A royal cover-up

  A New Mexico-based oil company has shortchanged the government a possible $22 million a year in lost taxes and royalties. Meridian Oil Inc., the country's largest independent oil company with 1,073 public-land leases in the San Juan Basin, has consistently under-reported production amounts since 1989, according to a Bureau of Land Management investigation. Two years ago, federal inspectors noted "continued submission of false and inaccurate production reports," and forwarded the evidence to the U.S. Attorney's office in Albuquerque, N.M. The office declined to pursue the case, claiming it could not prove criminal intent. But it recommended that the Bureau of Land Management refer the case to the courts for civil or administrative action. The BLM, however, failed to take action and removed the $22 million annual loss figure from its final investigative report in June 1993, according to a Washington, D.C.-based watchdog group, Public Employees for Environmental Responsibility. Peer and other critics say the case points up the need for agency monitoring of oil production. Now, lease-holders do their own reporting. The agency occasionally checks the figures, but "the BLM is unable to verify what the companies are producing," says Reed Smith, a former BLM deputy state director for New Mexico. The BLM says it isn't ignoring the Meridian Oil case and Inspector General David Williams, of the Interior Department, says his office is still investigating. "We're expecting developments in the relatively near future."


*Ross Freeman


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