Tuesday, December 11, 2007

"The Royalty Mess"

In September of this year, the New York Times editorialized on the lax oversight of the MMS in a piece aptly headlined "The Royalty Mess".

A yearlong investigation has now provided unassailable evidence that the Interior Department abdicated its responsibility to collect royalties from oil and gas companies that drill on public lands, chiefly the Gulf of Mexico. The report increases the pressure on Congress to find a way to recover the money. It also increases the pressure on Dirk Kempthorne, the interior secretary, to accelerate his reforms of the Minerals Management Service, the agency that failed to collect the royalties.

The investigation grew out of the discovery that a loophole in leases signed by the Clinton administration in 1998 and 1999 had allowed oil companies to duck royalties due on oil drilled on federal lands. Midlevel federal officials found the loophole in 2000, but nothing was done to close it or collect the lost revenues until 2006. It has already cost taxpayers more than $1.5 billion, a figure that could rise to $10 billion over the course of the leases.

The Interior Department has been hammered by Congress, but the strongest criticism has come from the department’s inspector general, Earl E.Devaney, whose final report was disclosed by Edmund L. Andrews in The Times on Monday. The report attributed the agency’s failure not so much to ineptitude as to lazy management, ethical lapses and a culture of secrecy that hid mistakes.

Click here to read the entire article

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