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
This article appeared in the print edition of the magazine with the headline A royal cover-up.
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