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D.C. Group Cited for Funneling Cash to Interior, DOE Officials

D.C. Group Cited for Funneling Cash to Interior, DOE Officials

A House subcommittee last week passed a resolution citing three members of a public watchdog group for refusing to respond to questions about payments they made to two federal officials involved in oil royalty policy.

Officials of the Washington D.C.-based Project on Government Oversight (POGO) refused to answer questions and provide certain records to the Energy and Mineral Resources Subcommittee in May regarding reports that they made payments of more than $350,000 each to two oil policy advisors in the Department of Energy (DOE) and Department of Interior (DOI).

The payments reportedly came out of POGO's share of a whistle-blower lawsuit seeking recovery of back royalties on oil. But POGO indicated it now is turning its sights to gas royalty underpayments, which it believes could be more lucrative than oil.

Cited by the subcommittee were Keith Rutter, POGO's assistant executive director; Henry M. Banta, director and former chairman of POGO's board; and Danielle Brian Stockton; director of the group. The DOI official who allegedly paid was by POGO, Robert Berman, also declined to answer the subcommittee's questions, but he was not cited. A subcommittee aide indicated more parties were likely to be cited in the future.

The House subcommittee's resolution is the first step in a contempt of Congress action against the three POGO officials. The resolution must now be acted on by the House Resources Committee and the full House before it is sent to the Department of Justice (DOJ), which then will decide whether to prosecute the POGO officials. The three could face fines up to $1,000 and a year in prison. In addition to the House, the DOJ and the inspector general of the DOI are investigating the allegations.

POGO allegedly made the payments to Berman and Robert A. Speir, who has since retired from DOE, from funds it received in connection with a whistle-blower lawsuit filed in Texas. Mobil Oil agreed to pay $45 million to settle the lawsuit, which was brought by a former Arco Oil employee. The ex-Arco worker agreed to share its portion of the settlement with POGO, which received $1.2 million. POGO then paid one-third of that amount to each Berman and Speir, who, according to POGO, "often objected to the way the oil companies calculated how much they owed the government" in royalties.

POGO has called the payments "public service awards," but the House subcommittee contends they are violations of federal ethics rules, which prohibit federal employees from accepting or soliciting outside compensation for doing their official duties.

The subcommittee wants to know "why, how and under what circumstances did POGO agree to evenly split millions of dollars with two federal employees; did the payments corrupt or cast a shadow over any oil valuation policies; and were agency ethics practices circumvented or were they too lax to stop this secret deal?" asked Subcommittee Chairwoman Barbara Cubin (R-WY) last week.

Although the payments have been for recovery of back oil royalties, POGO's Brian-Stockton has indicated that the group is now turning its attention to companies that have underpaid their natural gas royalties. "Having overcome Big Oil's efforts, POGO will now focus on investigating and preventing future underpayment of natural gas royalties --- an underpayment estimated to dwarf those of oil royalties," she said at a May 18 subcommittee hearing.

Susan Parker

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