Friday, September 22, 2006 - Department of the Interior Cozy With Oil Companies, and Bilking the American Taxpayer

Let's just dive into the hornet's nest that is developing since Earl E. Devaney testified before the House Government Reform subcommittee on energy.


Four government auditors who monitor leases for oil and gas on federal property say the Interior Department suppressed their efforts to recover millions of dollars from companies they said were cheating the government.


The accusations, many of them in four lawsuits that were unsealed last week by federal judges in Oklahoma, represent a rare rebellion by government investigators against their own agency.


The auditors contend that they were blocked by their bosses from pursuing more than $30 million in fraudulent underpayments of royalties for oil produced in publicly owned waters in the Gulf of Mexico.


"The agency has lost its sense of mission, which is to protect American taxpayers," said Bobby L. Maxwell, who was formerly in charge of Gulf of Mexico auditing. "These are assets that belong to the American public, and they are supposed to be used for things like education, public infrastructure and roadways."


Department of Interior is charging that these auditors didn't follow proper procedure, of going to through department channels.


Let's see. Department of Interior auditors say that their superiors had suppressed attempts correct egregious acts of several oil companies -- blocking attempts to collect monies owed -- yet these same auditors are supposed to bring these charges to the same superiors. Sounds like whistle-blower time to me.


In their suits, the auditors contend that they had no choice but to go outside the agency because their supervisors ordered them to "cease work" on five separate investigations and drop their claims.


Auditors are also contending that department officials have stopped allowing auditors to issue subpoenas to oil companies -- a tool often necessary to for the auditor to do their work.


Which companies have bilked the American taxpayers out of $30 million dollars, and Interior officials have allowed?


  • Shell Oil -- $18 million

  • Kerr-McGee -- $12 million

  • two dozen companies owing $1 million each in back interest

What is so disturbing is that collections of royalty payments under the Bush/Cheney administration have plummeted, drastically.


From 1989 through 2001, according to a report by the Congressional Budget Office, auditing and other enforcement efforts generated an average of $176 million a year. But from 2002 through 2005, according to numbers that the department provided lawmakers last May, those collections averaged only $46 million.


Quick math: a difference of $130 million dollars. That's a lot of dollars that could be utilized by our nation.


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