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Project on Government Oversight




New Evidence of Royalty Rip-Offs Mounts...But Big Oil Presses Ahead on Senate Bail-Out Scheme

July 22, 1999 


Senators Kay Bailey Hutchison (R-TX) and Pete Domenici (R-NM) want language approved this week or next in the Interior spending bill that would reward oil companies with $130 million for cheating taxpayers and the U.S. Treasury. Oil companies have already received $72 million under the provision.

The Hill proposal is coming to a decision as the most condemning evidence to date has surfaced about Big Oil's fraudulent practices that cheat the federal government of royalties owed for drilling on public lands. Industry has avoided paying billions of dollars in such royalties. Consider these important new developments:

  • In recent days, Chevron sought to get out from under a pending lawsuit alleging royalty evasion by offering almost $100 million to settle charges with the federal government. Government officials say this amount falls short of what is owed and have not yet settled.

    On July 6th and 7th, Harry C. Anderson, the retired Secretary of Crude Pricing for ARCO testified in California court that his and other oil companies priced their oil well below market value - perhaps by as much as 20% - in order to avoid paying royalties for drilling on public lands.

    Any reasonable person would ask: is this the kind of industry that deserves a reward from Congress? Oil royalties help state governments pay for the education of school children, the Land and Water Conservation Fund, and Native American nations. The Minerals Management Service calculates that oil royalties have funded more than 37,000 park and recreation projects.

    A letter opposing the Hutchison-Domenici rider delivered to the Senate today was signed by dozens of education, Native American, environmental, good government, taxpayer and labor organizations including Common Cause, National Parks and Conservation Association, National Rural Education Assocation, Native American Rights Fund, and American Federation of State, County and Municipal Employees (AFSCME). Senator Barbara Boxer (D-CA) will introduce an amendment to strike the rider.

  • 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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