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Project on Government Oversight




Public Wins--Big Oil Loses on Oil Royalty Issue

November 16, 1999 


Despite their massive lobbying and PR campaign, Big Oil lost its fight to preserve a biased and outmoded royalty collection system. This was a victory not only for the White House and congressional supporters but for the public. "This shows that the public can fight back and win against one of the most powerful industries in America," said Danielle Brian, Executive Director of Project On Government Oversight.

On March 15th, an oil-industry-designed hold on Interior regulations will be lifted and the nation's largest oil companies will finally pay fair market value to the taxpayers under an agreement reported today between the White House and Congress.

"Despite all their money, all their lobbyists, and all their power, Big Oil was defeated on their number one legislative priority. This win shows that ordinary citizens can still prevail in Washington, DC," stated Brian.

According to the Department of Interior, major oil companies bilk taxpayers and Indians of $66 million annually in fees known as "royalties" for drilling oil from public lands. Oil-accommodating Senators have enabled the fraud by holding hostage new Interior regulations to prevent further cheating since May 1998, an action which has cost the taxpayers almost $100 million.

In September, Senator Kay Bailey Hutchison (R-TX) succeeded in attaching an amendment to the Interior budget extending the moratorium for an additional year. Senator Hutchison is the oil and gas industry's top campaign contribution recipient in Congress, receiving $1.2 million in the most recent election cycle. Under the pressure of strong bi-partisan and public opposition, the provision was shortened to six months in conference in October.

The offenses of the oil companies under current regulations are so egregious that state governments including Alaska, California and Texas have collected close to $5 billion in lawsuit settlements. The Justice Department has reportedly settled or made "agreements in principle to settle" with oil companies for more than $200 million.

Oil royalties support the education of school children, the Land and Water Conservation Fund, state government budgets, and Indian nations. The Minerals Management Service calculates that oil royalties have funded more than 37,000 park and recreation projects including such crown jewels as Gettysburg National Memorial Park, Niagara Falls, the Appalachian Trail and the Everglades.

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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