POGO just received more documents via the Freedom of Information Act (FOIA) that provide more insight into how taxpayers have been shortchanged--it looks like we can specifically cite at least $5,845,018--by the poor guardianship at the Minerals Management Service (MMS). And while this number is not large comparatively, we suspect it is only a drop in the bucket of what might be discovered if real auditing was restored to MMS's stewardship of drilling on federal lands.
First, some background: In October 2002, then-MMS Director Johnnie Burton issued a guideline paper regarding the statute of limitations for demands and orders and appeals decisions for federal leases. At the time, the New Mexico Taxation and Revenue Department wrote to then-Minerals Revenue Management (MRM) Associate Director Lucy Denett that the guidelines were "clear[ly] written to appease the oil and gas industry." Reps. Carolyn Maloney (D-NY), Jim Costa (D-CA), Edward Markey (D-MA), and Maurice Hinchey (D-NY) were also concerned by the change, and in February 2008 sent then-MMS Director Randall Luthi a letter to find out the audit and royalties impacted by the guidelines.
POGO now has Luthi's response, which estimates that taxpayers lost approximately $5,845,018 as a result of the change in guidelines. The response also includes a breakdown of which companies didn't have royalties pursued, available below the jump:
For the $146,304.16 in demands withdrawn, in whole or in part, due to the change in Guidelines:
BP saved $1,126.98
Petro-Hunt saved $12,934.44
Citation saved $15,675.28
Western Energy saved $69,577.88
ORMAT saved $46,989.58
For the $2,862,024.90 in appeals disposed of in whole or in part due to the change in Guidelines:
Aera Energy saved $43,736.00
Western Energy saved $2,818,288.90
Royalty settlements impacted totaled $2,669,508.57 in savings for Pioneer, Conoco Phillips, and Kennecott.
And $167,180.01 was saved by Patrick Petroleum, Total Fina Elf, and Williams as a result of audits being ended or deemed closed or completed because of the new Guidelines.
-- Mandy Smithberger