Last night Interior Department Secretary Dirk Kempthorne announced the resignation of the embattled Director of the Minerals Management Service Johnnie Burton. Burton’s tenure at the agency was fraught with decisions and policies which impaired the government’s ability to collect oil and gas drilling fees owed to the federal government and Native Americans.
According to a document released by POGO today, Burton herself made the decision to cave in to a gas company in a precedent-setting legal dispute over oil and gas royalties. According to an email from a MMS official: “I just informed the lawyers of Johnnie’s decision that we will adhere to the Court’s ruling in Fina. No appeal is to go forward.” Additional documents say that the decision affected regulations for collection of federal and Native American oil, gas, and coal royalties.
Ms. Burton’s own state of Wyoming has been the most vocal of the drilling states to urge that the MMS fix its regulations to address the effect of the court ruling on the agency’s ability to collect royalties. In fact, Wyoming’s Governor wrote to urge MMS to revise its regulations. Yet, MMS failed to do so. It is unknown at this point how much money, if any, may have been lost as a result of the ruling, which is Fina Oil and Chemical Company v. Gale Norton.
The handling of the Fina case parallels MMS’ decision not to pursue natural gas royalties owed by Chevron Corporation, which was featured in an October, 2006 New York Times article.
These cases, as well as whistleblowers coming forward to expose the agency’s failure to collect on audit findings, and an “honor system” of collections according to the Interior Department IG underscore how MMS is dire need of systemic reform. Burton’s departure is a step in the right direction, but will not be enough to restore integrity to oil and gas royalty collections.