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Project on Government Oversight
 

 

 

 

Stop The Royalty Rip-Off!

July 7, 1998 

 

The issues are simple:
Big Oil vs. School Children;
Big Oil vs. the Environment; and
Big Oil vs. The Taxpayer.
 

An amendment to the Interior Appropriations bill, introduced by Senator Pete Domenici (R-NM), bans the Interior Department from using funds in fiscal 1999 to issue rules needed to protect the public's oil royalty income. Interior collects the royalties owed by oil companies for the privilege of profiting from public and Native American land assets. Interior's proposed rule bases royalties on real world market prices, rather than prices picked by the companies themselves.

The public cost of this oil royalty rider is at least $66 million but probably over $100 million annually. It will add to the monthly losses of $5.5 million caused by a similar Rider slipped on to the disaster relief supplemental appropriation by Senator Kay Bailey Hutchison (R-TX) in April that banned Interior's new royalty rule until October 1, 1998.

The oil royalty riders benefit Big Oil - major integrated oil companies with revenues exceed $30 billion a year (1995). It is these same Big Oil companies that have been charged by the Interior Department the Justice Department and several State and Native American governments with abusing their public land privileges by underpaying past oil royalties by $2 billion.

Education organizations oppose the Big Oil royalty rider because it shortchanges children and their education. Federal royalty income is shared with States for funding public schools; in 1997 alone, $545,447,235 was distributed to States from revenues gained through federal mineral leases.

Environmental organizations oppose the Big Oil royalty rider because it shortchanges the environment. Federal royalties finances the Land and Water Conservation Fund and the National Historic Preservation Fund. The riders increase the substantial and growing subsidies of polluting fossil fuel energy sources that contribute to smog and global warming.

Taxpayer organizations oppose the Big Oil royalty rider because it shortchanges the public as a whole. Federal land is a taxpayer asset that should be managed in a way that maximizes the return to current and future generations of taxpayers.

Native Americans oppose the Big Oil royalty rider because it shortchanges them of income vital to the survival of many Tribes. It is also inconsistent with the United States' fiduciary obligation to Native Americans.

The solution is simple: Oppose the Big Oil Royalty Riders. Save tax dollars and the environment by insisting that oil companies pay the full amount owed on the resources they extract from the public's land. Cut the Domenici amendment from Interior Appropriations, and oppose all similar riders that would permit Big Oil to continue to shortchange taxpayers, children and the environment.


Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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