http://www.nytimes.com/2006/10/31/business/31royalties.html?hp&ex=1162357200&en=00cf853d0bfa8d10&ei=5094&partner=homepage The Interior Department has dropped claims that the Chevron Corporation systematically underpaid the government for natural gas produced in the Gulf of Mexico, a decision that could allow energy companies to avoid paying hundreds of millions of dollars in royalties.
The agency had ordered Chevron to pay $6 million in additional royalties but could have sought tens of millions more had it prevailed. The decision also sets a precedent that could make it easier for oil and gas companies to lower the value of what they pump each year from federal property and thus their payments to the government.
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In a written statement, the department’s Minerals Management Service said it would have been useless to fight Chevron.
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The agency notified Chevron of its decision in a confidential letter on Aug. 3, which The New York Times obtained recently under the Freedom of Information Act.
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In return for the right to drill on federal lands and in federal waters, energy companies are required to pay the government a share of their proceeds. Last year, businesses producing natural gas paid $5.15 billion in government royalties.
But the Bush administration has come under fire on Capitol Hill for its record on collecting payments. While the Interior Department has sweetened incentives for exploration and pushed to open wilderness areas for drilling, it has also cut back on full-scale audits of companies intended to make sure they are paying their full share.
-large snip detailing how the scam works for the oil and gas barons -
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