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DOI allows underpayment of natural gas royalties

The Bush administration's lax oversight of the oil and gas industry has resulted in a loss of $700 million in natural gas royalties, The New York Times said after a three-month investigation.

The paper said Interior Department regulations allow oil and gas companies to understate their sale prices for gas. This has allows the companies to post record profits while taxpayers and other beneficiaries -- including individual Indians, tribes and states -- don't see any gain.

"It's more complicated than you might think," an associate director of the Minerals Management Service told The Times.

MMS is in charge of royalty payments for tribes, individual Indians and states but internal investigations have uncovered problems. In one case, MMS auditors falsified and back-dated documents for the Navajo Nation. Yet one employee was given a cash award for "creativity" for his efforts.

MMS fired Kevin Gambrell, the director of the Farmington Indian Minerals Office, which handles trust fund issues for about 8,000 individual Navajos. Gambrell was able to recover eight times as many royalties for Navajo beneficiaries through aggressive monitoring. He was forced to leave in 2003 but has since cleared his name.

Get the Story:
As Profits Soar, Companies Pay U.S. Less for Gas Rights (The New York Times 1/23)
Gas Cos. Said to Avoid Paying Royalties (AP 1/23)

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