
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, April 25, 1990                   TAG: 9004250075
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A7   EDITION: METRO 
SOURCE: The Washington Post
DATELINE: WASHINGTON                                LENGTH: Medium

REPORT: OIL COMPANIES LIE, UNDERPAY ROYALTIES

The federal government loses more than $400 million a year in royalties because some oil companies underreport their withdrawals from the nation's vast geological bank of petroleum and natural gas, according to a congressional study.

The study by the investigative staff of the House Appropriations Committee faulted Interior Department regulators for their "tacit acceptance" of cheating by energy companies, suggesting that the department's lax attitude has made it difficult for federal prosecutors to pursue charges of criminal fraud.

According to the study, "Government departments-agencies lack a businesslike, market-driven approach to the management and disposition of the government's assets and to the collection of amounts due" the United States.

For years congressional critics have accused the Interior Department of failing to police companies that siphon their wealth from federal oil and gas tracts, thus throwing away millions in potential revenues.

Recent investigations by the General Accounting Office and Interior's own inspector general have accused Interior's Bureau of Land Management of failing to verify adequately production figures provided by energy companies, lax enforcement of criminal penalties and weak environmental regulation.

Interior spokesmen acknowledged that there are problems with the department's regulatory program, but they disputed the study's conclusion that energy companies are underpaying royalties by 13.3 percent and said the most serious deficiencies have been fixed.

"We do not `tacitly accept' underreporting," said Steven Goldstein, the spokesman for Interior Secretary Manuel Lujan Jr. "We find it unacceptable."

Among other things, Goldstein said, Interior has hired scores of auditors to monitor federal oil and gas sales and inaugurated a computer system aimed at catching violators.

But the House report found that Interior still relies heavily on production data provided by energy companies in determining how much they owe. It was particularly critical of the department's Minerals Management Service, which works with the Bureau of Land Management and is responsible for the collection of energy royalties.

The report found that "BLM inspectors often are not inclined to look for criminal violations during their inspections of oil and gas leases." In one instance described in the report, a BLM inspector declined to pursue criminal penalties after uncovering evidence that a production valve had been deliberately tampered with. In another, a BLM official explained away a broken seal on a meter by saying, "Maybe a cow knocked it off."

by CNB