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'Drill now' proponents ensure more scrutiny of Interior Department
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| Saturday, Oct 4 2008 6:17 PM
Last Updated: Saturday, Oct 4 2008 6:18 PM
Despite California's tough stance against offshore drilling following Santa Barbara's 1969 oil spill, the price at the pumps and ramped-up rhetoric of presidential politics have brought the issue to the national forefront.
Some in Kern County's oil industry may support oil drilling in Alaska and along the California coast as a way to increase demand for oil services, or simply because they support the principle of free enterprise. Like many Californians, I oppose offshore oil drilling, fearing it will hurt our precious natural resources and hinder the push for renewable energy alternatives.
Regardless of one's position, recent headlines regarding the scandalous activities of workers in the Interior Department division responsible for collecting oil and natural gas royalties on behalf of the government should give everyone pause about any increase in offshore drilling.
Offshore and onshore drilling leases are regulated by the U.S. Department of Interior's Minerals Management Service -- the very same agency whose staff's inappropriate relationships and liaisons with oil industry executives made front page news in recent weeks. Given the agency's long history of failing California in its handling of oil leases, I am not surprised by news revelations painting MMS as little more than the oil industry's handmaiden.
As State Controller, I am in charge of collecting royalties from federal leases located within California's boundaries. Onshore oil and gas royalty payments are split between the federal government and California's K-12 education fund, while counties receive a share from geo-thermal and solid mineral leases. Over the years, my office has fought against the obvious favoritism that MMS has shown the oil industry at the expense of California's public schools and counties.
MMS adopted policies that protected oil companies from paying backdated royalties, shut down audits and said it would grant appeals filed by oil companies, regardless of whether royalties were owed. In addition, for three years straight, MMS unilaterally cut funding for my office to conduct royalty audits, reducing the number of auditors available to provide oversight and ensure California recovers all royalties owed to our schools and counties.
Considering Kern County alone received more than $100 million in royalties over the past two years, MMS's actions deprived schools and counties and endangered this important source of funding. This is why we took them to court in Washington, D.C. -- and won.
Unfortunately, the disarray at MMS goes far beyond its decision to minimize audits. MMS is unable to calculate interest or track its activities, little information is available for public evaluation, and press reports suggest a lack of management independence, integrity and credibility that taxpayers deserve from public servants.
Congress has held meaningful oversight hearings, and the General Accountability Office has shed light on MMS's shoddy oil production reports. I applaud the long overdue oversight, and believe the only credible course of action is to re-open the audits of oil and mineral leases, collect every last dollar and cent our public schools and local governments are due, and provide a full account of any amounts irretrievably lost as a result of its arbitrary and capricious policies.
One thing is for sure, even if MMS wants to move past the current scandal, the "drill now" proponents have ensured this troubled agency will remain under the microscope for years to come. Whether pro- or anti-drilling, we should all think twice before granting new oil leases and giving MMS expanded responsibilities -- at least until Congress can determine whether the agency is capable of acting in the public's, not the oil industry's, best interest.
John Chiang is the California State Controller.