CONGRESSIONAL REPRT SLAMS INTERIOR'S UNPAID ROYALTY COLLECTION EFFORT

Sep 23, 1996
Press Release
WASHINGTON, DC--Congresswoman Carolyn B. Maloney (D-NY) announced the release of the Congressional report, “Crude Oil Valuation: The Ineffective Response of the Minerals Management Service.”  The House Committee on Government Reform and Oversight issued this report as a follow-up to a hearing of the Subcommittee on Government Management Information and Technology held on June 17, 1996.  Maloney is the Ranking Member of the Subcommittee.  The report concludes that the Minerals Management Service has failed to aggressively collect hundreds of millions of dollars in unpaid federal oil royalties.According to Rep. Maloney, “The Minerals Management Service agreed to aggressively collect unpaid federal oil royalties at our June 17 hearing.  Yet, fourteen weeks later, MMS has only sent one bill to one company for two years of underpayments.  The Service knows that 20 companies owe up to $856 million for 15 years of oil production.  We should send out bills immediately.”  Rep. Maloney added, “I am very disappointed in MMS’ lack of effort.”  

    In addition to releasing the report, Rep. Maloney also sent a letter to the Department of Interior Secretary Bruce Babbitt stating her concerns.  In her letter, Rep. Maloney announced her intention to introduce a bill in the next Congress that will move the Minerals Management Service’s royalty collection program to the Department of Treasury’s Financial Management Service, whose mission is to collect money.

    Rep. Maloney also expressed concerns about past MMS global settlements.  She said, “The MMS may have signed away the government’s right to collect unpaid royalties from Exxon and Chevron for the years 1980 to 1989.  The Minerals Management Service made the mistake of globally settling with Exxon and Chevron only to find out later that both companies owe more than $200 million in underpaid royalties.”  Rep. Maloney referenced a November 1995 draft Inspector General report which severely criticizes the Minerals Management Service’s (MMS) handling of global settlements.  She is recommending that the Department of Interior make a legal attempt to collect the $200 million from Exxon and Chevron.

    Rep. Maloney said, “The information enclosed in the Inspector General report is explosive and timely because it involves the mismanagement of hundreds of millions of tax dollars.  This report must be promptly released in its final form, and I am deeply dismayed by the refusal to do so.”  Rep. Maloney added, “The American public has a right to know the deals their civil servants have made on their behalf.  I can imagine, having read the Inspector General’s draft report, that MMS employees would not want the public to know what they have done It seems to me that the agreements they made would not stand up to public scrutiny.”

    Rep. Maloney concluded, “I have also learned that the Minerals Management Service can enter into settlements with oil companies without the approval or even the knowledge of the Office of the Secretary of Interior.  To ensure that we do not face another case when hundreds of millions of dollars are thrown away with no accountability, I will also be introducing legislation at the beginning of the new Congress which will require any legal settlements entered into by the Department of Interior involving more than $2 million in outstanding claims to be approved by the Office of the Secretary.  Clearly someone must be held accountable.”

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