An editorial from Texas
Austin American Statesman
There are strong indications that a major scandal might erupt soon at the U.S. Department of the Interior over a failure to properly enforce payment of royalties owed American taxpayers by oil companies.
The problems come just as a new surge of drilling in the Gulf of Mexico is expected, thanks to a recent oil discovery.
It's not clear whether the root problem is incompetence or a refusal to police oil and gas producers, who enjoy great influence within the Bush administration.
One alarm has been rung by the department's own inspector general, Earl Devaney, who recently told a U.S. House subcommittee on energy, "Short of crime, anything goes at the highest level of the Department of the Interior. Ethics failures on the part of senior department officials — taking the form of appearances of impropriety, favoritism and bias — have been routinely dismissed with a promise of not to do it again."
Interior Department officials, Devaney said, covered up a mistake for five years that involved thousands of oil leases made in 1998 and 1999, during the Clinton administration, that could result in a huge financial windfall for the oil industry. U.S. Rep. Darrell Issa, R-Calif., chairman of the House subcommittee, said the mistake — omitting a certain provision in lease contracts — eventually could cost taxpayers $10 billion in royalties.
Devaney said the mistake was discovered in 2000, but department officials covered it up until this year. Despite an intensive investigation, he said, he has not been able to pin down just who told a staff member to omit the critical language.
Separately, four of the department's own auditors have filed federal lawsuits alleging that certain oil companies are deliberately underpaying by millions of dollars the royalties they owe taxpayers from Gulf of Mexico production — and that Interior Department officials refused to do anything about it. In one case, the department refused to act, but the State of Louisiana did — and won an additional $600,000 from Kerr-McGee Corp., The New York Times reported last week.
The Interior Department's official response is to question the motives of the auditors, who under federal law could collect a portion of the money owed to taxpayers if they win their lawsuits. But if departmental officials really believe there was no merit to their auditors' claims against the oil companies, then how can they gain financially by suing the oil companies themselves?
And then there are these figures from the Congressional Budget Office, as reported by the Times: From 1989 through 2001, auditors and other enforcement efforts brought in an average of $176 million a year. But in 2002 through 2005, the same efforts reaped an average of only $46 million a year.
The new secretary of the Interior, Dirk Kempthorne, has said he takes the inspector general's allegations seriously, but he has not said what specific actions he might take.
A good first step would be to take his own auditors seriously and start pressing the oil and gas companies for every nickel that belongs to the taxpayers.
With oil and gas companies making record profits, there's just no excuse.
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