Senate Investigates Oil, Gas Royalty Collections Within the Interior Department, a program called the Minerals Management Service is supposed to collect royalties from oil and gas companies that drill on public lands. But billions of dollars in royalty payments appear to be missing.
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Senate Investigates Oil, Gas Royalty Collections

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Senate Investigates Oil, Gas Royalty Collections

Senate Investigates Oil, Gas Royalty Collections

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SCOTT SIMON, host:

This is WEEKEND EDITION from NPR News. I'm Scott Simon.

Coming up, our colleague Dan Schorr reflects on the 50th anniversary of Sputnik with Nikita Khrushchev's son. But first, the federal government collects billions of dollars in royalties for granting oil and gas companies the right to drill on public lands - at least, it's supposed to.

After a yearlong investigation, Earl Devaney, the inspector general of the Interior Department, issued a report this week the details' problems in the program, including intimidation of department auditors who complained about those problems.

Senator Ron Wyden, a Democrat of Oregon, serves on the Senate Committee on Energy and Natural Resources. He's been following the issue and joins us from Capitol Hill.

Senator Wyden, thanks very much for being with us.

Senator RON WYDEN (Democrat, Oregon): Thanks for having me on again.

SIMON: When and how were the royalties that were supposed to be collected not collected and how much are we talking about?

Sen. WYDEN: We're talking about $10 billion at least. But we're talking also about interest and my guess is that it will be well over $10 billion. And this is money that has been owed over the last few years. We've been trying to get it collected and we haven't been able to do it.

SIMON: I read the losses occurred in the late 1990s. Could that be true?

Sen. WYDEN: That is correct, but also there'd been other losses since then.

SIMON: Obviously, you're going to criticize the Republican administration. Do we have to begin by noting these losses began under a Democratic administration?

Sen. WYDEN: That is a fair point as well. There is no question that the Clinton administration in the 1990s missed taking steps with respect to these contracts. It was necessary to protect the public interest. I would note, however, that the Bush administration has compounded the problem because essentially in the last big energy bill, they put additional (unintelligible) to help people who are drilling on these public lands.

SIMON: There were individual auditors at offices across the country - Minerals Management and Interior Department who said these royalties weren't being collected and tried to call out to the federal government's attention to get something done.

According to Mr. Devaney's report, what happened to some of them?

Sen. WYDEN: What we found is that you've got these lawsuits being brought by the auditors trying to recover money that they felt the companies owed. And then, these auditors came in to all kinds of problems and faced retaliation from an agency that should have been supporting them.

SIMON: What retaliation?

Sen. WYDEN: Personnel practices including protections for whistle-blowers were absent, ignored or just abused. Suffice it to say, these auditors clearly found problems when they brought these concerns forward, and the agency did virtually nothing to assist them.

SIMON: Let me try and run some of the arguments that people in the Interior Department have said to counter this. They say, first of all, it is the people who run the Interior Department, the managers, who were supposed to make these determinations, not the auditors. That's what they get paid for. And then an auditor can have an opinion, but in the end it's the manager who decides.

Sen. WYDEN: What I can tell you is the original purpose of the inspector general's investigation was to determine whether the lawsuits brought by these auditors had merit. Now, the fact that the auditors thought it was necessary to file their own lawsuits because they didn't think that their managers were doing a good job is in my view evidence enough that things are broken. I mean, the point really is here, there is a whole pattern of problems - I'm just reading from what the inspector general…

SIMON: This is Inspector Devaney's letter.

Sen. WYDEN: It's Mr. Devaney's letter. It talks of a profound failure in the development of a critical minerals management information technology system. It reveals a working environment with poor communication, ethics lapses, program mismanagement, process failures - one after another. And so you've got government auditors and they didn't think their own agency would follow up on the important and independent work they were doing.

SIMON: Are these royalties lost forever?

Sen. WYDEN: By no means are these dollars lost. And quite the contrary, we're going to stay at this until the taxpayers are protected, and the money that's owed is paid.

SIMON: Senator Ron Wyden from Oregon. Thanks very much for being with us.

Sen. WYDEN: Let's do it again.

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