US House Democrats warn of tougher MMS lease enforcement

Washington (Platts)--7Dec2006

US House Democrats warned oil and gas companies Thursday they would
dramatically toughen up enforcement of leasing requirements on federal lands
following a report by the Interior Department's inspector general criticizing
the Mineral Management Service's management of leases.

The IG report concluded that MMS has mismanaged its compliance review and
audit programs partly because of poor data and partly because of a lack of
manpower. It also charged MMS with inadequate evaluation of company-reported
volume and allowance data, increasing the risk that MMS won't detect underpaid
royalties.

"It is almost unbelievable that on the compliance reviews they rely on
information from the oil and gas companies that they are auditing," said
Representative Carolyn Maloney, Democrat-New York. "This program will be
revamped, reorganized, and made accountable to the American taxpayer."

"This is a warning to the oil and gas companies. When we get a Democratic
Congress, there is going to be a cop on the beat," said Representative Rahm
Emanuel Democrat-Illinois, who will be the chairman of the Democratic caucus
in January.

Emanuel called MMS an agency that "sees no evil, hears no evil and speaks
no evil" when it comes to enforcing rules against oil companies.

Representative Edward Markey, Democrat-Massachusetts, said the report was
"the most devastating critique I've ever seen leveled on anyone."

The Democrat lawmakers said MMS had "run out of time" on efforts to
renegotiate leases with the oil companies that did not include price floors
that would have suspended royalty relief that the oil companies now are
benefiting from.

They vowed to bring in legislation either before the end of the current
Congress Friday or in the next Congress starting in January.

--Daniel Whitten, daniel_whitten@platts.com

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