Thursday, December 13, 2007

Oil Accountability Project

Today, the GOP blocked the energy bill because it included new taxes on oil companies. It was blocked because it included billions of dollars in new taxes on the biggest oil companies.

The Democratic leaders fell one vote short, 59-40, in getting the 60 votes needed to overcome a GOP filibuster. And in order to move the bill forward, Democrats said they would strip the taxes from the legislation. Reid of Nevada revised energy package would include the first increase in automobile fuel efficiency in three decades and massive increases in the use of ethanol as a motor fuel, but it will "eliminate the tax title."

And thus, the Republican leader Mitch McConnell of Kentucky predicted the revised bill would be approved with wide bipartisan support.

Here are is the list of compromises already made to the bill:

  • Senate Democrats earlier dropped a House-passed provision that would have required investor-owned utilities nationwide to generate 15 percent of their electricity from solar, wind and other renewable sources.

  • The mandate was fought by the electric utility industry and, especially the Atlanta-based Southern Co. They argued that the mandate would lead to higher electricity costs, especially in regions that do not have an abundance of wind or solar energy, such as the Southeast.

  • The oil companies had pressed lawmakers to oppose repeal of the $13.5 billion in tax breaks provided them by Congress in 2004 and 2005. They argued the tax relief was essential as an incentive for domestic oil and gas production and refinery expansion and that rolling back the tax breaks would lead to higher energy prices.

Democrats released a report by the Joint Economic Committee on Wednesday that concluded that rescinding the tax breaks would have no impact on production decisions or "have any effect on consumer prices for oil and gas."

We exposed that last year's Abramoff/Safavian/Ney scandal revealed a number of massive scandals in the Department of Interior. But they were just the tip of the iceberg. Even though the spotlight has faded a bit, the litanies of scandals, rip-off and handout to big oil continues. Especially at the Minerals Management Service -- the part of the DOI that is supposed to collect royalties from oil companies who are extracting resources from our public lands.

However, for the past six years, government whistleblowers have alleged that a lack of oversight, deficient procedures, and cozy industry ties between MMS officials and oil and gas companies have created a system that allows the companies to underpay the federal government for scarce resources extracted from public lands.

On September 19th, DOI Inspector General Earl Devaney echoed these concerns in his report "Minerals Management Service (MMS): False Claims Allegations." The report describes a process systemically plagued by ethical lapses, process failures, mismanagement and conflicts of interest. The IG report highlights the need for vigorous oversight of the oil and gas industry with an eye towards real accountability.

Taxpayers for Common Sense and Project on Government Oversight assert the MMS's closeness with its clients taints its mission to pursue uncollected royalties for the Treasury. This has been especially true, they say, in the six years since the Bush administration instituted a new process called "compliance review." Beth Daley, an investigator for Project on Government Oversight, said there has been a fundamental change with auditors being told not to audit oil companies that hold federal leases: "It was never a great culture, but it has taken a turn for the worse." Before, the agency relied more on auditing to determine whether proper royalties were being levied and paid.

As a result of these alleged abuses, whistleblowers have brought forth legal actions claiming oil and gas companies systematically undervalue the amount and value of resources removed from public and Native American lands, with one case (Burlington Resources) recently settling for more than $97 million. Evidence in these cases suggests oil companies prefer to risk federal penalties rather than pay the actual amounts owed since the prospect of real penalties (particularly under this Administration) stands so remote.

The question to ask is if we have any reason to believe things will be any different under a Democratic president? Of course we all hope so, but will the candidates go on the record pledging to end the sloppy and corrupt practices at the DOI that are costing us all millions and millions of dollars?

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