WASHINGTON-- Rep. Carolyn Maloney(D-NY) today urged President Bush not to appoint oil industry insiders to lead the Federal agency charged with the oversight of oil companies' conduct on Federal lands. Recent reports have indicated that President Bush is considering two industry insiders, Tom Sellers of Conoco Inc. and Ben Dillon of the Independent Petroleum Association of America to lead the Department of Interior's Minerals Management Service.

In a letter to President Bush(attached), Rep. Maloney commented that appointing oil industry executives to oversee oil companies operating on Federal lands "sends the wrong message to taxpayers who have been cheated out of their fair share of royalties, and it sends the wrong message to everyday Americans who trust that the Federal government is working for them-not the oil industry."

BACKGROUND

Rep. Maloney has led the fight to ensure that taxpayers are fairly compensated for our natural resources. In 1996, after learning that numerous major oil companies were paying royalties much below market value to the federal government for oil taken from federal property, Maloney held a hearing before a Government Reform subcommittee to look into this issue. These hearings and subsequent investigations by the General Accounting Office (GAO) led Maloney and others to conclude that numerous major oil companies were unfairly cheating taxpayers out of nearly $100 million a year in oil royalties. Many companies were sued by the federal government for deliberate underpayment of royalties. Most elected to settle and, to date, over $425 million has been collected. States and private royalty owners have collected almost $3 billion more including $17.5 million for the state of Texas and $350 million for California. The Interior Department's new oil-valuation rule - which was announced last year - will save taxpayers at least $67 million each year.

The Minerals Management Service is the agency responsible for the oversight of all oil industry activities on Federal lands. As recently as 1999, MMS collected $4.4 billion in royalties from the oil industry. Royalty revenues are directed toward the Land and Water Conservation Fund, American Indian Tribes, the General Fund of the US Treasury and states.

TEXT OF LETTER

Dear President Bush,

It was recently brought to my attention that you are considering appointing top oil industry lobbyists to head the Department of Interior's Minerals Management Service(MMS). As you may know, since 1996 I have actively worked to ensure that taxpayers are paid their fair share of royalties for oil taken from Federal lands. I am concerned that the appointment of an industry insider who has actively worked to shortchange taxpayers and undermine these new regulations could undermine much of the progress we have made to ensure that royalties are paid fairly and accurately.

MMS is the Federal agency solely in charge of collecting royalties owed for oil taken from Federal lands. As recently as 1999, MMS collected $4.4 billion in royalties from the oil industry. Royalty revenues are directed toward the Land and Water Conservation Fund, American Indian Tribes, the General Fund of the US Treasury, and states.

As you may know, many oil companies have been sued by the Justice Department for deliberate underpayment of royalties. As a result, many companies have elected to settle and, to date, over $425 million has been collected. States and private royalty owners have collected almost $3 billion more including $17.5 million for the state of Texas and $350 million for California. The Interior Department's new oil-valuation rule - which was announced last year - will save taxpayers at least $67 million each year.

I understand that you are considering two individuals to lead MMS who have aggressively worked to undermine these new royalty rules. Tom Sellers, Government Relations Manager for Conoco Inc., is an expert in royalty issues and has staunchly opposed the new royalty rules. In March 2000, Conoco paid $26 million to the Federal government to resolve a lawsuit charging they had underpaid Federal oil royalties. Ben Dillon, currently Vice President for Political Affairs at the Independent Petroleum Association of America, is another royalty expert who has actively worked to undermine the new regulations despite the fact they will save over $67 million for taxpayers this year.

Rising prices or an increase in the amount of oil supplied from Federal lands will produce additional royalty payments. As stewards of Federal revenues and resources, I am sure you would agree that we should work to ensure that these payments are collected fairly and accurately. The appointment of these two industry insiders to lead the agency charged with the oversight of oil companies' conduct on Federal lands could jeopardize these efforts.

This sends the wrong message to taxpayers who have been cheated out of their fair share of royalties, and it sends the wrong message to everyday Americans who trust that the Federal government is working for them-not the oil industry.

I hope you will seriously consider these issues before making your final decision and I welcome your views on this important appointment.

Sincerely,

CAROLYN B. MALONEY
Member of Congress

cc: Secretary Gale Norton, Chairman James V. Hansen, Ranking Member Nick J. Rahall, Chairman Frank Murkowski, Ranking Member Jeff Bingaman

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