WASHINGTON, D.C. -- Today, Rep. Edward J. Markey (D-MA), a senior member of the House Natural Resources and Energy and Commerce Committees, questioned Interior Department Assistant Secretary C. Stephen Allred on the Bush Administration’s failed efforts to recover billions of dollars in taxpayer losses from faulty leases issued to big oil and its continued opposition to the royalty provisions of H.R. 6, such as the Markey-Hinchey language.

During questioning from Rep. Markey, Mr. Allred stated that the Interior Department has not dropped its opposition to the House-passed royalty reform legislation that would establish mandatory thresholds for suspension of royalty-free drilling whenever oil and gas prices are high.  Allred also conceded that the Interior Department is not seeking to collect the estimated $1-$2 billion in lost royalty payments from production that has already occurred from leases issued in 1998 and 1999 that do not suspend royalty relief at high prices. Mr. Allred said that Interior has instead chosen to focus solely on recovering the larger potential lost revenue from future production.

Rep. Markey said, “It is inexplicable that the Interior Department continues to oppose legislation to fix the problem of the 1998-99 leases and manufactures absurd constitutional arguments against such legislation.  At the same time, the Department is unwilling to aggressively pursue the recovery of both past and future losses from these faulty leases. The failure of the Interior Department to support the House-passed reforms and actively pursue monies owed the taxpayer only further aids and abets the big oil companies in a heist of taxpayer money.”

Mr. Allred also stated that Interior officials did not seek to have any of the 6 companies that have renegotiated their faulty contracts agree to waive their ability to bring suit as Kerr-McGee has done challenging all price thresholds as part of the negotiated terms. If Kerr-McGee prevails in its lawsuit, it could lead to additional losses of tens of billions of dollars.

“The Bush Administration has left the door wide open for yet another under-the-table bonanza to big oil by not asking oil companies to waive their ability to bring future Kerr-McGee style lawsuits as part of the renegotiation. This omission is just the latest example of the Interior Department completely failing in their responsibility to ensure that American Taxpayers receive a fair return on their investment.  The collection of royalties by the Department of the Interior has been an embarrassment,” Rep. Markey concluded.

For more information on Congressman Markey’s efforts to recover lost royalties from oil and gas drilling, please see http://markey.house.gov

March 28, 2007

CONTACT: Will Huntington
David Moulton