Department of Interior's Minerals Management Service said in a prepared statement Thursday. … Beth Daley, director of investigations for the Project on Government Oversight, a nonprofit public interest group in Washington that has been critical of the agency, said the BP announcement is a small sign of progress. "It might be reasonable to speculate that this new bill being issued to BP is part of an effort to step up what they should have been doing all along," she said.

Report: oil royalty program ineffective, Houston Chronicle, December 6, 2007, by Ian Talley.
The U.S. Minerals Management Service oil and gas royalty payments compliance program is ineffective and needs to be fundamentally reformed, the Interior Department's Inspector General said in a report leaked Wednesday. … Industry watchdogs, lawmakers and ex-MMS auditors have accused the MMS of being too cozy with the oil and gas industry, and not collecting hundreds of millions of dollars worth of royalty payments. … Critics have noted how federal royalties have dropped in the past few years despite higher commodity prices. Beth Daley at the Project on Government Oversight said collections from public lands have fallen to an average of $48 million annually in 2002 to 2005, half the average of $115 million collected annually in the 20 years prior. In the past five years, the number of audits initiated by the MMS has fallen by more than 20 percent.

Blowing the Whistle on Big Oil, New York Times, December 3, 2006, by Edmund L. Andrews.
During a 22-year career, Bobby L. Maxwell routinely won accolades and awards as one of the Interior Department’s best auditors in the nation’s oil patch, snaring promotions that eventually had him supervising a staff of 120 people. He and his team scrutinized the books of major oil producers that collectively pumped billions of dollars worth of oil and gas every year from land and coastal waters owned by the public. Along the way, the auditors recovered hundreds of millions of dollars from companies that shortchanged the government on royalties. … Less than two years later, the Interior Department eliminated his job in what it called a “reorganization.” That came exactly one week after a federal judge in Denver unsealed a lawsuit in which Mr. Maxwell contended that a major oil company had spent years cheating on royalty payments. … But Mr. Maxwell has hardly disappeared. Instead, he is at the center of an escalating battle with both the oil industry and the Bush administration over how the federal government oversees about $60 billion worth of oil and gas produced every year on federal property. In the process, he has become one of the most nettlesome whistle-blowers Big Oil has ever encountered, a face-off that offers an inside look at how the industry and the government do business together. … Mr. Maxwell says his first serious doubts about the Interior Department originated in 1998, when the agency reluctantly began to investigate accusations of systematic cheating on royalties for oil. Several of the nation’s biggest oil companies eventually settled that investigation by paying nearly $440 million. The investigation occurred only after outside whistle-blowers argued for years that the government was losing billions. The cases had been sparked in part by a former oil trader at ARCO named J. Benjamin Johnson Jr., known as Benji, who contended that oil companies had used elaborate swapping schemes to cheat on royalties owed to private and state landowners, as well as the federal government. … But Mr. Johnson found a way to recover the federal royalties on his own. In 1995, he filed suit under the False Claims Act, a longstanding law intended to encourage whistle-blowers. … The Justice Department initially refused to join Mr. Johnson’s suit, but it eventually did so, in 1998 after concluding that he and other whistle-blowers — including a nonprofit group called the Project on Government Oversight — were on to something.

Affidavit fingers MMS Director Burton in royalties suit, Dow Jones Newswires, November 17, 2006, by Ian Talley.
U.S. Minerals Management Service Director Johnnie Burton personally discouraged the agency from pursuing a key royalty claim, according to the affidavit of a former MMS auditor who is suing the agency. While the nature of the suit has been widely publicized, it's the first time that the MMS Director and other ranking officials in the agency have been identified as influential players in thwarting royalty collection. Bobby Maxwell, a former MMS auditor, said in an affidavit that Burton wanted the agency to drop a case against Kerr-McGee Corp. involving some $10 million in unpaid royalties. … The suit comes as some critics note how federal royalties have dropped, in spite of higher commodity prices. Beth Daley at the Project on Government Oversight said collections from public lands have fallen to an average of $48 million annually in 2002 to 2005, half the average of $115 million collected annually in the 20 years prior. … Daley, who's testified to congressional committees on the royalty issue, said Maxwell is one of four current and former DOI auditors who have filed fraud lawsuits over the failure to collect drilling fees from oil and gas companies.

POGO Alert - Interior Dept. Officials Told Auditor Not to Bill Oil Company; Jury Trial Scheduled in False Claims Act Case, November 17, 2006.

Fighting mad: Tycoon Jack Grynberg says the energy industry has stolen millions from him -- and billions from the government. What if he's right?, Denver Westword, November 16, 2006, by Alan Prendergast.
…Among his foes, Grynberg is regarded as intensely litigious, "a professional plaintiff," a nuisance, a pariah and worse. He hasn't always prevailed in his lawsuits; even the savviest oilman hits a few dry holes. But his accusations of widespread fraud in the oil and gas industry have implications well beyond his own pocketbook. They've attracted the attention of Congress, government investigators and watchdog groups looking into how energy companies have shortchanged taxpayers and Indian tribes on billions of dollars of royalties owed for production on reservations, public lands and offshore leases. … The Project on Government Oversight, a Washington-based nonprofit, has identified more than $11 billion in lawsuit settlements owed by oil and gas companies to states, tribes, the feds and private parties as a result of royalty underpayments from 1990 to 2001. But that may be just the beginning. "There's no doubt that there's an enormous amount of fraud," says Beth Daley, POGO's director of investigations. "They've been caught with their hands in the taxpayers' pockets over and over again." … Nearly a third of domestic oil production and a fourth of domestic gas comes from leases administered by MMS. Yet with oil and gas prices and production soaring in recent years, the amount the agency collects from its audit activities has sharply declined -- from an average of $176 million annually in the 1990s to $46 million in the years 2002 through 2005. MMS officials say that's because they've handed over more auditing responsibilities to Indian tribes and state agencies and are collecting more royalty payments in the form of crude oil or gas rather than cash, a system known as "royalty-in-kind." In addition, they're conducting more "compliance reviews" rather than full-fledged audits in the name of efficiency. But tribal leaders and watchdog groups have questioned the compliance-review procedure, since it depends on self-reporting by the energy companies. "It's not a real audit," says POGO's Beth Daley. "It's basically a pass for the company. If nobody double-checks, they can report whatever they want, and taxpayers are at risk. The oil and gas industry has figured out ways to game the system."

Panel to analyze royalties system, Houston Chronicle, November 15, 2006, by David Ivanovich.
The Interior Department will create a panel to recommend ways to improve the government's system for collecting federal royalties on oil, natural gas and coal production. In the wake of a costly gaffe that enabled producers to avoid making payments on production from deep-water leases in the Gulf of Mexico, Interior will ask the new Subcommittee on Royalty Management to review its procedures for reporting and accounting for mineral revenue coming from federal and Indian lands. … Beth Daley, director of investigations at the Washington-based Project on Government Oversight, called the creation of the panel "a good first step."

Auditors who find oil and gas fraud are being retaliated against by the Department of Interior: POGO urges intervention in letter to Royalty Policy Committee, November 13, 2006.

Black gold, Government Executive, November 1, 2006, by Katherine McIntire Peters.
Offshore oil and gas drilling has the potential to boost the economy or spoil the environment, or maybe both. … While Congress debates the future expansion of oil and gas exploration, the Minerals Management Service in August released its five-year plan for 2007 to 2012. Under the strategy, it would sell 21 leases in seven of 21 designated planning areas on the outer continental shelf - four areas off Alaska, two in the Gulf of Mexico and one in the Atlantic. … But pressure also is mounting on MMS to better manage its leases of those reserves. A three-month investigation by The New York Times early this year found that while oil and gas companies were reaping record-breaking profits due to high energy prices, the government was collecting only slightly more money in royalties on gas leases than it had been collecting five years earlier. … At a Sept. 14 House Government Reform Committee hearing, Beth Daley, director of investigations for the Project on Government Oversight, a Washington independent watchdog group, said there are a number of reasons to believe MMS is failing to adequately oversee oil and gas leases. "In the four years from 2002 to 2005, MMS' auditing and compliance program collected an average $48 million annually, less than half the average $115 million collected annually in the division's first 20 years," she said. The decline in collections has coincided with a shift in resources from auditing to a program known as "compliance review," whereby auditors check company records for data anomalies that raise questions and point to the need for a formal audit. In 2000, MMS spent $22 million on auditing and $12 million on compliance review. In 2005, those figures were reversed, with MMS spending $22 million on compliance review and $12 million on auditing. Additionally, MMS has reduced its auditing and compliance staff by 26 percent since 2001, Daley said. "While POGO supports efforts to make the government more efficient," she said, "cutbacks in the number of auditors at this particular juncture is hard to justify."

Oil giant tries to shirk royalty payments to Indians, The NewStandard, October 11, 2006, by Michelle Chen.
A case pending before the U.S. Supreme Court may determine whether the oil industry can cast off millions in debts incurred while exploiting natural resources on Indian lands in the Southwest’s San Juan Basin. … Yet tribes are not the only ones pushing for more accountability for both industry and the regulatory system. The Washington, D.C.-based watchdog group Project on Government Oversight (POGO) accuses the Minerals Management Service of shirking its regulatory duties by reducing staff and shifting toward computerized audits rather than in-depth investigations. In congressional testimony last month, the group cited agency whistleblowers' reports of experiencing retaliation for exposing problems. POGO urged the Interior Department to ensure that "those responsible for the failures to do their job and collect what is owed the American are held accountable."

Uncle Sam is happy to get paid in crude, Houston Chronicle, October 7, 2006, by David Ivanovich.
The federal agency entrusted with collecting royalties from oil and natural gas produced on federal lands has been under siege after a massive blunder that could cost American taxpayers as much as $10 billion. But the controversy has obscured the fact that the Minerals Management Service has been quietly — but radically — changing the way it collects royalties in a bid to make a convoluted system more straightforward. Abandoning its long-held insistence that producers pay royalties in cash, the agency is taking more and more of the government's cut in the form of natural gas and crude. And suddenly, Uncle Sam is emerging as a major energy marketer. … After all the revelations about the Minerals Management Service this year, the agency's critics aren't ready to break into applause over the royalty-in-kind program anytime soon. "It's a big question mark right now," said Beth Daley, director of investigations at the Washington-based Project on Government Oversight.

Now, oil-rich leaders mock Bush team, Atlanta Journal-Constitution, Editorial, September