Denver Westword, a Colorado alternative newsweekly, recently published a lengthy and detailed account of how big oil companies for years successfully cheated the government out of millions of dollars—with the help of a federal agency, the Minerals Management Service, which Westword called “the most dysfunctional, ethically challenged and scandal-rocked agency in the entire Department of the Interior.”
Three Oklahoma City auditors filed lawsuits against big oil companies—Kerr-McGee and Shell—under the False Claims Act, “a federal law that allows private citizens to file fraud claims on behalf of the federal government and sue for triple damages — and keep a percentage of any money collected themselves.”
That (Bobby) Maxwell, (Joel) Arnold and (Randy) Little were publicly pursuing their claims in defiance of MMS management made for embarrassing news stories — and prompted Salazar’s predecessor as Secretary of the Interior, Dirk Kempthorne, to request an investigation by the inspector general’s office. But (Earl) Devaney’s probe into the matter seemed to be focused on whether the auditors “followed proper procedure” or used work time and privileged documents to prepare their lawsuits. Their claims that Big Oil was ripping off taxpayers for tens, possibly hundreds of millions of dollars — with help inside MMS — appeared to be a secondary consideration. Devaney’s final report was masterfully inconclusive on numerous points, including the retaliation issue, citing “poor communication” and “a complex, and sometimes confusing, array of facts.”
Maxwell’s case was finally settled, 10 years after it was filed, but the other is ongoing and in the appeals process now.
For Little and Arnold, it’s far from over. Their lawsuit against Shell was moved from Oklahoma to Texas at the company’s request — where, for almost five years, it sat as inert as an expiring lizard in the Houston courtroom of Lynn Hughes, an industry-friendly federal judge whose financial-disclosure reports list stock in Chevron and mineral royalties on properties he owns. (Hughes was reportedly BP’s choice to oversee the slew of lawsuits filed against the company after the 2010 Gulf oil spill.) Last April, Hughes dismissed the case, claiming that the auditors had “attempted to manufacture a claim by violating rules and issuing arbitrary orders.”
Ken Salazar, appointed by President Barack Obama to be Secretary of the Interior three years ago, dissolved MMS and restructured its duties under the Office of Natural Resources Revenue. “Since its creation fifteen months ago, ONRR has beefed up its audit staff and implemented new software and data-mining procedures to target royalty-reporting problems,” Westword reported. “Its director, Greg Gould, has also vowed to pursue stiffer civil penalties against companies caught misreporting production or the royalties they owe.”
But former auditor Randy Little is skeptical that “energy companies that do business with the government are starting to follow the rules.”
“They can make those numbers come out any way they want to,” Little says of the government’s statistics. “The companies know what the regulations are. They know they’re wrong, and they still do what they do.”
—Holly Wall, News Editor
