Washington, D.C. – U.S. Senator Russ Feingold is among several senators concerned that the U.S. government could possibly lose billions of dollars to big oil companies because of a flawed court decision. A federal court in Louisiana recently decided big oil companies can use public resources for free, despite record oil prices nearing $100 per barrel. The court decision disregards a 1995 law passed by the Congress that was intended to allow the Department of Interior to collect royalty payments for the use of public resources if oil and gas prices surpass certain “price thresholds.” The court decision could cost the Federal Treasury up to $60 billion in lost oil and gas revenues and cause over $1 billion to be refunded by the government to the oil companies. Feingold joined a group of his Senate colleagues led by Senator Jeff Bingaman (D-NM) in writing to President Bush asking him what steps he will take to address the problem.

“The fact that the Treasury may have to cut a billion dollar check to big oil companies because of a flawed court ruling is absurd,” Feingold said. “At a time when oil companies are enjoying record profits while American consumers are coping with record gas and energy prices, the President should stand up for consumers, not big oil.”

A 1995 law passed by Congress established royalty requirements for certain Outer Continental Shelf oil and gas leases, and allows the Department of Interior to collect royalties when the price of oil and gas rises above a price threshold. It was recently discovered that due to an administrative error, some leases in 1998 and 1999 did not include the price thresholds. However, this court ruling would have much broader implications by voiding price thresholds in all leases between 1996 and 2000 subject to the 1995 law. Based on a 2006 estimate by the Government Accountability Office, the cost of the ruling could be as high as $60 billion in royalties that will not have to be paid by the oil and gas industry. In addition, over $1 billion in royalties already paid would have to be refunded from the Treasury to the oil and gas industry. While Congress is seeking ways to address the problem, the administration has remained silent on legislative fixes.

“In a time when critical national needs cannot be met because of lack of Federal resources, when ordinary Americans are paying prices for oil and gas that might to rise to unprecedented levels, and when oil and gas companies already have every fiscal incentive imaginable to produce more oil and gas, giving the oil and gas industry billions of dollars of the public’s natural resources for free, with a billion-dollar refund from the U.S. Treasury to boot, is not an acceptable outcome,” read the letter.