The Interior Department inspector general has issued a report that finds “pervasive problems in the government’s program for ensuring that companies pay the royalties they owe on billions of dollars of oil and gas pumped on federal land and in coastal waters.” The report reveals top Interior Dept. officials knew about the problem for years, but refused to do anything about it.
In September 2006 testimony before the House Government Reform committee, Minerals Management Service (MMS) director Johnnie Burton told lawmakers she only learned of the issue last year:
“We are not sure what happened. We did look at it,” said Burton, who chalked up the error to a breakdown in communications at her agency. “What I wanted to know is if that miscommunication was intentional or not.” Burton said she didn’t learn of the error until this year. “I don’t think the ranks realized it was an issue they needed to tell me about,” she said. [AP, 9/14/06]
The IG report reveals a different story:
[I]nvestigators have unearthed a series of e-mail messages by officials working under Ms. Burton in March 2004. [...] Marshall Rose, chief economist for the Minerals Management Service, wrote the agency’s associate director at the time, Thomas Readinger, that the decision had to be made by the “directorate” — Ms. Burton and her top deputies.
Mr. Rose told Mr. Readinger that he believed the leases entitled companies to the incentive regardless of oil price levels, and that he had told his own subordinates that “you and the director were aware of the need to make a decision on this matter.” Mr. Readinger, who retired last year, responded to Mr. Rose a few hours later by writing, “Sounds like we have an answer. Let’s go with it.” According to the report, Mr. Readinger told investigators “he was sure” that he had discussed the issue with Ms. Burton.
When confronted with the emails, Burton claimed she “could not remember being told about the mistake three years ago.”
Tomorrow, the House will take up a bipartisan bill to fix the problem — The Clean Energy Act of 2007. The bill is “aimed at recouping lost royalties and stripping oil and gas companies of other tax incentives,” and would “shift $13 billion into a fund to promote energy efficiency and development of alternative and renewable energy sources.” Learn more about at the bill from our Kick the Oil Habit campaign.