SPEAKERS CONTENTS INSERTS
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65–382 l
1999
OVERSIGHT HEARINGS TO EXAMINE THE LAWS, POLICIES, PRACTICES, AND OPERATIONS OF THE DOI, DOE., AND OTHER AGENCIES PERTAINING TO PAYMENTS TO THEIR EMPLOYEES, INCLUDING PAYMENTS RELATIVE TO MINERAL ROYALTY PROGRAMS AND POLICIES FROM PUBLIC LANDS AND INDIAN LANDS
OVERSIGHT HEARINGS
before the
SUBCOMMITTEE ON ENERGY
AND MINERAL RESOURCES
of the
COMMITTEE ON RESOURCES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
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MAY 4 AND 18, 2000, WASHINGTON, DC
Serial No. 106–73
Printed for the use of the Committee on Resources
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
or
Committee address: http://www.house.gov/resources
COMMITTEE ON RESOURCES
DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana
JAMES V. HANSEN, Utah
JIM SAXTON, New Jersey
ELTON GALLEGLY, California
JOHN J. DUNCAN, Jr., Tennessee
JOEL HEFLEY, Colorado
JOHN T. DOOLITTLE, California
WAYNE T. GILCHREST, Maryland
KEN CALVERT, California
RICHARD W. POMBO, California
BARBARA CUBIN, Wyoming
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HELEN CHENOWETH-HAGE, Idaho
GEORGE P. RADANOVICH, California
WALTER B. JONES, Jr., North Carolina
WILLIAM M. (MAC) THORNBERRY, Texas
CHRIS CANNON, Utah
KEVIN BRADY, Texas
JOHN PETERSON, Pennsylvania
RICK HILL, Montana
BOB SCHAFFER, Colorado
JIM GIBBONS, Nevada
MARK E. SOUDER, Indiana
GREG WALDEN, Oregon
DON SHERWOOD, Pennsylvania
ROBIN HAYES, North Carolina
MIKE SIMPSON, Idaho
THOMAS G. TANCREDO, Colorado
GEORGE MILLER, California
NICK J. RAHALL II, West Virginia
BRUCE F. VENTO, Minnesota
DALE E. KILDEE, Michigan
PETER A. DeFAZIO, Oregon
ENI F.H. FALEOMAVAEGA, American Samoa
NEIL ABERCROMBIE, Hawaii
SOLOMON P. ORTIZ, Texas
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OWEN B. PICKETT, Virginia
FRANK PALLONE, Jr., New Jersey
CALVIN M. DOOLEY, California
CARLOS A. ROMERO-BARCELÓ, Puerto Rico
ROBERT A. UNDERWOOD, Guam
PATRICK J. KENNEDY, Rhode Island
ADAM SMITH, Washington
CHRIS JOHN, Louisiana
DONNA MC CHRISTENSEN, Virgin Islands
RON KIND, Wisconsin
JAY INSLEE, Washington
GRACE F. NAPOLITANO, California
TOM UDALL, New Mexico
MARK UDALL, Colorado
JOSEPH CROWLEY, New York
RUSH D. HOLT, New Jersey
LLOYD A. JONES, Chief of Staff
ELIZABETH MEGGINSON, Chief Counsel
CHRISTINE KENNEDY, Chief Clerk/Administrator
JOHN LAWRENCE, Democratic Staff Director
Subcommittee on Energy and Mineral Resources
BARBARA CUBIN, Wyoming, CHAIRMAN
W.J. (BILLY) TAUZIN, Louisiana
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WILLIAM M. (MAC) THORNBERRY, Texas
CHRIS CANNON, Utah
KEVIN BRADY, Texas
BOB SCHAFFER, Colorado
JIM GIBBONS, Nevada
GREG WALDEN, Oregon
THOMAS G. TANCREDO, Colorado
ROBERT A. UNDERWOOD, Guam
NICK J. RAHALL II, West Virginia
ENI F.H. FALEOMAVAEGA, American Samoa
SOLOMON P. ORTIZ, Texas
CALVIN M. DOOLEY, California
PATRICK J. KENNEDY, Rhode Island
CHRIS JOHN, Louisiana
JAY INSLEE, Washington
BILL CONDIT, Professional Staff
MIKE HENRY, Professional Staff
DEBORAH LANZONE, Professional Staff
Hearing held May 4, 2000
Statement of Members:
Cubin, Hon. Barbara, a Representative in Congress from the State of Wyoming
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Prepared statement of
Hon. George Miller, a Representative in Congress from the State of California
Prepared statement of
Statements of witnesses:
Banta, Henry M., Former Chairman and Current Director of POGO (Project On Government Oversight), and Member, Lobel, Novins & Lamont
Berman, Robert A., Department of the Interior
Brock, Leonard W.
Burnham, David,
Cavallo, Michael,
Hamel, Charles,
Hunter, David,
Kritzer, Bernard,
Martineck, John, and J. Benjamin Johnson, Jr.
Mintz, Morton
Mitchell, Jack,
Rasor, Dina,
Rutter, Keith
Sims, Marjorie,
Zill, Anne,
Additional material supplied:
Memo from the Department of Energy
Potential for Oil Recovery
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Letter from Lon Packard
Oral deposition of David Hunter
Letter from Daniel Packard
Deposition from Mr. Wagstaff
Letter from Dodge Wells
Transcript from United States District Court, Eastern District of Lufkin, Texas
Letter from Daniel Packard
Hearing held May 18, 2000
Statements of Members:
Cubin, Hon. Barbara, a Representative in Congress from the State of Wyoming
Prepared statement of
Miller, Hon. George, a Representative in Congress from the State of California
Witnesses statements:
Berman, Robert A., Department of the Interior
Dodd, Olen Kenneth, Assistant United States Attorney, Eastern District of Texas
Schiffer, Stuart E, Deputy Assistant Attorney, Civil Division
Prepared statement of
Stockton, Danielle Brian, Executive Director of POGO
Speir, Robert A., Retired, Department of Energy
OVERSIGHT HEARING TO EXAMINE THE LAWS, POLICIES, PRACTICES, AND OPERATIONS OF THE DEPARTMENT OF THE INTERIOR, DEPARTMENT OF ENERGY, AND OTHER AGENCIES PERTAINING TO PAYMENTS TO THEIR EMPLOYEES, INCLUDING PAYMENTS RELATIVE TO MINERAL ROYALTY PROGRAMS AND POLICIES FROM PUBLIC LANDS AND INDIAN LANDS
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THURSDAY, MAY 4, 2000
House of Representatives,
Subcommittee on Energy and Mineral Resources,
Committee on Resources,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:04 a.m., in Room 1334, Longworth House Office Building, Hon. Barbara Cubin, chairman of the Subcommittee, presiding.
STATEMENT HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WYOMING
Mrs. CUBIN. The Subcommittee on Energy and Minerals meets today to examine the laws, policies, practices, and operations of the Department of Interior, Department of Energy, and other agencies pertaining to payments to their employees, including payments relative to mineral royalty programs and policies from public and Indian lands. This oversight hearing will now please come to order.
Taxpayers should get every penny of oil royalties from public domain lands that they have coming, period. I say that up front and I mean that very, very seriously.
Oil royalties are an important subject underlying our work and grounding our jurisdiction. In fact, the Subcommittee on Energy and Mineral Resources has conducted extensive oversight of the Minerals Management Service and their ability to collect royalties for the past four years, since I have been chairman of this Subcommittee, and we have proposed a broad-based royalty in-kind collection system. Had that system that we proposed been in place during the period of the underpayments, that fraud could not have been committed.
I have been active in trying to ensure that every single penny, no more and no less, of royalties that are owed are collected. The cumbersome and costly procedures for collecting the government's share of revenue from production on Federal lands could be drastically reduced if the MMS were to expand the use of the R-I-K program where it now has pilot programs.
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Additionally, Congress has several times barred the MMS from finalizing a proposed rule because of concerns that it would create an enormous uncertainty for lessees associated with shifting the valuation far downstream from the wellhead. But last Fall—and I pointed out that it was the Congress that stopped that, not this Subcommittee—last Fall, the Congress gave the green light to MMS to finalize this rule. My concern continues to be the integrity of the rulemaking process and the integrity of the information received from the Department of Interior in regard to our efforts to reform how oil should be valued for royalty payment purposes.
But our primary focus for today's oversight hearing is different. This oversight review is framed to study the policies, practices, and operations of the Department of Interior and the Department of Energy related to payment by non-government organizations or by individuals to employees of those departments who deal with oil royalty policy.
Consequently, our exercise today examines one instance where a private corporation made payments to department employees involved in Federal royalty policies. Before the word of the payments became known—there was no reporting of those payments and no disclosure of them. After the payments became known, what appears to be an elaborate cover story was developed to hide the true nature of the payment.
Our witnesses today will help us to understand the details of the lawsuit, agreements, and transactions involving payment by the Project on Government Oversight to Mr. Robert A. Berman, an employee of the Department of Interior, and Mr. Robert A. Speir, an employee of the Department of Energy. Those agreements and transactions which resulted in payments of $383,600 to each of these gentlemen with the promise of more to come. Each of them worked at their departments on Federal oil royalty policy, a subject within the jurisdiction of this Subcommittee.
The details of those agreements and transactions will allow members of the Subcommittee to make informed judgments about whether the laws, policies, ethical standards, and procedures that apply to people who work in areas of the Subcommittee's jurisdiction is adequate or whether they need to be
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changed.
We study this example because it illustrates how even good intentions can corrupt the Federal decision making process, and I believe collecting the accurate, the right amount of royalty, is a good intention. This Subcommittee has a duty to monitor that decision making process and ensure that the operation of programs within our jurisdiction is free of undue influence.
Our responsibility under the rules of the U.S. House of Representatives requires us to review this type of matter. Payments of this magnitude by anyone or any group to an agency policy advisor cut to the core of what our system of government should not be about. Will agency employees make judgments subject to the influence of $383,600 in cash or will their counsel be given in the public interest?
We have learned much, but not everything, in the year that the Committee and Subcommittee have studied how these two Federal oil policy employees got paid $383,600 each. This hearing will lay out some of what we think we know and we hope to fill in some details about which we are unsure.
The review and our hearing today begins with the money, the two checks for $383,600. Where did the money come from? How did a private, well-intentioned watchdog corporation with an annual budget of about $300,000 get an extra $767,200 to make the lottery-sized payments to the Federal employees who advised on oil policy?
The answer, in part, will come from our first panel, Mr. Johnson and Mr. Martineck. They brought the original lawsuit in February 1996 for the United States to recover what they described as oil royalty underpayments. Their lawsuit alleged that major oil companies paid too little in royalties to the United States because they set an unfairly low value for the oil pumped from the Federal land. If there are whistleblowers on royalty underpayments in this room, then these gentlemen are it, Mr. Johnson and Mr. Martineck. They had the expertise and they had the knowledge required by law to expose the royalty underpayments, and they did it first.
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Mr. Johnson and Mr. Martineck will help us to understand the basic nature of their lawsuit and how their lawsuit relates to the Project on Government Oversight. They will lead us to the second point, a better understanding of the agreements and understandings between POGO and themselves and POGO and Mr. Berman and Mr. Speir. Remember, the agreements resulted in the transaction that paid nearly three-quarters of a million dollars to Federal employees, with the promise of far more to come after the first checks were out.
Mr. Johnson and Mr. Martineck, I want you to know that I sincerely appreciate your cooperation with the Subcommittee and I appreciate your being here today.
Our second witness, Mr. Kritzer, is a known oil valuation expert, but he did not receive a six-digit public service award. He will help us to understand the underlying issue of oil valuation and what it takes to be an expert, as he certainly is one.
Our third witness is Mr. Brock. POGO recruited him as an expert to testify in POGO's ''nearly identical''—in the words of the Department of Justice—lawsuit to Mr. Johnson's suit. His past statements are a good indication of his qualification and knowledge about oil valuation and royalties. He has profited by about $1 million of the recovery thus far. The big question for him is what did he know that motivated POGO to give him a $1 million jackpot?
Our fourth witness is Keith Rutter, the Assistant Executive Director of POGO. Mr. Rutter kept the records of the organization and wrote checks to Mr. Berman and Mr. Speir. We need to understand what he knows about the agreement and the transaction that led to his signature on these checks.
Our fifth panel is all of the known members of POGO's board of directors who held office when the agreements were made with and the payments made to the Federal employees.
This is an important panel. We need to understand from them what debate and discussion took place when the agreement was made to pay the Federal employees way back in December 1996. We need to understand how deeply the board was involved in the decision making process when the secret agreement was reduced to writing in January 1998 and again in October of 1998.
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We need to understand what role, if any, the Federal employees who are paid by their agencies to advise about oil policy played in injecting POGO into Mr. Johnson's and Mr. Martineck's lawsuit. Remember, this is the lawsuit that ultimately provided the funds to pay the Federal employees.
Were Federal employment positions used to gain knowledge about the Johnson/Martineck sealed lawsuit or about its theories? We understand there were phone calls and notes, but we need to hear from the recipient of these calls. We need to know what the board knew about the role of these Federal employees in this lawsuit. What did the board know of the decision to state that the payments were public service awards? Why was it necessary for POGO to invent this deception? Did the board approve this? Perhaps when the group consulted lawyers about the proprieties of all these things, someone knew the line had been crossed.
As it turns out, the agreement with the Federal employees and the corporation's $383,600 payments to them nearly compromised the integrity of Mr. Johnson's and Mr. Martineck's oil royalty lawsuit, and we have reviewed the court transcript on that issue.
The payments and secret agreements certainly have cast a shadow on the integrity of the Department's efforts to deal with the royalty issue in general. The agreement and the payments leave a broad question in my mind. Just what were those involved in the secret agreements, the transactions, and the payments thinking?
We are here today to determine and to verify the facts. We are interested in nothing more than the facts. Intentions are not relevant to our work here today. Neither are the most noble ends. The facts are what matter. This is what Chairman Young and I want to bring out today.
We spent one year gathering facts without much cooperation from the Project on Government Oversight. I really wonder why a self-described watchdog group is so interested in hiding the facts about this transaction from us. POGO has defied lawful Committee subpoenas. They did so openly and by choice, even when we tried to accommodate their concerns.
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As I said before, this oversight hearing is conducted as part of the Committee on Resources' inquiry into the operations, policies, and practices of the Department of Energy and the Department of Interior, and into rules which were either circumvented or which were inadequate to prevent this apparent and serious conflict of interest. Chairman Young set the parameters of our oversight review in the request letters that launched this investigation and in transmitting the matter to the Subcommittee. We have made this material generally available to everyone. These are matters within the jurisdiction of this Subcommittee.
The scope of this hearing means that we are not—listen very carefully—we are not going to rehash the oil royalty policy rules, the new ones nor the old ones. Although there are many questions related to the new rule, the Congress authorized the agency to publish this rule and the proper venue to sort out those questions is now the courts, or in possibly another oversight hearing of this Committee, but not this hearing. That is not what we are here to talk about today.
The witnesses have been subpoenaed to testify today. I advised each witness weeks ago that they will be sworn in. I expect to hear truthful and complete answers. Witnesses were also advised that they could bring a lawyer to advise them of constitutional rights because the testimony will be sworn. However, only the witnesses will address the Subcommittee. Their lawyers may not address the Subcommittee. This means that I do not want to hear any words from any attorneys who are accompanying their witness.
Lawyers should note that the rules of the House of Representatives restrict counsel to advising the witness in the assertion of constitutional rights and privileges. Lawyers may not sit at the witness table, but I have reserved a seat in the first row so that lawyers may counsel their client if the need arises. Lawyers may not coach their clients. The rules of the House will be enforced firmly and impartially. I will not allow this Subcommittee to be detoured or filibustered by debates or lawyers' antics.
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I remind everyone that this is a Subcommittee hearing that proceeds under Rule XI 2(g)(2) of the Rules of the House of Representatives. Procedures associated with those rules apply. This is an open hearing. This is not an investigative hearing. The Subcommittee has not voted to launch an investigation. We may consider that issue at another date.
Witnesses will not make oral summaries of their testimony, but they may place statements that comply with the rules in the record.
As we begin this hearing, I ask everyone in the audience, the media, Mr. Johnson, and the POGO board, everyone, to undertake the following exercise. Imagine just two changes in what we now know. First, imagine that it was Exxon or Shell or Mobil Oil instead of POGO that made the two $383,600 payments. Imagine that one of those major oil companies called them public service awards and they secretly promised one-third of everything it saved on the oil royalties to two Federal policy advisors. Just imagine that. If that scenario makes the Federal employees silent partners of the oil company, then the POGO payment makes the Federal employees silent partners of POGO. Agency decision makers should not be silent partners of anyone.
I guarantee every person here that if the situation were reversed, instead of the case we now have in front of us today, as witnesses we would have the executives and the board members of that oil company in front of us, and rightfully so.
I now turn to our ranking Democratic member, Mr. Underwood, for any opening statement he might have.
[The prepared statement of Mrs. Cubin follows:]
STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WYOMING
The oversight hearing will come to order.
Taxpayers should get every penny in oil royalties from public domain lands that we are owed, period. I say that up front to clear the air.
Oil royalties are an important subject underlying our work and grounding our jurisdiction. In fact, the Subcommittee on Energy and Mineral Resources has conducted extensive oversight of the Minerals Management Service's (MMS) ability to collect royalties for the last four years and has proposed a broad-based ''royalty in-kind'' (R-I-K) system. Had it been in place during the period of the alleged underpayments of royalties made, the fraud could not have occurred.
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I have been active in trying to ensure that every penny-no more, no less—of royalties owed are collected. The cumbersome and costly procedures for collecting the government's share of revenue from production on Federal leases could be drastically reduced if MMS were to expand the use of the RIK method.
Additionally, Congress has several times barred MMS from finalizing a proposed valuation rule because of concerns that it would create an enormous uncertainty for lessees associated with shifting valuation far downstream from the wellhead. But last fall the Congress gave the green light to MMS to finalize its rule.
My concern continues to be the integrity of the rule-making process and the integrity of the information received from the DOI in regard to our efforts to reform how oil should be valued for royalty payment purposes.
But our primary focus for today's oversight hearing is different.
This oversight review is framed to study the policies, practices, and operations of the Department of Interior and the Department of Energy related to payments by non-government organizations or by individuals to the employees of those departments who deal with oil royalty policy.
Consequently, our exercise today examines one instance where a private corporation made payments to department employees involved in Federal royalty policies. Before word of the payments became known, there was no reporting of these payments, and no disclosure of them. After the payments became known, what appears to be an elaborate cover story was developed to hide the true nature of the payments.
Our witnesses today will help us to understand the details of the lawsuit, agreements, and transactions involving payments by the Project on Government Oversight to Mr. Robert A. Berman, an employee of the Department of the Interior, and Mr. Robert A. Speir, an employee of the Department of Energy.
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Those agreements and transactions that resulted in payments of $383,600 to each of these gentlemen with the promise of more to come. Each of them worked at their departments on Federal oil royalty policy, a subject within the jurisdiction of this Subcommittee.
The details of those agreements and transactions will allow Members of this Subcommittee to make informed judgments about whether the laws, policies, ethical standards, and procedures that apply to people who work in areas of the Subcommittee's Jurisdiction are adequate or whether they need to be changed.
We study this example because it illustrates how even good intentions can corrupt the Federal decision making process, and I believe collecting the correct royalty is good. This Subcommittee has a duty to monitor that decision making process and to ensure that the operation of programs within our jurisdiction are free of undue influence.
Our responsibility under the Rules of the U.S. House requires us to review this type of matter. Payments of this magnitude by anyone or any group to an agency policy advisor cut to the core of what our system of government should not be about. Will agency employees make judgments subject to the influence of $383,600 in cash or will their counsel be given in the public interest.
We have learned much—but not everything—in the year that the Committee and Subcommittee have studied how these two Federal oil policy employees got paid $383,600 each. This hearing will lay out some of what we think we know, and we hope to fill in some details about which we are unsure.
The review, and our hearing, begins with the money—the two checks for $383,600. Where did the money come from? How did a private, well-intentioned, ''watchdog'' corporation with an annual budget of about $200,000 get an extra $767,200 to make the lottery-size payments to Federal employees who advised on oil policy?
The answer, in part, will come from our first panel—Mr. Johnson and Mr. Martineck. They brought the original lawsuit in February 1996 for the United States to recover what they described as oil royalty under-payments. Their lawsuit alleged that major oil companies paid too little in royalties to the United States because they set unfairly low values for oil pumped from Federal land. If there are whistle blowers on royalty under payments in this room, these gentlemen are it. They had the expertise and knowledge required by law to expose the oil royalty under payments. They did so first.
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Mr. Johnson and Mr. Martineck will help us to understand the basic nature of their lawsuit and how their lawsuit relates to the Project on Government Oversight.
They will lead us to the second point—a better understanding of the agreements and transactions between POGO and themselves and POGO and Mr. Berman and Mr. Speir. Remember, the agreements resulted in the transaction that paid nearly three-quarters of a million dollars to Federal employees, with the promise of far more to come after the first checks were out.
Mr. Johnson and Mr. Martineck, I appreciate your cooperation with the Subcommittee and I appreciate you being here today.
Our second witness, Mr. Kritzer, is a known oil valuation expert, but he did not receive a six digit ''public service award.'' He will help us to understand the underlying issue of oil valuation and what it takes to be an expert.
Our third witness is Mr. Brock. POGO recruited him as an expert to justfy, in the words of the Department of Justice, its ''nearly identical'' lawsuit to Mr. Johnson's lawsuit. His past statements are a good indication of his qualifications and knowledge about oil valuation and royalties. He has profited by about $1 million of the recovery thus far. The big question for him is what did he know that allowed him to hit the $1 million Jackpot?
Our fourth witness is Keith Rutter, the Assistant Executive Director, POGO. Mr. Rutter kept the records of the organization and he wrote the checks to Mr. Berman and Mr. Speir. We need to understand what he knows about the agreement and transaction that led to his signature on the checks.
Our fifth panel is all of the known members of POGO's board of directors who held office when the agreements were made with, and the payments made to, the Federal employees.
This is an important panel. We need to understand from them what debate and discussion took place when the agreement was made to pay the Federal employees way back in December 1996. We need to understand how deeply the board was involved in the decision-making process when the secret agreement was reduced to writing in January 1998 and again in October 1998.
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We need to understand what role, if any, the Federal employees who are paid by their agencies to advise about oil policy played in injecting POGO into Mr. Johnson's and Mr. Martineck's lawsuit. Remember, this is the lawsuit that ultimately provided the funds to pay the Federal employees.
Were Federal employment positions used to gain knowledge about the Johnson/Martineck sealed lawsuit or about its theories? We understand there were phone calls, and notes, but we need to hear from the recipient of the calls. We need to know what the board knew about the role of these Federal employees in this lawsuit.
What did the board know of the decision to state that the payments were ''public service awards?'' Why was it necessary for POGO to invent this deception? Did the board approve of this? Perhaps when the group consulted lawyers about the propriety of all of these things, someone knew the line had been crossed.
As it turns out, the agreement with the Federal employees and the corporation's $383,600 payments to them nearly compromised the integrity of Mr. Johnson's and Mr. Maritneck's oil royalty lawsuit, and we have reviewed the court transcript on that issue.
The payments and secret agreements certainly have cast a shadow on the integrity of the Department's efforts to deal with the royalty issue in general.
The agreement and payments leave a broad question in my mind, just what were those involved in the secret agreements, the transaction, and the payments thinking?
We are here today to determine and verify facts. We are interested in nothing more than the facts. Intentions are not relevant to our work, neither are the most noble ends. The facts matter. That is what Chairman Young and I want.
We spent one year of gathering facts, without much cooperation of the Project on Government Oversight. I really wonder why a self-described watchdog group is so interested in hiding the facts about this transaction from us. POGO has defied lawful Committee subpoenas. They did so openly and by choice, even when we tried to accommodate their concerns.
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As I said before, this oversight hearing is conducted as part of the Committee on Resources' inquiry into the operations, policies, and practices of the Departments of the Interior and Energy, which were either circumvented or which were inadequate to prevent this apparent and serious conflict of interest. Chairman Young set the parameters of our oversight review in record request letters that launched this investigation and in transmitting the matter to the Subcommittee. We have made this material generally available. These matters are within the jurisdiction of the Subcommittee.
The scope of this hearing means that we are not—listen carefully—we are not going to re-hash the oil royalty policy rules, new or old. Although there are many questions related to the new rule, the Congress authorized the agency to publish this rule and the proper venue to sort out those questions out is the courts or in an oversight hearing called for that purpose.
The witnesses have been subpoenaed to testify today. I advised each witness weeks ago that they will be sworn in. I expect to hear truthful and complete answers. Witnesses were also advised that the could bring a lawyer to advise them of constitutional rights because the testimony will be sworn. However, only the witnesses will address the Subcommittee.
This means I do not want to hear any words from any attorneys who are accompanying witnesses. Lawyers should note that the Rules of the House of Representatives restrict counsel to advise the witness in the assertion of constitutional rights and privileges. Lawyers may not sit at the witness table, but I have reserved a seat in the first row so that lawyers may counsel their client if need be. Lawyers may not coach their clients. The Rules of the House will be enforced firmly and impartially. I will not allow this Subcommittee be detoured or filibustered by debates over lawyer antics.
I remind everyone that this is a Subcommittee hearing that proceeds under Rule XI 2(g)(2) of the Rules of the House of Representatives. Procedures associated with those rules apply. This is an open hearing. This is not an investigative hearing. The Subcommittee has not voted to launch an investigation. We may consider the issue at a later date.
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Witnesses will not make oral summaries of their testimony, but may place statements that comply with the rules in the record.
As we begin this hearing, I ask everyone, the audience, the media, Mr. Johnson, the POGO board . . . everyone, to undertake the following exercise. Imagine just two changes in what we know now. First, imagine that it was Exxon, or Shell, or Mobil Oil instead of POGO that made two $383,600 payments, called them ''public service awards,'' and secretly promised one-third of everything it saved on oil royalties to two Federal oil policy advisors. Just imagine that. If that scenario makes the Federal employees silent partners of the oil companies, then the POGO payments makes the Federal employees silent partners of POGO. Agency decision-makers should not be silent partners of anyone.
I guarantee every person here that if the situation were reversed, instead of the cast we have in front of us today as witnesses, we would have the executives and board members of that oil company in front of us. And rightfully so.
Mr. UNDERWOOD. Mr. Miller will make the opening statement for our side.
STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. MILLER. I thank the gentleman for yielding. Madam Chair and fellow members, I am attending today's oversight hearing to express my very strong concern about the manner in which this investigation is being handled. I believe that the rights of the witnesses have been abused in the process of this hearing.
Today, the Committee is investigating ostensibly whether or not a nonprofit group and two Federal employees violated any regulations or law when the group made a public service award to employees for their work in exposing serious underpayment of Federal royalties owed to American taxpayers by numerous large oil companies. The Committee is not investigating the fact that the oil companies have regularly underpaid hundreds of millions of dollars of royalties that are owed to the American taxpayer.
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This Committee has been used time and again on behalf of special interests who find themselves on the wrong side of the law. Once again today, we find the Committee coming to the aid of the oil industry that has already settled numerous cases out of court for hundreds of millions of dollars because they underpaid royalties that they rightfully owed the American taxpayer. Members of this Committee and others in the House and Senate tried for years to delay the administration's method of determining the proper royalty payments, and now they have launched an investigation against those who brought those underpayments to light.
Let me be clear, no one is condoning the potential misconduct that is being alleged. If any wrongdoing is discovered, those responsible should be held accountable. But the alleged wrongdoing is already under investigation by the proper authorities at the Department of Justice and Interior.
When this Committee investigation was started last June over the objections of the Department of Justice, the Office of Inspector General, the Department of Interior, and the Democratic members of the Committee, the Subcommittee chair said, ''It is not the intent of the Committee to intervene in the criminal investigation at all, but we do have a need to know what is going on because we have things in front of us as far as oil valuation is concerned that are the purview of the Committee.''
Right now, the administration, the Minerals Management Service, have some regulations and proposed regulations that should not go into effect because we do not know whether this payment of money or anything to do with the new regulations. We just need to know whether the two people involved had any influence in MMS. The administration has testified that these two individuals did not effect the new regulations, but instead of dropping the investigation, this Committee has gone off and appears on a witch hunt or, at best, tangent without any additional direction or input from members of the Committee. We now find ourselves embroiled in a private dispute between litigants who successfully sued the oil companies for defrauding the American people of hundreds of millions of dollars. Let me describe some of the actions by the Majority that should concern every objective member of this Committee.
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Dina Rasor, a member of the board of the Project on Government Oversight, was contacted by Mr. Casey of the Majority staff who reportedly dismissed a repeated request to consult with her attorney. Ms. Rasor is a private investigator more than a little familiar with the appropriate interrogation methods and witnesses' rights. Mr. Casey reportedly became belligerent when Ms. Rasor insisted on speaking with her attorney and the conversation was terminated. Soon thereafter, Ms. Rasor received a subpoena to appear today. She was not afforded an opportunity to voluntarily appear as a witness.
Further, due to an error by the Majority staff, the subpoena was sent to the Southern California Branch of the U.S. Marshals Service and was not properly delivered to Ms. Rasor, who lives in my Bay Area district, until April 21. The Majority did not inform Ms. Rasor nor the other out-of-town witnesses they subpoenaed that under House rules, the Committee must pay their actual travel expenses and the Federal rate of per diem. My understanding is that the Majority staff, in fact, refused to pay these expenses until my staff cited the House rules.
Only on April 26, last Wednesday, did the Majority fully concede the point, and even then, they refused to reimburse actual expenses and instead offered each witness the value of a government rate e-ticket. Of course, having first been informed that the Committee would not pay their travel expenses, most of the witnesses had already purchased their own or made their own travel arrangements. The Majority staff told my constituent, Ms. Rasor, to take the overnight red-eye from San Francisco to Washington to appear before the Committee and return to California the same day, presumably to avoid having to pay the per diem expenses.
This not only ignores the clear rules of the House but comes close to harassing witnesses that the Majority summoned to appear in the first place. The Committee should not force witnesses that it has compelled to testify, whom it has misinformed about the conditions of the testimony, to bear the financial brunt of the Committee incompetence. I ask the Committee reimburse her actual transportation costs and regular government per diem expenses consistent with the House rules for any witness that is subpoenaed here today.
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I also submit for the record the correspondence from POGO's attorney, Mr. Stanley Brand, former counsel to the House, outlining his objections to the manner in which the inquiry is being conducted, the latest of which is the chair's refusal to allow witnesses time to make oral statements. I find it appalling that the Committee would summon these people to participate in clearly adversarial proceedings, then deny them the opportunity to make statements on their own behalf.
[The information of Mr. Miller follows:]
STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Madame Chair and fellow Members, I am attending today's oversight hearing to express my very strong concern about the manner in which this investigation is being handled. I believe the rights of witnesses have been abused in the process of this hearing and I believe the Committee has been derelict in its investigative responsibilities.
Today, the Committee is investigating ostensibly whether a non-profit group and two Federal employees violated any regulations or laws when the group made a public service award to the employees for their work in exposing serious under-payments of Federal royalties owed to American taxpayers by numerous large oil companies.
The Committee is not investigating the fact that oil companies have regularly underpaid hundred of millions of dollars in royalties owed to the taxpayer.
This Committee has been used time and again on behalf of special interests who find themselves on the wrong side of the law.
Once again today, we find the Committee coming to the aid of the oil industry that has already settled numerous cases out of court for hundreds of millions of dollars because they underpaid royalties to the taxpayer. Members of this Committee and others in the House and Senate tried for years to delay the Administration's new method of determining proper royalty payments. And now they have launched this investigation against those who brought the under-payments to light.
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Let me be clear. No one is condoning the potential misconduct that is being alleged.
If any wrongdoing is discovered, those responsible should be held accountable. But, the alleged wrongdoing is already under investigation by the proper authorities at the Departments of Justice and Interior.
When this Committee's investigation was started last June, over the objections of the Department of Justice, the Office of the Inspector General of the Department of the Interior and the Democratic Members of this Committee, the Subcommittee Chair said,
''It isn't the intent of the Committee to intervene in the [criminal investigation] at all, but we do have a need to know what is going on because we have things in front of us as far as oil valuation is concerned that are the purview of this Committee. Right now the Administration and the Minerals Management Service [have] some regulation or proposed regulation that should not go into effect . . . because we don't know whether this . . . payment of money has anything to do with the new regulations. We just need to know whether the two people involved had any influence on the MMS.''
The Administration has testified that these two individuals did not effect the new regulations but instead of dropping the investigation, this Committee has gone off on what appears to be a witch hunt or at best a tangent—without any additional direction or input from the Members of this Committee.
And we now find ourselves embroiled in a private dispute between litigants who successfully sued the oil companies for defrauding the American people of hundreds of millions of dollars.
Let me describe some of the actions by the Majority that should concern every objective Member of this Committee.
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Dina Rasor, a member of the Board of the Project on Government Oversight, was contacted by Mr. Casey of the Majority staff who reportedly dismissed her repeated requests to consult with her attorney.
Ms. Rasor is a private investigator, and more than a little familiar with appropriate interrogation methods and witness rights. Mr. Casey reportedly became belligerent when Ms. Rasor insisted that he speak with her attorney, and the conversation was terminated. Soon thereafter, Ms. Rasor received a subpoena to appear today. She was not afforded an opportunity to voluntarily appear as a witness. Further, due to an error by the Majority staff, the subpoena was sent to a Southern California branch of the U.S. Marshals' Service, and was not properly delivered to Ms. Rasor, who lives in my Bay Area district, until April 21.
The Majority did not inform Ms. Rasor, nor the other out-of-town witnesses they subpoenaed, that under House Rules, the Committee must pay their actual travel expenses and a Federal-rate per diem. My understanding is that the Majority staff in fact refused to pay these expenses until my staff cited the House Rules.
Only on April 26—last Wednesday—did the Majority finally concede the point, and even then, they refused to reimburse actual expenses and instead offered each witness the value of a government-rate ''e-ticket''. Of course, having first been informed the Committee would not pay their travel expenses, most of the witnesses had already made their own travel arrangements.
The Majority staff told my constituent, Ms. Rasor, to take the overnight ''red-eye'' from San Francisco to Washington, appear before the Subcommittee, and return to California the same day, presumably to avoid having to pay per diem expenses.
This not only ignores the clear Rules of the House, but comes close to harassing witnesses that the Majority summoned to appear in the first place!
The Committee should not force witnesses it has compelled to testify, and whom it has misinformed about the conditions of that testimony, to bear the financial brunt of the Committee's incompetence.
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I ask that the Committee reimburse the actual transportation cost and regular government per diem expenses, consistent with the House Rules, for any witness it has subpoenaed to be here today. I also submit, for the record, the correspondence from POGO's attorney, Mr. Stanley Brand—former Counsel to the House—outlining his objections to the manner in which this inquiry has been conducted—the latest of which is the Chair's refusal to allow the witnesses time to make oral statements.
I find it appalling that the Committee would summon these people to participate in a clearly adversarial proceeding and then deny them the opportunity to make a statement on their own behalf.
As I said at the outset, I cannot help but wonder why the Committee is expending substantial amounts of time and money to investigate people who exposed hundreds of millions of dollars in royalty under-payments, but has utterly failed to focus on those who illegally shortchanged the taxpayers in the first place!
Mobil settled its False Claims suit last year for $45 million. Altogether, the oil companies have already coughed up over $300 million dollars in settlement costs.
But where are the witnesses from the oil industry today? When is the Committee going to focus on the systematic cheating of the American taxpayer?
The only attention this subject has received so far is the Majority's ceaseless promotion of its sham Royalty-In-Kind scheme which the Department of the Interior and the General Accounting Office say would cost taxpayers $330 million a year.
Madame Chairwoman, I would hope this Committee would devote at least as much energy and money to investigate the hundreds of millions of dollars the oil industry has underpaid the Federal taxpayer, state governments, Indian tribes and school children of this country as it has investigating the people who revealed those under-payments in the first place.
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Mr. MILLER. As I said at the outset, I cannot help but wonder why the Committee is expending substantial amounts of time and money to investigate people who exposed hundreds of millions of dollars in royalty underpayments but have utterly failed to focus those on who illegally shortchanged the taxpayers in the first place. Mobil settled its false claims suit last year for $45 million. Altogether, the oil companies have already coughed up over $300 million in settlement costs. But where are the witnesses from the oil industry today? When will the Committee focus on the systematic cheating of the American taxpayer? The only attention this subject has received so far is the Majority's ceaseless promotion of the sham royalty-in-kind scheme which the Department of Interior and the General Accounting Office say would cost the taxpayers $330 million a year.
Madam Chairwoman, I would hope that this Committee would devote at least as much energy and money to investigate the hundreds of millions of dollars the oil industry has underpaid the Federal taxpayer, State governments, Indian tribes, and school children of this country as it is investigating the people who revealed those very same underpayments in the first place.
Mrs. CUBIN. I would like to remind the ranking member on the Committee that this underpayment by the major oil companies apparently went on for at least ten years before I became chairman of this Subcommittee, and ever since I have been chairman of this Committee, for the last three-and-a-half years, we have recognized the problem and we have sought a solution. While Mr. Miller did not like our proposed solution, if he is being honest, he should be hard pressed to say that we have not recognized the problem and sought a solution.
But I would like to remind him, that is not what this hearing is about. What this hearing is about is examining the policies, the practices of the Department of Interior and the Department of Energy to see how this sort of payment from a nongovernmental agency, from a private corporation, could be made to employees of those departments while they were advisors in making oil royalty rules.
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So with that, I would like to recognize Mr. Thornberry for two motions.
Mr. THORNBERRY. Madam Chairman, under Clause 2(J)(2)(b) of Rule XI of the Rules of the House of Representatives, I move that you, myself, Mr. Tancredo, Mr. Brady, Mr. Gibbons, and Minority members of the Committee be allowed to question the witnesses, Mr. Johnson and Mr. Martineck, for equal periods of time, not to exceed 30 minutes.
Mrs. CUBIN. Without objection.
Mr. MILLER. Reserving the right to object, if you would just explain, that is 30 minutes a person or are you going to split that time on your side——
Mrs. CUBIN. It is per side.
Mr. THORNBERRY. It is 30 minutes a side.
Mr. MILLER. [continuing] to be equally divided?
Mr. THORNBERRY. It is 30 minutes a side, but it just avoids dealing with the five-minute rule. So it can be longer blocks of time.
Mr. MILLER. And that is for each panel, each witness?
Mrs. CUBIN. That is for each witness.
Mr. MILLER. So on the last panel, you have, what, five witnesses?
Mrs. CUBIN. This is for the first panel only.
Mr. MILLER. You are doing this just for the first panel?
Mr. THORNBERRY. That was my motion, just for the first panel.
Mrs. CUBIN. Do you withdraw your right to object?
Mr. MILLER. No objection. Madam Chair, I would like to request that our distinguished colleague, Carolyn Maloney from New York, be allowed to join us on the dais.
Mrs. CUBIN. I have no objection.
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Mr. MILLER. Thank you.
Mr. THORNBERRY. Madam Chair, under Clause 2(J)(2)(b) of Rule XI, the Rules of the House of Representatives, I move that Tom Casey of the Majority staff and a staff member designated by the Minority each be allowed to question the witnesses, Mr. Johnson and Mr. Martineck, for equal periods of time, not to exceed 30 minutes each.
Mrs. CUBIN. Is there any objection?
Mr. MILLER. Reserving the right to object, do this again? So that is an additional 30 minutes?
Mr. THORNBERRY. For the staff to question the two witnesses in the first panel.
Mr. MILLER. Well, the Minority was not informed of this. I do not object to it, but I wish—you know, it is just incredible how you continue to run this Committee and you do not consult with us on these kinds of procedures, but that is what is wrong with this hearing from the beginning in any case.
Mrs. CUBIN. Mr. Miller, we have genuinely tried to share every single piece of information we have had and——
Mr. MILLER. Do not do that.
Mrs. CUBIN. Well, it is.
Mr. MILLER. Do not insult me.
Mrs. CUBIN. It is, because——
Mr. UNDERWOOD. For clarification, what is the total amount of time we are going to spend on the first panel?
Mrs. CUBIN. The total amount of time on the first panel will be one hour divided for questioning of the staff——
Mr. MILLER. By members.
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Mrs. CUBIN. [continuing] 30 minutes by members, right, and then one half-hour divided into—or 15 minutes on each side.
Mr. MILLER. Reserving the right to object, let me ask, since we were not notified of the staff request, if the members on this side want to use that 30 minutes, that we be allowed to use that 30 minutes.
Mrs. CUBIN. Absolutely. And the chair would like to welcome Ms. Maloney to the dias and hope that you heard the opening statements and understand what the scope and view of this hearing is.
Now I would like to introduce our first panel, Mr. John Martineck and J. Benjamin Johnson, Jr. Would you please come forward and sit at the table.
I would like to ask the panel to remain standing. The witnesses had previously been advised of the Subcommittee's right to place the witnesses under oath. Would you please raise your right hands.
Do you solemnly swear or affirm under the penalty of perjury that the responses given and the statements made will be the truth, the whole truth, and nothing but the truth?
Mr. MARTINECK. Yes.
Mr. JOHNSON. Yes.
Mrs. CUBIN. I would like to remind the witnesses that there will be no opening statement from the panel today. Throughout the scope of the questioning, I think that we will be able to bring out a lot of information about you, your expertise, and what not. So thank you very much for being here, and also thank you for cooperating with our subpoenas for this appearance and for cooperating in the subpoenas for the important records that you gave us.
Mr. Johnson and Mr. Martineck, what is your background in the oil industry, both of you?
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STATEMENTS OF JOHN MARTINECK AND J. BENJAMIN JOHNSON, JR.
Mr. MARTINECK. My background started on the financial end with ARCO Oil and Gas. I recorded the revenues as they came in from the other oil companies, followed up with a long-term assignment in the marketing end of the business that started in 1985, and I have been working in the marketing business ever since that time.
Mrs. CUBIN. Mr. Johnson?
Mr. JOHNSON. Yes, I am a petroleum engineer by background. I worked for Atlantic Richfield Company, or ARCO Oil and Gas, since the late 1970s doing various projects, exploring, developing oil reserves around the United States. In 1991, I took the position of senior manager of crude oil marketing for the Eastern half of the U.S. for ARCO. At that time, I learned about the oil marketing systems and have worked in oil marketing since that time.
Mrs. CUBIN. While at ARCO as consultants, did you gain firsthand experience in how major oil producers, marketers, and refiners trade and price oil pumped from Federal leases?
Mr. MARTINECK. Yes, absolutely. The first assignment that I had in the marketing side was to work the offshore marketing area. I started as an area representative there, where we actually went out and negotiated with each one of these companies, later taking on an assignment for managing the group that did all of the offshore marketing operations for ARCO. At the time that Benjie came to the organization, he took over the job that I had in that area and he continued that assignment for two years after I had left it.
Mr. JOHNSON. By the time the two of us were co-managing marketing for ARCO, we were the final approvers for all of the marketing contracts with all of the other major—well, all of the oil companies in the United States for oil, not including California and Alaska.
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Mrs. CUBIN. In the world of lawyers, economists, Federal and State officials concerned with oil royalties, the names of John Martineck and Benjie Johnson and Summit Resources were well known and respected, even before your False Claims Act suit was made public, isn't that true?
Mr. JOHNSON. Yes.
Mrs. CUBIN. You do not have to be modest. Thank you. We know that was true.
Gentlemen, how did you conclude that a False Claims Act suit was necessary to address the underpayment of Federal oil royalties?
Mr. JOHNSON. Well, we had spoken with government employees, Federal employees of the MMS. We had presented seminars to State oil royalty people and we provided that information freely from about 1994 through 1995. We worked as consultants on some projects, as well, and it became obvious to us that nothing was being done to recover previous oil royalty underpayments by the Federal Government. That is when, in early 1996, we decided to file the False Claims Act case.
Mrs. CUBIN. When and where was your suit filed?
Mr. JOHNSON. The suit was filed in Lufkin, Texas, on early January, or February, I guess, 1996.
Mrs. CUBIN. And where? You did say where that was?
Mr. JOHNSON. It was in Lufkin, Texas.
Mrs. CUBIN. Thank you. When False Claims Act suit cases are filed, it is done in secret, is it not?
Mr. JOHNSON. Yes. This case was filed under seal.
Mrs. CUBIN. And what is the reason for that secrecy, because secrecy is unusual in Federal courts.
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Mr. MARTINECK. It gives the government time to do their own private investigation before it becomes public, to decide whether or not they are going to intervene in the case and to decide whether or not there is any merit behind the case.
Mrs. CUBIN. Mr. Johnson, during the period of court-imposed secrecy in your case, you learned that Danielle Brian, who is the Executive Director of POGO, appeared to have learned of the case, did you not?
Mr. JOHNSON. That is correct.
Mrs. CUBIN. Would you please tell the Subcommittee how you reached that conclusion?
Mr. JOHNSON. Well, in September—in fact, on September 23 of 1996, I received a phone call from Danielle and she—we had spoken before, so this was not the first time I had ever spoken with her, but in this phone call, she informed me that she had heard that John Martineck and I had filed a qui tam, or False Claims Act, case, and she proceeded to want to ask me some questions about it. Well, I said, first of all, if we had, we would not be able to talk about it. It would be under seal. And Danielle at that time said, ''Okay, do not talk, just listen,'' and then proceeded to give me the name and the phone number of a lawyer she recommended that we work with. She told me that there were some other government employees who were thinking about joining or working on a lawsuit, qui tam, False Claims Act case, and she suggested that we call this lawyer.
Mrs. CUBIN. Mr. Martineck, you and Mr. Johnson are business partners and you are also co-relators in the case that was still secret at the time of that call. Did Mr. Johnson tell you about Danielle Brian's phone call of September 23, 1996?
Mr. MARTINECK. Yes, absolutely. He called me immediately after receiving that call and was surprised that some one had found out that our case was out there.
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Mrs. CUBIN. How did you feel about that? Was that disturbing to the two of you?
Mr. JOHNSON. We were surprised, knowing that it was under seal.
Mrs. CUBIN. Mr. Johnson, in answering a subpoena for records required by this inquiry, you withheld a memo to your attorneys about the substance of that September 23, 1996, phone conversation with Ms. Brian. The memo was withheld under a claim of attorney-client privilege. The attorney-client privilege was devised by the courts to serve purposes which are valid but germane only to the judicial branch of government and their objectives. It is not a privilege that is established by the Constitution. It is not binding on the legislative branch of the Federal Government.
Because that phone call is important to this inquiry, I would ask you to produce it now, because the record was produced under subpoena, and because I overruled your claim of privilege, producing it will not prejudice a claim of privilege to protect that document in litigation. Do you have the document with you now?
Mr. JOHNSON. Yes, I do.
Mrs. CUBIN. May I have it, please?
Mr. MILLER. Madam Chairman, if I might——
Mrs. CUBIN. Mr. Miller?
Mr. MILLER. I just think that for you to——
Mrs. CUBIN. Stop the clock, the questioning clock.
Mr. MILLER. Stop the questioning clock?
Mrs. CUBIN. Yes, stop the questioning clock, not Mr. Miller.
Mr. MILLER. For you to sit here and assure what a court may or may not do or what a privilege may not be honored I do not think is accurate. I do not think you can do that. You may believe that, but that does not necessarily mean that that will be the case, that that will be a determination that a judge at some future time will make. I just think the witnesses and others ought to know that, that that may or may not be the case.
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Mrs. CUBIN. I believe the information that I presented to you is, in fact, correct. So did staff pick up the—would staff——
Mr. MILLER. Once again, this Committee finds itself constantly dabbling in other people's court cases and releasing testimony and evidence that is asserted under privilege or for other reasons, and constantly is releasing that evidence. We ought to go into executive session. You ought to receive the memo, if that is what you want to do. Obviously, you have the right to do that. But it ought to be done under some efforts not to screw up other people's litigation, whether it is the Department of Justice or whether it is the private litigation of these individuals or others.
Mrs. CUBIN. Mr. Miller——
Mr. MILLER. You know, it is a wonderful role this Committee plays of just wandering around the justice system when your sense of——
Mrs. CUBIN. Reclaiming my time, I certainly appreciate that you do not like the facts that are coming out and going——
Mr. MILLER. It is not about the facts, it is about——
Mrs. CUBIN. Mr. Miller——
Mr. MILLER. [continuing] it is about protecting——
Mrs. CUBIN. This Committee will stay in order.
Mr. MILLER. This is not about the facts.
Mrs. CUBIN. This Committee will stay——
Mr. MILLER. This is about the process and the procedure of this Committee.
Mrs. CUBIN. Reclaiming my time——
Mr. MILLER. This is about the process and the procedure and the fairness of this Committee and whether or not people's rights are going to be protected or whether you are going to ride roughshod——
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Mrs. CUBIN. Mr. Miller, the document was subpoenaed——
Mr. MILLER. [continuing] over individuals' rights.
Mrs. CUBIN. The tapes were subpoenaed and this Committee has the right to get them.
Mr. MILLER. You guys use subpoenas to take a drink of water, I mean, you know——
Mrs. CUBIN. The legislative branch of the Federal Government is not bound by attorney-client privilege.
Mr. MILLER. I appreciate that, but you ought to do what you can——
Mrs. CUBIN. Will the staff please——
Mr. MILLER. [continuing] to protect people's rights and fairness in other proceedings.
Mrs. CUBIN. [continuing] please pick up the—would the staff please give me the paper.
Mr. JOHNSON. Madam Chairman, we are producing this without——
Mrs. CUBIN. Thank you.
Mr. JOHNSON. [continuing] hopefully, without waiving other privilege——
Mrs. CUBIN. Absolutely.
Mr. JOHNSON. [continuing] and because we are being ordered to do so.
Mrs. CUBIN. I believe you are absolutely correct and I think that your own attorneys can advise you whether or not you are——
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Mr. MILLER. Judge Judy is going to rule next, but, I mean, this is——
[Laughter.]
Mrs. CUBIN. A sense of humor is helpful.
Mr. INSLEE. Madam Chair?
Mrs. CUBIN. Yes?
Mr. INSLEE. Madam Chair, over here, may I be recognized just for a minute?
Mr. MILLER. May I have a copy of that?
Mrs. CUBIN. Yes, you can have a copy, and you can be recognized, Mr. Inslee, when your side has the time.
Mr. INSLEE. It has a bearing on the use of this document, if I may ask the chair a question.
Mrs. CUBIN. No. When you have the time, when your side has the time, you can bring up all the information that you want.
Mr. MILLER. Madam Chairman, again——
Mr. INSLEE. But Madam Chair, I have a question.
Mr. MILLER. [continuing] this is about a process and a procedure of this Committee. A member of the Committee is asking you about procedure and the action that you are taking.
Mrs. CUBIN. I would ask the staff to keep track of the time that the other side is using.
Mr. MILLER. It is not related to the—subtract it from our time.
Mrs. CUBIN. Mr. Miller, you are out of order——
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Mr. MILLER. If we have got to lose a bit of our time to protect people's rights——
Mrs. CUBIN. [continuing] and subtract the time.
Mr. MILLER. [continuing] we are fully prepared to do that.
Mrs. CUBIN. We will let Mr. Miller have his tantrum on their time, not ours.
Mr. INSLEE. Madam Chair, may I be—I would like to ask the chair a question about your intentions.
Mrs. CUBIN. Mr. Inslee, we are in the middle of questioning the witnesses. When you have time, you can ask the chair a question.
Mr. INSLEE. Madam Chair, you are about to violate——
Mrs. CUBIN. Mr. Inslee, you are out of order.
Now I would like to go on——
Mr. MILLER. This Committee is out of order.
Mr. BRADY. Madam Chairman, if I may ask, because this is a serious subject, we do have a lot of ground to cover today. While the theatrics are very entertaining, I would think, just from a decorum standpoint, if members would ask to be recognized, then wait to be recognized to ask that question, I really think we could get to the heart of the matter much faster than that.
Mr. MILLER. That is what Mr. Inslee just asked——
Mr. BRADY. And there is another example.
Mr. MILLER. That is what Mr. Inslee just asked.
Mrs. CUBIN. Thank you, Mr. Brady.
Mr. INSLEE. Madam Chair, may I be recognized?
Mr. MILLER. We would be happy to live by those rules.
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Mrs. CUBIN. We will continue on.
Mr. BRADY. I do not think you have to be subject to——
Mr. MILLER. Apparently I am not going to be recognized——
Mr. BRADY. If I may reclaim my time, Mr. Miller, this issue is not about fairness. This is about harassing the chairman for trying to get to the truth. Now, if we will all hold our questions——
Mr. MILLER. This is about a process.
Mr. BRADY. Yes, it is, so let us honor the process of this Committee and give the chairwoman a chance to get this thing moving and ask those questions——
Mr. MILLER. So under your——
Mr. BRADY. And I still have my time, Mr. Miller, if you would wait for me to finish, and you know better. You know that we need to have decorum, so let us rely upon a fair process to go through this.
Mr. INSLEE. Madam Chair, I have a——
Mrs. CUBIN. There was an opportunity for the Minority to object to the procedure when we set it out at the beginning of the hearing, which was 30 minutes questioning time that belongs to one side, the Majority side, and then 30 minutes which belongs to the Minority side. I can guarantee you that the Majority side will not be interrupting, playing games, being rude and unprofessional during their questioning period and I would ask the same of the Minority side.
Mr. INSLEE. Madam Chair, may I be recognized for a serious question of the chair——
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Mrs. CUBIN. Now, I would like to go on.
Mr. INSLEE. [continuing] regarding the use of this document? Please, let me ask you the question.
Mrs. CUBIN. Because, Mr. Inslee, you were not here at the beginning of the hearing. Had you been, you could have posed that then. Unfortunately, you were not. When your time comes, you can make any point and ask any question that you wish.
Mr. INSLEE. It may be moot.
Mrs. CUBIN. I am going to proceed with my questioning, Mr. Inslee.
Mr. MILLER. Madam Chairman, he would not have been able to pose that question——
Mrs. CUBIN. Because the phone call——
Mr. MILLER. [continuing] because he did not know you were going to ask for this document which essentially waives their privilege. So now that you have done that——
Mrs. CUBIN. The document was subpoenaed and we have provided all of the subpoena requests to the other side. If he is not prepared, I cannot—that is his responsibility, not mine. Now, I am going to continue on asking questions. Mr. Johnson——
Mr. INSLEE. May I make a parliamentary inquiry?
Mrs. CUBIN. [continuing] in a sealed Federal court hearing last November, you also gave testimony describing a series of phone calls initiated by Bob Berman, the Interior Department employee who is party to the agreement with POGO and who was paid $383,600 from POGO's share of the first settlement in your suit. Will you tell the Subcommittee in detail about those calls?
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Mr. JOHNSON. The first call I received from Robert Berman was on April 11, 1996. I just receive a phone message from him. I returned the call the following day. In that conversation, Mr. Berman first told me that he was ''the watchdog'' or a watchdog for the MMS, that he was not in the Minerals Management Service but he was in the Interior Department. He told me that he had heard of Mr. Martineck's and my work in oil royalty issues and he asked pointedly how much we thought the underpayments could have been. In particular, he told me that they had been investigating underpayments in California, but there had not been investigations concerning east of the Rockies or non-California and he knew that we had spoken about that type of underpayment.
I did not give him any specific numbers, especially with regard to Federal oil royalty underpayments, but I did tell him what had been publicly stated in public hearings before, that the underpayment number was generally somewhere between 3 and 10 percent of the total revenue received on the oil. That was the end of that conversation.
Over the remaining year and a half, I spoke with Mr. Berman several times. He called. He told me that he had received information that we had given the State of New Mexico in some work, consulting work we had done for the State of New Mexico. He told me that he had been assigned to develop new oil royalty payment regulations and he asked me about how oil was marketed and how crude oil could be valued. In particular, he wanted to know how the value of crude oil could be hidden and have not been discovered to date.
I spent, over the course of a year and a half, I spent several hours on the phone with Mr. Berman, I guess in total, explaining to him many of the intricacies of oil marketing and how that worked. I sent him a fax, a long fax with graphics and I sent him a spreadsheet showing some of the financial calculations.
He called me on June 12, 1996, and he told me that he was going to be testifying to Congress shortly thereafter—I believe it was June 17, 1996—and he asked for, again, a reiteration of what I thought the underpayments were on the private side, not the Federal side, and what we had seen. He called me then later after his testimony to Congress in July and he told me that his testimony to Congress had been based upon the values that I had given him, the 3 to 10 percent of the revenue. He had simply taken the revenue and multiplied it by 3 to 10 percent to come up with the ''alleged underpayments.''
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I spoke with him several times after that. The last record of a conversation I have with Mr. Berman was on June 2 of 1997, and that was just a quick call and that was the last record I have of any conversation with him.
Mrs. CUBIN. Thank you. At this point, without objection, I understand that—well, certainly. The Committee subpoenaed your calendar and entries about these calls, is that correct?
Mr. JOHNSON. That is correct.
Mr. INSLEE. Madam Chair, may I be recognized for stating an objection? I have a sincere issue I would like to raise with the chair if you will allow me ten seconds. I would like to make a parliamentary inquiry whether the chair intends to keep under seal for executive purposes of the Committee any of these documents which the witnesses have described as subject to some privilege so that the privileges will not be——
Mrs. CUBIN. That is not——
Mr. INSLEE. Let me finish my question.
Mrs. CUBIN. Mr. Inslee, that is not a parliamentary inquiry.
Mr. INSLEE. Well, let me make it a non-parliamentary inquiry then to ask you what your intentions are in this regard, because I think it would be important for this Committee not to prejudice the judicial system in their ability to deal with the questions of these privileges and keeping these in the executive session of this Committee would be appropriate, and I would suggest you do so and I would ask you what your intentions are in that regard.
Mrs. CUBIN. We are not in executive session. Everything that we subpoenaed, we have the right to bring forward here. I will bring forward the documents that I think are pertinent to determining whether the policies and practices of the Department of Interior and the Department of Energy are adequate to protect the public interest in not allowing Federal employees to take payments that may affect their advisory capacity in oil royalty or any other Federal issues.
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Mr. INSLEE. I might inquire, I think the Committee needs to have a discussion about whether these should be kept under seal so that it will not prejudice the ability to raise these claims in court, and I would suggest the Committee needs to have that discussion. I would ask you, what would be the appropriate time to do so? I would be happy to do that now by motion or otherwise, but if there is another time to do so before disclosure, I would be happy to accommodate the chair in that regard. Otherwise, I would like an opportunity to raise this issue through motion with this Committee and I would ask you, when would be the best time for your purposes to allow us to do that?
Mrs. CUBIN. Mr. Inslee, if you are going to make an objection, we have documents which have have been subpoenaed. But they are not under seal.
Mr. INSLEE. I understand.
Mrs. CUBIN. All right. If you would like to object when I ask for unanimous consent to put something in the record, you certainly have the right to object——
Mr. INSLEE. We will deal with it——
Mrs. CUBIN. [continuing] and then we will take a vote at the Committee and——
Mr. INSLEE. Very well. Thank you. Thank you.
Mr. MILLER. Madam Chairman, on my reservation, let me ask you, if I look at the—do we have information—have you subpoenaed information from the Justice Department or from the Department of Interior or others, Energy?
Mrs. CUBIN. I am not sure that I understand your question, Mr. Miller.
Mr. MILLER. As I read the subpoena, it is said that information received from the Department of Justice, the Office of Inspector General, the Department of Interior, which is received in response to subpoena issued by the authority of the motion in response to the previous Committee document request in the matter be treated as received in executive session. Access is limited to members and the staff designated by the chairman and senior Democratic member. Release of any such material in any form must be authorized by a vote of the full Committee. I just do not know if this information is being received under that same basis or is this different——
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Mrs. CUBIN. It is only the Department of Justice information——
Mr. MILLER. That is directly from them, whether it is involved in their litigation——
Mrs. CUBIN. That is directly from them, that is correct, that is directly from the Department of Justice.
Mr. MILLER. And from the Inspector General, right.
Mrs. CUBIN. And from the Inspector General, but not the Department of Interior generally.
Mr. MILLER. But if we receive information from witnesses that is involved in their investigations, that will not be treated in this fashion? That can be——
Mrs. CUBIN. No, not necessarily. Information from another source is exemptible.
So, reminding the witness, I asked if you have a calendar and you made entries in that calendar about these calls. You provided them to be entered in the record and I would ask unanimous consent to allow the notes provided by Mr. Johnson under subpoena and the telephone records provided by the Interior Department subpoena to be entered into the record. These records indicate the key dates of telephone conversations between Mr. Johnson and Mr. Berman. Notably, these government records suggest that Mr. Berman found no reason——
Mr. MILLER. Wait. Wait. Reserving the right to object——
Mrs. CUBIN. Let me finish my statement and then I will give you time. Notably, these government records suggest that Mr. Berman found no reason to call Mr. Johnson in the year before his secret suit was filed and called Mr. Johnson on only one occasion after the POGO suit was filed in the same court hearing the then-secret Johnson and Martineck suit.
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So, Mr. Miller?
Mr. MILLER. Just again, and I seek this for clarification, because I guess I am at a loss. You just said—I do not have your statement in front of me, but you said these are the calendars you got from Mr. Johnson and from the Department of Interior.
Mrs. CUBIN. The calendar is from Mr. Johnson. The phone calls——
Mr. MILLER. The phone calls are from——
Mrs. CUBIN. The phone calls are from the Department of Interior, from Mr. Berman's number at the Department of Interior to Mr. Johnson, and those are the only calls.
Mr. MILLER. The documents you received from the Department of Interior, will those be treated as though we are in executive session?
Mrs. CUBIN. No. No. Those are public. Those came from the investigators. Excuse me, they did not come from the investigators.
Mr. INSLEE. Madam Chair?
Mr. MILLER. Again, if you will explain the conditions under which these will be released to the public, the Department of Interior documents. Are those separate from the Inspector General documents, or do we know if those are part of the Inspector General's investigation?
Mrs. CUBIN. Those are the property of the Committee as they came in as a result of the subpoena and they are available for public information.
Mr. MILLER. Well——
Mrs. CUBIN. It is very simple and straightforward, Mr. Miller. The phone calls are calls to—what the phone call records will do is they will just——
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Mr. MILLER. Before you say what they show, that is the whole point.
Mrs. CUBIN. I am going to say, what they will show is that the calls——
Mr. MILLER. Why do you not just trample on people's rights.
Mrs. CUBIN. The records indicate that the calls did occur to which Mr. Johnson is testifying, the calls from Mr. Berman to him.
Mr. MILLER. And the subpoena says that release of any material in this form must be first authorized by a vote of the full Committee. This is your subpoena.
Mrs. CUBIN. These are not law enforcement records, Mr. Miller. These are not law enforcement records. So——
Mr. INSLEE. Madam Chair, I had——
Mrs. CUBIN. Mr. Inslee?
Mr. MILLER. They are part of the investigation by the Inspector General and it says here in your subpoena, the Inspector General, Department of General——
Mrs. CUBIN. They are documents that the investigative people on the Majority side got from Interior but not from the I.G.
Mr. MILLER. I know. They got them by subpoena. That is why the subpoena protects the documents from public release. It says you have to have a vote of the Committee. I am asking you——
Mrs. CUBIN. Only if it is law enforcement records. Only if it is law enforcement records. But we do not need to continue to discuss this. Mr. Inslee?
Mr. INSLEE. Yes. I would object to public—putting these in the record in other than in executive session to the extent that any of these documents are either subject to a claim or privilege in the existing litigation that the witnesses have claimed and has not been adjudicated yet——
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Mr. MILLER. Or others have claimed.
Mr. INSLEE. [continuing] number one, or others have claimed, or two, records that were produced subject to a subpoena which my understanding, according to what Mr. Miller says, specifically said would be subject to a vote of the Committee before they are put in any form subject to public release, and let me suggest why I do this. I think it is an important point about how we in Congress proceed in these investigations at the same time where the Justice Department or the Judicial system has an ongoing litigation. I think it is important not for us in Congress to prejudice or jeopardize the judicial system's ability to deal with this. I speak as a former prosecuting attorney in this regard, and there are instances where our efforts could, frankly, foul up ongoing investigations and I think we should be sensitive to that in Congress.
So I would suggest to us that in the pursuit of this, we should adopt a procedure by which material that is provided to us but there is an objection as to a privilege in the judicial system investigation, that we use those in executive session, and I would object to the introduction of them in other form, and if you would like to, I would put this in the form of a motion and we can argue this right now, because there may be other documents that come up, so we can deal with this right now. We can make a rule for the Committee and abide by it. So I will state my objection——
Mrs. CUBIN. But this is not—fine. It just is astonishing to me.——
Mr. MILLER. The gentleman has objected.
Mr. INSLEE. Yes. Let me——
Mrs. CUBIN. And I am really not——
Mr. MILLER. You asked unanimous consent.
Mrs. CUBIN. Okay. He has objected. All right. Let me respond to the gentleman and then I will ask for a vote by the Committee. It is amazing to me that the Minority thinks that phone calls from the workplace of a Federal employee have to be kept a secret. The Supreme Court has repeatedly affirmed the breadth of Congress' right to investigate the government's conduct of criminal and civil litigation. The courts have also explicitly held that agencies may not deny Congress access to agency documents, even in situations where the inquiry may result in the exposure of criminal corruption or maladministration of agency officials. The Supreme Court has noted, ''But surely a Congressional Committee which is engaged in a legitimate legislative investigation need not grind to a halt whenever responses to its inquiries might potentially be harmful to a witness in some distinct proceeding or crime or wrongdoing is exposed.''
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Nor does the actual pendency of litigation disable Congress from the investigation of facts which have a bearing on that litigation where the information sought is needed to determine what, if any, legislation should be enacted to prevent further ills, and as I have stated, that is, in fact, the very purpose of this oversight hearing. So, having heard your objection——
Mr. MILLER. Madam Chairman, on your point——
Mrs. CUBIN. [continuing] having heard your objection, I will now——
Mr. MILLER. Madam Chairman——
Mrs. CUBIN. All those in favor of allowing the calendar and the phone records to be entered into the record will please say aye.
Mr. INSLEE. Madam Chairman——
[Chorus of ayes.]
Mrs. CUBIN. Opposed.
[Chorus of noes.]
Mrs. CUBIN. The ayes have it.
Mr. INSLEE. Madam Chair, I want to make clear just——
Mr. MILLER. Madam Chairman——
Mrs. CUBIN. The ayes have it.
Mr. MILLER. Madam Chairman?
Mr. INSLEE. Madam Chair, could I make one point clear? Just to make sure that we understand so that we do not have further disagreement in this regard, my objection is only to allowing some of these purportedly privileged documents to go out beyond executive session, and I agree with everything you said, that we have the right and responsibility on investigations. My only concern is, I think some of these could be held and used in executive session that could allow us to proceed with our inquiry and not prejudice the judiciary body and proceeding. That is the nature of my objection.
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I simply suggest on those specific documents where there is a privilege, we proceed with our investigatory function in this Committee but we do so in executive session so we do not prejudice their ongoing litigation rights. That is the nature of my objection, and I do not know if the last vote, if that was the specific intent of the chair or not, but that is the nature of what I would suggest.
Let me pose a motion, if I can, just so I can make sure that we understand your ruling in this regard. I would move that during the remaining portion of this hearing, that any articles that are subject to a claim of privilege by any of the witnesses that we handle in an executive session mode, that we accept them into the record but they are held for use in executive session, meaning that they are not disseminated to the public and thereby not, frankly, fouling up the ongoing litigation. I would make that motion. I think we can deal with this motion and have a ruling of the Committee.
Mr. MILLER. Madam Chairman, on the motion——
Mr. BRADY. Madam Chairman, on the motion myself, I think it is important to note here that the phone records are not under investigation from the standpoint of Mr. Johnson or his colleague broke any rules, unethical, illegal rules, that the Federal employees are being looked at. I think one of the points we are looking at today is did the Justice Department, which is conducting the investigation, did the Department of Energy, and did the Department of Interior turn a blind eye to the illegal and unethical conduct of their colleagues. And so information that can help us ascertain that truth, which these phone records are, I think are an important part of getting to the truth.
So if we have nothing to hide, I think this information should be part of this open hearing for the public, because so much of this illegal conduct was conducted in secret, let us make sure that we inquire in the open government forum that we have today.
Mrs. CUBIN. Mr. Brady, imagine that, again, an oil company where the executives were protesting the admission of certain documents. I can hear the screams and cries from the other side.
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Mr. MILLER. Madam Chairman, on the motion——
Mrs. CUBIN. The motion is out of order. The motion is out of order. I read from the Rules for the Committee on Resources, let me give you the cite here, Rule 4(i), Claims of Privilege. Claims of common law privileges made by witnesses in hearings or by interviewees or by deponents in investigations or inquiries are applicable only at the discretion of the chairman, subject to appeal to the Committee, which means the chairman decides what is privileged and if the Committee disagrees with the decision of the chair, then they can move to overrule the chair and a vote will be taken on that.
Mr. MILLER. Madam Chairman?
Mrs. CUBIN. So the chairman——
Mr. MILLER. Madam Chairman, parliamentary inquiry.
Mrs. CUBIN. Yes?
Mr. MILLER. If I might make a parliamentary inquiry, and that is this question. Nobody here is challenging the right of this Committee to have these documents. We have been through this before and clearly, as you stated in the portion of the opinion you read, this Committee has a right to these documents, whether the privilege is asserted or not.
The parliamentary inquiry I have is whether or not the release of these documents in public, not the right of the Committee to look at them and to look at them in executive session, whether or not—if the gentleman would let me finish my parliamentary inquiry—as to whether or not we can receive them, look at them in private as the conditions of the subpoena in the authorization for the subpoena set forth, because it appears that some of the information that you have, and that you have a right to have and you have a right to use in this hearing, but maybe not to use publicly, may be part of the criminal investigation with respect to the Department of Justice that apparently is now ongoing and is also received from the Department of Interior which has the Inspector General.
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So this is not about whether or not we have a right to look at this and to use it and to form our opinions and make findings of this Committee, but whether or not, as in the authorizing of the subpoena, it says that they will be treated as if received in executive session and access thereto limited to members and staff designated by the chairman and the senior Democrat.
This is not an attempt to keep this information away from the Committee and let the chips fall where they may, but it is a question of the language authorizing the subpoena and whether or not we are going to comply with that. At some point, people have a right to rely on the actions of this Committee, and my parliamentary inquiry is to whether or not the public release of these documents that have been received in this manner are in compliance with the authorization received by the Committee for the subpoena of these documents.
Mrs. CUBIN. Mr. Miller, you will recall the same exact debate going on when I was chairing hearings on the hard rock mining bonding issue. At that time, I assured you that I will follow the rules of the Committee and the House. I give you that assurance again. At that time, I also told you that I would judiciously look at the information and not release publicly information that I thought would be harmful. I told you that then. I lived up to that—or that would be harmful to a case—and I will do that again.
As chairman of this Committee, I have the responsibility of getting this information out in the best possible way, and that is my intention, and so what I——
Mr. MILLER. Madam Chairman, I do not for a moment——
Mrs. CUBIN. I am not finished. What I will do is after the hearing is over, if the Minority has—as we go, we will enter the documents into the record. If the Minority has particular heartburn over a certain document, I will discuss it with them. But we will proceed as though they are going to be made public, and then I am a reasonable person and you can, just as we did with the other issue, and I was good to my word, you were too, and you can expect me to be again.
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Mr. MILLER. Madam Chairman, as I understand what you are about to do, you are about to read from those very documents. They will now be public. It will not matter what the Majority says three weeks from now or two weeks from now. They will be displayed upon the public record here in the next few minutes and that is——
Mrs. CUBIN. Some of the documents absolutely will, but——
Mr. MILLER. And that is contrary to the authority, if you want to obey the rules, the authority that we voted on in this Committee, in the Subcommittee, the subpoena——
Mrs. CUBIN. Now listen, Judge Wapner——
[Laughter.]
Mrs. CUBIN. Now listen, Judge Wapner, the subpoena authority only speaks to the criminal law enforcement records that we received. It does not speak to the things that we received from Interior generally.
Mr. MILLER. With all due respect, you do not know factually whether or not these are part of that criminal investigation or not. Clearly, you are going to do what you do.
Mrs. CUBIN. Right.
Mr. MILLER. I am just telling you that you are trampling on the authority of this Committee, you are violating the rules of this Committee, and I think you are trampling on a criminal investigation and you may also be trampling on the rights of the parties to that criminal investigation. But Madam Chairman, I have known you long enough to know that you will proceed in the manner in which you proceed, and fortunately, you do keep a good sense of humor about you while you do it.
But nevertheless, I think you are about to trample on some people's rights and that should not be what this Committee should do and it should especially not do it to contradict the exact authority that the members of this Committee voted to give you and the conditions in which it was given.
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Mr. INSLEE. Madam Chair, I think that the chair has ruled. I take your statements as a ruling and I respect them. But I do, pursuant to Rule 4(i) appeal the ruling of the chair——
Mrs. CUBIN. Okay.
Mr. INSLEE. [continuing] to the Committee——
Mr. THORNBERRY. Madam Chairman?
Mr. INSLEE. [continuing] and let me state the basis of my appeal, if I may.
Mr. THORNBERRY. I move to table the appeal.
Mr. INSLEE. Well, let me state the basis of my appeal before you hear your motion to table. The basis for my appeal is this, Madam Chair. I think we really——
Mr. SCHAFFER. Madam Chairman, a parliamentary inquiry?
Mrs. CUBIN. Yes?
Mr. SCHAFFER. Is a motion to appeal the chair——
Mrs. CUBIN. It is not a debatable motion——
Mr. SCHAFFER. [continuing] a debatable motion?
Mrs. CUBIN. [continuing] because the motion has been made to table it, so it is not——
Mr. INSLEE. Well, I have not finished. I would appreciate my ability to finish my motion before we hear a motion to table it.
Mr. SCHAFFER. I would like an answer to my inquiry. Is the motion before us a debatable motion?
Mrs. CUBIN. The motion before us is not a debatable motion. Mr. Thornberry moved to table, and all in favor, say aye.
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[Chorus of ayes.]
Mrs. CUBIN. Opposed.
[Chorus of noes.]
Mrs. CUBIN. The ayes have it, so we—oh, I know. Gee, right to the heart.
[Laughter.]
Mrs. CUBIN. Okay. Now I need to recognize where we are. We have entered into the record the documents that have been discussed. I am going to ask one last question, and so the time needs to go back on.
Just to finish this up, to be clear, Mr. Johnson, all of the calls that are on the records that we just put into the record were initiated by Bob Berman, is that correct?
Mr. JOHNSON. That is correct. Mr. Berman called me, although many times I returned his calls.
Mrs. CUBIN. But he initiated the conversation, but you did return his calls sometimes?
Mr. JOHNSON. That is correct.
Mrs. CUBIN. Thank you very much.
Now the chair recognizes Mr. Thornberry.
Mr. THORNBERRY. Mr. Johnson, I want to try to get back together on the context for the suit that we are talking about. As I understand your testimony, you all filed your lawsuit in February 1996 and then, beginning in April 1996, you started getting some phone calls from Mr. Berman of the Department of Interior asking you lots of those questions, and those calls went on for more than a year, and in September 1996, you got a call from Ms. Brian with POGO saying that she knew you filed this case and you would not talk to her. Is that kind of a summary of where we have been so far?
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Mr. JOHNSON. Yes, really.
Mr. THORNBERRY. Now, one of my questions is, why did you talk with Mr. Berman? A few months later, you would not talk to Ms. Brian. Why did you talk to Mr. Berman?
Mr. JOHNSON. Well, first of all, we were right in the middle of a Justice Department investigation into our lawsuit. The lawsuit was under seal at the time. We had a number of people from the Federal Government calling, asking questions. Mr. Berman never identified himself specifically as an investigator in our lawsuit, although he did ask a lot of questions related to the subject, and without knowing if he was officially part of the investigation or even if he knew about our lawsuit, we responded. I gave him full cooperation, as I had with all government questioning.
Now, I had spoken with Danielle Brian at other times and I did give him information concerning not the Federal lawsuit, not underpayments on Federal lands, but the work that we had done on private litigation and we had cooperated with Ms. Brian, as well.
Mr. THORNBERRY. My understanding is, you cooperated fully with Mr. Berman. If he asked a question, you answered it?
Mr. JOHNSON. Absolutely.
Mr. THORNBERRY. Now, I also understand that you sent a letter to the Department of Justice to let them know those phone calls took place, is that right?
Mr. JOHNSON. Mr. Berman had been the most persistent in his questioning and his phone calls, and as I mentioned, he never had identified himself as being an investigator in our lawsuit. Because of that, we sent a memo to the Justice Department letting them know that he had been calling.
Mr. THORNBERRY. Did you ever hear back from the Justice Department?
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Mr. JOHNSON. Not to my knowledge.
Mr. THORNBERRY. When you file one of these suits, is it important to have very detailed knowledge of the subject matter that you file the suit about, or can you make some vague allegations and fill in the blanks later?
Mr. JOHNSON. Well, I am not an expert on the law, on the false claims act. It is certainly my understanding that we had to have very detailed personal direct knowledge, which we did, of this issue.
Mr. THORNBERRY. So you had to have that kind of detailed personal direct knowledge for your lawsuit?
Mr. JOHNSON. That is correct.
Mr. THORNBERRY. In your conversations with Mr. Berman that lasted over a year, did you form an impression about whether he had the same kind of detailed direct personal knowledge about how this stuff works?
Mr. JOHNSON. Clearly, Mr. Berman had a general understanding of oil prices, but he clearly did not have an understanding of the details involving how oil was sold from leases in the country and how it was actually valued and how the exchanges worked.
Mr. THORNBERRY. And were those the areas that you helped him with in your conversations?
Mr. JOHNSON. Very much so, yes.
Mr. THORNBERRY. Now, at some point, you, or you all both entered into an agreement with POGO and others to share in any money that you get out of these lawsuits, is that correct?
Mr. JOHNSON. That is correct.
Mr. THORNBERRY. I guess one of my biggest questions in this whole thing is why in the world you, who filed your suit first—and as I understand, that is the key, if you file your suit first, everybody else is shut out pretty much—you filed your suit first and yet you agreed, entered into an agreement to share part of the money that you get with these people who filed later suits. Why did you agree to share with POGO?
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Mr. JOHNSON. Well, at the time we entered into that agreement, it was not so clear to us what the law was. There certainly was a question as to if simply being the first to file answered all of the issues or if, in fact, there could have been another person, such as Mr. Brock, who a court or a jury could perhaps believe that he had been, in fact, the first person ever to bring this issue public. That was a question in our mind.
Mr. THORNBERRY. Now, you need to explain to us, I think, a little bit who Mr. Brock is, how he enters into it, and how that figured into your calculation.
Mr. JOHNSON. Well, Mr. Brock was—we had never met him at the time we signed the agreement, but it was represented to us by his attorneys he was in with the POGO, Danielle Brian, co-relators in their competing lawsuit, and we were told that he had been the first person back in the 1970s to bring up the issue of oil royalty underpayments in California. We were told that he understood and knew oil pricing and that he was, in fact, current on it and knew how oil underpayments could have been made or were made up into the 1990s, as well.
Mr. THORNBERRY. So was he represented to be an expert that could help you with your case, or is he another claimant out there?
Mr. JOHNSON. Well, actually, he was another claimant.
Mr. THORNBERRY. All right. And so based on what you were told, he might have had a claim that could in some way threaten your claim, and so to prevent that from happening, you agreed to share?
Mr. JOHNSON. Yes, and the long and short of it is, that is correct.
Mr. THORNBERRY. Did you find, in your dealings with him, did he help you? Did he have expert knowledge beyond what you had? Did he contribute?
Mr. JOHNSON. No. After we got into the case and met Mr. Brock, we saw that that was not the case.
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Mr. THORNBERRY. I understand that after it became public that POGO had these agreements with Mr. Berman and Mr. Speir to give them part of POGO's share of whatever they recovered, you and your lawyers hired somebody to look at this and got concerned about how it affected your ability to continue the suit, is that roughly what happened?
Mr. JOHNSON. Certainly, after we learned of that, yes.
Mr. THORNBERRY. What sort of ethics expert did you all look at and what did he tell you?
Mr. JOHNSON. Well, I mean, I am not an ethics expert and I am not sure how all that worked. It was my understanding that certainly there was a question whether government employees could be paid and whether, in fact, these people were—would have been witnesses in our litigation, and it, of course, has been my understanding that you cannot pay witnesses for their testimony. It certainly looked bad.
Mr. MARTINECK. And at the time we signed these agreements, we had no knowledge that these individuals were involved on that. So certainly we wanted to bring that to light, that we had found that out.
Mr. THORNBERRY. I want to ask that direct question. I think you have answered. But at the time that you reached the agreement with POGO and for a while thereafter, did you have any idea that POGO had these side agreements with these Federal officials to pay them part of what POGO received in any settlement? Did you all know that?
Mr. MARTINECK. No, we had no knowledge of that.
Mr. JOHNSON. Absolutely not.
Mr. THORNBERRY. And so it was a surprise to you when you found out?
Mr. JOHNSON. Yes.
Mr. MARTINECK. Very much so.
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Mr. THORNBERRY. I think that is all the questions I have at this time.
Mrs. CUBIN. Excuse me. I was trying to cut time short by possibly avoiding future disagreements. The chair now recognizes Mr. Schaffer.
Mr. SCHAFFER. Thank you, Madam Chairman.
I want to go back to the contacts by Mr. Berman and explore that a little further. I just want to be clear, all of the calls, the conversations that you had, were they initiated by Mr. Berman?
Mr. JOHNSON. Yes, I believe that is correct.
Mr. SCHAFFER. If you were to have called him back, would that just be in the course of returning phone calls, or did you initiate any at any time?
Mr. JOHNSON. I do not know of any phone calls that I initiated to him, so I believe that the calls from my phone to his would have been in a response to a question from him.
Mr. SCHAFFER. Mr. Berman mentioned or gave you the impression, as you stated, that he was an important player of some sort in oil royalty policy decisions at the Department of Interior. Did he ever specifically mention your case?
Mr. JOHNSON. No, he never did.
Mr. SCHAFFER. Did you take steps to assure yourself that Mr. Berman was genuine?
Mr. JOHNSON. Well, we, of course, wrote the letter to the Department of Justice informing them of his questioning and we did know that the phone number that he gave me to return his calls was in the government office.
Mr. SCHAFFER. You came to that conclusion on your own?
Mr. JOHNSON. Well, the conclusion——
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Mr. SCHAFFER. Or was that the answer the Justice Department gave you?
Mr. JOHNSON. No. The Justice Department did not give us an answer.
Mr. SCHAFFER. They gave you no answer at all as to these phone calls, the propriety of them or——
Mr. JOHNSON. I do not recall them telling us anything on that.
Mr. SCHAFFER. Now, during these calls, did Mr. Berman not also ask you to help prepare him for testimony before Congress in June of 1996?
Mr. JOHNSON. He did call me prior to his testimony and asked several pointed questions about the alleged underpayments.
Mr. SCHAFFER. I understand why Mr. Berman would need your expertise to help him prepare for that hearing, but if we assume, and I stress that for now this is an assumption, if we assume that Mr. Berman and POGO were planning to file a lawsuit similar to yours, why would it be valuable to know the details of the oil trading described in your suit?
Mr. MARTINECK. Well, first of all, you have to have firsthand knowledge that you gained through your own efforts to be able to be qualified for the suit, and if he was wanting to meet that hurdle, he would have to be able to answer certain questions.
Mr. SCHAFFER. When you say firsthand knowledge, direct knowledge?
Mr. MARTINECK. Yes. It has to be direct independent knowledge, firsthand, that you had gained through your own efforts.
Mr. SCHAFFER. Now, during these many phone conversations, did Mr. Berman discuss with you the new oil royalty regulation then being developed by the Department of Interior?
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Mr. JOHNSON. Mr. Berman first told me that he was the person charged with developing new regulations and he did mention several times the fact that new regulations we