James Watt’s Legacy

Minerals Management Service is a creature of James G. Watt, President Ronald Reagan’s first Secretary of the Interior. Watt, born in Lusk, educated in Wheatland and at the University of Wyoming, was secretary only two years,^ix but he was a busy fellow during that time, zealously pursuing the anti-conservation, pro-exploitation agenda he pioneered as founding president of the Colorado-based non-profit Mountain States Legal Foundation, a conservative legal group prominent in the anti-environmental protection movement.^x Until the 2006 appointment of Dirk Kempthorne as the Bush administration’s second Interior Secretary, Watt held the 20-year record for the fewest number of plants or animals placed on the Endangered Species list.

James Watt created Minerals Management Service by secretarial order in January 1982 out of the old Conservation Division of the U.S. Geological Survey, which previously had been responsible for collecting and managing royalties.

The Conservation Division had not done well. There had been scandal, theft, massive fraud, waste, and astronomical losses of revenues, particularly for Wyoming Indian tribes. There had been appointment of a special commission, and six months of investigation. There had been the conclusion, as the commission chairman David Linowes reported to President Reagan at a press conference,^xi that “the financial management of the Nation’s energy resources had failed to do its job” for more than 20 years.

“As a result,” Linowes went on, “hundreds of millions of dollars”—no one knew the exact amount— in federal revenues were lost each year because royalty collections were conducted on an “honor system” that let oil companies decided for themselves what royalties they would pay, without any government verification— only a handful of audits had ever been conducted. In addition, oilfield security was lax and theft of oil was “quite common” throughout the country. All this had been going on for more than 20 years; nothing had been done about it.

“Mr. President, this is the kind of fraud and waste that we can stop by investigating problems that now exist and installing improved management systems that will prevent fraud and waste in the future,” opined the press conference chairman Edwin L. Harper, who headed the President’s Council on Integrity and Efficiency.

Secretary Watt also attended this press conference and he spoke up, announcing that his department had adopted all 60 of the commission’s recommendations before they were made, and that he had two days previously created the Minerals Management Service agency to take care of the royalty problems.

“And we think that we have already started stemming the loss of funds—the unbelievable loss of funds to the taxpayers —that has been going on for these many years,” Watt bragged. “And within the next weeks, we will have really cut that flow off and saved the taxpayers these monies.”

He added that the royalties problem was a “tremendous example, unfortunately, of how the Department of the Interior has mismanaged a multi-million dollar problem for 20-plus years,” adding that the private citizens of the Linowes Commission had helped save the day, thanks also to his own almost incredible efficiency.

“Not many government reports get acted on like that,” he said of his speedy, before-the-fact response. “This one hasn’t been sitting around.”

“Yes, I know,” Reagan agreed. “Most people are cynical and think reports like this go on a shelf someplace.”

So the president was prescient; Watt was not.