More On Oil Lease Royalties
IT'S THE COVER UP, NOT THE $10 BILLION DOLLAR MISTAKE
In a new report, the Interior's Inspector General Earl Devaney concluded that the omission of key royalty requirements from leases with big oil companies in 1998 and 1999 was a "jaw dropping example of bureaucratic bungling". And he said the Minerals Management Service (MMS) adhered to a "shockingly cavalier management approach". In response to questions from the Senate Energy Committee today, Devaney said that 12 Interior employees are still under investigation.
Forgetting to add the original language about royalties into the contracts means U.S. taxpayers lost out on up to $10 billion in potential oil revenues and oil companies got a massive windfall. However, Devaney went further to suggest that Johnnie Burton, the head of Interior's MMS may have known about the massive mistake up to three years ago – and was not notified as she has previously stated – by reading a newspaper article about the mistake in early 2006. But Devaney concedes he does not have a "smoking gun". This reduces the likelihood that Burton would ever face criminal charges.
The agency stands by Burton and says "under no circumstances" will she be fired.
It's expected that Interior will announce in the next few days two co-chairs of an 'independent advisory panel' on royalty management. An Interior spokesperson says the co-chairs are "high in stature". Interior also says they are scrutinizing their backgrounds to make sure the two people have no suspicious ties to environmentalists or big oil. Interior says David Deal (reported by The New York Times to lead this committee) will be a Vice Chair - and will not head the committee. Deal worked for the American Petroleum Institute for over 20 years and was sharply criticized by many environmentalists and lawmakers as a poor choice to lead an "independent" advisory committee on royalty management.