MALONEY HAILS NEW OIL RULE--- BRINGS AN END TO BIG OIL'S RIP-OFF OF AMERICAN TAXPAYERS

Mar 14, 2000
Press Release
Congresswoman Carolyn B. Maloney (NY-14) made the following statement today regarding the Interior Department's new oil-valuation rule:

"Today's announcement finally brings to an end the decades-old scam that has permitted big oil companies to rip off the American taxpayer. This new rule is the culmination of a multi-year struggle between big oil and its supporters in Congress and defenders of the environment, public schools, and states and Indian tribes. I applaud Secretary Babbitt for his tenacity in the face of an unprecedented attack from the oil industry and its allies.

"I am pleased that this rule will finally force big oil companies to pay royalties based on the fair market value of the oil they produce and not on so-called 'posted prices' set by the industry. This is a tremendous win for the taxpayers, who will now finally get the money they deserve from companies that produce oil on federal land. I look forward to reviewing the rule in greater detail over the coming months and working with MMS to see that the rule is implemented fairly and impartially."

Background:

Today, the Interior Department's Minerals Management Service (MMS) released a new oil-valuation rule, to be published in tomorrow's Federal Register, that will determine the royalties paid by companies that produce oil on federal lands. The new rule will save taxpayers $67.3 million dollars each year, according to MMS estimates. Much of this money is shared with several state governments, many of whom use royalty income to fund their public schools.

MMS began to re-write its oil-valuation rules several years ago in the face of allegations that several major companies were deliberately underpaying royalties. In response to these allegations, the Justice Department joined in litigation against several major oil companies for violating the False Claims Act by deliberately underpaying royalties owed to the Federal government. To date, the litigation has collected nearly $200 million. State litigation has raised nearly three billion more.

Although MMS began rewriting its rules in 1997, it has been prohibited from publishing a final rule by a congressionally-imposed moratorium. The moratorium was first enacted in 1998 and was later extended on three separate occasions as a result of riders attached to must-pass appropriations bills. The current rider, which was adopted only after a prolonged filibuster and a narrow 51-47 vote in the Senate, expires tomorrow.

Congresswoman Carolyn Maloney, a long-time critic of waste, fraud, and abuse in government programs, has been a leader in efforts to revise the Interior Department's oil-valuation rules. At her urging, the House Subcommittee on Government Management, Information and Technology has held two hearings into MMS's royalty-collection efforts which were instrumental in getting MMS to re-write its oil-valuation rules. Last year, she issued a report demonstrating that several major oil companies used a variety of schemes to deliberately underpay royalties throughout the 1980s.

 

 

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