Several consumer groups and sympathizers yesterday launched a broadscale attack on the government's offshore leasing policy for oil and natural gas, charging in a lawsuit that the plan favors the few largest oil companies and cheats the public.
The attorneys for the plaintiffs in the suit say they hope to recover "billions of dollars for American taxpayers and consumers and end the hoarding of our badly needed oil and gas resources by the giant oil companies."
The suit, filed in U.S. District Court here, challenges government practice of leasing offshore oil and gas sites to companies that only have to pay a one-time cash-in-advance bonus and are allowed to keep 83.3 per cent of the royalties from any successful wells. It suggests various alternative leasing practices instead.
The 90-page lawsuit details various instances in which it said the government abuses the lease process by failing to consider alternatives. For example, it cites one sale in which an oil company paid $258 million for leasing rights in 1970 and on which the company had already received $1.4 billion in revenues by 1976.
The consumer and energy groups said in their complaint that the government system does not provide adequate information about possible lease candidates, failed to promote adequate competition among oil companies, does not stimulate development of oil and gas, and does not give fair returns to the taxpayers for the sale of public resources.
The groups had planned to ask for the immediate blockage of one planned sale, but withheld that aspect of the legal action pending further meetings with the Justice Department this weekend.
Joesph L. Rauh, one of the attorneys who filed the suit, said it was an attempt to end the Disastrous giveaway" of the Outer Continental Shelf oil and gas resources. He accused the Carter administration of failing to act on his campaign promises to solve the problem.
"Any private trustee acting in this manner would long ago have been charged with criminal neglect and discharged from his duties," Rauh said in a statement, calling the implementation of the leasing system "governmental gross neglect of duty."
One of the major complaints is the lack of competition among oil companies for the resources, the energy groups said. They said that few firms can afford to bid the large amounts and still have money available for exploration, so the large oil companies can dominate the bidding and "hoard" the reserves.