The Interior Department has dropped claims that the Chevron Corporation systematically underpaid the government for natural gas produced in the Gulf of Mexico, a decision that could allow energy companies to avoid paying hundreds of millions of dollars in royalties.
The agency had ordered Chevron to pay $6 million in additional royalties but could have sought tens of millions more had it prevailed.
"The government is giving up without a fight," said Richard T. Dorman, a lawyer representing private citizens suing Chevron over its federal royalty payments. "If this decision is left standing, it would result in the loss of tens of millions, if not hundreds of millions, of dollars in royalties owed by other companies."
But the Bush administration has come under fire on Capitol Hill for its record on collecting payments. While the Interior Department has sweetened incentives for exploration and pushed to open wilderness areas for drilling, it has also cut back on full-scale audits of companies intended to make sure they are paying their full share.
Administration officials knew that dozens of companies had incorrectly claimed exemptions from royalties since 2003, but they waited until December 2005 to send letters demanding about $500 million in repayments.
In addition, four government auditors last month publicly accused the Interior Department of blocking their efforts to recover more than $30 million from the Shell Oil Corporation, the Kerr-McGee Corporation and other major companies.
"This latest revelation proves that the Bush administration is incapable of preventing big oil companies from cheating taxpayers," said Representative Edward J. Markey of Massachusetts, a senior Democrat on the House Committee on Resources. "The public has been systematically fleeced out of royalties that these companies owe for the privilege of drilling for oil and gas on lands belonging to all of us."
Its time to do away with the secretive process of keeping information that should be available to citizen hidden behind corporate claims of proprietary information. How can it be proprietary if bidding process isn't rigged? The very competitors that they say they are keeping the information from is already aware of what is bid and we the taxpayers have a right to know how much of our natural resources are being removed by corporate greed.
I believe one of our congressmen should introduce a bill that says - Monthly extraction reports must be filed where a resource is taken from Public Land, and that based on the previous months average price, the contractor will pay to the Government 10% of that price times amount extracted - no loopholes, no legal mumbo jumbo, straight and simple law making.
At first glance, the suspected underpayments seemed trivial: about $6 million out of hundreds of millions in royalties. But the audits were limited to only a handful of plants. Had the Interior Department pressed its claims successfully, it could have recovered money tied to all the other plants, and for other years.
Chevron paid the $6 million but appealed. The file in that case now runs more than 900 pages, most of it still off-limits to the public.
Mr. Hosie, who represented Louisiana in a lawsuit that led to a $100 million verdict against Chevron over underpaid oil royalties, expressed surprise at the federal government's decision in the natural gas case.
"Is it even remotely likely that oil companies systematically underpay private royalty owners and state governments, but pay the federal government perfectly properly?" Mr. Hosie asked. "Isn't it more likely they are underpaying everybody?"
On July 11, three weeks before the department dropped its case against Chevron, Mr. Dorman and other lawyers involved in a Texas lawsuit against Chevron wrote to Interior Department officials. The lawyers, who represent a whistle-blower seeking to recover money for the federal government, said they were suing Chevron over the same issues the department had raised.
"All we were saying was that they should wait to see what evidence we turned up, and that we would gladly share everything we had with them," Mr. Dorman said. His firm faxed a letter to the policy appeals division. Getting no response, the lawyers sent a copy by U.P.S. Six days later, it was returned. The reason, according to the U.P.S. label: "Receiver did not want, refused delivery."
The agency confirmed in a statement that it knew of the lawyers' case. Asked why it refused to accept their letter, the Minerals Management Service said it could not comment "because these matters are the subject of pending litigation."
This is just another case of the Bush Administration running roughshod over the American people to line the pockets of their Big Oil cronies. Representative John Shimkus of IL-19 has voted with the Bush Administration 98% of the time in regards to shady deals like this. Its time to call the chickens home to roost (read retire). People in the 19th District of Illinois should support Danny L. Stover, the Democratic candidate for Congress and put integrity back in Washington.
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