Timeline, oil royalty fraud and settlements
From TomPaine.com, a progressive analysis/commentary journal
1974: The State of
1993: The Project on Government Oversight (POGO)--a tiny, nonpartisan, nonprofit, Washington-based public interest organization--began to prod the Interior Department's Minerals Management Service (MMS) to require the majors to pay royalties tied to market prices.
1994: The MMS stonewalled. POGO then began to use the Freedom of
Information Act to pry out of MMS documents relating to the pricing and
1995: The MMS, under pressure, proposed regulations requiring Big Oil to link royalty payments to market prices. The majors "don't want to pay their fair share," Interior Secretary Bruce Babbitt would say later. "They have established a collusive procedure for cheating the public of a fair return."
1996: Merely from production on federal lands in
1997: POGO obtained the last of thousands of documents it had sought under a succession of Freedom of Information Act requests. In a sometimes startling report, POGO disclosed the following: The MMS had made wide-ranging, so-called global settlements with Mobil, Exxon and Chevron; the settlements had the effect of limiting the potential payback of all ten major oil companies to only $385 million of the more than $1 billion the agency had said they owed for drilling on federal lands in California; and, finally, internal documents of the MMS itself described the settlements as "California Royalty Secret Deals."
In another key development, a federal judge consolidated lawsuits accusing eighteen mostly large oil companies of having knowingly underpaid royalties owed federal taxpayers and Indian tribes since 1988. The plaintiffs, including POGO and former ARCO marketing executives Benji Johnson and John Martineck, brought the litigation under the False Claims Act, which lets citizens sue on the government's behalf and enables them if successful to share in the award. They asked for billions of dollars in trebled actual damages and civil penalties.
1998: The Justice Department joined the False Claims Act litigation. Mobil bowed out, agreeing to settle for $45 million, of which POGO received $385,000. (Disclosure: I became an unpaid director of POGO after it had sued under the False Claims Act.) Interior, after a lengthy public-comment process, tried to make its proposed market-based-royalty regulations final, only to be blocked in the Senate. "They've found a way to fund corporate welfare for oil companies and other special interests," is how President Clinton put it recently.
The "way" was three successive riders (one in 1999) on humanitarian relief bills that, as a practical matter, were unstoppable. The riders cost the taxpayers tens of millions of dollars. In 1999, the fourth rider in two years, attached to Interior's appropriations bill, gave the Senate this choice: Approve the encumbered bill, or deny Interior any money at all.
Because the first three riders, in particular, were neither fully debated nor voted upon on the merits, they drew scant public attention. Indeed, Senator Barbara Boxer (D-CA) would tell the Senate, they were "agreed to many times in the dead of night," in committee, to protect the "5 percent of the oil companies that are ripping off the people."
All of the riders were sponsored by Texas Republican Kay Bailey Hutchison, Big Oil's staunchest ally and the leading recipient of its campaign contributions. The industry has given her $1.2 million in campaign donations in the past five years.
1999: The total amount that major oil companies agreed to pay over
a multi-year period to settle under-valuations lawsuits approached the $5
billion mark. The principal recipients:
Nevertheless, the majors continued to shortchange the federal government at the rate, Interior said in data published in the Congressional Record, of $66 million a year. "With $66 million, you can hire 1,000 teachers," Boxer declared. "You can put 44,000 new computers in classrooms. You can buy textbooks for 1.2 million students. You can provide 53 million hot lunches for schoolchildren."
But the False Claims Act case produced cave-ins. Chevron, the Wall Street Journal reported on September 10, had agreed to settle for $95 million, BP Amoco for about $30 million, Conoco for about $28 million, and Occidental for $7.3 million.
The debate turned on political philosophy as well as money. "I believe these public lands are a public trust," Richard Durbin (D-IL) said. "The philosophy on the other side...is that the public lands are in some way an intrusion of the Federal Government into many of these states."
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