Senators Introduce Legislation to End Oil and Gas Royalty Mismanagement
Washington, D.C. – Addressing what the Department of Interior’s Inspector General recently referred to as a “culture of ethical failure,” U.S. Senators Ron Wyden (D-Ore.) and John Barrasso (R-WY), the chairman and ranking member of the Senate Subcommittee on Public Lands and Forests, introduced legislation (S. 3556) increasing oversight and accountability at the Department of Interior’s Minerals Management Service (MMS).
“The Federal organization charged with collecting billions of dollars of royalties from oil and gas leases on public lands cannot be allowed to carry on like some corrupt, third world bureaucracy from a bad Hollywood movie” said Wyden. “This legislation will hold MMS, and the Royalty-in-Kind program it administers, to a new and professional level of accountability.”
“Our legislation increases accountability within MMS – accountability for state and federal revenues and accountability to the taxpayer. The recent investigation raises serious questions of public trust and illustrates a total disregard for personal, professional, and programmatic ethics,” said Barrasso. “Our bipartisan effort makes it clear that the status quo will not be tolerated.”
As introduced, the legislation has five major components. The bill:
· Requires that the head of the MMS be appointed by the President and must be confirmed by the Senate. MMS is the only major bureau within the Interior Department that does not require its director to be confirmed by the Senate.
· Requires MMS to implement a comprehensive audit program, including on-site financial audits of royalty payments.
· Gives the Secretary of the Interior 60 days to implement all of the Inspector General’s recommendations from both the May business practices report and the more recent September ethics report. If that deadline is not met, the Royalty-in-Kind (RIK) Program would be suspended.
· Requires the Secretary to annually “re-certify” that the RIK program meets all Federal ethics and procurement laws and regulations. If that recertification is not completed, the RIK program would be suspended.
· Directs the Inspector General to annually review the MMS program, including the RIK certification process.
The MMS oversees all oil and gas leasing on the Outer Continental Shelf and collects an average of $10 billion a year in mineral royalties from all Federal lands. Wyden and Barrasso introduced this measure both as an amendment to energy legislation currently pending before the Senate and as a stand-alone bill.
Wyden and Barrasso said that they look forward to working with Senator Jeff Bingaman (D-NM), Chairman of the Senate Energy and Natural Resources Committee, as well as the House Natural Resources Committee to advance these reforms in the next congress.
The September 2008 Inspector General reports on the MMS program can be found at:
http://wyden.senate.gov/newsroom/record.cfm?id=302756&
A May 2008 Inspector General report on the Royalty-in-Kind program can be found at:
http://wyden.senate.gov/newsroom/ig_report-royalties.pdf