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Washington, DC – U.S. Senator Dianne Feinstein (D-Calif.) today presided over a hearing for the Fiscal Year 2009 budget request for the U.S. Minerals Management Service.

Following is the text of Senator Feinstein’s prepared opening remarks:

“Good morning, ladies and gentlemen, and thank you for attending this oversight hearing on the Minerals Management Service and the minerals royalty program.

I’d like to welcome Stephen Allred, the Interior Department’s Assistant Secretary for Lands and Minerals Management.  Thank you, Mr. Allred, for joining us again this year.  Joining Assistant Secretary Allred is the Director of the Minerals Management Service, Randall Luthi.  We look forward to hearing your testimony.

The Minerals Management Service is responsible for managing the federal government’s oil and gas royalty programs on public lands and waters.

I know for some that probably sounds excruciatingly dry, but the fact is that MMS, working on behalf of the American taxpayer, plays an important role in the overall finances of the U.S. government.

Last year, MMS collected $11.4 billion in royalties and rents associated with 29,000 onshore and offshore oil and gas leases.

Of that amount, $2.5 billion was distributed to state and tribal governments, while the federal share was used to fund the Land and Water Conservation Fund, the Historic Preservation Fund, and the Reclamation Fund, in addition to general government operations.

Mr. Allred, we’ve asked you to address three specific subjects this morning in your testimony.

First, we would like you to update the Committee on the status of your negotiations with the oil companies holding leases issued in 1998 and 1999 for which MMS is not collecting royalties due to the US.  This is potentially a $10 billion loss to the taxpayer and we need to know what the department is doing to make the treasury whole.

Secondly, we’ve asked you to address the ongoing litigation between Kerr-McGee, which is now Anadarko Oil, and the Interior Department over the legality of price thresholds for all 1996-2000 leases.  We’re aware of the recent District Court decision that went against the government, but the Committee is eager to hear the status of the case and the Department’s outlook on its outcome.  As I understand, this is another potential loss of $21 billion should this case stand.

Finally, we’ve asked you to speak to the findings and recommendations contained in a December 17th report from the Royalty Policy Committee concerning mineral revenue collection on federal lands.

The report was authored by our former colleagues, Senators Bob Kerrey and Jake Garn, who co-chaired the special committee that investigated and reported on nearly every aspect of Federal performance in carrying out its oversight and revenue collection duties.  Senators Kerrey and Garn, while unable to attend today’s hearing, have submitted testimony that will be entered into the record of this hearing.

Before we hear from Mr. Allred and Mr. Luthi, I will turn to the Subcommittee’s distinguished Ranking Member, Senator Allard, to make any opening remarks he may wish.”