Policy Letter

POGO Supports Accountability and Honest Provisions in Energy Bill along with Taxpayers for Common Sense and Friends of the Earth

Take a Bite Out of Oil and Gas Giveaways

Oppose Efforts to Weaken Honesty and Accountability in H.R. 3221

Dear Member of Congress:

We are writing to urge you to oppose efforts to weaken key provisions in H.R. 3221 which would restore honesty and accountability to oil and gas drilling on federal and Indian lands. Several provisions in the Energy legislation to be considered this week would rein in oil and gas industry profiteering on public lands and protect valuable taxpayer assets.

For more than a decade, our organizations have actively worked to end subsidies to mature energy industries and ensure that taxpayers receive a fair return on resources extracted from federal lands and waters. In an era of record industry profits, taxpayers should not continue to prop up the oil and gas industry. It is clear that current energy policies have not provided taxpayers relief at the pump but have instead further padded the pockets of Big Oil.

For the past two years, the Department of Interior's Minerals Management Service has been beset by a series of shocking scandals which have revealed the agency's failure to protect the American taxpayer's oil and gas resources. In addition, according to the GAO, even when oil and gas drilling rules are being followed, the U.S. consistently ranks among the lowest countries in the world in regard to collection of drilling fees – behind Trinidad and Tobago, Australia, Angola, Norway, and the U.K..

Here are some of the important provisions in H.R. 3221 which would start to address these overarching concerns:

In Title VII, sections 7201 and 7202 address the decline in effective oversight over oil and gas royalty payments to the Minerals Management Service (MMS). In recent years, numerous management failures at the MMS have cost taxpayers billions of dollars in waste and lost royalty revenues. For example, MMS's lack of professionalism in its compliance and auditing division has resulted in the loss of as much as $100 million annually in oil and gas royalty payments. These provisions would restore the use of traditional audits which were a proven method for ensuring accountable and honest royalty payments. Further, it increases the penalties for those few companies that do try to cheat the government on royalties. These penalties have gone unchanged since 1982.

Additionally, H.R. 3221 includes several provisions that ensure the appropriate use of federal lands and benefit federal taxpayers. Title VII, section 7101, amends the 2005 energy bill and requires the oil and gas industry to compensate the Bureau of Land Management for the administrative costs associated with processing permits for drilling on public lands. The cost of using and profiting from public lands need to be borne by the beneficiary of access to public lands, and not borne by taxpayers. This bill would eliminate provisions that amount to millions of dollars in giveaways to oil and gas companies.

Section 7222 would also strengthen the mechanisms that are intended to help ensure that taxpayers are not stuck with the clean-up costs left by oil and gas development, by requiring companies to secure bonds that actually reflect clean-up costs. The current law is based on 1960 costs, and public dollars should not be used to clean up the mess left behind by private industry. In section 7224, the bill also reins in speculative holdings by instituting a per acre fee to non-producing lands.

The bill also addresses concerns about the rush to develop oil shale on federal lands. The Rand Corporation recently voiced skepticism about oil shale development and recommended the federal government not invest in this technology given the lack of commitment from the private sector. Title VII, Section 7103, puts into place tighter standards for the emerging shale and tar sands leasing program. The future of oil shale and tar sands development is unclear and still far from commercial viability. Consequently, if this program is not closely monitored or does not have proper safeguards in place, it runs the risk of becoming yet another example of wasted federal resources. Section 7103 provides a more cautious and thoughtful approach to oil shale development.

We urge you to support these efforts to reform oil and gas subsidies by opposing any amendments to weaken these provisions. This is an important first step to ending the expensive and irrelevant oil and gas giveaways. Please contact Autumn Hanna, Taxpayers for Common Sense Action at 202-546-8500 or [email protected] if you have any questions or would like more information.


Ryan Alexander, President

Taxpayers for Common Sense

Brent Blackwelder, President

Friends of the Earth

Danielle Brian, Executive Director

Project On Government Oversight