Oily mess ahead for Pombo

Hank Shaw
Capitol Bureau Chief
Published Saturday, Sep 23, 2006

SACRAMENTO - Just as he's heading into the home stretch of his toughest re-election campaign, Tracy Rep. Richard Pombo faces an oily morass at the U.S. Interior Department.

East Bay Rep. George Miller and six other House Democrats are demanding that Pombo hold "immediate" congressional hearings on what may be blooming into a full-fledged scandal at the Interior Department.

Pombo says he is concerned about the latest revelations and plans to speak with the department's inspector general, Earl Devaney, before Congress recesses in October.

Last week, Devaney delivered a withering assessment of a culture at the Interior Department that he says "sustains managerial irresponsibility and a lack of accountability.

"Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior."

Devaney said he hoped newly appointed Interior Department Secretary Dirk Kempthorne would improve the department's ethics.

Topping the department's sins is what appears to be a drafting error that occurred during the last year of the Clinton administration over regulations concerning when oil companies should pay federal taxes. This blunder has cost taxpayers at least $1.3 billion.

Interior Department officials said this week they will not try to recoup the loss.

Add to this a series of lawsuits filed by former Interior Department auditors that claim top department officials prevented them from pursuing up to $30 million in unpaid taxes from several oil firms operating in the Gulf of Mexico; this is where San Ramon-based Chevron announced a month ago it had discovered a huge deposit of oil.

Devaney says bureaucratic idiocy, not criminal conduct, appears to be the cause of the $1.3 billion mistake, which has become a hot political topic of late.

Miller and his allies - including Pombo's challenger, wind-energy consultant Jerry McNerney - want oil companies such as Chevron to renegotiate contracts they inked with Clinton administration officials that failed to include language requiring the firms to pay taxes when oil prices pass $36 a barrel.

Current prices are around $60 a barrel but reached $76 a few months ago.

Unless the firms renegotiate, the Democrats say, they should be banned from future federal contracts. Bush administration officials and Senate leaders reject this, saying it violates the sanctity of a contract.

Pombo had a provision written into the House's offshore drilling legislation, which passed earlier this year, that would instead levy a fee on those firms that refuse to renegotiate their contracts.

The intention is to match this fee to whatever "royalty," as this tax is called, the firm would have normally paid, House staffers said.

But the bill faces an uncertain fate in the Senate, which is committed to a narrower bill that does not include the royalty fix.

Miller, who has been feuding with his neighbor across the Altamont off and on for years, said it should be Pombo's Resources Committee that takes the lead in any investigation. The House Government Reform Committee has been taking the lead.

Pombo spokesman Brian Kennedy said the congressman has not yet decided whether he will hold formal hearings on the Interior Department, although he said Pombo does intend to investigate.

Pombo's committee has had frequent contact with the department in recent years.

He had two Interior Department staffers working for his Resources Committee on mining and oil issues for more than two years; one helped develop part of the offshore oil-drilling legislation now under debate.

Critics cited this as an example of a compliant Congress doing the Bush administration's bidding. Kennedy dismissed the claim, saying Pombo has always supported increased drilling.

Pombo also made headlines last year when his committee staff pressured Kempthorne's predecessor to exclude U.S. Department of Fish & Wildlife officials - who were concerned about bird deaths - from discussions about new wind energy regulations; Pombo's family earns money leasing land in the Altamont to wind firms.

Pombo says he never saw the letter his staff sent.

Contact Capitol Bureau Chief Hank Shaw at (916) 441-4078 or sacto@recordnet.com. Visit his blog at http://online.recordnet.com/blogs/?q=blog/9