by William Robinson, Jr.

Stop Oil Companies from Taking Money from Taxpayers,
School Children, Native Americans
and the Environment

July 21, 1999

Dear Senator:

We are writing to express our opposition to the Hutchison-Domenici rider attached to the FY 2000 Interior Appropriations bill and all other anti-environmental riders. The Hutchison-Domenici rider would give away $130 million in royalty write-offs to major oil companies on top of the $72 million that they have received since this rider was first imposed in May, 1998. The rider should also be opposed for the following reasons:

-- a former oil executive testified in California court on July 6th that his company misrepresented crude oil prices to avoid paying royalties;

-- according to trade press, an oil company {{Chevron}} has offered to settle with the federal government for almost $100 million {{actually 94 million; Platt's Oilgram News, July 1999}} for shorting the U.S. Treasury of royalties; and

-- the White House has singled out this rider as one that it strongly opposes in a letter to the Senate Appropriations Committee.

According to the Department of Interior, oil companies deprive the U.S. Treasury of $66 million annually in fees known as 'royalties' for drilling oil from public lands {{a gross understatement}}. To prevent further underpayment of royalties, Interior has developed new regulations that will continue to be held hostage under the Hutchison-Domenici rider until July, 2001.

The Department of Interior has taken extra care to ensure that the newly-developed regulations adequately balance the interests of industry, the federal government and taxpayers. To that end, Interior has revised the regulations five times, received input during seven open comment periods, organized 17 primarily industry-attended workshops and meetings, and received more than 4,000 pages of public comments.

The new regulations would require oil companies to pay royalties on the basis of prices set in the free market rather than on artificial prices set by the oil companies themselves -- the so- called 'posted prices.' Posted prices have become the focus of extensive litigation nationwide due to alleged undervaluing by oil companies. The offenses of the oil companies under current regulations are so egregious that state governments including Alaska, California and Texas have collected close to $5 billion in lawsuit settlements over posted prices. Yet, the federal government has lagged behind in fixing this serious problem.

Moreover, this continued underpricing of the public's natural resources contributes to greater environmental harm. As the current royalty valuation rule amounts to a subsidy to the oil industry, the effect will be to further encourage our dependence on fossil fuels, increase environmental damage, particularly global warming, and disadvantage the use and development of cleaner energy alternatives. The oil industry receives over $5 billion each year from the federal government. The new regulations would be a good first step toward eliminating this corporate welfare.

The majority of oil royalty revenues go directly to the U.S. Treasury where they may be applied to debt reduction and federal programming. However, oil royalties also help state governments pay for the education of school children, and provide underwriting for the Land and Water Conservation Fund and for Native American nations. The Minerals Management Service calculates that oil royalties have funded more than 37,000 park and recreation projects.

For these reasons, we strongly encourage you to oppose the Hutchison-Domenici rider and all other anti-environmental riders.


Brian Talbott, Executive Director American Association of Educational Service Agencies 703-875-0739
Jordan Cross, Legislative Specialist American Association of School Administrators 703-875-0764
Charles M. Loveless, Legislative Director American Federation of State, County and Municipal Employees (AFSCME) 202-429-5060
Bobby L. Harnage, National President American Federation of Government Employees (AFGE), AFL-CIO 202-639-6466
Steve Holmer, Campaign Coordinator American Lands Alliance 202-547-9105
Barbara Jeanne Polo, Political Director American Oceans Campaign 202-544-3529
Ann Mills, Vice President American Rivers 202-347-9240
Don Simon, Acting President Common Cause 202-833-1200
James Love, Director Consumer Project on Technology 202-387-8030
Gordon Ambach, Executive Director Council of Chief State School Officers 202-336-7036
Courtney Cuff, Legislative Director Friends of the Earth 202-783-7400
Conrad Martin, Executive Director Fund for Constitutional Government 202-546-3732
Louis Clark, Executive Director Government Accountability Project 202-408-0034
Gary Cook, Climate Coordinator Greenpeace 202-319-2419
Steve D'Esposito, President Mineral Policy Center 202-887-1872
William J. Chandler, Vice President for Conservation Policy National Parks and Conservation Association 202-223-6722
Kari Arfstrom, Project Director National Rural Education Association 703-875-0759
John Echohawk, President Native American Rights Fund 303-447-8760
Gregory Wetstone, Director of Advocacy Programs Natural Resources Defense Council 202-289-6868
Perry Shirley, Assistant Director, Minerals Department Navajo Nation 520-871-6340
John Passacantando, Executive Director Ozone Action 202-265-6738
Richard Miller, Policy Analyst Paper Allied Industrial Chemical and Energy Workers (PACE) 202-637-0400
Maura Kealey, Deputy Director Public Citizen's CongressWatch 202-546-4996
Wenonah Hauter, Director Public Citizen's Critical Mass Energy Project 202-546-4996
Jeff Ruch, Executive Director Public Employees for Environmental Responsibility 202-265-7337
Scott Denman, Executive Director Safe Energy Communication Council 202-483-8491
Skip Roberts, Legislative Director Service Employees International Union 202-898-3200
Ralph DeGennaro, Executive Director Taxpayers for Common Sense 202-546-8500
James K. Wyerman, Executive Director 20/20 Vision 202-833-2020
Ann Hoffman, Legislative Director UNITE, Union of Needletrades, Industrial and Textile Employees 202-347-7417
Anna Aurilio, Staff Scientist US PIRG 202-546-9707
Sue Gunn, Director of Budget and Appropriations The Wilderness Society 202-429-2676
Anna Aurilio Staff Scientist U.S. PIRG 218 D St. SE Washington, DC 20003

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