TOPICS
TOPICS
Lawmakers take Interior Department to task on royalty position
House Government Reform Committee leaders Tuesday took issue with the Interior Department's recent assertion that the department lacks the "bargaining power" to retrieve billions of dollars lost due to an error in federal oil and gas development leases.
In a Tuesday letter to Interior Secretary Dirk Kempthorne, Government Reform Chairman Tom Davis, R-Va., and Energy Subcommittee Chairman Darrell Issa, R-Calif., said the department should issue a plan to recoup money lost when Clinton administration officials failed to include provisions that required royalty payments if the cost of oil or gas reached price thresholds in leases issued in 1998 and 1999.
The Government Accountability Office has estimated that the omission has cost the government nearly $2 billion and will cost an additional $8 billion over the life of the leases.
Johnnie Burton, director of the Minerals Management Service, recently said the department "does not have the bargaining power to recoup the back royalty payments."
"This is absurd," Davis and Issa wrote. "That money belongs to the federal government and must be collected just as any other benefit unduly conferred upon a private citizen."
They argue that oil companies bid on the leases as if price thresholds were included and knowing that the department had the authority to include and enforce them.
"We must honor the clear intent of the parties and collect what is due," the lawmakers wrote.
They are also asking departmental officials to provide a better list of companies that hold 1998 and 1999 leases, those companies which are either actively renegotiating those leases or have expressed an intent to renegotiate, as well as lease expiration dates.
Davis and Issa said Burton provided an incomplete list last week after lawmakers requested the information at a Sept. 14 hearing -- including only the names of companies that gave the department permission to identify them as having met with departmental officials.
Interior Department Inspector General Earl Devany told lawmakers this month that a "classic bureaucratic" blunder in 1998 and 1999 had led to the lapse in royalty payments and that the department had a long history of irresponsible and unaccountable management.
Interior Deputy Secretary Lynn Scarlett defended the department before the Government Reform Committee at a hearing this month and said Devany "makes broad and serious, yet vague, allegations."
She said the department "disagrees with the IG's broad-brush characterization."
COMMENTS
- Auditors never lay the blame where it belongs -- this is classic because "everyone is doing it!" And it is bureaucratic because they do not want to assign blame or they might have to prove their allegations. Congress needs a set of tough auditors who lie out the exact process and pinpoint the individuals (at the highest levels) who are ultimately responsible for the "bureaucratic blunders." Get them out of government if they blunder -- the private sector gets rid of them -- how do you think we got our current president! Taxpayer Posted September 28, 2006 7:08 AM
- I personally resent the fact that I and my colleagues work hard to be efficient and to save our government agencies money, while at the same time, other parts of the government are "giving money away" because of incompetence, sloth, waste, stupidity, and lack of willingness to enforce contracts, agreements, or to take action against transgressors. What does it do to morale when you save a few million dollars and feel good about it, and then read about some dumb mistake that cost billions? This kind of stuff goes on all of the time. At the agency level stupid business deals are made. Government agency counsels, and the Justice Department, never want to litigate or fight anything, and they always say: "settle -- we don't have a good position." When they do litigate, they do so ineptly and the courts and boards are quick to move the matter off their dockets by ordering payment or settlement. Billions of dollars is a lot of money and it is money the nation can use. Government needs better management so stupid money wasting decisions are not made, and better enforcement of the agreements that are made. Contracting officers often bend over backwards to be fair to government contractor, and would be in trouble if they gave government rights or entitlements away. This abuse of the taxpayers has gone on far too long, and is costing unbelievable amounts of money, each year that could be better spent obtaining national priorities. A lot happens at Boards of Contract Appeals, in agency claims, in federal courts, and other forums, that is out of the public's view. A lot of what happens there costs the taxpayer and the government money. Government leases, for one example, have a cancellation clause if the building is damaged, but it must be exercised within 15 days of the damage. During Katrina you could not even get to your building in 15 days, to see if it was damaged. I have been advised that government counsel would not support issuing cancellations or defend cancellation even though this "act of God" intervened to prevent physical inspection. Who do you think will be paying on these leases? Thank God some of our lawmakers are looking out for the public's interest. If the oil companies cannot afford to pay what they owe in a lump sum, amounts owned should be taken out of future production over time until recouped, or their tax breaks should be offset and abated until recovery. GovExec.com reader Posted September 28, 2006 10:09 AM
