U.S. Isn't Getting Royalties From Big Oil

Keteyian--Investigating oil royalties CBS

Almost every time a company drills for oil or gas on federal property, it's supposed to pay a royalty or tax to the government, CBS News chief investigative correspondent Armen Keteyian reports. But CBS News has learned from a Congressional source that the federal agency responsible for collecting billions of dollars in those royalties has routinely failed to hold the companies accountable.

According to the source, the Interior Department's Minerals Management Service (MMS) audits only about 20 percent of the companies. The rest of the time, the payments are made on the honor system. But the government agency "could not accurately count" its own oil and gas audits — and as a result, it has reported audits that never occurred.

"The Department of the Interior doesn't see itself as a watchdog. It sees itself as a lapdog for the oil and gas industry," says Rep. Edward Markey, D.-Mass.

In fact, in September Inspector General Earl Devaney delivered a withering indictment of ethics inside the Interior Department.

"Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior," Devaney said at the time.

He has also launched an investigation into MMS. The critical results are expected to be released this week.

The sense is that the MMS is just in bed with the oil and gas industry when it comes to accounting and auditing, but not everyone agrees.

"I don't see that, and there are a lot of checks and balances. including annual audits, so I'm pretty confidence the process works," says Stephen Allred, Assistant Secretary of the Department of the Interior.

The department says it's finding new ways to hold companies accountable. But that doesn't work for Democrats; they plan aggressive investigations come January.


  • Melissa McNamara

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