For Immediate Release


Carol Goldberg (202) 265-7337

Interior Sued to Obtain Oil Royalty Revenue Data

Feds Claim Prices Oil Company Paid for Royalty-In-Kind Oil Are Trade Secrets

WASHINGTON - The U.S. Interior Department is wrongly withholding information that
will reveal whether taxpayers are being ripped off in a controversial
oil and gas royalty program, according to a lawsuit filed today by
Public Employees for Environmental Responsibility (PEER). Interior
claims that disclosure of bidding and contracting information about its
Royalty-In-Kind sales would reveal oil company trade secrets.

Royalty payments on oil and gas from offshore tracts and public
lands are one of the federal government’s greatest sources of non-tax
revenues. One royalty collection method, called Royalty-In-Kind (RIK),
lets companies pay federal royalties in the form of oil or natural gas
rather than cash. Interior, in essence, acts as an oil broker by
selling this oil or natural gas on the market in order to obtain its
share. Currently, the RIK program sells more than 150,000 barrels of
crude oil per day.

The RIK program was tarred by an official investigation last
September which found Interior employees engaging in sex and drug
parties with oil officials and accepting illegal gifts. Previous
official investigations have found contract irregularities. In a report
this April, the Government Accountability Office concluded that
Interior’s “reports to the Congress did not fully describe the
performance of the royalty-in-kind program and, in some instances, may
have overstated the benefits of the program”.

“We are trying to find out whether the Royalty-In-Kind program
collects as much as it should or whether it benefits oil companies at
the expense of the taxpayer,” stated PEER Executive Director Jeff Ruch.

On March 20, 2009, Interior denied a Freedom of Information Act
(FOIA) request for the records needed to determine whether RIK is
yielding the appropriate return to the federal government on the
somewhat contradictory grounds that the information relates “solely to
the internal personnel rules and practices of the agency” and consists
of “trade secrets” and confidential commercial oil company data. After
an administrative appeal yielded no change, PEER filed a lawsuit under
FOIA to pry loose the information.

Interior’s refusal to disclose what price the companies pay it for
the RIK oil makes it difficult to evaluate the effectiveness of the
program. Interior’s stance also appears at odds with pledges by
President Obama to run an open, transparent government and to err on
the side of disclosure in administering the Freedom of Information Act.

“We believe that Interior’s stated bases for withholding these
documents is without merit and will not withstand scrutiny.” said
Christine Erickson, who filed the suit today in the U.S. District Court
for the District of Columbia. “What oil companies bid or pay the
federal government should be a matter or public record and certainly
does not qualify as a trade secret.”


Read the PEER lawsuit

View the Inspector General report on sex and drugs in the RIK program

Read the GAO report calling for greater accountability in the RIK program

Look at President Obama’s memo on the Freedom of Information Act


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Public Employees for Environmental Responsibility (PEER) is a national alliance of local state and federal resource professionals. PEER's environmental work is solely directed by the needs of its members. As a consequence, we have the distinct honor of serving resource professionals who daily cast profiles in courage in cubicles across the country.

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