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Week of 9.15.06

Interior Official Slams Agency

On Wednesday, September 13, the House Government Reform subcommittee on energy held a hearing to discuss how oil and gas companies got away with shortchanging American taxpayers on billions of dollars in royalties for drilling rights on publicly-owned property. These royalties are the government's second largest source of revenue, behind income tax.

In testimony before the committee, Earl E. Devaney, the Interior Department's inspector general, charged the department with "bureaucratic bungling" of oil and gas leases signed in the 1990s.

Devaney also criticized the Interior Department for other ethical misjudgments, mistakes, and cover-ups. "Ethics failures on the part of senior department officials — taking the form of appearances of impropriety, favoritism and bias — have been routinely dismissed with a promise 'not to do it again,'" Devaney said. "Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior."

This comes as oil and gas companies continue to make enormous profits in a time of record-high gas prices.

NOW first reported on these royalty-avoidance tactics in a June 2006 show ("Crude Awakening"). The show also examined how members of Congress are being blamed for making sweetheart deals with Big Oil engineered to avoid the payment of royalties.

In May 2003, NOW investigated J. Stephen Griles, the former deputy secretary of the interior under President George W. Bush, who had also been a powerful lobbyist for the energy industry ("Revolving Door"). Griles resigned after being accused of inappropriately using his political position to benefit former clients.

In 2004, Delaney wrote that Mr. Griles was a "train wreck waiting to happen." During his testimony on Wednesday, Devaney expressed his strong disappointment that Griles' ethical breaches were dismissed or ignored by the Interior Department.

"I think the American taxpayers are losing billions of dollars," Kevin Gambrell, former director of the Federal Indian Minerals Office in Farmington, New Mexico, told NOW.

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