Now that the cigars have burned out and the lobbyists have left the smoke-filled room, it is clear that taxpayers have been ripped off. An oil industry provision, slipped into the pages of the large spending bill signed into law May 1, will cost taxpayers $22 million dollars in lost royalty revenue.
Oil companies that drill for oil on privately-owned land pay a royalty to the landowner. Similarly, when the oil is on taxpayer-owned land, oil companies sign contracts to pay a royalty to federal taxpayers. Unfortunately, some oil companies have used various gimmicks for years to avoid paying taxpayers cash they are owed, according to a suit by the U.S. Department of Justice. Underpayments total over $2 billion according to the Project on Government Oversight, an independent watchdog.
The Interior Department controls federal oil lands for taxpayers, and was set to propose reform regulations to stop the abuses. But the recently enacted pro-oil industry rider blocks the proposed reform regulations until October. The reform regulation would have increased royalties by about $5.5 million per month, meaning the delay will cost taxpayers $22 million, according to Interior. The pro-oil industry rider, engineered by Sen. Kay Bailey Hutchison (R-TX), was tacked onto a bill intended to provide emergency funds for flood victims and troops in Bosnia.
A few members of Congress, including Senator Barbara Boxer (D-CA) and Representatives George Miller (D-CA) and Carolyn Maloney (D-NY), are attempting to repeal the rider. But as they are working to make sure taxpayers receive a fair return for use of national resources, the oil industry is also pushing a separate plan to permanently pay less in royalties.
Under the industry's plan (H.R. 3334 and S. 1930), royalties would be paid in oil (in-kind) instead of cash. Under this plan not only would government receipts drop by hundreds of millions of dollars according to Interior, but the government would also be forced into the business of selling huge quantities of oil. Not surprisingly, Interior opposes this scheme, concluding that H.R. 3334 is "primarily designed to enhance the interests of oil and gas producers, at the expense of the American taxpayer."
For more information contact David Madland at (202) 546-8500 x111 or firstname.lastname@example.org.