Thought problems with royalty payments on natural resources extracted from Native American lands were going to be solved by the $3.4 billion Cobell v. Salazar settlement?

This story makes it clear the federal government isn’t the only one defrauding Native Americans of money owed them. It concerns accounting errors by BP – you’ve heard of them, right? – resulting in incorrect royalty payments on the company’s natural gas production on land owned by the Southern Ute tribe in southwestern Colorado.

The fine slapped on BP America yesterday was believed to be the largest civil fine from the Interior Department since such penalties were authorized in 1982, writes Julie Cart of the Los Angeles Times::

It was also the first punishment meted out by the newly constituted Bureau of Ocean Energy Management, Regulation and Enforcement, which replaced the beleaguered Minerals Management Service, or MMS, last month. The new agency oversees offshore energy leasing and production as well as management of onshore federal oil and gas leases.

Tribal auditors first brought the errors to the attention of BP three years ago after discovering that the company’s reports included incorrect royalty rates, sales prices and production data related to the leases. All of those factors are used to compute the amount of royalties BP owed to the tribe.

After repeated notification and an order from the MMS, the company agreed to correct the problem, which it attributed to errors in automated files. But later audits from MMS and the tribe showed that the errors continued, even after BP said it had resolved the issue.

BP spokesman Toby Odone attributed the problem to a “coding error” and said the company might appeal the fine.

To put things in perspective, Cart points out that in 28 years, Interior has levied only $35 million in civil fines to the oil and gas industry

Gwen Florio

Tags: BP, BP America, British Petroleum, buffalo post, Bureau of Ocean Energy .Management Regulation and Enforcement, Cobell v. Salazar, Gwen Florio, Minerals Management Service, Native American news, Natural Gas, Southern Ute Tribe, U.S. Interior Department