```

[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 
   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

                               __________

                   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

                                 ______

                     U.S. GOVERNMENT PRINTING OFFICE
65-382                       WASHINGTON : 1999

                         COMMITTEE ON RESOURCES

                      DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana       GEORGE MILLER, California
JAMES V. HANSEN, Utah                NICK J. RAHALL II, West Virginia
JIM SAXTON, New Jersey               BRUCE F. VENTO, Minnesota
ELTON GALLEGLY, California           DALE E. KILDEE, Michigan
JOHN J. DUNCAN, Jr., Tennessee       PETER A. DeFAZIO, Oregon
JOEL HEFLEY, Colorado                ENI F.H. FALEOMAVAEGA, American 
JOHN T. DOOLITTLE, California            Samoa
WAYNE T. GILCHREST, Maryland         NEIL ABERCROMBIE, Hawaii
KEN CALVERT, California              SOLOMON P. ORTIZ, Texas
RICHARD W. POMBO, California         OWEN B. PICKETT, Virginia
BARBARA CUBIN, Wyoming               FRANK PALLONE, Jr., New Jersey
HELEN CHENOWETH-HAGE, Idaho          CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California     CARLOS A. ROMERO-BARCELO, Puerto 
WALTER B. JONES, Jr., North              Rico
    Carolina                         ROBERT A. UNDERWOOD, Guam
WILLIAM M. (MAC) THORNBERRY, Texas   PATRICK J. KENNEDY, Rhode Island
CHRIS CANNON, Utah                   ADAM SMITH, Washington
KEVIN BRADY, Texas                   CHRIS JOHN, Louisiana
JOHN PETERSON, Pennsylvania          DONNA MC CHRISTENSEN, Virgin 
RICK HILL, Montana                       Islands
BOB SCHAFFER, Colorado               RON KIND, Wisconsin
JIM GIBBONS, Nevada                  JAY INSLEE, Washington
MARK E. SOUDER, Indiana              GRACE F. NAPOLITANO, California
GREG WALDEN, Oregon                  TOM UDALL, New Mexico
DON SHERWOOD, Pennsylvania           MARK UDALL, Colorado
ROBIN HAYES, North Carolina          JOSEPH CROWLEY, New York
MIKE SIMPSON, Idaho                  RUSH D. HOLT, New Jersey
THOMAS G. TANCREDO, Colorado

                     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       ROBERT A. UNDERWOOD, Guam
WILLIAM M. (MAC) THORNBERRY, Texas   NICK J. RAHALL II, West Virginia
CHRIS CANNON, Utah                   ENI F.H. FALEOMAVAEGA, American 
KEVIN BRADY, Texas                       Samoa
BOB SCHAFFER, Colorado               SOLOMON P. ORTIZ, Texas
JIM GIBBONS, Nevada                  CALVIN M. DOOLEY, California
GREG WALDEN, Oregon                  PATRICK J. KENNEDY, Rhode Island
THOMAS G. TANCREDO, Colorado         CHRIS JOHN, Louisiana
                                     JAY INSLEE, Washington
                    Bill Condit, Professional Staff
                     Mike Henry, Professional Staff
                  Deborah Lanzone, Professional Staff
                              ----------                              

                                                                   Page

Hearing held May 4, 2000.........................................     1

Statement of Members:
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming...........................................     1
        Prepared statement of....................................     5
    Hon. George Miller, a Representative in Congress from the 
      State of California........................................     8
        Prepared statement of....................................    10

Statements of witnesses:
    Banta, Henry M., Former Chairman and Current Director of POGO 
      (Project On Government Oversight), and Member, Lobel, 
      Novins & Lamont...........................................102,202
    Berman, Robert A., Department of the Interior................   154
    Brock, Leonard W.............................................    69
    Burnham, David,..............................................   105
    Cavallo, Michael,............................................   105
    Hamel, Charles,..............................................   101
    Hunter, David,...............................................   103
    Kritzer, Bernard,............................................    60
    Martineck, John, and J. Benjamin Johnson, Jr.................    14
    Mintz, Morton................................................   102
    Mitchell, Jack,..............................................   102
    Rasor, Dina,.................................................   104
    Rutter, Keith................................................    82
    Sims, Marjorie,..............................................   104
    Zill, Anne,..................................................   105

Additional material supplied:
    Memo from the Department of Energy...........................   195
    Potential for Oil Recovery...................................   196
    Letter from Lon Packard......................................   254
    Oral deposition of David Hunter..............................   256
    Letter from Daniel Packard...................................   266
    Deposition from Mr. Wagstaff.................................   261
    Letter from Dodge Wells......................................   263
    Transcript from United States District Court, Eastern 
      District of Lufkin, Texas..................................   259
    Letter from Daniel Packard...................................   269

Hearing held May 18, 2000........................................   127

Statements of Members:
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming...........................................   127
        Prepared statement of....................................   132
    Miller, Hon. George, a Representative in Congress from the 
      State of California........................................   135

Witnesses statements:
    Berman, Robert A., Department of the Interior................   154
    Dodd, Olen Kenneth, Assistant United States Attorney, Eastern 
      District of Texas..........................................   138
    Schiffer, Stuart E, Deputy Assistant Attorney, Civil Division   141
        Prepared statement of....................................   150
    Stockton, Danielle Brian, Executive Director of POGO.........   225
    Speir, Robert A., Retired, Department of Energy..............   169

    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

                              ----------                              

                         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.
    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 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.
    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.
    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.
    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.
    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.
    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.
    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.
    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.
    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.
    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.
    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.
    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.
    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.
    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.
    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.
    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.
    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.

    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.
    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.
    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.
    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?

   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.
    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.
    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.
    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.
    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----
    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----
    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----
    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.
    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----
    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?
    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.''
    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.
    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----
    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.
    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----
    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----
    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.''
    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.
    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.
    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.
    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.
    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.
    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.
    [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?
    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?
    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?
    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.
    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.
    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----
    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?
    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 were being 
considered, but he never, at least to my recollection, 
specifically discussed the essence of proposed new regulations.
    Mr. Schaffer. Did he characterize his involvement as 
perhaps framing the overall policy of the rule?
    Mr. Johnson. I do not recall those particular words, but he 
did certainly say that he was very much an integral part of the 
new regulations.
    Mr. Schaffer. Through all of these phone calls, beginning 
soon after the Interior lawyers and MMS experts began a secret 
review of your sealed lawsuit and concluding just seven days 
before POGO filed a complaint which the Justice Department 
found to be nearly identical to yours, did you form an 
impression of whether Bob Berman had a sophisticated 
understanding of the actual details of oil trading, other than 
the education you had given him?
    Mr. Johnson. Well, I formed the understanding that he did 
not know that on his own.
    Mr. Schaffer. I understand that POGO received a share of 
the settlement, a similar question to that that the gentleman 
from Texas just raised, a similar settlement. Did you provide 
POGO with such a large share because they could provide access 
to Berman and Speir?
    Mr. Johnson. At the time we entered into the agreement, we 
absolutely had no idea there was a connection there, so the 
answer is no.
    Mr. Schaffer. But is it not true that Ms. Brian offered you 
access to government experts in the September 23, 1996, phone 
call?
    Mr. Johnson. No. That was not the essence of the phone 
call. The phone call was that there were a couple of government 
employees who were looking at filing their own competing qui 
tam lawsuit.
    Mr. Schaffer. One last question. You mentioned that Ms. 
Brian referred you to a lawyer?
    Mr. Johnson. That is correct.
    Mr. Schaffer. Who was the lawyer or law firm?
    Mr. Johnson. Lon Packard.
    Mr. Schaffer. Thank you, Madam Chairman. I have no further 
questions.
    Mrs. Cubin. I am going to reserve the balance of the 
Majority's time and now recognize the Minority side for 30 
minutes of questions.
    Mr. Miller. Thank you very much. How did you and POGO get 
joined here as relators?
    Mr. Johnson. Well, we signed an agreement to work together, 
to join our two lawsuits. I'm not sure I understand the 
complete question.
    Mr. Miller. So that is how it was done? You were brought 
together how? I mean, you knew of one another, or you knew you 
both had lawsuits? Were there other lawsuits, or just these 
two?
    Mr. Johnson. There was one other lawsuit, as well, and----
    Mr. Miller. Were they joined as relators?
    Mr. Johnson. Yes, they were.
    Mr. Martineck. They were also part of that agreement.
    Mr. Miller. Pardon?
    Mr. Martineck. They were also part of that agreement.
    Mr. Miller. And so that brought you together as relators, 
and then your action was successful and you have started to be 
paid a portion that you are entitled to under the law of the 
underpayments of the findings, correct?
    Mr. Johnson. Yes.
    Mr. Miller. And then since that, what, you have sued the 
other relators?
    Mr. Johnson. No, we have not sued the other relators.
    Mr. Miller. What legal steps have you taken with regard to 
your agreement?
    Mr. Johnson. We filed a motion--after learning about the 
Berman and Speir payments, we filed a motion in our--in the 
same court where our false claims act case is pending to have 
the relator, Multi-Relator Counsel Agreement set aside or taken 
apart with regard to POGO.
    Mr. Miller. And what did you allege in that motion?
    Mr. Johnson. The allegations there were that we were 
fraudulently induced to enter into the agreement.
    Mr. Miller. And then what happened on that? What happened 
to the motion?
    Mr. Johnson. The judge had denied the motion.
    Mr. Miller. Have you filed other motions since then?
    Mr. Johnson. No, we have not.
    Mr. Miller. So the court looked at this, your allegation 
that, what, that there was misrepresentation or there was fraud 
or something in your agreement and determined that that is not 
the case?
    Mr. Johnson. That is correct, or he denied our motion to 
have it set aside.
    Mr. Miller. Right. So apparently, he disagreed with your 
allegation that there was fraud and misrepresentation and, 
therefore, it should be set aside. So then you are now in the 
position of having to live with your agreement, and as opposed 
to getting, what, 100 percent, you got 30 percent? What do you 
get, a third? There are three entities here?
    Mr. Johnson. There are three groups.
    Mr. Miller. And it is divided how?
    Mr. Johnson. It is divided 20 percent to one and then 40 
percent to the other two groups.
    Mr. Miller. And your share is?
    Mr. Johnson. Mr. Martineck's and my share is of the 40 
percent group.
    Mr. Miller. So the two of you are 40 percent. POGO is what?
    Mr. Johnson. Forty percent.
    Mr. Miller. And the third party is whom?
    Mr. Johnson. Mr. Gene Wright, and that is 20 percent.
    Mr. Miller. And where did his suit come from?
    Mr. Johnson. He had also filed a competing false claims act 
case some months after we had initially filed.
    Mr. Miller. So it was not a question of being first in 
time?
    Mr. Johnson. I am sorry?
    Mr. Martineck. We were the first. Mr. Wright was the 
second.
    Mr. Miller. But the law does not provide the first in time, 
it is winner-take-all. They look at all the lawsuits filed and 
then, in this case, apparently, join those lawsuits?
    Mr. Martineck. Actually, the law does say the first to 
file.
    Mr. Johnson. There are a variety of legal questions on that 
and we are not legal experts to tell you how the law works, but 
generally, the first to file gets the 100 percent. However, 
there are questions as to how that works and we did not have 
the answer to that.
    Mr. Miller. I do not understand, then, why did you enter 
into this agreement? Who brought the agreement to you?
    Mr. Johnson. Actually, I do not recall how we ended up all 
being introduced to each other.
    Mr. Martineck. I think the seal was released as to just let 
the other parties know that there were other suits filed out 
there so that we could find out who the other parties were, but 
it was only--the seal was only lifted as to that.
    Mr. Miller. Did you talk to the other parties? Did you talk 
to Mr. Wright and to POGO?
    Mr. Martineck. We had all gotten together to----
    Mr. Miller. You all got together and you shared 
information?
    Mr. Martineck. I do not know about sharing information.
    Mr. Miller. Did you look at their, Mr. Wright's allegations 
and POGO's allegations and your allegations to see if you are 
all on the same track here or could you strengthen your case or 
was your case strengthened or was their case strengthened by 
your work back and forth? I mean, because you are about to sign 
an agreement to give away 60 percent of the proceeds here. I 
assume you wanted to know whether or not their information is 
worth 60 percent of the pot.
    Mr. Martineck. Correct. In our minds, it was not so much 
the information that they provided as that there may be some 
question in the judge's mind that there may have been somebody 
like a Lenny Brock out there back in the 1970s that had an 
issue.
    Mr. Miller. This is not a new issue.
    Mrs. Cubin. Mr. Miller, I am sorry to interrupt you. I was 
just notified that there is a brown document case right out the 
back side door there with the initials ``CBM'' on it and if 
someone does not claim it in the next few minutes, the Capitol 
Hill Police will have to take it and we will have to clear the 
room, so if it is yours, please go get it. Go ahead. Is it Mrs. 
Maloney's? Will you send someone after it?
    [Laughter.]
    Mr. Miller. Would you mind going and getting it?
    [Laughter.]
    Mrs. Cubin. I am sorry for the interruption. Go ahead, Mr. 
Miller.
    Mr. Miller. No, that is okay.
    Mrs. Cubin. I thought it meant coal bed methane.
    [Laughter.]
    Mr. Miller. Such tunnel thought. This is not a new subject, 
underpayments. In my State of California, the State sued many 
years ago. Mr. Brock has been out there. The State Lands 
Commission, whether on the issues of seepage or actual royalty 
underpayment, the subject has been kicking around for a long 
time. We kicked it around when we had the Committee and 
obviously it has been done since then.
    It is not yours? Oh. I guess we still need someone to come 
forward for the briefcase. Do they have it?
    Mrs. Cubin. Oh, okay.
    Mr. Miller. Okay. Is that correct?
    Mr. Johnson. Certainly, underpayments, oil royalty 
underpayments have been around for years and years. What we 
bring, the information that we brought was very specific with 
regard to a specific type and methodology used for underpaying 
oil royalties.
    Mr. Miller. Right. No, no, and I am--so, but the point of 
the process here, at some point, you got together with Mr. 
Wright and with POGO and yourselves and you compared this 
information. You discussed where you thought you were legally. 
You are obviously trying to protect your case, and more power 
to you. I mean, I am a strong supporter of this law. I believe 
it is very important. And then you made a determination that 
you would join in your efforts and an apportionment was agreed 
upon? At that time, was an apportionment agreed upon, or was 
that later?
    Mr. Johnson. It was agreed up.
    Mr. Miller. It was agreed upon at that time, and you went 
forward. Now you do not like that agreement.
    Mr. Martineck. Well, actually, we had realized that we had 
met the first hurdle, to be the first to file, and there was a 
question on whether or not a court might see that differently 
as far as, like you said, the issue being out there----
    Mr. Miller. No, I understand that. I mean, that is what I 
am saying. You sat down and somebody said, look, this could be 
a problem for us. This could be a problem for you. There is 
this fellow out there from California and so you weighed all 
that and you made the agreement. It is not that necessarily you 
were right or they were right, but that is an agreement. That 
is what you do. You weigh the trade-offs and the liabilities 
and the assets and you entered into it, and now you do not like 
it, so you went to court to get it dissolved and you alleged 
that there was fraud or there was misrepresentation and the 
court said no, your agreement is your agreement.
    Mr. Martineck. Well, yes, it is not that we did not like 
the agreement. The fact of the matter is is they did not 
disclose a lot of information to us prior to entering into that 
agreement.
    Mr. Johnson. And we never protested the agreement. We had 
not filed a motion with the court to disband the agreement 
until we found out about the involvement of Berman and Speir in 
this with POGO.
    Mr. Martineck. And it was not until some time after that 
agreement was signed that we did find that out.
    Mr. Miller. Are you sure that is right in the chronology?
    Mr. Martineck. Yes.
    Mr. Johnson. Yes.
    Mr. Miller. Okay. So, therefore, then you made a series of 
allegations to the court about the agreement and about their 
activities, and the court denied your motion, correct?
    Mr. Johnson. That is correct.
    Mr. Miller. At this time, I will yield time to Mr. Inslee.
    Mrs. Cubin. Mr. Inslee?
    Mr. Miller. How much time do we have remaining?
    Mrs. Cubin. You have 21 minutes and 20 seconds.
    Mr. Miller. Thank you.
    Mr. Inslee. Well, I must say, I am a relatively new member 
of the U.S. Congress and I think I share a view of Americans 
who would be listening to this hearing of absolutely being 
stunningly shocked, shocked at what you gentlemen are telling 
us and what this hearing has disclosed is that some powerful 
corporations ripped off with a capital ``R'' and a capital 
``O'' the American taxpayers for over $300 million, who reached 
their corporate hands into my constituents' back pockets and 
took $300 million out of their hard-earned tax money and did 
not pay it to the taxpayer when it was legally owed, and the 
whistleblower statute, which has been an incredibly effective 
statute, which allowed these taxpayers to be protected, to get 
their $300 million back, that this Committee, instead of 
investigating the robbers, is trying to investigate the cops--
the cops, the ones who found the $300 million theft, the 
whistleblower statute that allowed them to do so, the taxpayers 
who have the only protection in statute which they enjoy, which 
is the whistleblower protection.
    And here we are, intelligent, well-minded people with 50 
days left in this session, instead of trying to figure how to 
make sure the mining industry and the oil and gas industry pays 
the taxpayers what they have coming, are messing around, 
mucking up an ongoing investigation by the Justice Department.
    Now, as a new member of Congress, I find this relatively 
shocking and I think Americans will, too, when they find out 
that groups that have massive campaign contributions to this 
institution took $300 million out of taxpayers' pockets, and 
what does the Majority party turn around and try to reduce the 
ability of taxpayers to get their money back. That is wrong.
    Now, I made some procedural objections to what is going on 
here, and there may be legitimate issues that the Justice 
Department is looking at in this investigation, but I am 
concerned that we are looking in the wrong direction, that the 
American people ought to have us looking and using our energies 
to figure out how to be fair to the American taxpayers, fix our 
royalty payment system and our whistleblower statute so the 
American taxpayers can be treated fairly and so the agencies 
are treated fairly. We are not doing that today. We do have an 
organ of body that is doing that, the Justice Department, which 
is looking into this issue, and yet we have prejudiced their 
ability by allowing public disclosure of this. I am concerned 
about this, speaking as a former prosecuting attorney.
    I just want to make sure I understand this. To make sure 
that my shock is not misplaced, I am going to ask you fellows 
this. My understanding is is that the Federal court ruled, and 
I am reading a quote, ``Whether POGO shared the proceeds of the 
Mobil settlement with Berman Speir has no bearing on whether 
the defendants paid royalties in compliance with the Federal 
regulations.'' In other words, the Federal court has ruled that 
what happened has no bearing on whether the taxpayers were 
offended or not. Is that your understanding of what happened 
here?
    Mr. Johnson. I actually do not recall the court--those 
words from the court, but I do understand that that was the 
ruling.
    Mr. Inslee. Well, my understanding is, if that is correct, 
that our hearing today is not designed to take care of the 
taxpayers. It may be designed for other purposes. And I will 
tell you that I think this hearing today is a perfect example 
why we have got to pass meaningful campaign finance reform. The 
issue here is whether we are going to be fair to the taxpayers 
and not allow certain industries to abuse the American 
taxpayer. That ought to be the issue. We ought to be talking 
about campaign finance reform today so that we protect the 
whistleblower statute rather than weaken it, and this means if 
the Justice Department can find any nefarious dealings, they 
are going to do so and we should not prejudice their abilities 
in a moment.
    But I think what this hearing has disclosed is that this 
Committee is less interested in taking care of the taxpayers 
and more interested in reducing the ability of whistleblowers 
to point out to the American public that they have been abused 
by folks in certain industries. The American public needs to 
know this. And instead of trying to shine the light of truth, 
which the whistleblower statute does, this effort is trying to 
put a cloak of darkness to allow the continued abuse of the 
American taxpayer, and that is what has gone on in this hearing 
to date.
    Let me just ask you, I understand you fellows are 
whistleblowers yourselves. I assume you would characterize 
yourselves as that, is that a fair characterization?
    Mr. Martineck. That is correct.
    Mr. Johnson. Yes.
    Mr. Inslee. Is it not your belief, is it not your firm 
belief, based on knowledge that you personally have, that a 
certain industry ripped off the American taxpayers for over 
$300 million in this case and that that was brought to light 
only because of the protection and incentives of this 
Whistleblower Act, is that not correct?
    Mr. Martineck. We had actually brought this issue to the 
government's attention prior to getting involved in this case 
and that took place probably a year and a half prior to us 
filing the case. So, I mean, we tried to inform the government 
of what was going on prior to getting involved in this 
whistleblowers' case. When no action was taken, that is when we 
filed our case.
    Mr. Inslee. And so what we need to tell the American people 
is, the only reason we eventually got this $300 million back 
for the taxpayers is we had a whistleblower statute that worked 
in inspiring people to bring a lawsuit to uncover this 
inappropriate--failure to pay taxpayers, is that not right? I 
mean, it worked, right?
    Mr. Martineck. The first case that was brought would have 
accomplished that.
    Mr. Inslee. So the whistleblower statute worked, is that 
not right?
    Mr. Johnson. In this case, we certainly have recovered 
settlements approximating $300 million, yes.
    Mr. Inslee. And do you think we in Congress should be at 
least somewhat concerned about efforts to intimidate 
whistleblowers by Congress? Do you think we should be a little 
concerned about that? Let me tell you why I suggest that.
    When you are a whistleblower, you are taking a big, big 
risk. When you are an employee of any agency, you are hanging 
out, you are sticking your neck out to take a big risk to 
expose the nefarious dealings where there has been a $300 
million, I will not use the word ``theft,'' but inappropriate 
failure to pay the U.S. taxpayers. There is a big risk. There 
is fear. There is concern. There is trepidation. Would you 
agree with me that the U.S. Congress ought to be a little bit 
Congress before it adds to the intimidation of whistleblowers?
    Mr. Johnson. Well, I guess it is not our place to make 
policy or to dictate policy on that. Certainly, there are a lot 
of risks associated with being a whistleblower. There is a huge 
burden associated with that. It needs to be appropriately and 
properly done.
    Mr. Martineck. And that is why the people that take the 
risks should be the ones that share the reward that comes along 
with that risk taken.
    Mr. Inslee. I think that is fair and it has been 
successful, as this case has indicated, that it has exposed 
some inappropriate conduct here. But do you think that when 
Congress tries to put the heat on whistleblowers, that that 
could reduce the number of people who may come forward to blow 
further whistles on further oil and gas industry failure to pay 
the American taxpayers? Do you think it might have that impact 
of intimidating future whistleblowers who are out there today 
who may know something about a failure of an oil and gas 
company to pay the American taxpayers, and maybe when they hear 
about these efforts that they may be a little more intimidated 
and they may be a little more reluctant to blow these whistles? 
Do you think that might be an impact?
    Mr. Martineck. Certainly, any time you raise the bar, that 
might be an impact on people taking the chance on getting 
involved with something like this.
    Mr. Inslee. And would you agree with me that the American 
taxpayers really need people to come forward to blow these 
whistles?
    Mr. Johnson. Yes.
    Mr. Inslee. I would defer. I just want to make one 
statement, though, and I have expressed how I feel about this 
issue. Some have indicated I feel pretty strongly about it. But 
I want to reiterate, if there are issues here about government 
employees and their actions after they have, in effect, become 
whistleblowers, it is important to look at those issues, and 
there may be legitimate issues here. But I really believe, 
again speaking as a prosecutor, the Justice Department is 
better capable of dealing with this, frankly, than we are, and 
that in these investigations, we ought to be very cautious 
about fouling up those ongoing investigations and I am 
concerned that that has happened here.
    Mrs. Cubin. Ms. Maloney?
    Ms. Maloney. Thank you very much.
    Mr. Miller. How much time is remaining?
    Mrs. Cubin. Mr. Miller, approximately 11 minutes.
    Ms. Maloney. Thank you for being part of an effort----
    Mrs. Cubin. Excuse me, Ms. Maloney. The Committee did give 
unanimous consent to have you seated at the dais, but now I ask 
the Committee unanimous consent to allow Ms. Maloney to 
question the witnesses. Without objection.
    Ms. Maloney. Thank you very much, Madam Chairwoman.
    As the Ranking Member on the Government Reform and 
Oversight Committee on Information and Technology, we held two 
hearings on the undervaluation of oil and Mr. Berman testified 
at one of those hearings. I issued a report on California 
alone, it was $300 million undervalued with the State. So when 
you combine the State with the Federal, the rip-off was in the 
billions, and the money that was coming to the government, 
whether it was State or Federal or tribe, was in the billions 
of dollars for schools and services in our communities. So I 
thank you for coming forward and being part of an effort that 
has helped us work together with Mr. Miller and others to 
change the valuation law.
    The MMS says that now they project that the government was 
losing $66 million a year from this valuation and that the 
change will bring an additional $66 million. As experts in this 
field, do you think that number is correct or do you think it 
is higher or lower?
    Mr. Johnson. We have not actually looked at those specific 
numbers. I have heard those numbers, and I am sorry, but I just 
cannot comment one way or the other. I just have not looked at 
the data behind that.
    Ms. Maloney. I think it is important that you look at that 
because I think your knowledge could be helpful in analyzing 
it. Personally, I think the people that have worked to put 
forward this information and bring it to the public should be 
given awards by government for helping save taxpayers' dollars 
and not being hauled in front of committees for their actions.
    Did you cooperate in any way with POGO in the mini-report 
that they issued on oil valuation and the loss of dollars to 
the American public, to the Federal Government, on oil 
extracted from Federal Government-owned land? Did you cooperate 
with any of those, I believe it was four or five reports that 
detailed the underpayment, the rip-off of the American public?
    Mr. Johnson. Well, as I testified earlier, I did speak with 
Danielle Brian about some of that information in the later 
reports. I did not provide her with information, written 
information. Most of that had been sealed or confidential in 
other lawsuits. I believe she was able to obtain some of that 
and did, in fact, use that. But we were--I was open in speaking 
with her and explaining to her how the underpayments had 
occurred on private lands.
    Ms. Maloney. Did you ever speak with Mr. Speir about the 
lawsuit?
    Mr. Johnson. No, I never did.
    Mr. Martineck. No.
    Ms. Maloney. And is it correct that Mr. Berman never asked 
you about the lawsuit?
    Mr. Johnson. That is correct.
    Ms. Maloney. That is correct, he never asked you. And if 
Ms. Brian had contacted you about the lawsuit, why did you sign 
the agreement since that phone call would have been sufficient 
to have her disqualified as a participant since the phone call 
was evidence that she did not have direct knowledge of the 
lawsuit?
    Mr. Johnson. I am not sure that the phone call was evidence 
that she did not have direct knowledge of the issues. Clearly, 
she did know about our lawsuit, but I am not sure and we were 
not sure at the time as to whether that would disqualify her or 
not.
    Mrs. Cubin. Could I get clarification? That is while the 
lawsuit was still under seal, is that right, or not?
    Mr. Johnson. Yes, it was.
    Mr. Martineck. That is correct.
    Ms. Maloney. Did you mention the call to the Department of 
Justice?
    Mr. Johnson. No, we did not.
    Ms. Maloney. But you did mention the call from Mr. Berman?
    Mr. Johnson. Yes. Mr. Berman called repeatedly and asked 
very detailed questions and he was representing himself to be 
the government watchdog, or the MMS watchdog within the 
government on this issue.
    Ms. Maloney. When did you first mention this alleged phone 
call from Ms. Brian?
    Mr. Martineck. To who?
    Mr. Johnson. To who?
    Ms. Maloney. To anyone.
    Mr. Johnson. Immediately after the phone call, I called Mr. 
Martineck and the two of us then immediately called Mr. Richard 
Coffman, our attorney at that time, and explained it to him. 
The issue there was that there were potentially some competing 
relators or people planning to file a competing lawsuit, not 
the fact that she knew about it.
    Ms. Maloney. How long do you think this underpayment and 
rip-off of the American taxpayer and the Federal Government was 
going on, how many years?
    Mr. Johnson. Our lawsuit alleges that at least from 1986, 
and primarily from 1988 forward, included in our lawsuit.
    Ms. Maloney. And I feel that it is important that we 
understand the lawsuit, and I am reading from the document on 
the consolidated false claims complaint that was filed in 
September of 1998. You had seven scenarios that the oil 
companies were using to shortchange the government, the 
taxpayers, the people of royalties. Could you go over the most 
frequently used form that they underpaid?
    Mr. Martineck. Probably the----
    [Witnesses conferring with counsel.]
    Mrs. Cubin. They can talk to their attorneys but the 
attorney cannot talk to us.
    Mr. Miller. Only on constitutional questions.
    Ms. Maloney. I think this is an important question.
    Mr. Johnson. Well, without compromising the ongoing 
litigation, because we still are right in the middle of the 
lawsuit with several remaining defendants, we can say that what 
we said in that complaint holds. All of those methods that we 
listed in the complaint are important and were used and we are 
still continuing to pursue that and to fight that in court.
    Ms. Maloney. Well, could you describe one of the methods? 
Take the posted price. Instead of the market price which they 
sold oil to each other, they had a posted price. Can you 
explain that?
    Mr. Johnson. One of the methods listed in the lawsuit 
itself was that the companies used the posted price to sell 
oil--to transfer oil essentially to themselves in an intra-
company transfer and then actually received a higher value for 
that oil but paid their Federal royalties on the lower posted 
oil price. That is one of the methods.
    Ms. Maloney. So in other words, they kept two sets of 
books, one for themselves to rip off the government and one for 
the government when they charged them the higher price--the 
lower price, right?
    Mr. Johnson. I am not sure that I could characterize it as, 
quote, two sets of books, but clearly, they understood what 
they had received and that it was more than the posted price 
transferred.
    Ms. Maloney. So two sets of methods, one that benefited 
them greatly at the expense of the American people.
    I yield to the distinguished ranking member and I thank him 
for his leadership on this issue.
    Mr. Miller. When was that practice first discovered?
    Mr. Johnson. The issue of intra-company transfers? That 
particular issue has--the potential for that has been around 
for----
    Mr. Miller. A long time, right?
    Mr. Johnson. [continuing] many, many years.
    Mr. Miller. And the posting of sour crude versus sweet 
crude, taking the sweet oil and paying sour prices for it, how 
long has that been going on?
    Mr. Martineck. That has also been----
    Mr. Miller. A long time in California, right?
    Mr. Johnson. A long time.
    Mr. Miller. Is that correct?
    Mr. Martineck. That is correct.
    Mr. Miller. So the information, I mean, if you were going 
to put together one of these lawsuits, not making light of your 
technical capabilities or anything, but there is an awful lot 
of information and allegations out in the domain, in the public 
discussion about this practice, certainly since California 
started its aggressive actions and alleging these various 
actions, is that not true?
    Mr. Johnson. There is a lot of information concerning some 
of those practices in the public domain, yes.
    Mr. Miller. And do not let me characterize it, but one of 
the things when you first sat down to testify, and do not let 
me put words in your mouth, but essentially what you are saying 
was there is this huge amount of information and it became 
rather apparent to you the Federal Government was never going 
to do a damn thing about it, and that is why you filed your 
lawsuit, that the taxpayers for all of these schemes that you 
alleged were ongoing, pretty well substantiated by practices 
that you knew from within the industries and other that allege, 
whether it was the State or people involved in California, this 
was out there but what was not happening was the Federal 
Government was not reacting to this to try to straighten out 
these practices and get the royalties and that was the basis 
for your lawsuit, was it not?
    Mr. Martineck. I mean, clearly, we were aware of the issues 
for a period of time and that is the reason why we brought the 
lawsuit.
    Mr. Miller. And others may have made that same decision.
    [Witnesses conferring with counsel.]
    Mrs. Cubin. The rule is that the attorneys cannot coach the 
witnesses, only advise them on their constitutional rights.
    Mr. Miller. Give me your constitutional answer.
    [Laughter.]
    Mr. Martineck. Clearly, there was other cases filed.
    Mr. Johnson. Well, yes.
    Mrs. Cubin. And it seems to me that Mr. Miller is doing 
what he accused me of, of possibly compromising your case, so 
be careful with your answers.
    Mr. Miller. Oh, I will be careful with my questions. I was 
asking him about the general state of public knowledge, but I 
think our time is expired. We are going to go vote and come 
back or what?
    Ms. Maloney. When were you aware of the underpayments?
    Mr. Johnson. From the time we were working with this, 
myself in the early 1990s----
    Ms. Maloney. So you knew in the early--when did you start 
working for ARCO? Was this in 1986 or when?
    Mr. Martineck. In 1981.
    Ms. Maloney. In 1981. Were you aware of the practices in 
1981?
    Mr. Martineck. We were aware of what they were paying at 
that time. We did not understand the implications of it at that 
time because we were only seeing that they were paying on 
posted prices. We did not know how that related into the grand 
scheme of things.
    Mr. Johnson. It was not until the early 1990s----
    Mr. Martineck. Right.
    Mr. Johnson. [continuing] that we actually saw how this fit 
together.
    Mr. Martineck. When we got involved on the marketing side 
of it.
    Ms. Maloney. When you got in the marketing, then you put 
the pieces together and you understood?
    Mr. Martineck. Right.
    Ms. Maloney. How much money do you think they have ripped 
off from the American government over the years?
    Mr. Martineck. I would even hesitate to guess what that 
number is.
    Mr. Johnson. We have no way to actually answer that.
    Mrs. Cubin. The time has expired. The members have a vote. 
We will go vote, give everyone a chance to grab something quick 
to eat, real quick. We will be back and reconvene in 20 
minutes.
    [Recess.]
    Mrs. Cubin. The Committee will please come to order, and I 
apologize that we are late. We ended up having two votes 
instead of one.
    The Subcommittee, the oversight hearing will return to 
regular order. We will be operating under the five-minute rule 
prior to the staff questioning the witnesses.
    I do want to first make a statement regarding Mr. Inslee's 
questioning. I want to refocus the Committee that this is an 
oversight hearing. I think all of us are outraged at the 
practices that cost the Federal taxpayer, people in my own 
State, our State treasury money because oil companies did not 
pay what they actually owed. Everyone is outraged by that. It 
was testified that since 1986, these underpayments had been 
made.
    Now, I have only been chairman of this Committee three-and-
a-half years. Ever since I have been chairman of this 
Committee, I have recognized that there is an underpayment 
problem and the pilot projects for royalty-in-kind, although 
some people disagree that is the way to go, the ones that are 
in place are working very well, and this could not have 
happened had that been in place at the time. So for Mr. Inslee 
to indicate that this Committee and these members do not want 
to get what is owed the government is simply, simply wrong.
    Also, his statement about intimidation of witnesses and 
reducing the government's ability to get the taxpayer 
everything they are owed in Federal royalties is absolutely 
absurd. The only thing that has been reduced, that reduces the 
ability of the taxpayer to collect the properties that they are 
rightly due is the fact that POGO made a payment to two 
government employees who were, in fact, in the business of 
dealing with oil royalties and oil valuation. That weakens the 
Federal taxpayers' case horribly in future settlements in 
future lawsuits. That is the only undermining of authority that 
has happened. It is due to POGO and the two employees that took 
the payments.
    So with that, thank you for your indulgence. With that, we 
will now go under the five-minute rule. Mr. Brady?
    Mr. Brady. Thank you, Madam Chairman.
    Let me address some of the issues raised earlier. I 
appreciate Mr. Inslee raising the issue of campaign 
contributions. I want to commend and congratulate our 
Democratic Minority on their record amount of soft money 
contributions and record amount of hard dollar contributions 
that they have so gainfully acquired this year.
    I just wish the Minority were as interested in Federal, 
special interest purchasing Federal employees, which is the 
case here today, as their new-found interest in campaign 
reform, because, make no mistake, these are the whistleblowers 
in front of us right now. Mr. Johnson and Mr. Martineck are the 
ones who are at risk, who developed their information for this 
suit on their own. They were misled, intentionally misled by 
those inside with information. Their suit, the seal was 
breached. The confidentiality was not upheld and they were 
encouraged by everyone from insiders to a U.S. Attorney to 
enter into agreements that they feel, and rightfully so, does 
not pass the smell test.
    It seems clear to all that we have three, at least three 
fairly common thieves, Robert Berman, Robert Speir, and 
Danielle Brian, who used their inside information gained from 
their position of public trust to line their own pockets. They 
had unprecedented means and motives. The secrecy with which 
they have worked so hard to conceal their actions is damning 
alone. I think the question before us is, did the Justice 
Department, Energy, and Interior Department turn a blind eye to 
special interest purchasing Federal employees or did these 
three intentionally and successfully hide their legal conduct 
from the authorities?
    My one question, because it--two questions, because it goes 
to the heart of the matter, to Mr. Johnson and Mr. Martineck, 
from what you have learned, from what you know now, do you 
believe that the seal and secrecy of your original suit was 
upheld or breached, and I am not going to follow it up with who 
you might think and how it might have happened. I am simply 
asking, do you believe that the seal and the secrecy of your 
original suit was upheld or breached?
    Mr. Johnson. It clearly had been breached at some point.
    Mr. Brady. In, and the final question, it is a simple one, 
from what you know now, do you believe that Mr. Berman, Ms. 
Brian, others who contacted you about the suit, do you believe 
that they honestly represented to you their intentions and 
motives in this case, honestly represented to you all their 
intentions and motives in this case, from what you know now?
    Mr. Johnson. As I testified last November in a hearing, 
clearly, we were not told about the payments to Berman and 
Speir. Mr. Berman never indicated to me anything either way. 
Danielle Brian did not tell us about that and we did not learn 
about it until April of 1999.
    Mr. Martineck. And clearly, there was a good period of time 
that passed between the time the agreement was signed with 
those individuals, meaning the other relator groups and 
ourselves, until the time we found out that Mr. Berman and Mr. 
Speir were involved in this.
    Mr. Brady. Thank you for being candid, in being cautious in 
your answers, because you do have a great deal to lose in this 
case. You are the true whistleblowers. It is our responsibility 
to take that breach of confidentiality, the damning secrecy, 
the misrepresentation, and to find out, again, did our 
authorities turn a blind eye or did these three successfully 
conspire to hide their actions, and that is at the heart of 
this issue, not the oil royalty matter, which I would love to 
debate at any time, and I love that issue. But unfortunately, 
that is not the one before us today.
    Thank you, Madam Chairman.
    Mrs. Cubin. Thank you. Mr. Underwood?
    Mr. Underwood. I do not have any real questions other than 
one and then I will yield to Mr. Miller. In your estimation, 
either one of you, since many of the questions apparently have 
called for some speculation, how was the seal breached? Do you 
have any idea?
    Mr. Johnson. We do not know how the seal was breached.
    Mr. Underwood. Mr. Martineck?
    Mr. Martineck. No. I would echo Mr. Johnson's response. The 
only thing that we did know is that it was breached.
    Mr. Underwood. Okay. George?
    Mr. Miller. I thank the gentleman for yielding. I am 
delighted that Mr. Brady has arrived at his conclusion at the 
outset of the hearing. He could have waited for the rest of the 
evidence.
    Mr. Brady. Mr. Miller, it is what it is----
    Mr. Miller. No, no----
    Mr. Brady. [continuing] and sometimes common sense really 
dictates that.
    Mr. Miller. [continuing] that is interesting, except based 
upon exactly the--this is my time--based upon exactly what you 
said----
    Mr. Brady. And Madam Chairman, I will respect Mr. Miller's 
right to finish his statement.
    Mrs. Cubin. Thank you, Mr. Brady. The time----
    Mr. Miller. The court determined exactly otherwise. It was 
not as you said it was, and that is why these gentlemen are 
here today, because they are still looking for the other 60 
percent of their agreement. But, in fact, the court said that 
that was not the case. The fact of the matter is, I do not 
know, and this hearing may help determine that, but clearly the 
Justice Department investigations and the Inspector General's 
investigations will also help determine that, but the two, as I 
understand the law, and correct me if I am wrong, the Federal 
employees can and do file these very same cases. They are 
entitled under the law to do so.
    In this particular case, it appears that they were not the 
formal petitioners, and whether or not they were paid to 
develop information or not, those are all allegations that have 
yet to be proved and this Committee has yet to hear from those 
individuals, so I find it disconcerting when we rush to 
judgment even before you have heard from the last panel and 
others who were directly involved in that. But that is the 
nature of this Committee, unfortunately, all too often.
    As was testified before we went to the vote, there clearly 
was sufficient evidence in the public domain, in hearings and 
records developed by the State of California, by other people 
who have been involved in this issue, by Committees of 
Congress, by reports issued, that if you wanted to put together 
the specifics for this lawsuit, and, in fact, POGO here had 
been involved with the State of California, with others, in 
those investigations, in those legal proceedings under false 
claims.
    So we really do not know yet what happens if people are 
engaged in wrongdoing. Traditionally, as I understand it, if a 
Federal employee had filed such a case, they would have been 
walled off at that point. That, I think, is a normal process, 
because in this case, they were not formally filing. Their 
departments apparently did not know of that until later. So 
there is an awful lot that yet is to be determined before we 
rush to judgment. But what is not yet to be determined, or what 
has been certainly determined to the extent to which rewards 
have already been received, and that is the allegations of the 
false claims.
    In your claim, you say that, in your first scenario, you 
say that the companies are misrepresenting that the first sale 
of oil under a buy or sell agreement between themselves and/or 
other parties is the actual value received for the oil. What 
are you telling us there?
    Mr. Johnson. Okay. That is an issue that had not been 
brought forward before, was not used, and was not understood 
well by the government. This is an issue that we were the first 
people to bring out and to really explain to the government. 
This is the understanding that when a company enters into what 
is called a buy/sell agreement, that they essentially exchange 
the oil from one place to another, but it is structured in the 
manner of a sale at one location for some price and a purchase 
at another location for some related price, and the fact of the 
matter is, and what we have said, is that price is really 
irrelevant to the actual value of the oil.
    Mr. Miller. That is a paper transaction? It is not a real--
you say that is not a real sale?
    Mr. Johnson. There are checks written, there are invoices 
created, wire transfers made. There are a lot of audit trails 
created from that, but they are not real.
    Mr. Miller. It sounds like a Colombian cartel.
    Mrs. Cubin. The gentleman's time is expired.
    I would like to make a point of clarification. While, in 
fact, it is true that Federal employees can file in suits like 
this, these two employees did not file. And when Federal----
    Mr. Miller. That is what I said.
    Mrs. Cubin. Yes. I am not arguing with you. I am making a 
point. When Federal employees do file these suits, the vast, 
vast majority of the time, they are dismissed because the 
judicial branch of government and the Department of Justice do 
not want money to influence a government employee's decision 
about how they do their job. And so that is why they are 
practically always dismissed, and when they are not, as Mr. 
Miller said, the government employees are walled off from any 
further action on the issue at hand, in this case, oil 
valuation, and this did not happen. As a matter of fact, one of 
the people who received a check for $383,600 and more to come 
described himself as the key person in the regulatory revision 
process in this. So those are the facts. I just wanted to make 
sure they were on the record clearly.
    Mr. Schaffer?
    Mr. Schaffer. Thank you, Madam Chairman.
    Mr. Johnson, just in answering Mr. Miller's question, I do 
not remember exactly how he characterized the particular 
methods that were used to obscure the value of the subsequent 
royalties in question, but your answer was that the government 
had not previously been aware of this scheme and this strategy 
or something to that effect. Did I characterize that so far 
correctly?
    Mr. Johnson. That is correct. The government did not 
understand it and was not aware of it.
    Mr. Schaffer. The government, does that include Mr. Berman 
or Mr. Speir?
    Mr. Johnson. Mr.--I do not know about Mr. Speir because I 
have never spoken to him. Mr. Berman did not understand how it 
worked. Clearly, the government and Mr. Berman were aware that 
those, quote, buy/sell agreements existed, but they were not 
aware of how they were used and the resulting impact.
    Mr. Martineck. And the other thing I would like to point 
out, too, is Mr. Miller was referring to all these things being 
out in the public, and a lot of the issues that were brought in 
our case were unique to our case and they were not out in the 
public's eye as he would suggest in his statement.
    Mr. Schaffer. I have not had a chance to go through the 
details of the differences in the three false claims acts, but 
were these unique discoveries included in either of the other 
two claims?
    Mr. Johnson. No.
    Mr. Schaffer. No? Okay. In the previous question, I asked 
you about the attorney you were advised to contact by Ms. Brian 
and you said the name of that attorney mentioned or suggested 
to you was Lon Packard. I neglected to ask, did you contact Lon 
Packard?
    Mr. Johnson. No, neither I nor my attorney contacted him.
    Mr. Schaffer. Thank you. Given your previous answers about 
the level of understanding by Mr. Brock of many of these 
issues, did you try to take advantage--and the testimony that 
he provided was more evidence that his level of understanding 
was perhaps not what you would suspect in being part of false 
claims suit--did you try to take advantage of his disappointing 
testimony to renegotiate the contract that you had?
    Mr. Johnson. Well, we certainly had discussed, after we 
learned about his actual background, we did have discussions 
with POGO and their attorneys regarding the renegotiation of 
the contract. However, in the end, we decided not to make any 
change and actually sent a letter saying essentially a deal is 
a deal. We are going to abide by the terms of this agreement. 
We signed it and we will honor it, and that was prior to the 
time we learned about Berman and Speir.
    Mr. Schaffer. I really want to explore that particular 
aspect, because, obviously, at one point, you thought POGO and 
their witnesses or those collaborating in their particular 
interest, their false claims act, were credible additions to 
perhaps enhance the success of your claim. Later, you came to a 
different conclusion. What was it that persuaded you that POGO 
had something to add to your efforts?
    Mr. Martineck. It was not so much that they had something 
to add, because we knew our knowledge of the facts were 
correct. We had seen the dealings of these companies in the 
past and we had all the certainty that we needed to know that 
we would be successful in proving our case. The fact of the 
matter is, we were not sure how a judge might see us as 
relators down the road and that was why we signed that 
agreement.
    Mr. Schaffer. Were there any persuasive efforts by the U.S. 
Attorney to enter into this agreement with these other two 
false claims claimants?
    Mr. Johnson. Well, certainly the U.S. Attorney's office 
encouraged all of the relators to work together. It is in the 
best interest of the country, the nation, for the relators not 
to be arguing and for there to be one suit versus three. But 
other than that, I mean, that was the motivation there.
    Mr. Schaffer. One last thing. Two others have asked 
already, but I just want to ask one more time, if you were a 
member of Congress, where would you look to find out where this 
breach in secrecy took place, as to the fact that the claim 
was--if you were me, where would you look?
    Mrs. Cubin. The gentleman's time has expired. Would you 
like to answer the question?
    Mr. Johnson. My answer is, I really have no idea where I 
would look for that. It could have been a number of places.
    Mr. Martineck. My response would be somewhere internal, 
because we filed it to the government and we expected that to 
be kept secret, like we were expected to keep it secret.
    Mr. Schaffer. Sure. Thank you, Madam Chair.
    Mrs. Cubin. The gentleman's time is expired. Mr. Miller?
    Mr. Miller. Thank you, Madam Chairman.
    Mr. Johnson, another way that in your suit you say that the 
oil companies would cheat the taxpayers is that they would 
falsely classify oil as lower priced sour--that is oil with a 
higher sulfur content, crude oil--or as oil subject to quality 
penalties when such oil was, in fact, higher valued sweet oil. 
Can you explain that, what the oil companies were doing there?
    Mr. Johnson. That involves a situation where the oil 
companies take sweet oil and perhaps classify it as sour and 
pay a lower price than what it is really worth, or where it 
may, in fact, be blended and mischaracterized from that 
standpoint.
    Mr. Miller. So these would be--sweet oil and sour oil are 
not necessarily found in the same place, is that correct? In 
California, you can find sour oil, I think, in Bakersfield and 
sweet oil you might find offshore or something, is that 
correct?
    Mr. Johnson. You can find sweet and sour oil in the same 
fields, the same locations, not within the same well.
    Mr. Miller. Not in the same well. So this would be a 
conscious decision to label oil as sour or label oil that was 
subject to penalties when, in fact, it was not. You would have 
to make that conscious decision?
    Mr. Johnson. Clearly, in our lawsuit, we said this was done 
consciously.
    Mr. Miller. Another one that you allege was that they used 
sales to affiliated companies to mask the true value of the 
oil. What are they doing there? What are the oil companies 
doing there to be deceptive?
    Mr. Johnson. As I believe I mentioned this morning in 
testimony, they have what they call a transfer price, which is 
usually the posted price, to represent the value of the oil at 
which royalties are paid. That is not necessarily what they 
actually receive for the oil and we have shown we knew that 
they had received higher values, in fact, for the oil.
    Mr. Miller. Again, that would have to be a conscious 
decision. You would have to go through these transactions, 
paper transactions or otherwise, to make it appear as though 
the sale to the subsidiary had accomplished that fact?
    Mr. Johnson. Certainly. As we alleged in our lawsuit, they 
were aware of the situation.
    Mr. Miller. Another one was the suggestion that the oil 
companies would pay royalties on the basis of the API gravity 
penalties when, in fact, the oil had been commingled to yield a 
mixture of oil that would not be subject to that. What is going 
on there? That is a variation on the sour/sweet scheme.
    Mr. Johnson. Yes. That refers to the situation where oil of 
a, say, a lower gravity may be blended with oil of a higher 
gravity, yet still may be sweet. Both streams may be sweet. The 
final commingled stream is sold for a higher value than either 
of the two entry streams are paid on royalties.
    Mr. Miller. So there, the oil companies are paying a 
royalty to the Federal Government. They are paying a royalty 
based upon a sour price or a penalty price. They then commingle 
that oil and when they then go to sell that oil in the real 
market, that oil is not subject to penalties because it has 
been commingled, either due to a sourness and sweetness or 
because of the penalty nature of the oil. They then sell that 
at a higher price and the royalty does not reflect that higher 
price.
    Again, here, an oil company would have to make a conscious 
decision to commingle the oil, blend it to such a state so that 
the purchaser would not be subject to penalties, and then 
report two different prices to the government in the State of 
California or to the Federal Government.
    Mr. Martineck. Just one correction on what you said there, 
was that it does not necessarily have to be a sour barrel. It 
could be a lesser gravity----
    Mr. Miller. There are two classifications. You could do 
this with sweet and sour oil or you could do this with penalty 
oil, which is not subject to questions of sweet and sourness.
    Mr. Martineck. Correct.
    Mr. Miller. But the point is here, you have to make a 
series of conscious decisions to defraud the public. You have 
to make a decision to take penalty oil and commingle it with 
non-penalty oil but pay the government a royalty based upon the 
penalty oil, and then when you sell the commingled oil, which 
is now of higher quality, you get a higher price, do not tell 
the government what the real sale price or the real value of 
that oil was. That is the process you go through.
    Mr. Martineck. That is what we allege, sir.
    Mr. Miller. Again, that would have to be a conscious 
decision?
    Mr. Martineck. Yes.
    Mr. Miller. That is why it is called fraud. You make an 
intentional decision to perpetrate a fraud.
    Mr. Martineck. Yes. That is what we alleged in our lawsuit.
    Mr. Miller. This was very prevalent, I know, in my State 
and in Wyoming, where you have various grades of oil in 
relation to one another, is that correct?
    Mr. Martineck. That is correct.
    Mr. Miller. Thank you.
    Mrs. Cubin. The gentleman's time is expired. I would like 
to point out that while Mr. Miller's questioning did not fall 
within the jurisdiction or within the subject of this oversight 
hearing, I was glad to allow that information to go onto the 
record because I find that practice just as distasteful, 
despicable, if you will, as Mr. Miller does. However, that is 
not the subject of this hearing, although having it on the 
record certainly----
    Mr. Miller. Will the gentlewoman, because I would like to--
--
    Mrs. Cubin. Yes, sir.
    Mr. Miller. God knows, I would not intentionally violate 
the rules of this Committee.
    Mrs. Cubin. Oh, I know.
    [Laughter.]
    Mrs. Cubin. Nor I.
    Mr. Miller. Just teasing.
    Mrs. Cubin. Nor I.
    Mr. Miller. Nor you, absolutely. We have difference of 
opinions.
    But my point here is that these were practices that were 
fairly common, tragically so for the taxpayer, but these were 
fairly common in my State. These were tragically common 
business practices that were ongoing and they could not have 
been conducted without a lot of people being involved in order 
to do this.
    Mrs. Cubin. Mr. Miller?
    Mr. Miller. You know, you are not dealing with a suitcase 
full of cocaine. You are dealing with a train of tanker cars or 
trucks or pipelines, so you are moving a lot of product here to 
get $66 million on royalties a year just from the Federal 
Government, and that is pertinent to this because the question, 
one of the underlying questions of the investigation is, how 
was this information developed, was the seal breached, was it 
taken from a breached seal, was it developed by government 
employees and then back-channeled to somebody else, or did POGO 
or, what was the other person, Mr. Wright, did they develop 
this on their own independently, and as we see, was it 
developed from public documents? I mean, I think----
    Mrs. Cubin. Mr. Miller, I allowed----
    Mr. Miller. So, you see, I did not intentionally break the 
rules----
    Mrs. Cubin. Obviously, and I was certainly glad to have 
that.
    Mr. Miller. Good. Thank you. I feel better.
    Mrs. Cubin. Now, would it be rude----
    Mr. Miller. I feel like I got a Good Housekeeping seal of 
approval.
    Mrs. Cubin. Would it be rude, Mr. Miller, if I were to ask 
you why, when you were chairman of this Committee, if you knew 
this was going on, why did you not do anything about it?
    Mr. Miller. We went after them, and----
    Mrs. Cubin. Why was no attempt made----
    Mr. Miller. The same reason the whistleblowers----
    Mrs. Cubin. [continuing] to change this until I became 
chairman of this Subcommittee?
    Mr. Miller. Because for the same reason our whistleblowers 
found out----
    Mrs. Cubin. Mr. Tancredo?
    Mr. Miller. [continuing] that the Reagan-Bush 
Administration would not deal with this----
    Mr. Tancredo. Thank you, Madam Chairman. I appreciate the 
time that you have allowed me to speak.
    Mrs. Cubin. The question was, would it be rude? I guess the 
answer would be yes?
    [Laughter.]
    Mr. Miller. I was traveling all over Wyoming chasing these 
people around. Where were you? You should have run for office 
earlier.
    Mrs. Cubin. It was not these oil people you were chasing 
around in Wyoming.
    Mr. Miller. Oh yes, it was. It was those people up there in 
that tight, tight sands. Is that not where a tax break breaks 
oil----
    Mrs. Cubin. What you were calling tight then?
    Mr. Miller. There were tight, tight sands and apparently 
the only way you can get oil out of tight, tight sands is 
through a tax break.
    [Laughter.]
    Mr. Miller. You do not even have to drill for it. You ask 
the Ways and Means Committee.
    Mrs. Cubin. Mr. Tancredo--those tight sands are gas, not 
oil.
    Mr. Miller. That is gas?
    Mrs. Cubin. Mr. Tancredo?
    Mr. Miller. They were selling it as oil.
    [Laughter.]
    Mrs. Cubin. Were they collecting royalties? The Committee 
will come to order.
    Mr. Miller. Back to the subject matter at hand.
    Mrs. Cubin. Mr. Tancredo?
    Mr. Tancredo. Thank you, Madam Chairman. I have something 
in common with Mr. Inslee and his earlier comments, strangely 
enough, in that I, too, am relatively new to the Congress and 
I, too, I guess I will use the word ``shocked'' in the 
Casablancan sense of that word, as I think Mr. Inslee was using 
it, shocked. But our shock is at two different things entirely.
    We were apparently observing two different events, because 
although there has been a certainly sometimes spirited and 
constantly blatant attempt on the part of the Minority to 
refocus the direction of this Committee's work onto issues 
totally irrelevant to the original, to the stated purpose, it 
is nonetheless important for us to try and determine where true 
concern should exist and why, if we are shocked, why we should 
be concerned as public policy people here.
    And I think we have a right to be concerned and, indeed, 
shocked because, in fact, although some oil companies have 
settled in this situation, in this case, others have not, and 
very large oil companies have not yet settled. It is my concern 
that, in fact, those cases may have been--the government's case 
against them may very well have been jeopardized by the actions 
taken by these employees. Certainly, the possibility that these 
two gentlemen working for the Federal Government in 
policymaking roles in the oil industry receiving huge payments 
from people who benefitted as a result of legal actions brought 
against oil companies, surely that would bring question, at 
least question, to the mind of any juror or any judge in cases 
not yet settled.
    And that is what we should all be concerned about here, 
whether or not the government's case has been jeopardized, not 
whether the oil companies are going to get--these greedy oil 
companies, we are not getting at them enough. I am worried 
about the government's case here and that is the real purpose 
of this hearing, is to determine what policies need to be 
changed, perhaps, looked at in the Department of Interior and 
the Department of Energy so as to prevent this kind of thing 
from happening again. And that is something we all have a 
responsibility for, it seems to me, and that is where we are 
trying to go with this hearing, all bantering to the contrary, 
not being relevant.
    I would like to ask you, you mentioned earlier, I think, 
that there were other members of--well, no, let me ask you 
this. Did the Justice Department ask you at any time to brief 
Interior employees in regard to your allegations?
    Mr. Johnson. Yes, they did.
    Mr. Tancredo. So other members of the Federal Government, 
other employees of the Department of Interior knew, while you 
were under seal, they knew about your allegations. That is 
essentially the purpose of putting it under seal, so that, 
what, people can begin to look at this from--I am not sure 
exactly why they would have to know. Could you help me 
understand that part?
    Mr. Johnson. This is a very technical lawsuit----
    Mr. Tancredo. Oh.
    Mr. Johnson. [continuing] and the Justice Department did 
not have the expertise within the Justice Department to 
understand it and they enlisted the aid of the Interior 
Department personnel, selected people. We do not know who all 
they talked to. We do not know who all knew about it. There 
were some meetings where we had Interior Department or Minerals 
Management Service people present. There were other times when 
we were not sure if maybe the people who we initially talked to 
had perhaps told others about it and then they were calling to 
ask questions. We did field a number of questions from Interior 
Department people.
    Mr. Tancredo. So it is true, then, that many other Federal 
employees knew about at least your allegations in this case?
    Mr. Johnson. Yes, that is true.
    Mr. Tancredo. So when there is some sort of attempt to 
deflect attention to the idea that these people, Berman and 
others, were just two good employees and therefore deserved 
almost $400,000 in payments, just because they were a couple of 
good guys, but there were a lot of people. Do you know of 
anybody else in the Federal Government, any of these other 
people who were involved who knew about this case? Do you know 
of any of the others that got any money from it?
    Mr. Martineck. No.
    Mr. Johnson. No.
    Mr. Tancredo. No, just Berman and Wright. What an 
interesting----
    Mr. Martineck. Berman and Speir.
    Mr. Tancredo. Berman and Speir, excuse me. What an 
interesting coincidence. Thank you, Madam Chair.
    Mrs. Cubin. The gentleman's time is expired.
    We will now move to the staff questioning period. Under the 
prior motion, Mr. Casey is recognized on behalf of the Majority 
for 15 minutes. We will then turn to the Minority side to have 
staff or member, whomever they decide, to do their questioning. 
Mr. Casey?
    Mr. Casey. Thank you, Madam Chairman.
    Mr. Johnson and Mr. Martineck, did the court in your case 
ever rule that the seal had been breached? Did they ever 
address that issue?
    Mr. Johnson. It was never addressed.
    Mr. Casey. Did the court in your case, when you made your 
motion to void the sharing agreement, the Multi-Relator Counsel 
Agreement, rule on whether or not the payments to Mr. Berman 
and Mr. Speir were appropriate or proper or address them at 
all?
    Mr. Johnson. No, the judge did not address that directly.
    Mr. Casey. I want to make sure I understand it. I have read 
the file there, and as I understand it, Judge Hannah was simply 
ruling that you had not made your claim that you had been 
fraudulently induced into that contract, and that is all he 
said?
    Mr. Martineck. That is correct. I believe all he said was, 
motion denied.
    Mr. Casey. Thank you. Let me go back to the telephone calls 
from Mr. Berman. In those telephone calls, was this a mutual 
education or was he seeking information or giving you 
information or was it all one way?
    Mr. Johnson. From the technical standpoint of how the oil 
was marketed and how oil could be valued, that was strictly one 
way. I helped Mr. Berman understand that. Mr. Berman did, 
however, tell me occasionally that activities within the 
Interior Department, he expressed disappointment in the way 
that the MMS had behaved at times. He was frustrated at times 
and he, perhaps the word is vented to me about that.
    Mr. Casey. I am sorry. Did I interrupt you, Mr. Martineck?
    Mr. Martineck. No.
    Mr. Casey. During the occasions when you briefed other 
Interior employees on your case, and I think, as I understand 
it, there was at least one large session out in Colorado at the 
request of the Justice Department, were the government 
employees at that meeting that you recall given any kind of 
explicit warning that this case was under seal and the facts of 
it were to be kept confidential?
    Mr. Johnson. Yes. Clearly, at the beginning of the one 
large meeting that I had, I know that that was discussed and 
that this was strictly under seal and not to be talked about.
    Mr. Casey. So I think we can assume that a Justice 
Department lawyer would have understood that. So any Interior 
employee who learned of this case in the course of his or her 
job, as far as you know, was expressly warned that the case was 
under seal and that it should not be discussed outside the 
workplace, and, in fact, a limited crew within the workplace?
    Mr. Johnson. To the best of my knowledge, every time that 
was discussed or was explained to an Interior Department 
employee, they were told that this was under seal.
    Mr. Casey. Back to the telephone call with Ms. Brian, if I 
heard you correctly and if I understand correctly, she did make 
reference to some kind of government employees considering 
their own qui tam or suggesting they might want to join yours 
or something of that sort. Did she suggest to you why it would 
be that she would want to call your lawyer and have them get in 
touch with these folks?
    Mr. Johnson. Well, she explained that, or she told me that 
these folks, these government employees, did not have the 
degree of understanding that Mr. Martineck and I did, but that 
they had been around for a long time and that there could be 
some confusion about whether they had, in fact, been the first. 
She clearly understood and made clear to me that she believed 
we were the ones who had the specific information and knew it, 
but she did say that these other people might be considered by 
somebody, a court, to be the first, and--and--she encouraged 
that we should talk to them and see about joining with them.
    Mr. Casey. Now, prior to the time of you filing your case 
and subsequent to the Long Beach cases, the State of Alaska, 
the State of Texas, as well as the State of California had 
succeeded in suits on related claims, similar allegations, if 
you will. So when Ms. Brian refers to government employees, did 
you even have any clue that she was talking about Federal 
employees, or might it have been a State employee or a city 
employee?
    Mr. Johnson. Well, in fact, the groups who had actually 
collected the money were the State of California and the State 
of Alaska, to my recollection. I was not sure and she did not 
make clear to me.
    Mr. Casey. Okay. Did I deduce properly during your earlier 
answers when you were discussing the MRCA, the sharing 
agreement--let me just sort of rephrase it and see if I am 
correct--that when the point is reached at which there is your 
case filed first, Mr. Wright's case filed second, and the POGO, 
Brian, and Brock case filed third, that the best strategic 
decision in the interests of moving ahead, establishing the 
fact of the allegations in your case, putting an end to the 
underpayments, collecting past royalties, was for all three 
groups to make a common cause and cooperate with each other.
    Mr. Johnson. That is correct. We did, in fact, join with 
each other and we filed a joint suit after that.
    Mr. Casey. Now, at the moment, I mean, there has been some 
mixing of terms and we all--terms like relator and so forth 
become comfortable, but, in fact, right now, who are the 
relators in Johnson v. Shell?
    Mr. Martineck. Mr. Johnson and Mr. Martineck. We are the 
only ones that the court saw to be proper relators.
    Mr. Casey. Is Harold E. ``Gene'' Wright a relator?
    Mr. Martineck. No, he is not.
    Mr. Johnson. No.
    Mr. Casey. Is Danielle Brian a relator?
    Mr. Martineck. No, she is not.
    Mr. Casey. Is Leonard Brock a relator?
    Mr. Martineck. No, he is not.
    Mr. Casey. Is the Project on Government Oversight a 
relator?
    Mr. Martineck. No.
    Mr. Casey. Do any of those parties contribute at this point 
to the prosecuting of the case on a daily basis? Do you all 
meet together and plan trial strategy, share information and so 
forth?
    Mr. Martineck. No, we do not.
    Mr. Casey. Who does that job?
    Mr. Martineck. Our attorneys are the only ones that are 
working on the legal side of it, and myself and Mr. Johnson are 
the ones that handle the details.
    Mr. Casey. So you carry the burden of proving this case and 
effectively following through on the whistleblowing, is that 
right?
    Mr. Martineck. That is correct.
    Mr. Casey. But Mr. Wright continues to receive his share of 
settlement checks as they come through?
    Mr. Martineck. Yes, he does.
    Mr. Casey. And POGO continues to receive a share? The POGO, 
Brian, and Brock group continues to receive a 40 percent share 
of every settlement check that comes through?
    Mr. Martineck. That is correct.
    Mr. Casey. And they do not participate in carrying this 
workload or proving the allegations?
    Mr. Martineck. None whatsoever.
    Mr. Casey. I forget who used the phrase. Is that what is 
meant by the phrase ``mailbox money''? You just sit back and 
wait and you do not have to do anything?
    Mr. Martineck. I have heard that term before.
    Mr. Casey. Somebody along the way had used that. I would 
reserve my time.
    Mrs. Cubin. The gentleman reserves the balance of his time. 
Now I recognize the Minority side for whomever would wish to 
ask questions.
    Mr. Miller. Thank you. Thank you, Madam Chairman. I would 
ask unanimous consent that a letter from Mr. Lon Packard to 
Chairman Young and myself be made a part of this hearing 
record.
    Mrs. Cubin. Without objection, so ordered.
    [The information of Mr. Miller follows:]
    Mr. Miller. Mr. Johnson, how much time have you spent with 
the Majority staff on this Committee going over testimony?
    Mr. Johnson. Prior to the hearing today, we met with them 
one time, one meeting.
    Mr. Miller. When was that?
    Mr. Johnson. Last week, I believe.
    Mr. Miller. For how long?
    Mr. Johnson. I am not sure, but it was several hours.
    Mr. Miller. What did you do?
    Mr. Martineck. We talked about how the process would be 
handled as far as, you know, how we are to address people, how 
the room was going to be set up, what types of things we could 
be expecting.
    Mr. Miller. Did you go over questions?
    Mr. Martineck. No, we did not go over questions.
    Mr. Miller. No questions at all?
    Mr. Martineck. No.
    Mr. Miller. Did you go over the characterizations of the 
various parties, POGO or other relators or non-relators or 
people or what have you?
    Mr. Johnson. No, I do not believe so. I think that had been 
pretty clear.
    Mr. Miller. On the question of when you say that you are 
now involved in the continued prosecution, what is left to 
continue to prosecute?
    Mr. Johnson. Well, we have three remaining defendants who 
have not settled. We are taking depositions. We are attending 
depositions. We are--both Mr. Martineck and I have participated 
in writing an expert report and doing the calculations of 
damage analysis, pretty much a full-time job.
    Mr. Miller. You are the lead on this?
    Mr. Johnson. That is correct.
    Mr. Miller. What is the Justice Department doing?
    Mr. Johnson. Well, the Justice Department is taking 
depositions on two of the companies in which they have 
intervened against, two of the defendants. However, we are 
participating with them. We attend their depositions. We 
actually help write questions for them.
    Mr. Miller. So it is not just you. The Justice Department 
is involved in, what, two of the three, is that what you are 
saying?
    Mr. Johnson. That is correct.
    Mr. Martineck. That the Justice Department has taken the 
lead on those two, but we play a substantial role in helping 
them in that.
    Mr. Miller. Who will make the decisions whether there will 
be settlements or not or whether there will be prosecution or 
to go forward or not?
    Mr. Johnson. That is a joint----
    Mr. Martineck. Yes.
    Mr. Johnson. That is a joint effort. We jointly do the 
calculations with the Interior Department personnel and the 
Justice Department people. Any time a settlement is reached or 
negotiated, we work----
    Mr. Miller. No, but, I mean, do you get to make a decision? 
Do you or the other relators, do you have a veto over a 
decision to settle as opposed to go to trial?
    Mr. Martineck. We are certainly a signing party to that 
settlement and we could hold up the settlement----
    Mr. Miller. You could hold up that settlement?
    Mr. Martineck. Yes, if we deemed it not to be appropriate.
    Mr. Miller. And the other relators could do that also?
    Mr. Johnson. I am not sure that they could.
    Mr. Miller. No, I mean, do they have the authority under 
your agreement and under the way the suit is progressing? Did 
they review settlement agreements?
    Mr. Johnson. No.
    Mr. Miller. Are they signatories to it?
    Mr. Johnson. No.
    Mr. Miller. And so when we see settlements, we can assume 
that you have, in fact, agreed to each of those settlements?
    Mr. Martineck. We have agreed to the compromise to settle 
the case.
    Mr. Miller. I am sorry?
    Mr. Martineck. We have agreed to the compromise to settle 
the case, taking into consideration all the risks of taking a 
suit such as that to trial. In that you may be unsuccessful, 
there is a lot of risk to weigh in that, so yes.
    Mr. Miller. And if you decided otherwise, Justice would not 
be able to bring about that settlement?
    Mr. Martineck. I believe that is right. We have never 
encountered that situation.
    Mr. Miller. Yes. But what is the role of the other joint 
parties here, in the three joined parties?
    Mr. Johnson. Right now----
    Mr. Miller. Are you their agent in this case? I mean, do 
you stand in their shoes, or----
    Mr. Johnson. We are not lawyers, and so I am not sure--I do 
not know legally how that works. I know we have an agreement 
with them. We are prosecuting the case to the best of our 
ability and----
    Mr. Miller. That was the original agreement when the three 
cases were brought together?
    Mr. Johnson. I am not sure that the original agreement ever 
anticipated exactly how it ended up, where the other relators 
were actually dismissed. But because we were left in, we have 
continued to do this to the best of our ability, to bring the 
maximum value return in a reasonable manner.
    Mr. Martineck. Without their assistance.
    Mr. Miller. Have you differed with the government? I mean, 
you have some experience in these valuations. Have you differed 
with the government on valuations at time of settlement?
    Mr. Martineck. Sure. We have had issues that have come up 
that we have had to reach compromise on. They have got facts 
that we do not have that we have looked at, and what we have 
always come to the bottom line, that the facts are what they 
are and we come to an agreement on what the settlement should 
be.
    Mr. Miller. Madam Chairman, I will reserve the balance of 
my time until we vote.
    Mrs. Cubin. Actually, I did not hear what you said. You 
reserve the balance of your time?
    Mr. Miller. Yes. We have a vote on, so we have to go vote.
    Mrs. Cubin. Okay.
    Mr. Miller. You have reserved your time, so you will get to 
ask questions when you come back or I will ask questions when 
we come back.
    Mrs. Cubin. Let us just go vote and we will be straight 
back, and we will keep your time.
    [Recess.]
    Mrs. Cubin. The Subcommittee will please return to order. 
The chair recognizes Minority staff to conclude their 
questioning. Ms. Lanzone?
    Ms. Lanzone. Thank you. Mr. Johnson or Mr. Martineck, the 
Multi-Relator Counsel Agreement dated March 9, 1999, that is 
still in effect, correct?
    Mr. Johnson. Yes.
    Mr. Martineck. Yes, it is.
    Ms. Lanzone. And on page two of that document, paragraph 
two, it says that the agreement clearly says that any relator's 
recovery shall be divided 40/40/20 after the payment of the 2 
percent consulting fee to Johnson and Martineck. That would be 
you, correct?
    Mr. Johnson. That is correct.
    Mr. Martineck. That is correct.
    Ms. Lanzone. And you are receiving that two percent off the 
top?
    Mr. Johnson. Yes, we have.
    Ms. Lanzone. Okay. And then on the next page, there is a 
series of conditions, I guess, which include--four, five, and 
six relate to fees, attorneys' fees, manpower, I mean, I will 
give this to the chairman so that it can go into the record, 
but it looks like the other relators in the agreement are 
contributing significant costs to the ongoing litigation, is 
that correct?
    Mr. Johnson. No, it is my understanding that there are not. 
There have been some contributions from the other groups, but--
--
    Ms. Lanzone. It says, each group must invest equal manpower 
to the case. In other words, if it takes 21 attorneys and 21 
paralegals working full time to prosecute the case, then each 
group must commit seven full-time lawyers and seven full-time 
paralegals. Is that not----
    Mr. Martineck. That has not happened.
    Mr. Johnson. That has not happened, that is correct.
    Ms. Lanzone. That has not happened. Okay. What about 
expenses of the common litigation fund must be paid equally by 
the three groups? That is not happening? Right now, the Brock/
POGO group would owe $220,000 and the Wright group would own--
own or owe?--$170,000 to achieve parity.
    Mr. Martineck. I know at some point, all those groups 
contributed something. I do not believe that they have 
continued to contribute. I think the Wright group has continued 
to honor their obligations. I am not sure that the Brock/POGO 
group has.
    Ms. Lanzone. Okay. Well, maybe we will--I guess next week 
we can pursue that.
    Mr. Johnson. The answer to that is that we do not know 
exactly how all that has worked.
    Ms. Lanzone. Okay. So before, when you were saying that you 
are doing everything and they do nothing, then that is not 
exactly correct if they are contributing financially by paying 
your attorneys, I guess----
    Mr. Johnson. Well----
    Ms. Lanzone. [continuing] and you get the 2 percent off the 
top. That is really all I was asking.
    Mr. Johnson. Well, in answer to your question, we are doing 
all the work in the case and we do know that we have 
contributed the vast majority of the money. But in response to 
your question, we do not know exactly how much the other groups 
have contributed.
    Ms. Lanzone. Even though the agreement says it will be 
shared equally?
    Mr. Johnson. That is correct.
    Mr. Martineck. That is correct.
    Mrs. Cubin. Do you yield back the balance of your time?
    Ms. Lanzone. Yes. I am sorry.
    Mrs. Cubin. Thank you. Mr. Casey?
    Mr. Casey. Thank you, Madam Chairman.
    I have perhaps just two, and forgive me, I continue to get 
confused a bit and I want to make sure it is clear on the 
record. The purpose of the Multi-Relator Counsel Agreement, 
well, its purpose but its motivation, I guess you might say, 
originally was to strengthen the joint effort to expose the 
underpayments, put a stop to it, collect past-due underpaid 
royalties, is that correct?
    Mr. Johnson. Sure.
    Mr. Casey. So when you moved to void that contract back in 
November, there had already been other disputes within the 
group. Had you made any attempts, formal or otherwise, prior, 
in relation to those disputes, to void the contract? As I 
understand it, there has been friction regarding the various 
weight that parties brought to that agreement and contributions 
and knowledge and expertise they were making and there were 
some serious disagreements within the three groups, Wright, 
Johnson/Martineck, POGO/Brian/Brock. Had you, Mr. Johnson and 
Mr. Martineck, made prior attempts to void the contract?
    Mr. Johnson. I do not--no, I do not think you could say we 
tried to void it. We certainly had negotiated changes to the 
situation. We had disagreements. There is no question about 
that. But in the end, we agreed unilaterally on our side. We 
wrote a letter to the other groups and said we are going to 
abide by this. A deal is a deal and we will honor those terms.
    Mr. Casey. So after learning about the payments, and as I 
understand it, you learned essentially when the rest of the 
world learned, after learning about the payments to Mr. Berman 
and Mr. Speir, what about that caused you to take the drastic 
step, and very difficult legally, as I understand it, step of 
trying to void the contract?
    Mr. Martineck. Clearly, there was information that they 
withheld from us when we entered into that agreement which 
would have entered into our decision to make an agreement with 
them, and without knowledge of that, there is no way we would 
have signed that agreement.
    Mr. Casey. At a hearing back in November of 1999 on your 
motion to void the contract, an attorney who was a witness for 
POGO, in other words, opposing your motion to void the 
contract, gave a deposition in which he offered the opinion 
that neither Mr. Berman nor Mr. Speir would have qualified as a 
relator or a fact witness or an expert witness in your case and 
that neither POGO nor Danielle Brian would have qualified as a 
relator in a Federal oil royalty false claims case. Do you take 
issue with that assessment?
    Mr. Johnson. Based upon the knowledge that we have today, I 
would agree with that. But that was not the knowledge that we 
had at the time we originally entered into that agreement.
    Mr. Casey. Thank you, ma'am.
    Mrs. Cubin. Since we still have a little over three minutes 
on the Majority side, I just have one question for you, Mr. 
Johnson. If the government were to have taken large volumes, 
and I mean large volumes of its royalty oil in kind rather than 
in value, could the sweet versus sour misclassification have 
occurred?
    Mr. Johnson. That particular misclassification would have 
been much more difficult to have been hidden.
    Mrs. Cubin. Thank you very much, and I thank you both, Mr. 
Martineck and Mr. Johnson, for your candid testimony. It has 
been highly educational. I think that you have given us a firm 
and credible account of everything that happened. The phone 
calls from Ms. Brian and from Mr. Berman, in my opinion, are 
quite disturbing. I appreciate your willingness to respond to 
the subpoena and answer our questions. Those folks will have an 
opportunity in two weeks to provide their version of the 
conversations, but in the meantime, please accept the 
Committee's thanks for being here and your cooperation in this 
oversight hearing. You are now free to go get some lunch or 
something, so thank you very much.
    Mrs. Cubin. Next, the chairman requests Mr. Bernard Kritzer 
to come forward to the table. I think he is out in the hall. 
Would someone ask him to come in? Mr. Kritzer has been here 
waiting and is just not here for the moment.
    Mr. Kritzer, would you please take a seat at the table? Oh, 
before you are seated, as you know, we had advised you earlier 
that all the witnesses would be sworn in and so I ask you to 
raise your right hand.
    Do you solemnly swear or affirm under the penalty of 
perjury that the responses and statements given will be the 
truth, the whole truth, and nothing but the truth?
    Mr. Kritzer. I do.
    Mrs. Cubin. Thank you very much. I would like to start out 
by saying how relieved and glad we are that all your medical 
tests turned out all right. Thank you for being here today and 
please accept my apology for having to wait for so long before 
you have been able to come forward. Your testimony will be very 
important to us and I do appreciate your cooperation.
    Mr. Kritzer. Thank you.
    Mrs. Cubin. We will start out, I would like to just make a 
brief statement. Mr. Kritzer is now a Commerce Department 
expert on international chemical weapons treaty enforcement. 
Previously, Mr. Kritzer was the Department of Commerce's expert 
on oil markets. He was a widely known and highly regarded, and 
I would like to underscore that, authority on undervaluation of 
oil and royalties in the California market. Mr. Kritzer's work 
on oil matters is cited as a key source by Bob Armstrong, 
former Assistant Secretary at Interior.
    Mr. Kritzer has also been cited, along with Mr. Berman, Mr. 
Speir, and Mr. Henry Banta and the Lobel law firm, who were 
comrades in arms in fighting for greater Federal attention on 
California royalty underpayments. Yet in the December 1996 
agreement and then again in November 1998, the checks that were 
awarded to Mr. Speir and Mr. Berman were kept secret from Mr. 
Kritzer.
    I think we will learn that Mr. Kritzer's depth of knowledge 
and depth of feeling on this matter is matched by the strength 
of his commitment to be an honest public servant. So with that, 
I would like to begin questioning.
    We are back under the five-minute rule, which is regular 
order for the Committee, so I will allow the questioning to 
begin with Mr. Brady.
    Mr. Brady. Madam Chairman, if I may reserve my question at 
this time.
    Mrs. Cubin. Certainly. I will go ahead, then, for five 
minutes and then I will yield to the other members of the 
Committee.
    Mrs. Cubin. Mr. Kritzer, would you please describe your 
career at Commerce and your responsibility for analyzing oil 
markets?

                  STATEMENT OF BERNARD KRITZER

    Mr. Kritzer. My career at Commerce began in 1982. At that 
time, I worked for the Under Secretary for the International 
Trade Administration who was responsible for export control 
matters, among other things, controls on oil and natural gas 
equipment that was sold to East Bloc countries, and this 
involved in great detail work on the Soviet pipeline embargo 
and the sanctions in 1982-83.
    Following that, I worked on the Alaskan oil and did a study 
on Alaskan oil in the 1980s, followed by a study on West Coast 
oil markets and the opportunities to export heavy crude oil 
from California in the late 1980s. At the same time that these 
things were going on, I worked on a whole series of national 
security studies involving imports of oil, involving U.S. 
energy trade with Communist countries.
    Sometime in the mid-1990s, I began to move away from oil, 
specifically in 1996, and with the exception of work on a 
Section 232 analysis, in the last four years, my work has been 
in high technology and it has been, now, in the chemical 
weapons and nonproliferation areas.
    Mrs. Cubin. Are you generally familiar with the oil royalty 
problems that were described by Mr. Johnson and Mr. Martineck 
and do you agree with their conclusions about the underpayment 
of the royalties?
    Mr. Kritzer. I was not here for the attendance. I was 
outside, so I cannot--since I did not hear their conclusions, I 
cannot--I can tell you, based on personal experience, I am 
familiar with the problems and recognize that for some time 
there has been underpayment.
    Mrs. Cubin. And I think that you have been pretty vocal 
about that, is that correct?
    Mr. Kritzer. Yes.
    Mrs. Cubin. It has been no secret that you have been aware 
of the practices, as well?
    Mr. Kritzer. Yes.
    Mrs. Cubin. Interior, I believe, should have come forward 
and done more and done it sooner. How long ago did Interior 
have sufficient information to start collecting underpayments 
and to put a stop to those continuing underpayments, do you 
know--an estimation.
    Mr. Kritzer. If I had to estimate the time at which the 
situation obviously became very sensitive to all was in late 
1991. After a period of approximately 10 or 15 years, the State 
of California was able to settle with the oil industry for some 
$350 million. Around that time, the State of Alaska also worked 
out a settlement for greater sums of money.
    Mrs. Cubin. You are an acknowledged expert in oil markets. 
In fact, you played a key role in Interior's interagency study 
on California's undervaluation. Let me ask you, do you consider 
yourself a whistleblower?
    Mr. Kritzer. How do you define a whistleblower?
    Mrs. Cubin. Well, I think maybe that is the question. What 
is a whistleblower? You were an expert. You vocalized the 
underpayment, how it was done. You wanted this practice to 
stop. But you did not ever get any money for having done that, 
is that correct?
    Mr. Kritzer. That is correct.
    Mrs. Cubin. Did you know about the Johnson and Martineck 
False Claims Act suit while it was sealed?
    Mr. Kritzer. My only familiarity with that suit came as a 
result of some discovery requests in the last couple of years 
and an occasional reading of the newspapers. In these last four 
years, I really have not been heavily involved in this area. So 
other than occasional glimpse at the newspaper or in some 
request under discovery and, I believe, FOIA, that this was 
going on.
    Mrs. Cubin. How long have you known Bob Speir and have you 
worked on oil matters together?
    Mr. Kritzer. I have known Mr. Speir approximately a decade. 
We worked on a wide variety of issues together.
    Mrs. Cubin. So that is quite a long time. You have known 
him very well, and have you collaborated on these oil 
underpayments work with Mr. Speir?
    Mr. Kritzer. Mr. Speir and I were members of the 
Interagency Task Force in Interior between 1994 and 1996 and we 
worked together as part of a team on that.
    Mrs. Cubin. And what about Mr. Berman? Have you consulted 
with Mr. Berman or has he consulted with you on oil issues?
    Mr. Kritzer. I have known Mr. Berman for a similar amount 
of time. We have worked on a number of issues. I would say that 
in both instances, since many of the studies that my agency did 
and other agencies do in the field of petroleum are 
interagency, I worked with these two gentlemen on many studies, 
and at the time, on a wide variety of energy issues, I found 
them to be highly competent, authoritative, and they did a very 
good job.
    Mrs. Cubin. Mr. Berman was not a member of that task force; 
is that correct? But you and Mr. Speir were?
    Mr. Kritzer. That is correct.
    Mrs. Cubin. Did Mr. Berman work closely with the task 
force? Was he at the meetings of the task force? And although 
he didn't belong to the task force, per se, did he frame the 
study that was being developed by the task force?
    Mr. Kritzer. To the best of my recollection in 1993 and 
1994, Mr. Berman was part of a process at Interior where a 
study was set up. For whatever decisions they made, he was not 
a member of the task force. I found him, in the times that we 
consulted, to be a useful source of technical information or if 
I wanted to corroborate, he was among the number of people you 
could corroborate if there was something that had been said to 
us, you know, by people from Interior.
    Mrs. Cubin. And did he attend most of the task force or all 
of the task force meetings?
    Mr. Kritzer. To the best of my recollection, no, he did 
not.
    Mrs. Cubin. Do you have any idea how many he did attend?
    Mr. Kritzer. I can't recollect that. I don't think many----
    Mrs. Cubin. But he did attend----
    Mr. Kritzer. I don't think many, if any, but I don't have 
a----
    Mrs. Cubin. But you don't know.
    Mr. Kritzer. [continuing] complete recollection.
    Mrs. Cubin. Okay. Thank you very much. My time has expired. 
And now I will recognize Mr. Brady.
    Mr. Brady. Thank you, Madam Chairwoman, and thank you Mr. 
Kritzer for being here.
    I am curious, you are very knowledgeable in the area of oil 
valuation. You had, like the others, inside access to 
information dealing with this issue. You had perhaps the same 
motivation in that you think and believe strongly it is unfair 
how the valuation has been paid and collected, and you want to 
see that righted. But you weren't approached, you weren't part 
of a scheme to pay off Government officials for insider 
information. Knowing what you know now, but more importantly 
knowing your own principles, why do you think you weren't 
approached?
    Mr. Kritzer. Excuse me for a second.
    [Witness conferring with counsel.]
    Mr. Kritzer. To answer your question, Mr. Congressman, in 
general, there at one time was a passing conversation between 
myself and Mr. Banta about the possibilities of looking into 
this. The conversation took place sometime in 1996, long before 
the California study was over. Absent that conversation, there 
were no other discussions.
    Mr. Brady. Sure. And I was asking more so, in that 
conversation, do you feel like you encouraged more contact with 
Mr. Banta or discouraged more conversation with him about this 
issue?
    Mr. Kritzer. Well, all I can tell you is the issue never 
came up again in that context.
    Mr. Brady. Good. Let me ask you this: If looking at that 
check to a Government official, looking at that agreement 
between two Government officials and a special interest group, 
if you had been approached, in your personal view, if you had 
been approached to provide information that would enter into an 
agreement to receive payment for that information, would you 
have considered that agreement illegally supplementing the 
salary of a Federal employee, in your belief?
    Mr. Kritzer. Well, one, I am not expert on, you know, 
what's legal and----
    Mr. Brady. No, I'm just asking you----
    Mr. Kritzer. [continuing] illegal in this.
    Mr. Brady. [continuing] your personal view from----
    Mr. Kritzer. My mandate, my mission at that point in time, 
in light of where I was in my career and the assignments I had, 
was to complete the study, to bring to the attention of the 
Congress what was going on on this issue. We'd hoped that there 
would be a public to deal with it.
    Mr. Brady. So----
    Mr. Kritzer. Once I completed that mission, that was my, 
that was my job.
    Mr. Brady. So, no, you wouldn't see--you would have thought 
that agreement was just fine?
    Mr. Kritzer. No, I didn't say that.
    Mr. Brady. Would you have viewed it as unethical?
    Mr. Kritzer. I don't think I want to choose to use words 
and judge something where other people may be sort of viewing 
it. This as something I would not have gotten into. But I 
cannot, you know, I'm not going to judge what others----
    Mr. Brady. Sure. And I'm not asking you. The reasons you 
wouldn't have gotten into it, was it it would have been simply 
personal ethics? Would it have been statutory law against that? 
Would it have been disclosure or ethical regulations which you 
were under as an employee? Any of those?
    Mr. Kritzer. Throughout my career, in addition to the work 
that I have done, there have been a number of times where I 
have done a number of things that were pro bono, that were 
supplemental to what I did. Once I have completed the 
assignment, I move on. I think that's about as clear as I can 
make it to you.
    Mr. Brady. Well, that's--I was hoping you'd be a little 
clearer than that. But just let me summarize because your 
answer is, I take it, you didn't see anything unethical, 
improper, any violation of law or ethical standards with an 
agreement had you approached to participate in this scheme?
    Mr. Kritzer. I was, until the news came up last year that 
this had broke, I was unaware of any agreement.
    Mr. Brady. Sure.
    Mr. Kritzer. Okay.
    Mr. Brady. But, again, back to the question. Had you been 
approached to participate in that agreement, receiving that 
type of check for the information that was provided, would you 
have viewed that to be proper?
    Mr. Kritzer. I would have viewed it as something I would 
not have done.
    Mr. Brady. So improper?
    Mr. Kritzer. You can, you know, you can determine as 
appropriate with that.
    Mr. Brady. I don't----
    Mr. Kritzer. I'm not trying to----
    Mr. Brady. Oh, I'm not asking you to cast aspersions. I'm 
just trying to find out----
    Mr. Kritzer. It's not something that I would be involved 
with.
    Mr. Brady. Yeah. It's not something you would be involved 
in.
    Mr. Kritzer. Yeah. That is correct.
    Mr. Brady. And the reason is personal beliefs or statutory, 
agency laws, regulations against such an agreement?
    Mr. Kritzer. A series of things, to be----
    Mr. Brady. Both?
    Mr. Kritzer. A combination of things.
    Mr. Brady. A combination of both?
    Mr. Kritzer. A combination of those issues, plus the fact 
that at the time, after some 25 years in the field, I was 
moving away from the field, so that I was seeking other 
assignments, plus the fact that I just, I just do my job, and 
I, you know, go about my business.
    Mr. Brady. So you see your job----
    Mrs. Cubin. The gentleman's time has expired.
    Mr. Brady. Thank you very much.
    Mrs. Cubin. Mr. Schaffer is now recognized for 5 minutes, 
and Mr. Jones's phone needs to be answered before it keeps 
ringing.
    Mr. Schaffer. Thank you, Madam Chairman.
    I want to get back to your impressions of a couple of 
issues with respect to Mr. Berman. You stated that, although 
that he did not belong to that study team--let me state it a 
different way.
    During Mr. Johnson's testimony, he had suggested that his 
role in new oil royalty regulations being developed by the 
Department of Interior were rather substantive, and that 
suggested that he took some credit for framing the overall 
policy of the rule. Do you believe that to be accurate? Was Mr. 
Berman--how involved was he in framing policy and the rules at 
the Department of Interior?
    Mr. Kritzer. My comments on Mr. Berman's activities in this 
area would have to cut off in the middle of 1996. I think that 
he was a very good analyst. He worked on some of these issues. 
And to the best of my knowledge and recollection, he worked on 
a whole series of other issues related to coal, Indian issues, 
other things.
    Mr. Schaffer. And although he was not a member of the study 
team, would you say he framed the study?
    Mr. Kritzer. I think he was one of a number of people who 
had initially identified or framed the issues prior to the 
start-up of the study based on his knowledge.
    Mr. Schaffer. A number of people being how many?
    Mr. Kritzer. Whoever else would have been over there in 
Interior working with him, which I assumed would have been MMS 
people.
    Mr. Schaffer. His involvement you would characterize as 
substantial, as remote, what? Can you give us a better picture 
of----
    Mr. Kritzer. Once the study began, he was a person if you 
had a question, a technical question, a question on an issue 
that had been represented to us by MMS, he was one of a number 
of people that I could check on because I make a practice that 
when I work on a study that I corroborate facts to make sure 
that they are accurate, and there frankly were some times I was 
not sure that the facts I received were accurate.
    Mr. Schaffer. Thank you. Do you know POGO?
    Mr. Kritzer. Yes, I know POGO.
    Mr. Schaffer. Do you know Danielle Brian and Henry Banta?
    Mr. Kritzer. Yes, I know them.
    Mr. Schaffer. Do you know other members of the law firm of 
Lobell, Novins, Lamont?
    Mr. Kritzer. I know several.
    Mr. Schaffer. Do you know why they would be interested in 
oil valuation in royalty matters?
    Mr. Kritzer. I think probably this was something that they 
had done in the past and had some past activity and involvement 
in with regard to the State of California.
    Mr. Schaffer. Did Berman or Speir ever tell you they were 
going to share proceeds of such a suit with----
    Mr. Kritzer. No.
    Mr. Schaffer. [coninuing] POGO, Mr. Banta and Ms. Brian are 
clearly familiar with your work in oil royalty underpayments. 
Did Banta, Brian or anyone else connected with POGO ever offer 
you a public service award?
    Mr. Kritzer. No.
    Mr. Schaffer. Any other kind of recognition, plaque, 
citations, certificates, anything like that----
    Mr. Kritzer. Again, I would have to mention----
    Mr. Schaffer. [continuing] awards of any sort?
    Mr. Kritzer. [continuing] one thing to you, Mr. 
Congressman, that I can talk to you and help you, in terms of 
the valuation study in the 1994-1996 period. Once I left this 
area, my knowledge of what activities went on or were alleged 
to have gone on, I have no knowledge of it. I was removed and 
involved in other activities.
    Mr. Schaffer. Sure. Thank you. In your view, would former 
Interior Assistant Secretary Bob Armstrong deserve credit for 
supporting efforts to address the California underpayment 
problems?
    Mr. Kritzer. I would like to say this: That I thought that 
Assistant Secretary Armstrong was an outstanding person. I 
found that it was a pleasure to serve with him, that he had to 
balance a whole series of competing interests, including not 
only his staff, but for the first time taking people from 
another agency, integrating them into a study, being prepared 
to recognize that everybody brought a different perspective, 
had different things that they could bring to share. Had he not 
been on the study, I think that, and somebody else had directed 
the study, the results could have been much more 
confrontational.
    Mr. Schaffer. I just want to, before that light turns red, 
did he, in your opinion, support or oppose the efforts by you, 
Berman, Speir, POGO and the Lobell firm?
    Mr. Kritzer. I wouldn't phrase it that way. I thought he 
supported the efforts by the members of the team to do the best 
job possible. I always felt it was kind of sad that he became 
sick at the end when it was an important time to shape things. 
But he was one of the best people in this field that I've 
worked with in my years in the government.
    Mr. Schaffer. So you couldn't say whether you would 
characterize it as support or----
    Mr. Kritzer. He worked--all I know is my contact with Bob 
Armstrong was through that team.
    Mr. Schaffer. Yeah.
    Mr. Kritzer. It was not through any other activity. I have 
not seen him since probably April or May of 1996.
    Mr. Schaffer. Any indication that he opposed the efforts?
    Mr. Kritzer. The efforts of the Interagency Working Group?
    Mr. Schaffer. Yes.
    Mr. Kritzer. No. I thought he was, without him----
    Mr. Schaffer. That and the subsequent False Claims Act.
    Mr. Kritzer. I have no knowledge that he was involved in 
that. As I tried to tell you a little earlier and to your 
colleagues, once I left in 1996, I moved on to other things, so 
my knowledge in those areas is nonexistent.
    Mr. Schaffer. Thank you, Madam Chairman.
    Mrs. Cubin. The chair now recognizes Mr. Gibbons.
    Mr. Gibbons. Thank you, Madam Chairman.
    Mr. Kritzer, welcome. We are pleased that you have come 
here to help us better understand the issue that's before us 
today. I would like to step back, if I could, to that time 
frame in the 1996 time frame.
    Prior to you leaving, your area of expertise dealing with 
oil royalties in, as you said, I believe, 1996----
    Mr. Kritzer. Uh-huh.
    Mr. Gibbons. Had you any knowledge at that point in time 
when you left of the Johnson and Martineck qui tam lawsuit or 
false claim lawsuit?
    Mr. Kritzer. I think the answer is no, but I really don't 
recollect.
    Mr. Gibbons. You told the Committee that you learned of it 
through news reports, newspaper.
    Mr. Kritzer. It was either newspaper reports or, which 
mentioned the whole series of false claims, or more 
appropriately, when I first dealt with it in the sense that I 
had to deal with it directly, it was through some discovery 
requests for documents in my Department.
    Mr. Gibbons. Do you remember what time frame that would 
have been?
    Mr. Kritzer. The document request would have been last year 
some time.
    Mr. Gibbons. So you had no knowledge of the Johnson qui tam 
lawsuit prior to 1999.
    Mr. Kritzer. There was a general knowledge through reading 
several articles that there were a number of people who were 
pursuing lawsuits. And I think one of the articles identified 
one of these people.
    Mr. Gibbons. Now, general knowledge, though, is what I'm 
trying to get at. What did you generally----
    Mr. Kritzer. It would have just been reading the industry 
press. That's all.
    Mr. Gibbons. Okay. You indicated that you know of the 
Program on Government Oversight or POGO----
    Mr. Kritzer. Uh-huh.
    Mr. Gibbons. When did you first become familiar with them?
    Mr. Kritzer. Well, I knew about them because Mr. Banta and 
I have been friends for a number of years.
    Mr. Gibbons. And when would that friendship have developed?
    Mr. Kritzer. This friendship developed in the 1980s, long 
before these issues were raised.
    Mr. Gibbons. And I would presume that that friendship 
carried over into some of your roles in the 1980s dealing with 
the California oil royalty issues?
    Mr. Kritzer. There were no California oil royalty issues in 
the 1980s. The only issue that occurred was in the 1988 Omnibus 
Trade and Competitiveness Act, there was a requirement placed 
by Members of the Congress, the California delegation, to take 
a look at the heavy oil in California, which basically was not 
able to be marketed because there was such an excess, and to 
see if it was appropriate to consider an experiment to market 
small quantities of that oil. And at that time he and I got, 
you know, met.
    Mr. Gibbons. You indicated that you knew Ms. Danielle 
Brian. How do you know her?
    Mr. Kritzer. I met her on several occasions through Mr. 
Banta.
    Mr. Gibbons. Do you recall the first time you met her?
    Mr. Kritzer. It was probably at a Christmas party.
    Mr. Gibbons. Do you recall when that was?
    Mr. Kritzer. Possibly the mid-1990s. I don't have that good 
a recollection.
    Mr. Gibbons. Okay. What relationship have you had with POGO 
since you left your oil valuation job in 1996? What 
relationships have you been involved with POGO?
    Mr. Kritzer. Okay. Well, oil valuation was just one of a 
number of activities I did.
    Mr. Gibbons. Well----
    Mr. Kritzer. Okay.
    Mr. Gibbons. Okay.
    Mr. Kritzer. My relationship----
    Mr. Gibbons. You know what I'm asking the question about.
    Mr. Kritzer. My relationship was, other than occasionally 
having lunch and keeping up contact as old friends, none.
    Mr. Gibbons. So nothing professional.
    Mr. Kritzer. No, just keeping up contact as old friends or 
if somebody were to call me. And on occasions, Mr. Banta would 
call me about nothing related to oil, but just say, ``I have a 
case in a particular area. Who should I contact at your 
Department?'' You know, it would be a social call for a couple 
of minutes.
    Mr. Gibbons. And you indicated in your testimony that no 
one ever advised you that Mr. Speir or Mr. Berman was going to 
be paid any sort of a fee for their efforts in this lawsuit; is 
that correct?
    Mr. Kritzer. That's correct.
    Mr. Gibbons. When did you ever hear that they were paid or 
going to be paid?
    Mr. Kritzer. I heard allegations that they were going to be 
paid surprisingly in sometime about this time a year ago, when 
I was convening an interagency study on an issue. And following 
the meeting, I went up to someone and just said, ``You know, we 
have a mutual friend.'' And I forget, one of them I identified, 
and somebody said to me, ``Oh, by the way, did you know this?'' 
That was the first time I had any, you know, clear indications 
or allegations that this had gone on.
    Mr. Gibbons. Mr. Kritzer, I presume in all of your time 
that you've spent within Federal Government in the employment 
of our Nation that you are familiar with the ethics 
requirements.
    Mr. Kritzer. Yes.
    Mr. Gibbons. Can you help this Committee understand what 
the ethics rules are with regard to unsolicited gifts?
    Mr. Kritzer. I have never accepted anything.
    Mr. Gibbons. Do you know if the ethics rules address that 
issue?
    Mr. Kritzer. Yes, it does address that issue.
    Mr. Gibbons. Would you expect that most employees in the 
employment of the Federal Government would understand the same 
thing you understand?
    Mr. Kritzer. I can only speak for myself, sir.
    Mr. Gibbons. Well, just your expectation.
    Mr. Kritzer. There is certainly an expectation of that.
    Mr. Gibbons. Thank you, Madam Chairman.
    Mrs. Cubin. Thank you.
    I just have one final question that I wanted to ask you, 
Mr. Kritzer. If I understand your view correctly, you saw 
correcting the royalty underpayment problems, when you were 
involved in that, to be your duty as a Federal employee; is 
that right?
    Mr. Kritzer. It was to provide a completed report, which 
then hopefully recommendations would be made, and they would 
have been acted upon to revise the basis upon which oil 
royalties were evaluated for the State of California at that 
time and that, you know, some other--any other actions that 
were necessary would have been carried out.
    Mrs. Cubin. But you never viewed that as a personal 
financial opportunity for yourself; is that correct?
    Mr. Kritzer. No.
    Mrs. Cubin. I would like to commend you for the work that 
you do. And frankly, Mr. Kritzer, I think that you are an 
excellent model for other Federal employees to follow. I think 
that your integrity and your personal behavior certainly is 
above reproach, and I appreciate that very much coming from any 
government employee. So I do thank you for that. I think if 
someone was handing out awards for diligent, public-spirited 
people that understand the problems in valuation of oil, that 
you certainly ought to be a person to receive that credit.
    So, with that, I would like to ask if you would be willing 
to respond in writing to any further questions that the 
Committee might have at a future time.
    Mr. Kritzer. Yes, I will. I'd be glad to.
    Mrs. Cubin. The record will be kept open for 2 weeks, as is 
the policy of this Committee.
    So, with that, I thank you again very much for being here, 
and you are excused.
    Mr. Kritzer. Thank you.
    Mrs. Cubin. Thank you.
    The chair now will call forward Mr. Leonard Brock. If you 
would just remain standing for a moment, Mr. Brock. Again, we 
advised you earlier that your testimony would be taken under 
oath.
    [Witness sworn.]
    Mrs. Cubin. Thank you very much.
    Mr. Brock, I want to start out by acknowledging the 
hardship that you have gone through in coming all of the way 
from California. Believe me, if anyone knows that travel isn't 
easy, I am one. We will try to not keep you any longer than 
necessary, but I do thank you for being here.
    You have been subpoenaed to help this Subcommittee learn 
whether a valid public service award program motivated you, 
Danielle Brian and POGO to share your information of Johnson v. 
Shell proceeds with two Federal employees.
    Mr. Brock, POGO told Mr. Martineck, Mr. Johnson and Mr. 
Wright that you provided the key to success in any False Claims 
Act. They highly value your contribution to the case. What 
share do you receive from the settlement proceeds paid to the 
group consisting of you, Ms. Brian and POGO? What is your 
share?

                 STATEMENT OF LEONARD W. BROCK

    Mr. Brock. I'd like you to rephrase that, please.
    Mrs. Cubin. Okay. Do you receive 25 percent of the amount 
distributed by the relators to the Brian, Brock and POGO group? 
Do you receive 25 percent?
    Mr. Brock. That's right.
    Mrs. Cubin. Did you participate in the decision to share 
the money with Mr. Berman and Mr. Speir?
    Mr. Brock. I never heard those names until the thing hit 
the fan with the other relators.
    Mrs. Cubin. Did Mr. Banta or Ms. Brian or anyone connected 
with your suit tell you that POGO had a plan or an agreement to 
share the money with two Federal employees?
    Mr. Brock. Never until the thing came to light.
    Mrs. Cubin. So POGO represented to their partners in the 
settlement sharing contract that you were a highly valued ally, 
so valuable that Ms. Brian and POGO deserved a share equal to 
the relators, but POGO never told you a key fact about their 
intention for that money, which was to share it with Mr. Berman 
and Mr. Speir. Do you approve of POGO paying those Federal 
employees and withholding the information from you and the 
other parties until it was too late to stop the first check?
    Mr. Brock. I don't know enough about what they did and why 
to comment on that.
    Mrs. Cubin. As a general principle, would you think it was 
appropriate for Federal employees to accept this sort of 
payment?
    Mr. Brock. I don't know what it was for.
    Mrs. Cubin. We don't either. That's what we're trying to 
find out.
    Mr. Brock. That's good. You're not going to find out from 
me.
    [Laughter.]
    Mrs. Cubin. As a City of Long Beach employee, can I ask you 
if you would have accepted payment like this, as a city 
employee in the Long Beach case?
    Mr. Brock. There would have been no reason for any city 
employee to have to be paid to give them any information about 
any of our oil properties. Anything we did was a public record, 
and we're very happy to discuss with anybody what we got, and 
why and how.
    Mrs. Cubin. Mr. Brock, I know that is true, and I'd like to 
say amen to that. Wish it were the case in this situation.
    Mr. Brock. If it were, you wouldn't have this problem.
    Mrs. Cubin. That's right. We wouldn't be here today.
    How did POGO recruit you to join the false claim act suit?
    Mr. Brock. You'll have to ask them on that. I got a call 
from Danielle, asked me if I would like to participate in this, 
and I told her yeah.
    Mrs. Cubin. And so you didn't really think that you had a 
lot of pertinent information.
    Mr. Brock. I knew I had as much as anybody about 
California.
    Mrs. Cubin. About the California, the Long Beach lawsuit.
    Mr. Brock. That's right.
    Mrs. Cubin. Okay. Did you know Ms. Brian at that time? Had 
you ever spoken to her before?
    Mr. Brock. She called me one day. I'm not sure how she got 
my name or why, but she called me, and we discussed it, and 
then after several discussions, I agreed that I would help her.
    Mrs. Cubin. So did you know her before that time?
    Mr. Brock. Never.
    Mrs. Cubin. And what kind of help was it that she told you 
you could give to the case?
    Mr. Brock. Well, in what we discussed was the fact that the 
Federal Government leases in California were being underpaid. I 
knew that, and I told her I would be involved and help her.
    Mrs. Cubin. And what would that involvement entail? I mean, 
what actions--was it just lending your name or were there----
    Mr. Brock. Would you like me to tell you why?
    Mrs. Cubin. Pardon me?
    Mr. Brock. Would you like me to tell you why?
    Mrs. Cubin. Yes.
    Mr. Brock. I had dealt on my job, and by the way, I'm not a 
whistleblower. I worked for the City of Long Beach and the 
State of California, and it was my job to get as much money for 
the oil as I could.
    Mrs. Cubin. Good.
    Mr. Brock. I wrote contracts that I thought would do that. 
I tried to get the top price that we could get and deserved for 
our oil, and I was doing that when price controls came in. We 
got frozen--low-gravity oil got frozen at a depressed level, 
and I tried to convince the DOE, the cost of living or whoever 
they were, whoever would listen, Senators, Congressmen, that 
the price of oil was low, and it was frozen wrong, and they 
should change it.
    And along the line, when I was trying everything I knew 
why, it dawned on me, look, the Feds are probably getting paid 
on the posted price, so they're getting robbed. And so I tried 
to get from the Fed, not me personally, but my staff--I had a 
good staff of petroleum engineers--they tried to find out what 
royalty oil was in California from the Feds, what they were 
paid for it, and they were told that that was proprietary 
information and they couldn't get it.
    So what I did, I had my staff find out from the 
Conservation Committee of California how much Federal oil there 
was. I assumed that probably the royalty was 12.5 percent 
because I had seen bids that that's what it was. So I took 12.5 
percent of that. I knew how much the oil was underpriced, and 
so I came up with a number. And I went to the Interior, to the 
DOE, to Senators, to Congressmen, and in our discussions I said 
that the Federal Government is being underpaid on Federal oil 
by ``X'' number of dollars.
    Mrs. Cubin. And that----
    Mr. Brock. I was told by one gentleman in the FEA that 
their duty was to keep the price of gasoline down and not worry 
about what oil was. To me, that's wrong. My life has been in 
the oil business. When it came up that this other was coming 
up, I was very happy to lend what little support I could give 
to it, and I thought it might be substantial.
    Mrs. Cubin. So just to sum this up, your expertise all 
related to the situation in the Long Beach suit, and you didn't 
really have any knowledge of oil valuation and taxation or 
royalties in the rest of California. Would that be correct for 
me to say?
    Mr. Brock. Not at all. I represented the California 
Independent Producers Association before the DOE and before 
Congress Committees and whatever, and we collaborated on what 
the prices were and what people were being paid for. We had an 
evaluation made of the price of California low crude oil. We 
had a very complete study that the oil companies never refuted, 
except the fact that they said that it didn't include 
amortization. Well, after several years, you know, a buck a 
barrel at 100,000 barrels a day pays out pretty fast. And so we 
tried to get them to change, to give us an answer again, and 
that's when they had just started to change what they were 
doing, and the Feds put the price control on.
    During this period of time, one of the contracts that I was 
very instrumental in drawing up, we had the right to have the 
oil companies tell us what they paid for oil all over, what 
they paid for our oil and everything. And in one of these 
discussions that we had, it happened, I believe it was in 1974, 
one of--I'm not sure if it was my people or one of the State 
people, but somebody got a letter they picked up from the oil 
company, and in there it showed the scheme that they were 
using, which is called a three-cut exchange, how they were 
concealing to us what the value of the oil was. The oil 
companies tried to hide that. We finally had to, I guess Ken 
Corey [ph] probably went to court, and we got that. That's when 
we decided to file the oil suit.
    And after the oil suit----
    Mrs. Cubin. Excuse me, Mr. Brock. While that is very 
interesting, the focus of this oversight hearing is to 
determine the payment to two Federal employees who were 
involved in policymaking about oil valuation. So it really 
isn't relevant. But I do thank you for your information.
    My time has expired, and the Chair will now recognize Mr. 
Brady.
    Mr. Brock. Let me say you asked me why I was involved. I 
was trying to tell you.
    Mrs. Cubin. Thank you very much.
    Mr. Brock. I'm a good citizen of the United States. I was a 
Boy Scout, and I felt that it was important that I gave my 
knowledge to somebody that would listen and maybe do something 
about it.
    Mrs. Cubin. And I commend you for that. And I certainly 
would agree that you are a good citizen. Your being here also 
demonstrates that. Thank you, Mr. Brock.
    Mr. Brady?
    Mr. Brady. Thank you, Madam Chairman.
    Let's go back to something you said that's very important. 
I don't know how you were raised, but in Washington one of the 
excuses for dismissing inquiries like this is that everybody 
does it, everybody does things like this. As a city employee, 
as a government employee in a position of trust, with inside 
information on the California royalty issue, would you have 
entered into agreement like this? Would you have accepted that 
check, as a Federal--as a government employee, for the 
information you had dealing with oil royalties in California?
    Mr. Brock. It wouldn't be necessary in California.
    Mr. Brady. So California would have stopped you from it or 
your own ethics would have stopped you from it?
    Mr. Brock. No. That information that--I can't think of any 
information that anybody would need that wasn't readily 
available in California.
    Mr. Brady. So, in that case, you didn't provide any 
additional expertise. But had you been approached to 
participate, you would not have or you would have? No problem 
or it wouldn't have been--earlier you said, ``In California we 
are very open. We don't go, we don't do things like this.'' I'm 
just trying to clarify would you have participated in that----
    Mr. Brock. That is our side of it. That is the government 
side of it.
    Mr. Brady. So it's no problem from your standpoint? You'd 
have been happy to be----
    Mr. Brock. Well, I don't know----
    Mr. Brady. I don't get the impression you would, and I 
don't know why you wouldn't simply say ``no.'' Because I get 
the impression from you that you were doing your job, that you 
felt it was a duty, and you feel strongly about it. And in your 
earlier statement you said this would not have happened in our 
government, in our city government. So is the answer, yes, you 
would have participated or, no, you wouldn't have?
    Mr. Brock. Participated in what?
    Mr. Brady. In any agreement where, as a government 
official, you were paid by special interest to provide insider 
information that ultimately lined everyone's pocket.
    Mr. Brock. I can't think of any information that I would 
have that somebody would be willing to pay me for.
    [Laughter.]
    Mr. Brady. But, well, now you've been paid $900,000 for the 
information you were supposed to have known in this case.
    Mr. Brock. In this case? Look, I did in California----
    Mr. Brady. And I would think having a million-dollar 
expertise didn't occur overnight. So are you knowledgeable or 
are you not knowledgeable?
    Mr. Brock. Would you like me to finish?
    Mr. Brady. Sure.
    Mr. Brock. Okay. I did and presented for the State and city 
exactly the same thing that Benjie Johnson and his partner are 
doing, and they're getting millions of dollars for it. When I 
was in California, I did it for the city and State and got 
nothing except my paycheck. I felt that the government was 
being taken, and when I had an opportunity, somebody suggested 
to me will I help them, I agreed.
    Now, do you think that those two gentlemen there had an 
agreement with us and said that we'll give you 40 percent----
take 40 percent and give 20 percent to somebody else if they 
didn't think, at that time, there was a good reason for it? We 
could have been the relators and they could have been on the 
outside.
    Mr. Brady. In that case, because you bring it to a 
wonderful close, in that case, if they had come to you, and you 
were an employee of the government and had that million-dollar, 
$900,000-information that you possess, would you have, as a 
government employee, would you have entered into this secret 
agreement to be paid for that information?
    Mr. Brock. I probably wouldn't.
    Mr. Brady. I don't think you would.
    Final question: There's 600 courts in America these suits 
can be filed in. I don't know how many other cases you're a 
relator in. I would imagine not a lot. Is there reason out of 
600 that you chose the Lufkin court to file this brief in?
    Mr. Brock. Pardon?
    Mr. Brady. Is there a reason your attorneys, on your behalf 
in this important case, filed it in the Lufkin court?
    Mr. Brock. I don't understand that. Rephrase that.
    Mr. Brady. As an important part of this case, filing a very 
important lawsuit on an issue you're very knowledgeable on, a 
suit was filed in the Lufkin court on your behalf. What was the 
reason, from your knowledge, why was the Lufkin court chosen to 
file this suit?
    Mr. Brock. Well, you'll have to ask them.
    Mr. Brady. No. But you are them.
    Mr. Brock. Pardon?
    Mr. Brady. I apologize. But you are them. You filed the 
suit.
    Mr. Brock. Okay.
    Mr. Brady. So why did you choose Lufkin court, out of 600 
in the country, to file?
    Mr. Brock. Well, I still don't understand.
    Mr. Brady. Was there----did you want to say something? Does 
your attorney understand that question?
    Mr. Brock. No, I didn't understand it, and all of the 
legal----
    Mr. Brady. No, I'm sorry. Does your attorney understand it?
    Mr. Brock. All of the legal stuff that went on has been 
done by the attorneys. When I entered this thing, I had never 
heard of a, what is it, a qui pay or whatever, or a relator or 
any of those things. I had never heard of those. I was doing 
the end of my job that I wasn't being able to do in California.
    Mr. Brady. Thank you, Madam Chairman.
    Mrs. Cubin. The gentleman's time has expired.
    You stated, Mr. Brock, that you did all of the work in Long 
Beach and you didn't get one dime for yourself out of all of 
the millions that were recovered in unpaid royalties in that 
suit. And then you referred to Mr. Johnson and Mr. Martineck, 
who have received millions. And you asked if that was right.
    So what I wanted----
    Mr. Brock. You misunderstood me if you said if I thought 
that was right. Of course it was right. That's the law. I'm not 
objecting to that. I'm just saying that you seem--the Committee 
seems to have the feeling that those two guys are doing a great 
job for the government, and nobody seems to think that I have 
anything to do with it. I think the questions of your 
attorneys, ``You mean, you're not doing anything, and you're 
getting all of this money?'' I think that we were part of the 
law. We had an agreement with them, and the only reason they 
made that agreement was because they thought that we might have 
been the only relators. That's what they said, if you read 
between the lines.
    Mrs. Cubin. Okay. So----
    Mr. Brock. They didn't give us 40 percent for nothing.
    Mrs. Cubin. Was what you were trying to say that you think 
you deserved the million dollars that you have so far received? 
You think you deserved that because of the work that you did in 
Long Beach?
    Mr. Brock. No, I think I deserve that because I had an 
agreement with them. What I'm getting has no affect on what the 
government gets. They get it all, and then because of a side 
agreement they had with me, I get my share.
    Mrs. Cubin. Mr. Schaffer?
    Mr. Schaffer. Thank you, Madam Chairman.
    Mr. Brock, a minute ago you--Mr. Brady mentioned that you 
had received about $900,000 as your, so far, for your 
involvement in the suit; is that accurate?
    Mr. Brock. That sounds about right.
    Mr. Schaffer. Does that sound right? Let me ask you about 
the False Claims suit. Your deposition was delayed about a day. 
Why was that? Do you remember? It was scheduled for, I don't 
remember the date, but it was pushed back one day. Do you know 
why? Can you tell us why?
    Mr. Brock. When was this?
    Mr. Schaffer. In Dallas. You were scheduled for the 
deposition, and it had to be delayed for one day?
    Mr. Brock. Oh, I had a back problem.
    Mr. Schaffer. Is it true that the other parties questioned 
your knowledge in the case?
    Mr. Brock. Pardon?
    Mr. Schaffer. Was it true that the other parties questioned 
your knowledge in the case----
    Mr. Brock. I don't believe so.
    Mr. Schaffer. [continuing] about the case for that day.
    Mr. Brock. I don't believe so.
    Mr. Schaffer. You don't believe so?
    Mr. Brock. No.
    Mr. Schaffer. Okay.
    Mr. Brock. I don't think that anybody there has ever 
questioned my knowledge on that case.
    Mr. Schaffer. Did Mr. Wright ever request that you be 
removed from the case at that time?
    Mr. Brock. I'm not sure. They had some--that side agreement 
came and went, and I don't know how long it took to get it.
    Mr. Schaffer. Did you show up the next day for the 
briefing----
    Mr. Brock. Pardon?
    Mr. Schaffer. Did you show up the next day for the 
deposition with three pages of handwritten notes?
    Mr. Brock. Yes. Yes.
    Mr. Schaffer. Did you have three pages of handwritten 
notes?
    Mr. Brock. Pardon?
    Mr. Schaffer. Did you have three pages of notes with you?
    Mr. Brock. Three pages of notes?
    Mr. Schaffer. Were you coached/briefed on what needed to 
be, on the matters of the case at the deposition?
    Mr. Brock. Yeah.
    Mr. Schaffer. You were. Okay. How about for today's 
testimony?
    Mr. Brock. How about what now?
    Mr. Schaffer. How about for today's testimony? Were you 
briefed and coached on your presentation to the Committee 
today?
    Mr. Brock. Well, not really. I was briefed on how this 
thing works, and what I'm doing, why I'm here, and that sort of 
stuff. It had nothing to do with what I'm going to say, if 
that's what you mean.
    Mr. Schaffer. Okay. As far as content, what you're telling 
us is your own----
    Mr. Brock. Yeah. They said what this is, and what you're 
doing----
    Mr. Schaffer. Very good.
    Mr. Brock. And why I'm here, which is a little----I don't 
understand.
    Mr. Schaffer. How would you characterize your knowledge of 
the suit filed?
    Mr. Brock. Pardon?
    Mr. Schaffer. How would you characterize your knowledge, 
your involvement with the specifics of the False Claims case? 
Are you very knowledgeable about it? Are you involved in a 
detailed sort of way?
    Mr. Brock. No. Let me say this: I think it came out in all 
of this that my knowledge of the Texas problems is limited. 
However, I think I know probably together as much as anybody 
else about California. This lawsuit went to both California and 
every place, the United States. There is no doubt but what 
Benjie Johnson and those guys know so much more about Texas 
than I do. However, I know a whole heck of a lot more about 
California than they do.
    Mr. Schaffer. Well, congratulations.
    Mr. Brock. Now, then, when the relators split out, they, 
for their own reasons, I don't know, decided to handle it all 
alone. They never talked to me. They're doing it all 
themselves, and that's their legal right. They are a relator 
and I'm not. However the judge could have made it the other 
way.
    Mr. Schaffer. How do you know the law firm Lobell, Novins 
and Lamont?
    Mr. Brock. How? Pardon?
    Mr. Schaffer. How do you know them, the law firm? How did 
you come into contact with them? How did you learn about them? 
How do you know them?
    Mr. Brock. Which ones are you talking about?
    Mr. Schaffer. The name of the law firm, Lobell, Novins and 
Lamont, are you familiar with them?
    Mr. Brock. Very well, from California.
    Mr. Schaffer. How did you come to know them?
    Mr. Brock. Well, they were the lawyers for the State of 
California, and----
    Mr. Schaffer. Very good. How long have you closely worked 
with them?
    Mr. Brock. Probably from early seventies, after price 
control.
    Mr. Schaffer. Do you know Lon Packard?
    Mr. Brock. Yes.
    Mr. Schaffer. Did Mr. Packard ever discuss with you the 
False Claims case that you're involved in?
    Mr. Brock. I can't recall specifically anything. And I 
understand that my lawyer and I have a privilege on such 
things.
    Mr. Schaffer. Thank you, Madam Chairman.
    Mrs. Cubin. The gentleman's time has expired.
    Mr. Brock, could you refresh my memory. Who are the 
relators in this case?
    Mr. Brock. Benjie and his partner.
    Mrs. Cubin. The only ones?
    Mr. Brock. No.
    Mrs. Cubin. The chair now recognizes Mr. Inslee for 5 
minutes.
    Mr. Inslee. Thank you, Madam Chair.
    Mr. Brock, you expressed some kind of mysticism as to why 
you're here, and some of us share that view. But I want to take 
a stab at explaining to you how that's come about. And I guess 
the best way I can try to explain it is to sort of explain the 
way this Committee works at the moment, and I want to give just 
kind of a metaphor. Perhaps you'll understand.
    Mr. Brock. I think I've seen.
    [Laughter.]
    Mr. Inslee. It's kind of like this: Let's assume that you 
were standing outside of a bank, and these two big trucks 
pulled up beside the bank, and these guys went into the bank, 
and they came out with about--big sacks stuffed with $300 
million, and they threw it in the back of the truck, and the 
trucks had ``Acme'' written on the big side, and the other one 
said ``AAA, Inc.'' on the other side of the other truck. And 
then the trucks pulled away, and the bank tellers came out 
screaming, ``These guys just heisted $300 million from us,'' 
and then this Committee showed up on the scene. What we would 
do is haul, give a subpoena to you to investigate you about 
whether you had removed tags from your mattresses or not----
    [Laughter.]
    Mr. Inslee. [continuing] in violation of the prohibition 
against removal of the tags from mattresses that is an 
important American policy. And I just want to explain to you 
that, so you'll understand how this works because essentially 
that's what we're doing here today, and we're not using our 
time to make sure the taxpayers' get their monies' worth, and 
we're not using our time how to make sure whistleblowers will 
continue to have faith in this system to allow us to save money 
for taxpayers, and we are also not allowing the Justice 
Department review of the facts of this case to continue 
unimpeded by politics.
    And I just want to tell you that it's a sad day that the 
politics of this have intruded in this situation. And when I 
get a chance in this Committee, we're going to ask questions 
about the fellows in the trucks, rather than the fellows and 
the mattresses, and I appreciate your attendance here, Mr. 
Brock, and patience.
    Mr. Brock. Well----
    Mrs. Cubin. Mr. Inslee's comments clearly reveal that he 
hasn't been here for the hearing and really doesn't understand 
what the oversight hearing is about.
    The chair now calls on Mr. Gibbons for 5 minutes.
    Mr. Gibbons. Thank you, Madam Chairman. And certainly, Mr. 
Brock, if those two big guys coming out of that bank with two 
big sacks of money stopped and gave you or tried to give you 
money, would you have taken it? Certainly not. I mean, that's a 
rhetorical question, but it ought to bring us all back to 
reality.
    What we're here to talk today about is the ethical problems 
of whether two Government employees illegally or unethically 
took money they weren't entitled to for their part in 
discovering the illegal payments or failure to make payments to 
the United States for royalty problems. So that's where we're 
going with this Committee hearing, and I hope that it's 
evidently clear to you and your attorney, who is sitting behind 
you. This is not a hearing on whether or not you, Mr. Brock, 
have committed any crime at all. What we're trying to do is 
discover the facts and circumstances surrounding whether or not 
two Government employees should or should not have been paid by 
a private corporation money. This is where we're going, and 
this is where we want to focus on. Nothing should be drawn to 
any other conclusion other than that.
    Now, when, Mr. Brock, did you file your lawsuit, your qui 
tam or False Claim lawsuit in this case?
    Mr. Brock. I'm not sure. The attorneys did that.
    Mr. Gibbons. Do you remember even the year you filed it?
    Mr. Brock. Probably 1997.
    Mr. Gibbons. Probably 1997. Do you recall why you chose the 
lawyers you chose?
    Mr. Brock. I didn't choose anything. The attorneys did it.
    Mr. Gibbons. All right. So you are sort of an innocent 
bystander, and they came along and asked you to be a named 
relator in this lawsuit.
    Mr. Brock. I submitted a lot of data to them.
    Mr. Gibbons. When did you or when were you first contacted 
by Danielle Brian and POGO?
    Mr. Brock. Sometime in the middle nineties.
    Mr. Gibbons. Middle nineties. Would that have been 1995?
    Mr. Brock. It could have been.
    Mr. Gibbons. Had they contacted you at any point in time 
from the middle nineties about filing a lawsuit or joining them 
in their lawsuit?
    Mr. Brock. When I first talked to them, I don't know that 
we discussed a lawsuit. I agreed that I would help to try to 
correct the inequities that was being paid for the Federal 
Government oil. I wasn't sure at the time if it involved a 
lawsuit. I haven't been involved in one for 15 years in 
California. I thought it was a very distinct possibility.
    Mr. Gibbons. You've already testified that you didn't know 
anything about the royalty process in Texas. Did you agree----
    Mr. Brock. The sale of oil?
    Mr. Gibbons. The Texas royalty problems in Texas.
    Mr. Brock. I wasn't familiar with how the oil was sold. I 
didn't know what schemes they were using in Texas.
    Mr. Gibbons. Certainly. Did you agree when your lawyers 
indicated that they wanted to file your suit in Texas?
    Mr. Brock. I don't even know if I was considered in where 
they filed it.
    Mr. Gibbons. I certainly understand that.
    Could you have filed your complaint for a false claim in 
California?
    Mr. Brock. What did you say, should I have?
    Mr. Gibbons. Could you have?
    Mr. Brock. I don't know why not.
    Mr. Gibbons. I would agree. Let me go back----
    Mr. Brock. And I certainly don't know why they filed in 
Lufkin, Texas.
    Mr. Gibbons. Thank you. And I agree. We don't know why 
either, and that's part of the process and part of the problem 
that we want to find out about later on.
    Mr. Brock. Good luck.
    Mr. Gibbons. I agree.
    [Laughter.]
    Mr. Gibbons. It's going to be difficult because there are 
so many people that here are intentionally avoiding answers or 
that come here with a convenient lapse of money that we have 
got to delve into.
    Let me ask you what you talked to Danielle Brian about when 
she invited you to be part of the process to recover these oil 
royalties? How did she talk to this matter with you?
    Mr. Brock. Well, as I say, it's about as fuzzy as when it 
was. But I'm sure that over a period of several conversations 
we talked about what I could offer, what my involvement was in 
California. And I made it very clear to her that I didn't want 
to get stuck with a bunch of attorneys' fees. I think you have 
a letter in front of you which was our agreement that she show 
that. I was willing to get involved, and do some help and try 
to correct something that was very wrong, and I was willing to 
get involved, but I just didn't want to pay a bunch of 
attorneys.
    Mr. Gibbons. One final question, Madam Chairman, and I see 
my time has elapsed. But let me say that you can obviously 
remember that you did not want to get in touch--or did not want 
to get settled with a bunch of attorneys' fees. Did she ask you 
about what you knew about the oil royalty schemes in Texas at 
the time?
    Mr. Brock. I don't know that we discussed that.
    Mr. Gibbons. The gentleman's time has expired.
    The chair recognizes Mr. Underwood for 5 minutes.
    Mr. Underwood. Thank you, Madam Chairwoman. I appreciate 
the opportunity to interact with obviously the star witness of 
the afternoon, Mr. Brock.
    I'm trying to understand as well how it is, what is the 
nature of your appearance before the Committee. Are you an 
expert on ethics laws?
    Mr. Brock. Pardon? Am I what?
    Mr. Underwood. Are you an expert on ethics?
    Mr. Brock. Hardly.
    Mr. Underwood. Are you an expert on the False Claims Act?
    Mr. Brock. No, I've never even read it.
    Mr. Underwood. So what it is that you really think that you 
could contribute to these hearings that will clarify some of 
the questions that have been raised before the Committee 
relative to the payments to Berman and Speir?
    Mr. Brock. Well, that's a difficult question. I think that 
there isn't anything that can be done to solve the overall 
problem as long as there are people that are willing to make 
undercover deals. You have an industry that controls the 
refining. And if they do not fairly deal with the government or 
anybody else, I'm not sure there's anything that you can do.
    Mr. Underwood. Well, I appreciate that very much because I 
think that brings us back to the nub of the question that 
should be in front of the Committee. And while I appreciate and 
understand the majority's insistence on drawing attention to 
the problems that they are trying to draw attention to, I think 
that your statement there really indicates where we should 
focus our attention.
    Thank you very much.
    Mr. Inslee. Would the gentleman yield some of your time 
just for a moment?
    Mr. Underwood. Sure.
    Mr. Inslee. I'd like to ask a question. Perhaps one of the 
members of the panel or the Chair could help me on this. Is 
there any question but that the two government employees 
themselves could have been the relators in this case? Is it 
clear that they, if they had chosen so, that there is nothing 
that would have prohibited them for themselves initiating this 
lawsuit? Is that clear or is there an issue about that?
    Mrs. Cubin. Mr. Inslee, I suggest you discuss that with 
your staff. I'm sorry that you aren't prepared.
    Mr. Inslee. I was looking for a higher power. So I was 
seeking the Chair's comments in this regard. And I guess 
reclaiming my friend's time, my understanding, and I have been 
advised by our staff that the two employees, should they have 
decided to, could themselves have been the relators in the 
case. And if that is true, they could have legally received the 
compensation associated with being a relator in a whistleblower 
case one way or another, whether they get it first through a 
third party or they get it directly as the relators themselves.
    And the reason I ask that is, assuming that's true, and to 
my knowledge that is true, I am having difficulty seeing the 
difference of an effect receiving it from a third party, 
assuming that they had not involved themselves in any decision 
making that would somehow create----
    Mrs. Cubin. Would the gentleman yield?
    Mr. Inslee. I would certainly do that. And I would 
appreciate your wisdom in that regard.
    Mrs. Cubin. The fact is, and had you been able to stay, I 
understand you are busy, and we can't all always be here, the 
fact is that it is true that Federal employees can file a qui 
tam suit. They, however, the vast, huge majority of the time 
are thrown out by the courts because the courts do not want 
money to be the determining factor in policy decisions that 
Federal employees or government employees might have to make. 
But in the very, very small percentage of cases where the 
Federal employee, where it may not be thrown out, in those 
cases, that employee is then walled off from any decision 
relating to the issue at hand.
    So Mr. Berman and Mr. Speir would have been walled off from 
advising on the new oil valuation regulation. They would have 
been walled off, not been able to advise or make any policy. So 
that is where it falls short. That's where the break in ethics 
and possibly the legal system goes.
    Mr. Brady. Madam Chairman, may I inquire----
    Mrs. Cubin. The time is Mr. Underwood's.
    Mr. Underwood. Go ahead.
    Mr. Inslee. If I could reclaim just for a moment. My 
understanding is we haven't had any witnesses involving the 
False Claims Act who are experts on it. And I would suggest 
that if that is really the thrust of this inquiry, that really 
is what we should be looking for on how to deal with issues 
that you raise under the False Claims Act. And I would suggest 
to you if that is the inquiry of the Committee, we would be 
well advised to sort of seek some expert testimony in that 
regard. It's just a suggestion. It's a friendly suggestion, and 
I'm sincere about it.
    Mrs. Cubin. Thank you.
    Mr. Brady?
    Mr. Brady. Madam Chairman, I have an inquiry of the Chair. 
As I understand it, Mr. Brock filed a suit on a State topic 
with which he wasn't familiar with, under an Act he never read, 
based on knowledge that many people in California had and 
received $900,000 for it. My question to you is we don't know 
anything either. Can we get in on this lawsuit before it ends?
    Mrs. Cubin. Mr. Brady, your question is out of order.
    Mr. Brock, the last thing of you, and thank you very much 
for being here. We do appreciate that it was difficult for you, 
and thank you for being here.
    Mr. Brock. I was happy to be here.
    Mrs. Cubin. Thank you.
    I want to make this clear: You did offer something to this 
lawsuit, to POGO, and that is you gave them information, and 
that is why you are being paid, why you have raised money; 
isn't that correct?
    Mr. Brock. Yes.
    Mrs. Cubin. That's what your testimony is. And so do you 
think it's fair then to say that's why the other people who 
have received money from this lawsuit; that is, like Mr. Berman 
and Mr. Speir, they received the money because of information 
they provided as well?
    Mr. Brock. I'm not sure. I had nothing to do with that, and 
I don't know what the deal was.
    Mrs. Cubin. Thank you very much. And again thank you for 
your testimony and have a safe trip back to California.
    Mr. Brock. Thank you.
    Mrs. Cubin. Mr. Schaffer, did you have a----
    Mr. Schaffer. Yes. Thank you, Madam Chairman. Just in 
response to the questions raised by Mr. Inslee. There's an e-
mail here that I would quote from, and it's to the senior 
attorney in the Johnson case. He says, I don't want to mention 
exactly who.
    Mrs. Cubin. Mr. Schaffer----
    Mr. Schaffer. Madam Chairman, that essentially 
characterizes the point that you just made. It's that it's 
important to note that had the Department of Interior known 
that employees were actively involved in a case of that sort, 
that they would have been walled off for fear of giving the 
appearance, effectively, that Federal regulators are subject to 
personal gain as a result of their involvement. And your 
characterization of the likely effect is not just one of 
speculation, but one that this Committee is aware is a very 
real consideration.
    Mrs. Cubin. So do you have a document that you are asking 
to be submitted to the record?
    Mr. Schaffer. No, Madam Chairman.
    Mrs. Cubin. Oh, okay then. We'll move on to----
    Mr. Inslee. Mr. Schaffer, would you yield? I want to ask 
you a question about that document. Would you entertain one 
question?
    Mrs. Cubin. Certainly, Mr. Inslee.
    Mr. Inslee. Mr. Schaffer, I just took a look at the 
document I think you're referring to. Has there been any 
suggestion by any quarter that, in essence, the oil companies 
paid too much because of some action by the two employees in 
question here? Has anyone asserted that somehow their actions 
resulted in the oil companies paying more than they should have 
because these individuals made some decision that was 
influenced adversely by this payment? Has there been any 
suggestion like that? To my knowledge, I have not heard any.
    And the reason I think that's significant in this inquiry 
is so far I haven't seen an assertion that there has been any 
damage to any party resulting from this. I haven't heard anyone 
saying these, you know, these agents of the government made me 
pay more to the government than I was supposed to. Now, I've 
heard the opposite. I've heard that the oil companies have been 
made to pay what they were supposed to pay due to litigation 
and whistleblower efforts that they did not pay and were 
required to do so. But I haven't heard anyone say that these 
employees made a mistake and made us pay more than we were 
supposed to. Is there any assertion like that, that anyone is 
aware of?
    I'm seeing the Chair shake her head no. And if that is not 
true, aren't we sort of looking a little bit down a dead end 
here if we don't have any injury, if we don't have anything 
that went wrong here, if nothing's broke, I haven't seen 
anybody assert that there was a broken leg economically 
suffered by anyone, as a result of these employees' misconduct. 
And I guess what I'm questioning is if we haven't seen a crime, 
what are we looking for here? And that's a serious question.
    Mrs. Cubin. Mr. Inslee, I'd like to respond to your 
question because I agree with you.
    The only party--I can't say the only party--but the party 
that we care most about that may have been damaged are the 
American public, are the taxpayers, are the people who should 
be receiving every single penny of royalties that are due them. 
It is not out of the realm of possibility--okay. So, first of 
all, number one, we have to protect the integrity of the 
process of government. We have to protect the ethical rules 
that apply to public servants for the sake of the public. But 
then going beyond that, my sincere question is, and I am 
sincere about this, has POGO damaged or has POGO, through good 
intentions. I am not saying that I think anyone set out to do 
anything evil, but because of the payments to these two Federal 
employees, there are still lawsuits out there that are pending.
    Now, because these employees were involved in the new oil 
valuation regulation, they remained involved after they had the 
agreement for sure and possibly after they received the checks. 
Have they damaged the standing of the citizens of the United 
States so that those oil companies will be more brazen about 
going to court and challenging the existing rule? In my 
opinion, the existing rule is tainted by the fact that two 
advisers at least and policy makers at most took this money. 
That's the damaged party, Mr. Inslee.
    So now with that, the Chair would call Mr. Keith Rutter to 
the table please.
    Mr. Rutter, thank you for being here.
    [Witness sworn.]
    Mrs. Cubin. Thank you very much. I appreciate your being 
here.
    Mr. Rutter, as the assistant executive director of POGO, 
you have been subpoenaed to help the Subcommittee understand 
the process which resulted in POGO reporting to the Internal 
Revenue Service that payments to Mr. Berman and Mr. Speir were 
one-time public service awards; the process by which the POGO 
board decided to establish such an award program, if they did; 
the decisions by the board to file and prosecute an oil royalty 
lawsuit and the meeting minutes reflecting their decisions.
    I'd like to start out with just some preliminary questions. 
How long have you been employed by POGO, Mr. Rutter?

                   STATEMENT OF KEITH RUTTER

    Mr. Rutter. Since 1989.
    Mrs. Cubin. And what are your responsibilities?
    Mr. Rutter. I have a variety of duties throughout the 
organization.
    Mrs. Cubin. Excuse me? I couldn't hear what you said. Is 
your microphone on?
    Mr. Rutter. My responsibilities include a variety of things 
throughout the organization.
    Mrs. Cubin. So do they include handling tax matters and 
record keeping, such as board minutes?
    Mr. Rutter. Yes, they do.
    Mrs. Cubin. Are you generally familiar with the 
requirements for making IRS Form 990 and IRS Form 1023 
available to the public?
    Mr. Rutter. I'm sorry. Could you----
    Mrs. Cubin. Yes. I just wonder if you are generally 
familiar with the requirements for making those two Internal 
Revenue Service forms available to the public.
    Mr. Rutter. I'm sorry. When you say ``generally familiar--
--''
    Mrs. Cubin. You are aware that there is a requirement to 
make those forms public.
    Mr. Rutter. Yes. We comply with the IRS regulations.
    Mrs. Cubin. Can anyone just walk in off the street and 
review a copy of those records in your office?
    Mr. Rutter. Yes. Anyone can walk off the street and review 
those records.
    Mrs. Cubin. Well, then can you tell me why POGO won't 
furnish those documents to this Committee.
    [Witness conferring with counsel.]
    Mr. Rutter. Madam Chair, I am advised by my counsel that 
the Committee may require me to answer all questions pertinent 
to the subject under inquiry. My attorney advises me that this 
question is not pertinent to a proper subject before the 
Committee.
    Mrs. Cubin. Mr. Rutter, I would advise you that the forms 
that I referred to were subpoenaed by this Committee, and 
therefore they are pertinent to this hearing.
    [Witness conferring with counsel.]
    Mr. Rutter. The chairman, according to the rules of the 
House and of this Committee, the chairman is solely authorized 
to determine what is pertinent for a hearing and what is not. 
Additionally, the proceeds from those lawsuits, Mr. Rutter, are 
reported on those forms. And since the payments to Mr. Berman 
and Mr. Speir came out of the proceeds of that lawsuit, which 
is reported on that form, I again ask you, since these are 
public documents and since someone can walk in off of the 
street and see them, what is the reason that POGO refused to 
honor the subpoena and supply those to this Committee?
    Mr. Rutter. With respect, and I understand the chair's 
position, and upon advice of counsel, I will stand by my 
objection.
    Mrs. Cubin. Upon advice of counsel, excuse me? I didn't 
hear the last.
    Mr. Rutter. I said that upon advice of counsel, I am going 
to stand by my objection.
    Mrs. Cubin. Moving right along. Were you asked to consult 
an accountant and lawyers about POGO's payments to Mr. Berman 
and Mr. Speir? I want to point out I am not asking what advice 
those experts gave, but according to some of the minutes that I 
saw, I will repeat the question. Were you asked to consult an 
accountant and lawyers about the payments to Mr. Speir and Mr. 
Berman?
    Mr. Rutter. I'm sorry. When you say ``was I asked to 
consult an accountant and an attorney----''
    Mrs. Cubin. Yes, or did you just do that of your own 
accord? According to the minutes, an accountant and lawyers 
were contacted about POGO's payments to Mr. Berman and Mr. 
Speir.
    Mr. Rutter. Correct.
    Mrs. Cubin. And who contacted those accountants and 
lawyers?
    Mr. Rutter. I was involved in the meetings with the 
accountants and the lawyers.
    Mrs. Cubin. So you selected the lawyers and the accountants 
yourself or did someone recommend that to you?
    Mr. Rutter. The accountant we have had for several years, 
and I don't recall who suggested this particular lawyer that we 
went to see.
    Mrs. Cubin. Who determined that there was a necessity for 
an accountant, and particularly a lawyer, to be consulted 
regarding those payments?
    Mr. Rutter. I think it probably was a joint decision.
    Mrs. Cubin. A joint decision of whom?
    Mr. Rutter. Of the staff.
    Mrs. Cubin. And the staff would be you and Danielle Brian 
and no one else?
    Mr. Rutter. No. There are more staff members than just 
Danielle and I.
    Mrs. Cubin. So who decided then--please give me the names--
that it was necessary to contact an accountant and an attorney 
to give these awards?
    Mr. Rutter. I don't know if it was, when you say ``it was 
necessary,'' it was, you know, probably reached upon agreement. 
It was a good idea.
    Mrs. Cubin. Who decided that it was a good idea and who 
decided who you should call?
    Mr. Rutter. I think the staff. I'm sure there were----
    Mrs. Cubin. Please give me the names of all of the people 
that were involved in the decision.
    Mr. Rutter. At the time of----
    Mrs. Cubin. When the decision was made.
    Mr. Rutter. Right. The staff at the time would have been 
Danielle Brian, myself, Marcus Corbin. I don't know if there 
was anybody else at the time. I'm not familiar with----
    Mrs. Cubin. So you're saying it was your own decision to do 
that. Danielle Brian didn't recommend you to do that or tell 
you to do that.
    Mr. Rutter. No. I said it was a joint decision. I'm sure 
that we were in, you know, contact with the board of directors 
as well.
    Mrs. Cubin. That was my next question. Who on the board did 
you consult about whether or not you needed to contact an 
attorney?
    Mr. Rutter. I can't recall specifically.
    Mrs. Cubin. But you do recall that the board was in on that 
decision or not?
    Mr. Rutter. Yes. The board was aware.
    Mrs. Cubin. Were they aware prior to the time that you 
contacted the accountant and the attorney or were they notified 
after?
    Mr. Rutter. As I recall, some of the board might have been 
aware prior to the contacting of the attorney and the 
accountant.
    Mrs. Cubin. Okay. So you have a recollection about that. 
Which board members were those that you recall?
    Mr. Rutter. No, I said, you know, I'm sure somewhere. I 
don't know. I don't know specifically.
    Mrs. Cubin. You do know that, you do remember that you're 
under oath.
    Mr. Rutter. Yes.
    Mrs. Cubin. And you do recall that there were board members 
that knew prior to the time you, but you don't know who they 
were; is that your testimony?
    Mr. Rutter. No. I'm saying that I'm recalling that they 
were, but I don't remember specifically who each particular one 
was or not.
    Mrs. Cubin. Any one, not each--any one.
    Mr. Rutter. I'm sorry. Any one?
    Mrs. Cubin. Any one board member that was aware before you 
contacted the accountant and the attorney.
    Mr. Rutter. You know, more than likely it would have been, 
you know, David Hunter I think was chair at the time, but----
    Mrs. Cubin. Mr. Banta was chairman at the time.
    Mr. Rutter. I don't think that's correct, ma'am.
    Mrs. Cubin. Oh, okay. Hunter in 1998. Did Mr. Banta take 
part in--did Mr. Banta specifically take part in the 
notification and the contacting of an accountant and an 
attorney?
    Mr. Rutter. I'm sorry?
    Mrs. Cubin. Did Mr. Banta contribute anything to that 
decision?
    Mr. Rutter. I don't think so. I don't recall.
    Mrs. Cubin. So you don't know. Okay.
    So your testimony is that the accountants were accountants 
that you had used on a regular basis.
    Mr. Rutter. Uh-huh.
    Mrs. Cubin. And that the lawyers, you don't know how they 
were selected.
    Mr. Rutter. No, they were just recommended.
    Mrs. Cubin. And who recommended them?
    Mr. Rutter. I don't know. I don't recall.
    Mrs. Cubin. Do you recall if the lawyers were specifically 
identified to you as experts in the field of employee ethics?
    Mr. Rutter. [No response.]
    Mrs. Cubin. I mean, why would you feel the need to call an 
attorney is my question. You don't know who told you to do it, 
you did it, and you don't remember why you would feel the need 
to do it? I'm confused here.
    Mr. Rutter. We were--we were going to share the settlement 
money, and we wanted----
    Mrs. Cubin. And was there some question of whether or not 
that was legal or ethical?
    Mr. Rutter. We wanted to make sure that we took all of the 
proper procedures to ensure that the funds were distributed in 
a proper manner. And these were just some of the steps that we 
took.
    Mrs. Cubin. So was there a question then whether or not----
    Mr. Rutter. We had never done this before. We wanted to 
talk to people who had advice on, you know, doing it.
    Mrs. Cubin. So these lawyers were experts in ethics?
    Mr. Rutter. I don't know.
    Mrs. Cubin. But your question was based on ethical 
concerns; is that correct?
    Mr. Rutter. When you say ``ethical concerns,'' we wanted to 
make sure the decisions were, that the payments were made 
properly.
    Mrs. Cubin. And what do you mean by ``properly''? What do 
you mean by that?
    Mr. Rutter. Within the rules.
    Mrs. Cubin. Pardon me?
    Mr. Rutter. Within the rules.
    Mrs. Cubin. Within what rules?
    Mr. Rutter. Well, the rules of law and the rules of 
accounting.
    Mrs. Cubin. The rules of law? So there was a question in 
your mind whether or not this was legal.
    Mr. Rutter. No, ma'am. I said we wanted to make sure that 
they were done properly. I'm not saying that there was any 
question at the time.
    Mrs. Cubin. Does POGO keep minutes of all of their board 
meetings?
    Mr. Rutter. Yes, we do.
    Mrs. Cubin. Are they circulated to the board after the 
meetings?
    Mr. Rutter. Yes, they are.
    Mrs. Cubin. Are they then approved at the next meeting?
    Mr. Rutter. Yes.
    Mrs. Cubin. And whose job is it to take minutes at the 
meetings?
    Mr. Rutter. It is my job.
    Mrs. Cubin. And you type them, file them, and circulate 
them to the members?
    Mr. Rutter. Yes, I do.
    Mrs. Cubin. Were you present at the December 9th, 1996, 
board meeting?
    Mr. Rutter. I think I was.
    Mrs. Cubin. Did you keep the minutes of that meeting?
    Mr. Rutter. Yes. If I was there, I would have kept the 
minutes.
    Mrs. Cubin. Were you present at the October 27, 1998, board 
meeting?
    Mr. Rutter. I don't have the minutes in front of me, but if 
I was there, I would have kept the minutes.
    Mrs. Cubin. You would have typed and kept the minutes of 
that meeting as well?
    Mr. Rutter. Yes.
    [Discussion off the record.]
    Mrs. Cubin. I'm going to have a copy of some minutes that 
we have run and delivered to Mr. Rutter. So I will yield to Mr. 
Underwood.
    Mr. Underwood. Well, thank you, Madam Chair.
    I just wanted to clarify, I thought we were operating under 
the 5-minute rule. And--pardon me? It was a little bit more 
than that.
    I just want to clarify, we are operating under the----
    Mrs. Cubin. I only have two ears and a lot of people 
asking.
    Mr. Underwood. Yeah, well, you can give me some attention 
now.
    Mrs. Cubin. I am happy to do that.
    [Laughter.]
    Mrs. Cubin. You certainly deserve it.
    Mr. Underwood. So are operating under the 5-minute rule for 
this?
    Mrs. Cubin. Yes.
    Mr. Underwood. Okay. Thank you.
    Mr. Rutter, I guess some inferences have been made about 
the fact that you asked, POGO asked for legal assistance or 
some kind of legal representation in the process of acquiring 
this sum of money. Did POGO ever have experience, an experience 
like this previously?
    Mr. Rutter. No, we did not.
    Mr. Underwood. And so wouldn't it have been kind of a 
prudent course of action, don't you think, that if you all of a 
sudden came into this large sum of money that you would then do 
the prudent thing, which is to seek legal assistance? Is that 
the general spirit in which you sought legal assistance?
    Mr. Rutter. Yes, it is.
    Mr. Underwood. And so there was nothing, at the time that 
you asked for it, there was nothing nefarious or, at the time, 
there was nothing like that in your consideration.
    Mr. Rutter. No, not at all.
    Mr. Underwood. I would also like to ask about the nature of 
your services to the organization. How would you characterize 
the minutes that you keep for POGO board meetings. We have a 
very organized and formal set-up here, where we have a 
stenographer, and we have lots of people here taking minutes, 
and we have all kinds of staff up here recording every single 
nuance. And even then we have disagreement about what our 
intentions were or trying to read back in the record.
    So maybe you could just characterize for the Committee how 
do you keep minutes, and were they transcribed? Were these 
impressions? Did you just use paper and pencil? And was it just 
solely left up to you? Could you describe that.
    Mr. Rutter. Yes. These minutes are not verbatim minutes. I 
will take notes, brief notes at the time. Sometimes it's, you 
know, a few days afterwards, and I will, when I get the time, I 
will type them up, and I'll send them out to the board. The 
board reviews them. I might give the minutes to the board 
again. At the next board meeting, they review the minutes and 
vote to accept the minutes or edit or amend them.
    Mr. Underwood. So would it be fair to characterize the 
nature of the minutes as kind of impressionistic on your part? 
You know, you'd have the----
    Mr. Rutter. Absolutely.
    Mr. Underwood. [continuing] the details are in there, but 
you know, if you put in an additional word or two, there was 
not a lot of quibbling in the subsequent board meeting about 
what did you mean by this or----
    Mr. Rutter. Yes.
    Mr. Underwood. [continuing] as there would be today, 
perhaps.
    Mr. Rutter. It's my imp--yes, it was totally based on my 
impression of what transpired.
    Mr. Underwood. Okay. Since you weren't allowed to, in the 
conduct of this hearing, witnesses are not allowed to give an 
opening statement. Perhaps there's something you would like to 
say to the Committee, and perhaps you'd like to--is there--I'm 
sure there's a lot of, maybe the temptation would be not to say 
anything, and that would be better. You'd be better off not 
saying anything. But is there something that you would like to 
add based on your observation of the previous witnesses and the 
likely questions and the kinds of questions that have been 
asked? Is there something that you would like to characterize 
your end of the decision-making process?
    Mr. Rutter. I greatly appreciate the offer, but I'm going 
to abstain from at this time.
    Mr. Underwood. Okay. Thank you.
    Jay, would you like to ask a quick question?
    Mr. Inslee. I would appreciate a moment if I could.
    Mr. Underwood. Sure.
    Mr. Inslee. Mr. Rutter, approximately how much has been 
paid by the oil companies to the Federal Government or their 
agencies as a result of the whistleblower activities, 
approximately?
    Mr. Rutter. It's my understanding it's over $300 million.
    Mr. Inslee. And could you help me on the sequence of those 
payments relative to when the payment to the whistleblowers in 
this case took place?
    Mr. Rutter. I'm sorry. Could you rephrase that?
    Mr. Inslee. Tell me the sequence of the payments by the oil 
companies to the Federal Government relative to when knowledge 
came out about these payments to the whistleblowers.
    Let me start again. Let's scrub that.
    Mr. Rutter. Okay.
    Mr. Inslee. It's late in the afternoon. Let me try a 
different tack.
    What I'd like to know is whether anyone has, to your 
knowledge, asserted that they were injured, wrongfully injured, 
as a result of the decisions or any actions by the two 
government employees in this case? In other words, have any of 
the oil companies said, ``We paid too much. We paid $300 
million, and we only should have paid $250 million''? In any of 
these lawsuits, have they made that assertion?
    Mr. Rutter. Not to my knowledge.
    Mr. Inslee. Have they made that assertion anywhere in 
public, to your knowledge?
    Mr. Rutter. No, not to my knowledge.
    Mr. Inslee. Have you been sitting through this hearing? I 
had to step out to some other hearings. Have you been here the 
whole time?
    Mr. Rutter. No, I've been in and out. Sorry.
    Mr. Inslee. Okay. Thank you.
    Thank you, Madam Chair.
    Mrs. Cubin. The gentleman's time has expired.
    The chair now recognizes Mr. Brady.
    Mr. Brady. Thank you, Madam Chairman.
    Mr. Rutter, did Mr. Berman or Mr. Speir provide any 
information to POGO or to POGO's attorneys that led to or were 
incorporated into the lawsuit that you filed?
    Mr. Rutter. Not to my knowledge.
    Mr. Brady. So you are saying that Mr. Speir and Mr. Berman 
absolutely provided no information to the organization or to 
your attorneys that was used, incorporated, developed for that 
lawsuit, none whatsoever?
    [Witness conferring with counsel.]
    Mr. Rutter. Not to the best of my knowledge.
    Mr. Brady. To your knowledge, absolutely no information was 
provided.
    Mr. Rutter. No.
    Mr. Brady. What then, what services then were Mr. Berman 
and Mr. Speir compensated for to the tune of $383,000, as your 
minutes and agreement reflect?
    Mr. Rutter. I'm sorry. When you say ``services,'' they had, 
for years, spoken out loud to anybody who would listen to them 
about the problem.
    Mr. Brady. Let me read you the minutes of December 9th.
    ``Ms. Brian informed the board that POGO was pursuing a 
False Claims lawsuit that Mr. Banta, then chair, know that POGO 
is the only relator that is public. The others are in private 
agreements. Ms. Brian mentioned that an agreement had been 
worked out if there was some reward or whatever and whenever an 
amount would be won, that the individuals that have been doing 
this for years would be compensated.'' These individuals, she 
confirms, are Mr. Berman and Mr. Speir.
    My question is, since my guess is POGO doesn't write a lot 
of $383,000 checks and that people simply don't walk out and 
give them to people along the street, my question is simple, 
and any common-sense person would ask it.
    What services did they provide that POGO compensated them 
for?
    Mr. Rutter. As I said, they didn't provide any 
information----
    Mr. Brady. They provided no services?
    Mr. Rutter. For the lawsuit.
    Mr. Brady. Even though they were identified as to be 
compensated, they were confirmed that they were owed that 
money, owed that money as the prior agreement had said, and 
you're saying that there was no services whatsoever provided 
that they were compensated. I just want to make clear.
    Mr. Rutter. Right. Could I see the--incidentally, you're 
reading from this. Can I see a copy of those minutes?
    Mr. Brady. Of the minutes of December 9th? Sure. Since you 
provided them to us, I was hopeful that you might have a copy.
    Mr. Rutter. Okay. I'm sorry, sir, you're reading from the?
    Mr. Brady. December 9th, 1996 minutes.
    Mr. Rutter. Oh, I have the October 27, '98.
    Mrs. Cubin. Would staff please get Mr. Rutter the correct 
minutes?
    Mr. Brady. The pertinent question still remains. What 
services were they compensated for?
    Mr. Rutter. I just want to make sure that I'm reading the 
same thing, so that----
    Mr. Brady. Sure.
    Mr. Rutter. I mean, you're referring to something that was 
in the minutes, correct?
    Mr. Brady. Yes, sir.
    Mr. Rutter. Well, in this instance here, sir, of the board 
minutes, when I say ``compensated'' I just mean that--you know, 
I'm referring to they'd be doing this work for years, and if we 
saw any money from the lawsuit, we would share it with them.
    Mr. Brady. But later on you pursued--when one of the 
insiders protested that they weren't being paid as per the 
agreement--so under award, this was an agreement--your 
executive director, Ms. Brian, confirmed, ``Yes, we will pay 
you as we promised to.'' My question is very simple. What 
services did they provide you that warranted $383,000?
    Mr. Rutter. They provided no services for the lawsuit.
    Mr. Brady. That is hard to believe, and for an entity that 
purports to be open and honest in their dealings, it is 
unbelievable. I think POGO can rightfully change its name to 
``Paying Off Government Officials'', because clearly, in this 
case, unless you're the greatest Santa Claus that ever walked 
this earth--and I have some suggestions of other people who 
could use $383,000 for doing nothing for your organization--
your testimony is not believable.
    Thank you, Mr. Chairman.
    Mr. Gibbons. [presiding] Mr. Inslee.
    Mr. Inslee. If I may inquire of my friends across the aisle 
or the chair--and this is maybe a procedural question as much 
as anything--it seems to me that there's two questions I don't 
think we're going to get to today as far as answers that I 
think are really pertinent here. One is what the real policies 
are of the respective agencies regarding situations like this 
where there might be compensation to an employee, either as a 
relator or as a witness who's getting information. And my 
understanding is, at least today, we're not going to have 
testimony. I guess the question is, in any part of this hearing 
do we intend to do that? And second, are we going to hear any 
testimony that you're aware of to assert that these employees 
in fact did something inappropriate that changed a person's 
payment to the Federal Government?
    And that is a question, because I think those really are 
the important questions, and I don't think we're going to get 
to them today. And I would just my friends across the aisle if 
they have any intention to bring witnesses forward on those 
issues?
    Mr. Gibbons. First, Mr. Inslee, let me say that we're well 
aware of those questions, that we certainly can bring those at 
a later time. I think also one would have to also be aware that 
the purpose and policies of asking these very questions go to 
standards of conduct of government employees, and that's the 
basis by which we're trying to get to the matter at hand. 
According to 5 CFR 2635, Subpart B, which is the Ethical 
Requirements of all Government Employees, there are some rules 
and regulations in which they have violated that we are going 
after with this determination, and relevancy of the testimony 
as regard to those violations of those standards of conduct. We 
would be happy to bring, in my view, and I would make the 
recommendation along with you, that another hearing we do delve 
into the questions of those standards and whether or not these 
employees violated those standards.
    And I am informed also that there is a hearing planned for 
the 18th on those issues.
    Mr. Inslee. Well, let me just suggest that the real kernel 
of the issue here ought to be was someone prejudiced or injured 
wrongfully by these employees' conduct? And I would just 
suggest that if someone's going to assert that, that we need to 
hear testimony, and of course, the Majority's in charge of the 
panel who will be called, so let me just make that suggestion. 
If people want to know that, we need to hear testimony in that 
regard.
    Mr. Gibbons. And I would suggest to you, Mr. Inslee, that 
any time there's a breach of ethical violation, there is indeed 
a damage done to the American public, and that is the damage 
we're after.
    Mr. Inslee. I would agree with you. I would agree with that 
rhetorical statement.
    Mr. Gibbons. Thank you. Did you have any questions, Mr. 
Inslee?
    Mr. Inslee. No, thank you.
    Mr. Gibbons. Mr. Schaffer? Mr. Schaffer, before you begin 
your questioning, let me say we've just been called on a vote 
of approving the conference report for the Africa Trade Bill. I 
will defer to the chairwoman of the Committee, but I would 
think that if we recessed for a short break to go vote and come 
back, that would be appropriate, rather than delaying any 
further comments.
    We will recess for approximately 20 minutes.
    [Recess.]
    Mr. Brady. Madam Chairman?
    Mrs. Cubin. Mr. Brady.
    Mr. Brady. Under Clause 2(j)(2)(c) Rule 11 of the Rules of 
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 witness, Keith Rutter, for equal 
periods of time not to exceed 30 minutes.
    Mrs. Cubin. Without objection, so ordered.
    Mr. Tancredo, who has been here for most of the hearing, 
does desire to question this witness. He's tied up for a few 
minutes. So I think I would like to make one point, and then 
hopefully Mr. Tancredo will be here, and if not then--oh, here 
he is right now--then I'll recognize Mr. Thornberry.
    Mr. Rutter, I'm referring back to your not answering the 
question that I asked regarding the Internal Revenue Service 
forms because you declare that answering is not pertinent. 
Pertinency is important. It is one of the four elements that 
must be proven to convict someone in a criminal contempt of 
Congress.
    Here is how pertinency fits in. First of all, the 
Subcommittee must have jurisdiction over the subject of the 
hearing. It does fall under the House Rules. Then the 
Subcommittee must have the authority to conduct oversight. Our 
authority comes from Article I of the Constitution, under which 
Congress has the authority to collect information so that it 
can legislate. That authority was delegated by the House Rules 
to the Committee, and then by the Committee Rules to the 
Subcommittee. Third, the Subcommittee must have a legislative 
purpose. It is clear, based on the Subcommittee's past work on 
oil policy. Finally, the testimony or records subpoenaed must 
be pertinent to the inquiry.
    Because these elements exist, the Committee's oversight 
project is valid. Its subpoenas for documents and testimony can 
be properly enforced. So I ask you again, do you wish to answer 
the question about the Internal Revenue Service forms that I 
referred to?
    Mr. Rutter. I'm sorry. Those questions specifically were?
    Mrs. Cubin. The questions were--the question was: why did 
you refuse to produce the documents according to the subpoena? 
Why did you refuse to answer the questions about the documents 
here in front of the Committee today, the Internal Revenue 
documents that in fact had the award from the settlement 
included in those documents, and other years?
    [Witness conferring with counsel.]
    Mr. Rutter. Madam Chair, in addition to my pertinency 
objection, I have also been advised by my counsel that the 
jurisdiction of this Committee is limited to matters delegated 
to the Committee under House Rules 10, Clause 1(L), Mineral 
Resources of Public Lands; and under House Rule 10, Clause 
2(A), Oversight and Administration of the Department of 
Interior. I have also been advised that POGO's tax status and 
its compliance with applicable tax laws do not come within that 
delegation of authority, and therefore, I decline to respond.
    Mrs. Cubin. Mr. Rutter, I would like to remind you that--
and to warn you--that failure to answer the question or to 
provide the documents that were subpoenaed by the Committee--
the Committee determines that the material is pertinent and the 
Chairman determines that the material is pertinent--can cause 
you to be held in contempt of Congress. Are you aware of that?
    Mr. Rutter. Yes, I am aware of that.
    Mrs. Cubin. Mr. Rutter, will you turn those documents over 
to the Subcommittee at this time?
    [Witness conferring with counsel.]
    Mr. Rutter. With respect--and understand the Chair's 
position, and upon advice of counsel, I will stand on my 
objection.
    Mrs. Cubin. Do you wish at this time to answer the question 
about the Form 990?
    Mr. Rutter. I'm sorry. And the question being?
    Mrs. Cubin. To produce it and tell the Committee why you 
would not explain the form, and why you would not give it to 
the Committee?
    [Witness conferring with counsel.]
    Mr. Rutter. You know, I'm going to stand on the advice of 
my counsel, and also stand on my objection.
    Mrs. Cubin. Mr. Rutter, it's easy for the former counsel to 
the House to instruct you that way, because he's not on the 
line here. He's not the one who can be charged with contempt of 
Congress, and sir, his advice to you is bad, because I want you 
to know that I will pursue in every way that I can contempt of 
Congress charges against you, not as thinking that it is the 
material that is the most important factor. It is the contempt 
that you are showing for the process and for Congress.
    So with that, I will now recognize Mr. Tancredo for 5 
minutes questioning.
    Mr. Tancredo. Thank you, Madam Chairman.
    Mr. Rutter, understanding that you will not produce the 
documents in question or not tell us why, perhaps you would 
tell me in fact--let me back up and ask you another question.
    How long have you worked for POGO as an executive director?
    Mr. Rutter. Sir, I'm not the executive director.
    Mr. Tancredo. Well, in whatever capacity you serve.
    Mr. Rutter. I've been with the organization since 1989.
    Mr. Tancredo. And what exactly do you do there; what are 
your responsibilities?
    Mr. Rutter. My duties include doing the administrative work 
of the administration. I do fund raising for the organization, 
and I do some research for the organization.
    Mr. Tancredo. In the administrative work that you do for 
the organization, are you responsible for the preparation of 
the IRS Form 990?
    Mr. Rutter. When you say am I responsible for the 
preparation, we have accountants that do the IRS Form 990.
    Mr. Tancredo. And when the accountant calls POGO and asks 
for information, who gives it to him?
    Mr. Rutter. That's exactly what I was going to say. The 
accountant then will call me or meet with me, and say, ``We 
need, you know, this information'', and I supply the 
information.
    Mr. Tancredo. And when you prepared or worked on or in 
whatever capacity you serve POGO that allows you to work on the 
IRS Form 990, do you recall listing the source of income for 
your organization on that IRS Form 990? Do you recall, first of 
all, saying anything about the amount of money that POGO takes 
in in a year?
    Mr. Rutter. No.
    Mr. Tancredo. On the IRS Form 990. Do you remember that? 
That's what's part of----
    Mr. Rutter. Well, specifically, which IRS Form 990 are we 
talking about, sir?
    Mr. Tancredo. Any year that you want.
    Mr. Rutter. Any year that I want.
    Mr. Tancredo. Yes.
    Mr. Rutter. Do I recall listing the amount of the 
organization's----
    Mr. Tancredo. Do you recall that that's actually one of the 
things on a IRS Form 990, an amount of money that the----
    Mr. Rutter. I'm sure it is, but I can't recall that that's 
a specific question.
    Mr. Tancredo. In your preparation or in your help for the 
creation of the IRS Form 990, exactly what information did you 
provide the accountant?
    Mr. Rutter. I'm sorry. Could you say that again?
    Mr. Tancredo. Yes. In your aid, in the aid that you give 
the accountant in the preparation of the IRS Form 990, what 
information did you provide for last year or the year before? 
The one that you recall, any one that you recall?
    Mr. Rutter. I provide the accurate information.
    Mr. Tancredo. Like what?
    Mr. Rutter. I provide the accurate information.
    Mr. Tancredo. Be specific. What kind of information?
    Mr. Rutter. Whatever the question.
    Mr. Tancredo. Do you have any idea what's on there at all?
    Mr. Rutter. Not really. I mean, there's a variety of 
questions that the accountants ask me.
    Mr. Tancredo. Do you know the purpose of the IRS Form 990?
    Mr. Rutter. It's to publicly disclose information.
    Mr. Tancredo. About what?
    Mr. Rutter. About our tax information.
    Mr. Tancredo. About tax information.
    Mr. Rutter. But we're actually a non-profit, so----
    Mr. Tancredo. I know exactly what you are. And I ran a non-
profit. I also know what's in a IRS Form 990, and I'm asking--
and I know the administrator from my organization knew very 
well what was in a IRS Form 990 and what his responsibilities 
were. And I'm trying to figure out--how many people work there 
at POGO in the administrative division?
    Mr. Rutter. Well, in the administrative division----
    Mr. Tancredo. It's just you?
    Mr. Rutter. It's just me at the time.
    Mr. Tancredo. And so therefore, since you're the only 
person there that helps prepare the IRS Form 990, it seems to 
me logical that you would have some information available to 
you about what is actually on there, and the structure of it.
    Mr. Rutter. I didn't--I'm sorry. Did I----
    Mr. Tancredo. Do you recall, for instance, telling your 
accountant the source of or the amount of the income that POGO 
had for the preceding year, for last year?
    Mr. Rutter. As I said, sir, if that's a question, I must 
have done it.
    Mr. Tancredo. Okay. You gave him the information about the 
source of income for POGO. Do you recall giving him information 
directly related to the funds that came to POGO as a result of 
this lawsuit?
    Mr. Rutter. Yes, we were very open with our accountants as 
far as funds coming from this lawsuit.
    Mr. Tancredo. So that's listed on there someplace.
    Mr. Rutter. That's my understanding.
    Mr. Tancredo. And were payments listed on there, payments 
to anybody else, payments that came out of those funds listed 
on your 990?
    Mr. Rutter. When you say payments to anybody else----
    Mr. Tancredo. Expenditures, costs to the organization.
    Mr. Rutter. If it's a question on the 990, we provided the 
answer to our accountants.
    Mr. Tancredo. If you know what's on the 990 and you know 
exactly what it is--you know that it requires and you know what 
you told them.
    Mr. Rutter. I'm not here as an accountant, sir. I'm not----
    Mr. Tancredo. I know. You're an administrative officer. I 
know that. But if you know that, if you know what I just asked, 
what's on it and what's required and what you provided, then 
why can't you tell us what that was, what that is?
    Mr. Rutter. I'm sorry. What the information was? I'm 
telling you that I provided the information to the accountants.
    Mr. Tancredo. We're not going to get anywhere here. Let's 
move on to the IRS Form 1023. Are you familiar with that 
particular document?
    Mr. Rutter. I'm not very familiar with it, no. Prior to 
last year nobody had requested our IRS Form 1023s before.
    Mr. Tancredo. But you do know what's on them?
    Mr. Rutter. It's a form and a file, sir. When somebody 
requests it, we make a copy. I don't reread--
    Mr. Tancredo. You've never looked at it?
    Mr. Rutter. Yes, I----
    Mr. Tancredo. When you make a copy.
    Mr. Rutter. Not when I've made a copy, no. I'm not being 
quizzed on the IRS Form 1023, sir.
    Mr. Tancredo. Well, I'm asking you about the IRS Form 1023.
    Mr. Rutter. I understand that, but I didn't realize there 
was going to be a quiz on the IRS Form 1023.
    Mr. Tancredo. Well, you know, are these questions really 
all that challenging for an administrative officer for an 
organization of this nature?
    Mr. Rutter. I can only tell you what I know, sir.
    Mr. Tancredo. Do you know whether on your IRS Form 1023 you 
listed the payment of any public service awards?
    Mr. Rutter. On our IRS Form 1023?
    Mr. Tancredo. Yes.
    Mr. Rutter. I wouldn't think so, but I have no idea. The 
IRS FOrm 1023's an old document.
    Mr. Tancredo. That is true. Let me ask you this. Your 
testimony here, have you ever testified before a Committee of 
the Congress before, by the way?
    Mr. Rutter. Not this one, no, not a congressional 
Committee.
    Mr. Tancredo. But have you supplied testimony to----
    Mr. Rutter. To different panels and forums, things like 
that, workshops.
    Mr. Tancredo. But nothing of the Congress?
    Mr. Rutter. Nothing of the Congress, sir.
    Mr. Tancredo. Madam Chairman, I really do not think we're 
going to get really much farther here, and I just don't have 
any other questions I think will be answered, frankly and 
candidly, and we're just wasting time, and I apologize.
    Mrs. Cubin. The Chair now recognizes Mr. Casey for staff 
questioning for 15 minutes.
    Mr. Casey. Thank you, Madam Chairman.
    And there are a couple of things I do want to go over with 
you that were touched on earlier, Mr. Rutter, and perhaps a few 
things that are new.
    I don't think we, at least in my mind, clarified who were 
among the people, to the best of your recollection, among the 
POGO staff and on the POGO board of directors, who thought out 
loud, directed or suggested that lawyers and accountants might 
be or should be or could be consulted before writing the checks 
in November 2nd of '98 to Mr. Berman and Mr. Speir.
    Could you try again to go through the names of the folks 
who you--to the best of your recollection were probably 
involved, or if there's anyone you could exclude who was on 
staff or on the board at the time?
    Mr. Rutter. Well, as I mentioned, you know, Marcus Corbin, 
Danielle Brian and I, I think were the folks on staff at the 
time. I don't think that necessarily Marcus Corbin--I think one 
of your questions directed me?
    Mr. Casey. I gave you a variety of--directed, suggested, 
thought out loud, you don't seem to recall very----
    Mr. Rutter. I'm sure he was aware of that, but I don't know 
that he directed, suggested. But you know, we're a small 
office. I'm sure he was aware of that. As far as the board of 
directors, I don't remember who on the board knew and who 
didn't, and the only thing I can recall is it's more than 
likely I would think that Mr. Hunter, being the chair of the 
board at the time, that he was aware of it.
    Mr. Casey. Is there anybody on the board or on the staff 
who you can exclude as having taken part in this general 
discussion or decision or direction?
    Mr. Rutter. No, there's nobody that--but when--no. I mean, 
exclude.
    Mr. Casey. Again, not asking, as Mrs. Cubin did not, not 
asking what advice was given by the accountants or by the 
lawyers, among the issues presented to the accountants and the 
lawyers, did it include only accounting procedures and IRS 
matters?
    [Witness conferring with counsel.]
    Mr. Rutter. What we said to our lawyer is privileged, but, 
you know, we did go to see the accountant.
    Mr. Casey. Did you show the lawyers or the accountant, when 
you consulted them on this in--must have been, I guess, October 
or at some point in the second half of '98, it would appear, 
before November 2nd--did you show them either the board meeting 
minutes such as they are from December 9th of 1996, or the 
January 5, 1998 agreement signed by Mr. Berman, Mr. Speir and 
Ms. Brian?
    Mr. Rutter. As I said before, as far as our attorneys are 
concerned, I can't speak to that. However, what the 
accountants--you made a list of things. I can take them one at 
a time if you'd like.
    Mr. Casey. Of course.
    Mr. Rutter. And could you do me a favor and read them back? 
Did I show our accountants----
    Mr. Casey. Did you show the accountant either the December 
9th, 1996 board meeting minutes----
    Mr. Rutter. No.
    Mr. Casey. The discussion pertaining to this question, the 
agreement to pay?
    Mr. Rutter. No.
    Mr. Casey. Did you show the accountant the January 5, 1998 
agreement signed by Ms. Brian, Mr. Speir and Mr. Berman?
    Mr. Rutter. No.
    Mr. Casey. Did you provide them any information, whether on 
paper or otherwise, that at some point the board of directors 
had decided to establish a program of public service awards?
    Mr. Rutter. I don't think so. I can't recall exactly, but I 
don't think so.
    Mr. Casey. Since December of '96, has your IRS Form 1023 
been amended or modified or renewed in any way to include, 
among the organization's exempt charitable purposes, awarding 
cash public service awards?
    [Witness conferring with counsel.]
    Mr. Rutter. I've been advised by my attorneys that the 
answer to that question is not pertinent, and not within 
jurisdiction.
    Mr. Casey. If I could--all right. If I could just make sure 
I understand correctly, your position is that the giving of 
cash public service awards by POGO is not pertinent to this 
inquiry?
    [Witness conferring with counsel.]
    Mr. Rutter. Sir, that wasn't your question before. Your 
question before related to the IRS Form 1023.
    Mr. Casey. And whether the IRS Form 1023 reflects now or 
originally that one of POGO's exempt charitable purposes is to 
make cash public service awards?
    [Witness conferring with counsel.]
    Mr. Casey. Are you all talking case or constitutional law?
    Mr. Rutter. Constitutional law, sir.
    Mr. Casey. Good.
    Mr. Rutter. I'm just going to have to stand on my 
objection, sir.
    Mr. Casey. Okay. I'm not sure I followed the discussion 
about the board meeting minutes and them being impressionistic, 
but could I just recount my understanding and see if I have it 
right, that during board meetings, you keep notes?
    Mr. Rutter. Sometimes I do----
    Mr. Casey. Sometimes you don't?
    Mr. Rutter. As I said, sometimes I actually write out 
notes; sometimes I jot along--if there's a board agenda or an 
outline, sometimes I'll just make note, you know, 
``discussed'', something like that. Sometimes I'll just totally 
go by memory.
    Mr. Casey. When did you reduce to typed form the documents 
that were produced as board meeting minutes for December 12--
excuse me--December 9, 1996?
    Mr. Rutter. I can't recall, sir.
    Mr. Casey. You can't recall. Do you think it was in 
December of '96?
    Mr. Rutter. I'm pretty sure it was in December of '96.
    Mr. Casey. I think somebody handed you that document 
before. So you believe--are you testifying that you believe 
that you typed up the December 9, 1996 minutes as they appear 
now in the excerpt you have, in the month of December 1996?
    Mr. Rutter. Yes. Usually, as I stated before, it might be, 
you know, a day or two. Ideally it would be a day, the next 
day, but----
    Mr. Casey. But proximate to the date of the actual meeting.
    Mr. Rutter. But it would usually be within a week or so of 
the meeting.
    Mr. Casey. Did you retype them before they were produced to 
this Committee or anybody else under a subpoena?
    Mr. Rutter. No. Did I retype the minutes that were already 
typed?
    Mr. Casey. Is the document that was produced to this 
Committee or to anybody else under a subpoena, the document 
that you see in front of you now, at least the relevant 
portion, or did you at some point take what you had typed up in 
December of 1996 and put it in a different format, or reword or 
restate it?
    Mr. Rutter. Okay. I think what you're alluding to, sir----
    Mr. Casey. I'm not alluding to anything, Mr. Rutter. I'm 
asking a direct question.
    Mr. Rutter. Well, then, I'm sorry. Then can you state the 
question again?
    Mr. Casey. As I understand it, sometime in the month of 
December 1996 you took your memory and your notes from that 
board meeting, and you typed them up as something called 
minutes. Is that the document that's in front of you right now 
in the very same form, same format, et cetera?
    Mr. Rutter. No, that is not the exact document that I typed 
up.
    Mr. Casey. How is it different?
    Mr. Rutter. How it is different is I gave our attorneys the 
full document, the minutes. They went through and looked at 
what was the relevant part of the minutes relating to the 
questions on the subpoena. And in this particular case here, I 
guess they just put pieces of white paper--I don't know what 
they did--cut out to submit to you.
    Mr. Casey. Is the wording exactly the same as you gave it 
to the lawyers?
    Mr. Rutter. I guess so, but without having it exactly in 
front of me--I mean, it seems like it is, but I can't be 100 
percent unless I had----
    Mr. Casey. Can't be 100 percent sure, but it is possible 
that your lawyers altered the minutes before they were given to 
the Committee?
    Mr. Rutter. No. I was referring to that it's possible that 
you might have altered them prior to giving them back here to 
me.
    Mr. Casey. I can rule that out.
    Mr. Rutter. Well, I can probably rule--well, I can check 
with the attorneys to see if they altered them, but it's my 
understanding they did not.
    Mr. Casey. Is the document you gave to the attorneys 
exactly the same as the one you typed up in December of '96, or 
did you in any way alter it before giving it to them?
    Mr. Rutter. I did not do anything to alter that before I 
gave it to my attorneys.
    Mr. Casey. Did anybody?
    Mr. Rutter. Not that I know of.
    Mr. Casey. Can you exclude that possibility?
    Mr. Rutter. You know, I guess you can't.
    Mr. Casey. Okay. So of the December 1996 board minutes we 
have are a true and genuine document, why is there no mention 
of a public service award? Was there a discussion that was not 
recorded about making public service awards to the two 
individuals named?
    Mr. Rutter. I can't recall, sir.
    Mr. Casey. If there had been such a discussion do you think 
you would have included it in the minutes?
    Mr. Rutter. I don't know.
    Mr. Casey. Do you recall any discussion from any prior 
board meeting about establishing a public service award that 
would be paid in cash?
    Mr. Rutter. No.
    Mr. Casey. Same exercise--similar exercise on the October 
27, '98 board meeting minutes. Is what you have there exactly 
what you gave to the lawyers--we know that things have been 
redacted--but is the description of that meeting that you have 
in front of you now exactly what you gave to your lawyers?
    Mr. Rutter. No. I gave the full minutes to the lawyers.
    Mr. Casey. No. I'm talking about just the relevant portion 
that you have in front of you.
    Mr. Rutter. I gave the full minutes to the lawyers, and the 
lawyers made the decision on what portion was relevant or not.
    Mr. Casey. Okay. On the portion that they deemed relevant 
and that's in front of you now, is that exactly the way you 
gave it to them?
    Mr. Rutter. No.
    Mr. Casey. How is it different?
    Mr. Rutter. This is different, because after giving the 
full minutes to the lawyers, they said about that there are 
certain relevant parts, and they said that we only need to turn 
over to the questions, the certain relevant parts.
    Mr. Casey. Do you recall information in the original full 
minutes that dealt with the payments to Mr. Berman and Mr. 
Speir that are not in the document that you have in front of 
you? You don't have to tell me what those discussions were, but 
if there are discussions that were in the document you gave 
them which pertained to the payments to Mr. Berman and Mr. 
Speir and which are not in the documents in front of you.
    [Witness conferring with counsel.]
    Mr. Rutter. I'm sorry. Can you repeat the question for me, 
please?
    Mr. Casey. Do you recall that in the original document you 
gave to the lawyers, whether there was any discussion or 
reference to the payment to Mr. Berman and Mr. Speir, which is 
not in the document in front of you now? But I'm not asking 
what the substance of that discussion was, merely if there's 
any missing discussion or missing part that is relevant to the 
payments to Berman and Speir.
    Mr. Rutter. Okay. I don't know the answer to that, sir.
    Mr. Casey. You don't know the answer.
    Mr. Rutter. I don't know. I mean, without the full minutes 
here to compare, I don't know.
    Mr. Casey. All right. Now, the phrasing, which I can't 
quote from memory--here we go. ``The staff consulted with our 
consultants and a non-profit/tax attorney recommended by Mr. 
Hunter to make sure we were following proper procedure. The 
staff also consulted with a constitutional attorney. The 
lawyers and our accountant agreed that we send a letter stating 
that it was an award for public service, and that we would send 
them the appropriate tax form at the end of the year.''
    At that meeting, did the board affirmatively decide, by 
vote or assent, to make a public service award to Mr. Berman or 
Mr. Speir?
    Mr. Rutter. No. I mean, if there was a vote, it would be 
reflected in the minutes, and so if there wasn't a vote, then 
it means that--you know, and would come to some consensus.
    Mr. Casey. Did they acquiesce in or confirm a staff 
decision to make a public service award?
    Mr. Rutter. I would say they came to consensus. If there 
was dissension. If somebody had a problem, an issue or 
something like that, you know, anybody could say, ``Let's vote 
on this'', or there would have been more of a debate.
    Mr. Casey. Was there a debate about making these men a 
public service award at that meeting?
    Mr. Rutter. Not that I recall. I would have reflected it if 
there would have been a----
    Mr. Casey. So there was never an affirmative decision by 
the POGO board to award cash public service awards to Mr. 
Berman or Mr. Speir at any time?
    Mr. Rutter. Well, when you say an affirmative decision, I 
mean, as I said, the board does things by consensus, and so if 
there wasn't consensus----
    Mr. Casey. When did they reach the consensus to establish a 
public service award program or to make one-time public service 
awards to Mr. Berman and Mr. Speir?
    Mr. Rutter. I don't know as far as the minutes are 
concerned.
    Mr. Casey. Well, leave aside the minutes. In your memory, 
do you know when that was?
    Mr. Rutter. No, I can't recall.
    Mr. Casey. Did it ever happen?
    Mr. Rutter. What I was going to say is I can't recall. I 
guess it happened during this meeting here.
    Mr. Casey. And if it's not reflected in that meeting--those 
meeting minutes, then it never happened?
    Mr. Rutter. Well, I'm not saying it never happened. I'm 
just saying that as I recall, I can only--you know.
    Mr. Casey. Would you have forgotten a consensus or decision 
that resulted in the checks to Berman and Speir?
    Mr. Rutter. No, I don't think I would have forgotten, but 
you know, these minutes accurately reflect the proceedings of 
the board meetings.
    Mrs. Cubin. The gentleman's time has expired.
    I thank the witness for his testimony. You are dismissed. 
Oh, I'm sorry. Yes, I knew they didn't have questions over 
there. They had already told me that, so officially for the 
record, the Minority has no questions for this witness.
    Thank you very much for your testimony, what there was of 
it, and you'll hear from us again.
    I would like to ask the next Panel to please come forward, 
Anne Zill, Marjorie Sims, Dina Rasor, Jack Mitchell, Morton 
Mintz, David Hunter, Charles Hamel, Michael Cavallo, David 
Burnham and Henry Banta.
    Would you please rise and raise your right hand?
    [Witnesses sworn.]
    Mrs. Cubin. Mr. Thornberry, for the purpose of making a 
motion.
    Mr. Thornberry. Under Clause 2(J)(2)(b) of Rule 11 of the 
House of Representatives, I move that Chairman Cubin, myself, 
Mr. Brady and a Minority member of the Committee each be 
allowed to question the panel now seated for equal periods of 
time, not to exceed 30 minutes each.
    Mrs. Cubin. Without objection, so ordered.
    Mr. Thornberry. Madam Chairman, under Clause 2(J)(2)(c) of 
Rule 11 of the Rules of the House of Representatives, I move 
that Tom Casey, the Majority staff, and a staff member 
designated by the Minority, each be allowed to question the 
panel now seated for equal period of time not to exceed 30 
minutes.
    Mrs. Cubin. Without objection, so ordered.
    Ladies and gentlemen, you have been subpoenaed to tell this 
inquiry how you decided to enter into an agreement among POGO, 
Robert A. Berman and Robert A. Speir, to share all the proceeds 
of an oil royalty suit filed by POGO. We also seek to 
understand whether you intended this agreement and the payments 
made pursuant to it, to be public service awards from the 
inception in early December 1996. We also wish to understand 
the process by which you, as the responsible governing party of 
a private corporation with substantial financial interests in 
Federal royalty policy matters, chose two Federal employees 
involved in those matters as recipients of payments running 
well into seven figures.
    Attempts by Committee staff to informally interview the 
directors were blocked by POGO attorneys. Those lawyers have 
repeatedly insured the Committee that all relevant board 
meeting minutes have been produced. If so, they shed no light 
on the why and how of selecting Messrs. Berman and Speir to 
become multimillionaires.
    So the only way to determine what qualifications and 
ethical or fiduciary considerations were discussed is to ask 
you here today.
    Because of the number of witnesses necessary for today's 
hearing, and because the Subcommittee is keenly interested in 
your answers, your written statements will be entered in the 
record, rather than taking the time for statements at this 
time. With your cooperation in making concise, candid answers, 
we will try to make this round of questioning run smoothly, and 
we will try to get this finished as quickly as we can.
    I am going to ask a series of questions. Each question will 
be stated once, and would you please answer in turn with the 
first question by identifying yourself, and then giving an 
answer?
    For the convenience of the reporter, as I said, the court 
reporter, I guess we need you to identify yourself each--we 
don't? Okay. So the first time around please identify yourself 
for the convenience of the reporter.
    I have a question for all of you. At the time of the 
meeting of December 9, 1996, did you specifically understand 
that the agreement described by Mr. Banta and Ms. Brian, was 
that POGO would split its proceeds in equal thirds with Mr. 
Berman and Mr. Speir? We could start to my left, please. 
Identify yourself, and answer the question.

                   STATEMENT OF CHARLES HAMEL

    Mr. Hamel. My name is Charles Hamel. Would you repeat the 
question, please? I didn't know it was for me.
    Mrs. Cubin. Certainly. At the time of the December 9th 
meeting of 1996, did you specifically understand that the 
agreement described by Mr. Banta and Ms. Brian, was that POGO 
would split its proceeds in equal thirds with Mr. Berman and 
Mr. Speir; did you understand that on December the 9th?
    Mr. Hamel. I don't think you've read my statement. I have 
recused myself at all meetings having to do with the oil 
industry of the United States of America.
    Mrs. Cubin. So, Mr. Hamel, you were present at the meeting; 
is that correct?
    Mr. Hamel. I stepped--I don't know about that particular 
meeting, because every time the word ``Exxon, et al.'' came up, 
I left the room, didn't return again until we were on a new 
subject.
    Mrs. Cubin. The next?

                   STATEMENT OF MORTON MINTZ

    Mr. Mintz. I'm Morton Mintz. I did not become a member of 
the board until September 1997.
    Mrs. Cubin. The reporter would ask you to please speak into 
the microphone.
    Mr. Mintz. My name is Morton Mintz. I did not become a 
member of the board of POGO until September 1997, so the 
question is absolutely irrelevant to me.
    Mrs. Cubin. Thank you, Mr. Mintz. And certainly we would 
have known that, had POGO decided to honor the subpoena and 
give us the names of the people on the board of directors.
    Mr. Mintz. I have that information in my prepared 
statement.
    Mrs. Cubin. No, I'm talking about the board of directors 
for the last few years, over the time that is relevant to this 
situation.
    Next person, please.

                    STATEMENT OF HENRY BANTA

    Mr. Banta. Madam Chair, I'm Henry Banta. I'm not sure I 
would characterize the decision of the board to share the 
proceeds as an agreement. I think it was just a decision to 
award these people for their distinguished service.
    Mrs. Cubin. Next person, please.

                   STATEMENT OF JACK MITCHELL

    Mr. Mitchell. My name is Jack Mitchell. I'm sorry, but I 
don't have any recollection of the specific dates you've cited, 
Madam Chairwoman, so I'm not positive, not having had an 
opportunity to review any of these minutes, that the timing of 
this is right. I generally recall some discussion about this. I 
don't remember a particular proportion as you've stated, but I 
do recall there being a discussion at some point among the 
board of making a public service award of a type to these two 
gentlemen.
    Mrs. Cubin. Do you recall what year that would have been 
in?
    Mr. Mitchell. I'm sorry, I do not, without benefit of 
seeing the minutes that would record both what meetings I was 
at, which might not have been all of them, at which they were 
discussed. I honestly don't recall at this time if I 
participated in all of the meetings at which this might have 
been discussed. I cannot give you the year. I'm sorry.
    Mrs. Cubin. Once again, it would certainly benefit the 
Committee if we had access to those minutes. Then we too would 
understand that, although it's my understanding that you were 
listed as present at that meeting, but if you don't know, 
then----
    Mr. Mitchell. And I certainly don't say that I was not 
there. I just honestly after--we're talking three and a half 
years--if I was there on that particular date, without a review 
of the written record.
    Mrs. Cubin. And I can certainly understand that, sir, Mr. 
Mitchell.

                   STATEMENT OF DAVID HUNTER

    Mr. Hunter. Hello, Madam Chair. My name is David Hunter. 
I'm the current chair of the Board of the Project on Government 
Oversight, and on behalf of the board I'd like to introduce an 
objection at this time to the Subcommittee's refusal to allow 
us to present our oral presentations, the board members' 
written statements. This decision violates the Committee of 
Resources own Rule----
    Mrs. Cubin. Excuse me. Could you speak a little slower? I 
couldn't hear what rule you said it violated?
    Mr. Hunter. I'm sorry. This decision violates the Committee 
on Resources' own Rule 4(b), which requires that each witness 
shall have an opportunity to provide a 5-minute summary of his 
or her written statement. Rule 4(b) provides no basis for the 
elimination of this oral presentation.
    Mrs. Cubin. The issue--that issue would be for the courts 
to decide, but this is certainly a creative theory that is 
completely wrong. The Rules of the House and the Committee 
Rules do not give any witness a right to make a statement. In 
fact, House Rule XI(2)(f) imposes a limitation on initial 
presentations by witnesses to brief summaries of their written 
statements. It does not grant a right to a witness to make an 
opening statement. Furthermore, Committee Rule 4(b) echoes that 
limitation on oral presentations. It says that witnesses shall, 
quote, ``limit his or her oral presentation to a five-minute 
statement unless the time is extended by the chairman or 
Ranking Member. This limitation is a ceiling, not a floor.''
    While it may be customary to allow a five-minute statement, 
we are treating all witnesses equally today, and none of them 
will be making statements. This is in the interest of time and 
efficiency. It is within the discretion of the Chair, but your 
entire comments will be seen in the record. We appreciate the 
point of view of your counsel, but unfortunately his judgment 
is mistaken at this time.
    Now, do you wish to answer the question?
    Mr. Hunter. Yes, I do, and I stand by my objection. Thank 
you, Madam Chair.
    I don't recall exactly the conversations, but I do recall 
generally on the board that we have discussed this matter, and 
again, I don't actually recall specifically the time when it 
would have been, but, yes, we did discuss it at the board that 
we would provide award to--at some point to two whistle-
blowers--this is what I recall--who had been working for a long 
time to promote this issue and to get it into the public realm 
after years when nobody seemed to, in this town, want to talk 
about the oil fraud that was being perpetrated by the industry.
    Mrs. Cubin. So let me get this clear. You don't know the 
time frame of that; is that what you said; you don't know when 
that was that that discussion took place on the board? You 
don't know if it was December 9th, 1996?
    Mr. Hunter. I don't have at this point in time any 
recollection of the exact time. I have reviewed the minutes of 
the December board date, and I have no reason to believe that 
wasn't the time of the discussion.
    Mrs. Cubin. And it's interesting that the Committee 
subpoenaed the minutes and was to have received and purportedly 
did receive all of the information in the minutes that were 
pertinent to this investigation and to this, quote, unquote, 
public service award. It was never mentioned in the minutes 
until the payments were actually made, so I think that's quite 
an interesting point.
    Mr. Hunter. If I may add, I don't know what the point is, 
but that the--I would like to say something about our minutes. 
They're not meant to be verbatim, as Mr. Rutter had mentioned. 
But they give a general reflection of what was discussed, and I 
think a lot is trying to be made out of a specific verbiage 
that's used in those minutes, and I think you're trying to make 
too much out of it, quite frankly.
    Mrs. Cubin. Well, you're certainly entitled to your 
opinion, and I think you're making too little.
    Next witness, please.

                    STATEMENT OF DINA RASOR

    Ms. Rasor. Yes, I'm Dina Rasor. And while I may not have 
recalled the exact dates of the minutes, I also need to put in 
the caveat that sometimes I was at the board meetings via 
telephone since I live in California.
    But I recall these discussions, and I recall the board's 
view of it, and by the way, I have a lot of confidence in Keith 
Rutter's record keeping. I hired him in 1989, and he's been a 
marvelous person.
    Mrs. Cubin. Thank you. You say you recollect discussions. 
Do you recollect when they took place?
    Ms. Rasor. Not exactly, because I don't have the board 
minutes in front of me.
    Mrs. Cubin. Next person.

                   STATEMENT OF MARJORIE SIMS

    Ms. Sims. My name is Marjorie Sims, and I do not recall 
conversations on that specific date, but I do recall being at 
board meetings where we discussed honoring the service of those 
two Federal employees.
    Mrs. Cubin. Do you recall whether that occurred before or 
how long before the checks were actually issued?
    Ms. Sims. I do not recall specifics at all.
    Mrs. Cubin. Could you give me an idea within a year?
    Ms. Sims. I have no idea.
    Mrs. Cubin. Next person.

                     STATEMENT OF ANNE ZILL

    Ms. Zill. I'm Anne Zill. I was in the process of moving to 
Maine, so it's very possible that I wasn't at that board 
meeting. I don't recall.
    What I do recall is during this entire last four and a half 
years, there have been discussions about this not-for-profit 
organization wishing to honor people who do a tough job, who 
work in bureaucracies--sometimes they're called whistle-
blowers; others call them truth-tellers--who face adversity, 
and who try to get the government to do the right thing on the 
behalf of the American people, and it was in that context, the 
board--from my general recollection, nothing specific--felt 
that it would be a good idea to help the people who had been in 
the trenches for ten years, in this case these two public 
servants.
    Mrs. Cubin. It's curious to me that these two public 
servants who were involved with the rule-making on oil 
valuation are the ones that were rewarded, when Mr. Kritzer, 
who certainly had at least during the same time period, spoken 
out as ardently against the practices that were taking place, 
he wasn't offered an award.
    And I assume that Assistant Deputy Mr. Armstrong, who also, 
going years and years back, tried to bring this out, wasn't 
offered an award either. And neither of them were involved with 
the rule-making process, so I find that somewhat curious. The 
next person, please.

                  STATEMENT OF MICHAEL CAVALLO

    Mr. Cavallo. My name is Michael Cavallo. I'm not sure 
whether I was at the December meeting in question. I may have 
been. I remember general discussions about sort of recognizing 
these two individuals, and that the board saw no objection in 
that, and in many cases were wholeheartedly behind the idea.
    Mrs. Cubin. Thank you. Next person, please.

                   STATEMENT OF DAVID BURNHAM

    Mr. Burnham. My name is David Burnham. I was not on the 
board at the time of this meeting.
    Mrs. Cubin. The chair will now yield to Mr. Brady.
    Mr. Brady. Thank you, Madam Chairman. My question is really 
very simple.
    During your term of service on the board--and I'll start 
with Mr. Banta first, so we'll have some fair warning. During 
your term of service on the board, did you have full knowledge 
of the private agreement between POGO and the two government 
insiders, and of the legal ramifications of the compensation 
POGO paid Mr. Berman and Mr. Speir? Did you have full knowledge 
of that agreement and of the legal ramifications? I'm sorry, 
Mr. Banta.
    Mr. Banta. We didn't hear who you were addressing. I'm 
sorry.
    Mr. Brady. Did you have full knowledge of the private 
agreement between POGO and the two government insiders, and of 
the legal ramifications of the compensation you paid Mr. Berman 
and Mr. Speir?
    Mr. Banta. Well, if you would note from my statement, I 
recused myself after the lawsuit was filed.
    Mr. Brady. So you had no knowledge of either the private 
agreement----
    Mr. Banta. No. I understood the decision to make the 
awards, but after the lawsuit was filed, I recused myself. So I 
was involved in the first part of----
    Mr. Brady. Well, then let's go to some of those who we know 
at least served in 1998. Ms. Sims, did you have full knowledge 
of the private agreement and the legal ramifications of the 
compensation?
    Ms. Sims. No, I didn't, and I just want to make a 
clarification, because we just received these minutes, and I 
was not at this board meeting on December the 9th, 1996.
    Mr. Brady. Actually, I'm looking at October 27, 1998.
    Ms. Sims. No. I was making a clarification on an earlier 
comment that I made, and no, I'm not aware of that.
    Mr. Brady. So you did not have full knowledge of this 
private agreement nor of the legal ramifications?
    Ms. Sims. No.
    Mr. Brady. Knowing what you do today, that this 
compensation is not disclosed, that it is illegal to supplement 
a Federal employee's salary, and that the Justice Department 
clearly and emphatically advised against such compensation, 
would you as a board member approve that compensation today?
    Ms. Sims. I'm still not aware that that is the law. I just 
heard that you stated that. I'm not aware of that being the 
law.
    Mr. Brady. Are you aware the Justice Department advised 
against----
    Ms. Sims. No, I'm not.
    Mr. Brady. Do you think anyone else on the board knows 
that?
    Ms. Sims. I'm not certain. I don't know.
    Mr. Brady. It's a complete surprise to everybody.
    Ms. Sims. I don't know. I am just stating what I understand 
and know.
    Mr. Brady. Thank you. Well, let's go to another member who 
was there. Mr. Mitchell, did you have full knowledge of this 
private agreement and the legal ramifications of compensation?
    Mr. Mitchell. Well, I doubt if I would have what you would 
term as full knowledge. There was discussion among the board. 
Our view was that the staff was carrying out the details of 
these matters. We are board members as advisors, and we discuss 
these issues. We are not always involved in the details 
themselves, and in terms of what you said, the full legal 
ramifications, I'm not an attorney, and I would trust the 
organization to--as your counsel earlier referred--to seek 
whatever legal counsel we needed to make sure we were doing 
things according to appropriate procedure.
    Mr. Brady. Now, as a Federal employee, clearly you knew the 
requirement that disclose compensation. You know it is illegal 
to supplement the salary of a Federal employee. Did you need to 
be advised on that or----
    Mr. Mitchell. I didn't know that.
    Mr. Brady. [continuing] as placed on this board----
    Mr. Mitchell. Mr. Brady, my understanding is that the 
Federal ethics laws is for each individual Federal employee to 
know and understand and follow those. And I try to do that, and 
I believe I've done that very rigorously.
    I cannot speak for anyone else as to what their 
understanding is, and I do not know, with all due respect, that 
it is correct that Federal employees may not receive any kind 
of outside compensation. I don't know that to be a fact.
    Mr. Brady. But your answer is, you did not have full 
knowledge?
    Mr. Mitchell. I did not have full knowledge of all of the 
legal ramifications in the sense I'm not an attorney.
    Mr. Brady. Knowing what you do now, as a fiduciary board 
member of POGO, would you approve such compensation to the two 
government insiders?
    Mr. Mitchell. I wouldn't refer to them as government 
insiders, with all due respect, sir.
    Mr. Brady. Well, one was employed by the government, and 
one was a recent retiree. Would you call them a----
    Mr. Mitchell. That's your phrase. We saw them as public 
servants in this particular instance.
    Mr. Brady. Would you approve such compensation knowing what 
you know now?
    Mr. Mitchell. I've heard no evidence that these gentlemen 
did anything appropriate, and as a matter of fact, it's my 
understanding, and it was represented to me, that the Interior 
Department has said that neither of these gentlemen were 
involved in the decision or policy-making process involving 
this. And I have no reason, even at this time, to disbelieve 
that.
    Mr. Brady. So you're not aware that the Justice Department 
advised POGO's attorneys against this?
    Mr. Mitchell. No, I'm not aware of that.
    Mr. Brady. The first time you've heard of it. Come on now, 
you're under oath. The first time you've heard of it?
    Mr. Mitchell. I'm aware that there was some contact by the 
Justice Department.
    Mr. Brady. Let's go forward. Let's see if we can get a 
straight answer from someone here.
    David Hunter, did you have full knowledge of the private 
agreement between POGO and the government insiders, and did you 
know the legal ramifications of the compensation?
    Mr. Hunter. Thank you. Yes, I did know about the 
arrangement. I am going to have to object to your continuing 
use of the legal ramifications of the compensation. It suggests 
that there is----
    Mr. Brady. Actually, I am using your board minutes which 
term them compensation.
    Mr. Hunter. But the legal ramifications, I don't think that 
there are any legal ramifications that arise from the verbiage 
of those minutes. I don't think there are any legal 
ramifications----
    Mr. Brady. When the Justice Department advises against it--
--
    Mr. Hunter. May I--excuse me--may I----
    Mr. Brady. [conmtinuing] do you believe that there are 
legal ramifications?
    Mr. Hunter. Excuse me, Congressman, with all due respect, 
if I could be given an opportunity to finish my answers, then--
--
    Mr. Brady. If I could ask you to answer, I would 
respectfully allow you to.
    Mr. Hunter. Okay. We never know what we don't know. I had 
some knowledge, so let's get away from full knowledge, because 
I don't know what the full knowledge. I don't know what I don't 
know. I don't know--I don't think we have agreement on what 
the, quote, unquote, legal ramifications are. I do not think 
there are any legal ramifications from use of the word 
``compensation.'' It was not compensation as we understood it. 
It was an award. That's what we were doing. We had our--if I 
may continue and finish--as a board and what I understood, is 
that we were going to provide an award for people who had for a 
long time been trying to disclose and get people in this town 
to pay attention to what had been going on for a long time. I 
think that that's a worthwhile thing to do when we can do it, 
and I'm glad that we were able to do it.
    Mr. Brady. I applaud that public view, but your own board, 
your own organization says that's not the case. Your own 
organization says ``We are entering into a private agreement to 
compensate individuals who have been doing this work for 
years.'' So my question to you would be, what services did 
these two government insiders provide POGO that you awarded 
them, compensated them $383,000?
    Mr. Hunter. Let me be clear. I have no understanding, nor 
do I believe that there were any services that were provided by 
these two employees to POGO. That was not what we gave them 
money for, and it was not in that sense compensation. So if you 
would----
    Mr. Brady. So you agree that no information was provided by 
Mr. Berman and Mr. Speir to POGO, their attorneys, that was 
included, used, developed or a portion of your lawsuit, 
absolutely no information from those two individuals?
    Mr. Hunter. To my knowledge, no.
    Mr. Brady. Thank you, Madam Chairman.
    Mrs. Cubin. Mr. Thornberry?
    Mr. Thornberry. Thank you, Madam Chairman.
    Ms. Zill, in answering the questions earlier, you mentioned 
that you remember some conversations about trying to 
acknowledge people's work that were doing a tough job, and you 
remember that coming up from time to time at board meetings. Do 
you remember specifically these two individuals, and talking 
about rewarding or compensating them in some way?
    Ms. Zill. I've heard the names, but I don't remember at 
which board meetings, and I only now learn that I was at the 
first board meeting that we have part of the minutes for, but 
not at the second.
    No, what I know, because I've been on the board for almost 
ten years, is that this is an organization that is concerned 
with the non-profits' mandate to do things, not for special 
interest, but for the public interest. And so it's a different 
concept than a for-profit operation.
    Mr. Thornberry. And I appreciate that perspective. Are you 
aware of any other times that the board has looked at 
rewarding, compensating, acknowledging someone for their work, 
where there were written agreements on how much these people 
would receive?
    Ms. Zill. No, I don't have any knowledge of that.
    Mr. Thornberry. Mr. Cavallo, I think you said that you 
remembered some discussions at various board meetings about 
these folks. Do you remember how many times you discussed it at 
board meetings?
    Mr. Cavallo. No, I don't remember exactly how many times.
    Mr. Thornberry. Can you give me your best estimate, 
understanding that it's been a while?
    Mr. Cavallo. If I were going to make a wild guess, I would 
say that this situation came up at maybe three of the board 
meetings that I attended, just a guess.
    Mr. Thornberry. And do you recall when it came up at these 
board meetings, three or four or two times, do you recall that 
you all were made aware that there were written agreements 
between POGO and these individuals, that whatever was received 
from POGO at whatever time, that these individuals would get a 
share of it?
    Mr. Cavallo. I wasn't aware that there were written 
agreements, but I understood is as sort of the intention of 
POGO to not keep all of whatever money it received in these 
settlements, but to distribute it to other people who had been 
sort of fighting the good fight on this issue for a long time.
    Mr. Thornberry. Ms. Rasor, let me ask you. You said that 
you didn't recall for sure if you were there, because you were 
in California, and as a matter of fact, neither of these board 
minutes seem to indicate your presence. Do you think you might 
have been there, but--listening on the telephone, but they just 
didn't make a note of that?
    Ms. Rasor. I would trust that if I was on the telephone, 
that Keith Rutter would have recorded that I was there.
    Mr. Thornberry. Okay. Well, do you remember having payments 
to Mr. Berman and Mr. Speir discussed at board meetings when 
you were sitting in listening, listening on the telephone?
    Ms. Rasor. Yes, very much so, yes.
    Mr. Thornberry. You do remember that?
    Ms. Rasor. Oh, yes.
    Mr. Thornberry. Okay. Do you remember approximately how 
many times you heard these payments to these--or compensation 
in some way to these specific individuals discussed?
    Ms. Rasor. I need to make a distinction here. I had 
discussions with the--much like Mr. Hunter, I'm the treasurer 
of the organization, and I have discussions with the staff 
about items outside of board meetings. And so----
    Mr. Thornberry. And so you can't distinguish when you 
discussed it from one time to another?
    Ms. Rasor. It's very hard to do that when you're in weekly 
contact with people and talking about things, when yo discussed 
it in a board meeting, when you discussed it otherwise.
    Mr. Thornberry. Okay. Were you aware of these written 
agreements with Mr. Berman and Mr. Speir before the checks were 
made?
    Ms. Rasor. Yes, I was.
    Mr. Thornberry. When did you become aware of them?
    Ms. Rasor. Can't remember. Part of that long stream of 
consciousness discussion you have over two or three years.
    Mr. Thornberry. Do you recall that raising any red flags, 
that we are here to try to recognize what these people have 
done over a period of years, and yet we have, one, a written 
agreement that says we're going to pay a third of--or a third 
each of whatever we get; and then there appears to be some 
specific need to reinforce it? It's like somebody was getting 
nervous. And so there's another memo later in 1998 that says, 
``We're really going to do what we've promised you to do.'' Did 
that concern you at all that that's not exactly--that would 
maybe not be consistent with public service recognition?
    Ms. Rasor. No, not at all. You may not know it, I was the 
founder of this organization, and in 1981, and one of the 
things that I have learned from doing 22 years of working with 
whistle-blowers, and I have to say I'm very proud of this board 
because most of us have done exactly the same thing. You don't 
make decisions, you don't do things unless you know. You don't 
go out and criticize the Federal government or large 
corporations if you don't have a clean house. If they were 
going to get something on us, you know, I've been deposed by 
Lockheed, numerous people.
    So the bottom line was, when this came up, I remember in 
one of the board meetings a very strong sense of the board that 
you dot your ``i's'' and you cross your ``t's'', and we felt 
that these people had toiled for a long time without--you know, 
one thing that needs to be brought in context here, we worked 
on this issue way before a lawsuit was ever filed.
    Mr. Thornberry. Sure.
    Ms. Rasor. So I'm just saying that when we came down to 
this kind of decision to award these people for what went on 
way before the lawsuit, you better believe everybody on this 
board makes sure their tax forms--if you're going to criticize 
the government and you're going to be criticizing corporations, 
you'd better have a clean closet, and I am confident that this 
board does. And that was the reason that we went to 
professionals, because we're not all lawyers, to review this.
    Mr. Thornberry. Sure. Well, can I understand what you're 
saying if I summarize it by saying that because of the nature 
of the work you do and your past experience, you felt certain 
that these payments were thoroughly vetted with lawyers and 
ethics people, everybody--they were checked out before these 
agreements were made or before the checks were written? I mean, 
as a board member you felt that was checked out and it was 
okay.
    Ms. Rasor. I don't want to go into ethics situations. I'm 
telling you right now we specifically went to the professional 
people you go to--as Mr. David Hunter said, the most dangerous 
thing in the world is you don't know what you don't know.
    Mr. Thornberry. Sure.
    Ms. Rasor. So we knew we didn't know. We wanted to make 
sure our ``t's'' were crossed, ``i's'' were dotted. We checked 
it out. We felt confident. We felt confident of the staff. We 
felt confident of the professionals, and the board has had no 
reason to ever doubt our staff before.
    Mr. Thornberry. Sure. Let me move. Mr. Mitchell, I think 
you also said that you recalled at board meetings this coming 
up. Do you recall how many times the payments to Mr. Berman, 
Mr. Speir, or a desire to compensate Mr. Berman and Mr. Speir, 
recognize them in some way, how many times that came up at 
board meetings?
    Mr. Mitchell. Sir, again that would be a guess on my part, 
and I would say between one and three times, probably twice I 
would say, in my own memory, relative to perhaps my own 
participation or my own memory.
    Mr. Thornberry. Do you recall whether you were aware that 
there were written agreements which Mr.--a written agreement 
which Mr. Berman and Mr. Speir signed about what they would 
receive by way of payments from POGO?
    Mr. Mitchell. I don't recall the written agreements, per 
se, formally, but I do remember the discussion of them and----
    Mr. Thornberry. Of the written agreements?
    Mr. Mitchell. No, discussion of Mr. Berman and trying to 
award him this public service award for his getting out in 
front of this issue in the past, something we've been working 
on for many years. We were briefed on that by the staff, and we 
felt that was--as you've already heard--a very legitimate idea 
to do so.
    Mr. Thornberry. Sure. And I appreciate--you all have 
expressed that very well.
    Mr. Mitchell. And again, in terms of the time, I'd just 
like to add that we started talking about this--we had no idea 
what kinds of monies, if any, would be involved, because we 
didn't know exactly what was going to happen in the future.
    Mr. Thornberry. Sure. But is it consistent with your idea 
of a public service award, recognizing someone for working away 
and toiling, to have this kind of a written agreement that 
we've seen, where POGO agrees that it will share the proceeds, 
a third with each of them, whenever they occur?
    Mr. Mitchell. Well, Congressman, I'd just like to note that 
POGO's made a lot of public service awards--and this probably 
was a little bit different in the sense that we've given many 
whistle-blower awards in the past, including one I recall to 
senator Grassley. This, because it involved a sum of money, was 
different. And as Dina has just said, to whatever extent we 
found the staff, and the professional staff should do it, they 
needed to make sure that they consulted the appropriate people 
to follow through on this in whatever way they thought was 
appropriate, and my recollection is the board supported that.
    Mr. Thornberry. You've given me my question, which I guess 
I've been fumbling around to try to understand. Of all of the 
public service awards that POGO has ever given, is any of the 
witnesses on this panel aware of a prior agreement with the 
recipient of the public service award, on how much they're 
going to get or how that public service award is going to be 
decided?
    Ms. Zill. Well, I'm the President of the Fund for 
Constitutional Government, which used to be the fiscal sponsor 
for POGO before it was POGO. And what I can say is that I think 
that what isn't reflected in the minutes, but that was 
discussed every time we heard about this, the whole issue of 
oil royalties, was the unlikely nature of every getting any 
money. It isn't really the case that POGO has ever gotten huge 
sums of money. This was an almost unimaginable windfall. And so 
I think it ought to be seen as very much out of the ordinary 
situation.
    Mrs. Cubin. Would the gentlemen yield?
    Mr. Thornberry. Yes. Can I----
    Mrs. Cubin. Go ahead.
    Mr. Thornberry. Is there anyone, of all the public service 
awards that POGO has received, that can recall a specific 
written agreement with the recipient of the public service 
award? And I understand, and I wanted to actually get to this 
area later with Mr. Banta, about whether there was a likelihood 
of recovery, but can anybody remember the recipient of the 
public service award saying, ``I agree that I'm going to get 
this much money'', and have it in writing?
    Mr. Hunter. No.
    Mr. Thornberry. Madam Chairman, I don't see any response. 
I'll be happy to yield.
    Mrs. Cubin. I wanted to ask Ms. Zill. You were talking 
about a foundation that gives public service awards, and I 
believe those are generally $10,000 awards, is it? Oh, that's 
Cavallo. Excuse me. I had the wrong award. Okay.
    Do you have a written policy or do you have a procedure by 
which these awards are approved?
    Mr. Cavallo. Yes, we do.
    Mrs. Cubin. But there's no such procedure or policy 
involved here; is that correct?
    Mr. Cavallo. I believe this--whereas, that was the regular 
main purpose of my foundation, this was an unusual situation 
for POGO.
    Mrs. Cubin. You know, I have been a member of a non--of 
many non-profits for 25 years, so even more than you, Dina. And 
this is exactly the sort of thing that every board member 
should be having nightmares about, letting situations, letting 
things go on that you are not aware of, letting executive 
directors have enough authority that they can make secret 
agreements that all of you admit you didn't know anything 
about, but you don't know when you knew it, so, you know, that 
isn't very good dotting ``i's'' and crossing ``t's'', as far as 
I'm concerned.
    Mr. Brady, I think you had some follow up.
    Mr. Brady. Yes, Madam Chairman. It seems incredible that a 
public service award would be given after not only an agreement 
was signed, but your honoree demanded his fair share of the 
award that he believed was coming to him. I don't know how 
grateful these honorees are these days, but routinely, I'd say 
they don't demand enough so that a board has to--an executive 
has to reaffirm their commitment.
    The bottom line is, this was not a public service award. 
Your records clearly show this was a contractual agreement 
between POGO and these two government insiders. Your records 
show that you reaffirmed that commitment in writing to them, 
and then only after that did you decide to cloak it in a public 
service award.
    It still comes back to the point, what services under this 
written contract did these two government insiders provide 
POGO? And let me tell you, they are not whistle-blowers. They 
have not filed whistle-blower suits. They do not have or claim 
to be whistle-blowers. These are two government officials you 
paid for some contractual service you entered into. So what was 
that service?
    Mr. Hunter. I believe you've asked and I've answered that 
question. There was no service.
    Mr. Brady. No service. It was--we're the Santa Claus of 
Washington, and that we are, while we've entered into this 
agreement, we do it of our own goodwill. This contractual 
agreement.
    Ms. Zill. Well, about whistle-blowers I have a few facts. 
In the 27 years that I've been associated with the Fund for 
Constitutional Government, we've worked with whistle-blowers, 
both in the military audit project originally, then the project 
on military procurement, and the project on government 
oversight, the government accountability project, a series of 
projects. There are several facts about whistle-blowers that 
aren't true. They are difficult to work with. They have 
difficult jobs. They are frequently vilified by their agencies. 
In the best of circumstances, they do not get recognition, and 
they very often do not get their agencies to do the right thing 
from the point of view of open, honest and accountable 
government.
    Mr. Brady. And in those cases, thankfully, our law provides 
for a whistle-blower protection for them, which these two 
didn't accrue. The other thing is most whistle-blowers that I'm 
aware of--are you aware of any whistle-blower who has demanded 
payment from a special interest for an agreement they entered 
into?
    Ms. Zill. I'm not aware that these two did. I'm just not 
aware of it.
    Mr. Brady. Well, your records show that you did enter into 
an agreement. Your records show that you did have to reaffirm 
that commitment. And while we're dealing in facts, while you 
say you were uncertain that there would be any money due to 
this lawsuit, the fact of the matter is, California had settled 
for $350 million almost a decade ago, Alaska $1.5 billion. You 
had every expectation of receiving compensation, and you 
entered into a contract for some type of service with two 
government officials who were legally prevented from doing so, 
and no claim of no knowledge, or we're good guys, or this is a 
great service award, those arguments or excuses really, simply 
aren't credible.
    Thank you, Madam Chairman.
    Mrs. Cubin. The time of the Committee has expired. The 
Chair now recognizes Mr. Casey--there's no member to do on the 
other side, so the Chair now recognizes Mr. Casey for staff 
questioning.
    Mr. Casey. Thank you, Madam Chairman.
    At any time in the last, let's say two years, let's say 
since January 1st of 1998, has the board as a whole or any 
subset of the board undertaken any effort to reassure itself 
that you knew all you think you should have known in December 
of 1996 or after that, about what was put on paper, what Mr. 
Berman and Spear may have expected, and what they--what POGO 
was perhaps--had committed itself to do on paper or verbally?
    In other words, to sum up, knowing what you do now, in the 
last year since this has become an issue, a controversy, and 
even beyond that, have you taken any steps--if so, what--to 
make sure that everybody who signed that January 5, 1998 
agreement understood that it did not mean what it said?
    Mr. Hunter. We've taken no steps to reassure ourselves, 
because at least speaking for myself, I don't need any 
reassurance, and as far as I know, the second part of your 
question, no, I don't--certainly I have not, and I don't 
believe any other member of the board has approached any member 
who signed that agreement, other than obviously the 
conversations we had with our staff.
    Mr. Casey. Does anybody else have a different or a fuller 
answer?
    [No response.]
    Mr. Casey. Ms. Zill, the Fund for Constitutional Government 
makes grants, I think you said, you have given grants to POGO. 
Is it the practice of the Fund for Constitutional Government to 
give grants without any written application?
    Ms. Zill. We have projects that are of long standing. We 
adopt in a sense projects after a long review, or sometimes 
they are created, and there's always paperwork, but----
    Mr. Casey. And a long review?
    Ms. Zill. But I don't mean to imply that we get a grant 
request in a long written form every time we make a grant. We 
make an annual grant or sometimes divided into two.
    Mr. Casey. But I think there is a staff for you, a formal--
whether it's on paper or not, there's a formalized process to 
review the progress of the project and its suitability?
    Ms. Zill. Yes, we get progress reports from the project 
directors at least twice and sometimes three times a year or 
four times a year on occasion.
    Mr. Casey. Do you recall your organization ever giving out 
as much as $750,000 without any kind of written record or 
formal staff process or board process, to assure itself that 
the ``i's'' were dotted and the ``t's'' were crossed?
    Ms. Zill. Well, what I would say is that we have not given 
out a grant of that size to my knowledge. On the other hand, we 
are not--we haven't engaged in the kind of activities that POGO 
has, and I don't think in the case of POGO that the monies were 
distributed without a very careful review and the crossing of 
``i's'' and dotting--dotting of ``i's'' and crossing of 
``t's.''
    Mr. Casey. Thank you. Mr. Banta, at what exact time did you 
recuse yourself from discussions of the payments to Mr. Berman 
and Speir?
    Mr. Banta. I don't remember. I think they're reflected in 
the board minutes that you have.
    Mr. Casey. No, sir, they're not. You have in front of you 
what we have.
    Mr. Banta. I can't remember that. It was in between the--it 
was shortly after the lawsuit gets filed. I don't remember when 
it was.
    Mr. Casey. Well, this first complaint was filed June 9th, 
1997.
    Mr. Banta. It was later than that. It was----
    Mr. Casey. Later than that. How much later?
    Mr. Banta. I haven't a clue.
    Mr. Casey. Please try to remember. Before the end of that 
year?
    Mr. Banta. I don't remember. I really don't.
    Mr. Casey. Is there any written record in the board meeting 
minutes; did you put something in writing in the board files, 
in the POGO files to indicate that you were formally recusing 
yourself from the issue of the payments, not the lawsuit in 
general, the payments to Mr. Berman and Mr. Speir with regard 
to the----
    Mr. Banta. No. My recusal was with regard to everything 
relating to the lawsuit.
    Mr. Casey. And that would include the payments to Berman 
and Speir?
    Mr. Banta. That included everything.
    Mr. Casey. Oh, good. So the payments to Berman and Speir 
are related to the lawsuit?
    Mr. Banta. Very funny.
    Mr. Casey. Do you think you had recused yourself before 
January 5, 1998?
    Mr. Banta. I just don't remember. I really don't.
    Mr. Casey. Do you recall meeting in your office on or about 
that day with Mr. Berman, Mr. Speir and Danielle Brian to sign 
the agreement dated that day?
    Mr. Banta. I remember being--I remember knowing of the 
agreement. Whether it was signed in my office or not, I knew 
about it. Whether I was physically present--but, yeah.
    Mr. Casey. Do you remember being asked about this very 
subject in your deposition for the November 29 hearing on the 
motion to void the MRCA?
    Mr. Banta. I probably was, yes.
    Mr. Casey. And do you remember what you said in that 
deposition about your physical presence when that agreement was 
signed?
    Mr. Banta. I don't. I'm sure you'll refresh my----
    Mr. Casey. You said you were present, and you said it was 
in your office.
    Mr. Banta. Okay.
    Mr. Casey. Do you remember being present, apparently 
sometime in early December 1996, in your office with Mr. 
Berman, Mr. Speir and Danielle Brian, to discuss the filing of 
a False Claims Act lawsuit dealing with oil royalties?
    Mr. Banta. I remember having discussions. I can't give you 
dates. I am just lost on dates.
    Mr. Casey. Do you recall the December 9, 1996 board meeting 
at which you gave a presentation along with Ms. Brian----
    Mr. Banta. Yes, I do remember that.
    Mr. Casey. [continuing] the decision to fill the suit.
    Mr. Banta. Yes, I do remember it.
    Mr. Casey. Do you remember a meeting shortly before that 
with Mr. Berman, Mr. Speir and Ms. Brian to discuss that plan?
    Mr. Banta. I have no specific recollection of it, but----
    Mr. Casey. Do you recall----
    Mr. Banta. [continuing] I'm sure there was conversations.
    Mr. Casey. Do you recall being asked, in your deposition 
taken for the November 29 hearing on the motion to void the 
MRCA, do you remember being asked whether the agreement put in 
writing in January 5th, 1998, and signed on that day, 
essentially reflected the agreement reached in your office with 
Mr. Berman, Mr. Speir and Ms. Brian?
    Mr. Banta. That's probably the case, yes.
    Mr. Casey. Probably the case.
    Mr. Banta. Yes.
    Mr. Casey. When did you give us the chairmanship of the 
POGO board?
    Mr. Banta. Help me, Dave. I don't--when did you become 
chairman?
    Mr. Hunter. I took over in February of '98, I believe.
    Mr. Casey. February of '98. So if someone under oath 
recollected that it was early January of 1998, would that--can 
we exclude that as being possible?
    Mr. Hunter. My recollection is----
    Mr. Casey. Did it take place at a board meeting?
    Mr. Hunter. Yes.
    Mr. Casey. Was there a vote to make you chairman, Mr. 
Hunter?
    Mr. Hunter. Yes.
    Mr. Casey. Could you give us that portion of that board 
meeting sometime in the next two weeks?
    Mr. Hunter. I will certainly consider it without waiving 
any objections at this time on pertinency or any other 
objections.
    Mr. Casey. Okay. Now, the answer to many questions from 
many of you, you've stated your great faith in Mr. Rutter, 
Danielle Brian and the rest of the POGO staff, and how you've 
trusted them to carry out the details of this agreement and 
other things. Did any of you understand in December of '96, in 
January of '98 or at any time since then, that Mr. Banta took a 
direct part in negotiating the agreement which resulted in the 
payments to Mr. Berman and Mr. Speir? Anybody? And in fact, 
everybody, please, except for Mr. Banta, who obviously knows 
what he did or didn't do.
    Mr. Hunter. I think I probably have a general understanding 
that Mr. Banta was often in contact with Ms. Brian----
    Mr. Casey. A specific understanding that he took a direct 
part in the signing of the January 5, 1998, agreement and a 
direct part in the----
    Mr. Hunter. I can't recall whether I----
    Mr. Casey. You can't recall. Does anybody recall having 
that specific understanding at any time?
    [No response.]
    Mr. Casey. I assume your silence means nobody has such a 
recollection.
    Ms. Rasor. Well, you are saying ``specific.'' I think that 
is why you are not getting any answers. You know, we all knew 
that Hank Banta was the chairman and was working very closely 
with Danielle Brian on the suit. But we all weren't standing 
there specifically with a glass to the wall listening.
    Mr. Casey. Okay. The meeting minutes from December of 1996 
reflect that there was a general presentation of some kind by 
Mr. Banta and/or Ms. Brian about the likelihood of success in 
the lawsuit. At that meeting or at any prior meeting, did the 
POGO Board discuss explore asking a law firm as a pro bono 
matter to undertake litigation that would have stopped the 
underpayments and/or even collected past royalties owed, but 
would not enrich POGO, an injunction of some kind?
    A couple of you are lawyers. I am sure you could think of 
something. In other words, any kind of discussion of that?
    Mr. Banta. The cost of such a lawsuit would have been 
prohibitive.
    Mr. Casey. I said pro bono, Mr. Banta.
    Mr. Banta. Yes. The cost would have prohibited a pro bono 
effort in that regard.
    Mr. Casey. But did you ask? Was any law firm approached or 
asked?
    Ms. Zill. Well, not to my knowledge, but one of the things 
I believe is correct is that the Fund for Constitutional 
Government produced a little booklet on the history of the qui 
tam--the history of the qui tam Act, not Act, but whatever.
    Mr. Casey. Ma'am, we are running out of time. Is the 
answer----
    Ms. Zill. So the reason we went that route is because we 
knew something about it and it seemed at least vaguely 
possible. At least that is my memory of it.
    Mr. Casey. If POGO wished to stop the underpayments and 
provide money to those who had taken part in all of this, why 
not give away everything after paying your expenses?
    Mr. Hunter. First, let me say that I don't know that we 
ever discussed, and I don't think we did discuss, doing it in 
any other way. We did discuss, and I think we decided that a 
qui tam lawsuit was a good way of highlighting and publicizing 
what was going on. That is why we did it, I believe, and my 
recollection was we didn't really think we were going to ever 
win anything.
    Mr. Casey. I understand that.
    Mr. Hunter. Now, as far as--could you repeat your last 
question about why we don't give it all away? We still may. We 
have to cover some of our expenses right now, but let me be 
quite serious about this.
    Mr. Casey. Well, I don't know that that is giving it away.
    Mr. Hunter. Let me be quite serious about this, about the 
money, because it seems to be something that some of you are 
having a difficulty understanding. And I think somebody twice 
now has referred to POGO as Santa Claus, and I am reminded of 
the movie ``Miracle on 42nd Street'' where we had a whole bit 
of a trial about whether Santa Claus existed.
    One of the things that is most disconcerting about this 
process is that it seems to be inconceivable to the members of 
this Congress that a small non-profit could give away some 
resources. We don't necessarily want to grow bigger. We are not 
a for-profit company. We don't have investors for whom we have 
to maximize profits.
    This was in some ways--once money started appearing, it 
provides a challenge for us. We have to go through strategic 
planning. This wasn't why we did it. We did it to get the rules 
changed and we got the rules changed.
    Mr. Brady. I just want to point out the reason you did it 
is you had a contractual relationship that you have to provide, 
and the only reason you are here today is that someone blew the 
whistle on you and that is why we are here.
    Mr. Hunter. May I respond to that?
    Mr. Brady. I would yield back to Mr. Casey.
    Mr. Casey. We are getting short of time.
    Mr. Hunter. Madam Chairman?
    Mrs. Cubin. Yes. Mr. Casey has the time.
    Mr. Casey. Once POGO discovered that two solid relator 
groups had preceded you in this cause of action, or one 
extremely similar, and that therefore there would be in all 
likelihood a False Claims Act lawsuit that would put a stop to 
this process, why did you push forward with your own if the 
motivation wasn't money?
    If the motivation was to stop the underpayments, recoup 
past underpayments, make it a public issue, why did you need to 
proceed with your own case when you discovered that there were 
two before you?
    Mr. Hunter. First off, I am not certain when the Board 
discovered there were two before us. And, secondly--well, I can 
only speak for myself--we never really addressed it. The 
lawsuit was being handled. It didn't come up. It wasn't 
something--so we filed it in order to highlight the things and 
it kept going; it had its own momentum.
    Mr. Casey. Ms. Rasor, have you ever been employed by any of 
the law firms of Packard, Packard and Johnson, or Packard and 
Packard?
    Ms. Rasor. Not Packard and Packard, but I have been 
employed by Packard, Packard and Johnson.
    Mr. Casey. Did you play any role in putting together the 
Packard law firms in POGO?
    Ms. Rasor. Yes. I would also have liked to--since that was 
a general question, the last question, I work quite intimately 
with a lot of qui tam lawsuits and it is one of my areas of 
expertise, even though I am not an attorney. And one of the 
things that you find in a qui tam lawsuit when there are 
multiple cases that are combined together is that everybody 
brings something to the table.
    And so it would probably have not been a good idea to stop 
the bleeding of the taxpayers' money for us to just say, oh, 
they have got it, forget it, because we had knowledge that 
would also add to--each relator brought information.
    Mr. Casey. Okay, I get your drift.
    In your experience with the False Claims Act, have you 
become aware that the False Claims Act itself specifically 
prohibits retaliation against Federal employees who file as 
relators openly? Yes or no, please.
    Ms. Rasor. I worked to get the law passed and so I am very 
aware of it. Now, repeat your question because it doesn't make 
sense to me.
    Mr. Casey. Are you aware of any provision of the False 
Claims Act which provides that Federal employees who openly 
file as relators may not be retaliated against for doing so by 
their agencies?
    Ms. Rasor. Yes. In fact, I worked on getting that provision 
passed. Unfortunately, getting laws passed and getting what 
reality happens to a Federal whistleblower is two different 
things.
    Mr. Casey. Mr. Hunter, have your attorneys in this case, 
the attorneys representing the organization, been authorized to 
use private investigators to look into the private lives of any 
member of this Subcommittee?
    Mr. Hunter. Not that I now of. Which attorneys?
    Mr. Casey. Brand and Frulla.
    Mr. Hunter. Not that I know of.
    Mr. Casey. Would you authorize them to or would you 
prohibit them to do that?
    Mr. Hunter. I never thought about it one way or the other.
    Mr. Casey. Your attorneys have. According to the National 
Journal of March 25 of this year, it is standard operating 
procedure.
    Are any of you--and I think this is my last question, Madam 
Chairman--are any of you----
    Mr. Hunter. Will this one be pertinent, because I am----
    Mr. Casey. Are any of you aware of any specific harm to the 
career, to the prospects, to the finances, to the physical 
well-being of Mr. Berman or Mr. Speir for the positions they 
took on the subject of oil royalty underpayments?
    [No response.]
    Mr. Casey. Do I take that as a no?
    Mr. Banta. I don't know about Mr. Speir, but I know that 
Mr. Berman got into some difficulty when the first memo went to 
Lakewood asking for a response to his questions. I know that 
there was some--that was not an appropriate question for him to 
ask in his position, at least in the view of some of his 
superiors. You would have to ask him about the details, but I 
think there was a problem.
    Mr. Casey. In the meeting in your office sometime in early 
December, it appears, possibly very late November of 1996, at 
which you and Ms. Brian and Mr. Berman and Mr. Speir discussed 
the filing of an oil royalty lawsuit, did either gentleman 
clearly indicate that he feared retaliation or retribution from 
his agency if he openly filed such a suit?
    Mr. Banta. Yes, that was discussed.
    Mr. Casey. Do you have a clear recollection that either or 
both gentlemen----
    Mr. Banta. I think both of them.
    Mr. Casey. [continuing] affirmatively represented----
    Mr. Banta. My recollection is that both of them expressed 
fears of that kind.
    Mr. Casey. If I might, let me ask again and try to be 
specific and see if this changes your answer. Did either of 
them specifically and affirmatively say that they feared 
retribution or retaliation from their agencies if they put 
their names on a False Claims Act lawsuit dealing with oil 
royalties?
    Mr. Banta. It is difficult for me, you know, at this 
distance in time to be that precise, Mr. Casey, but that is a 
sense that I still have that that type of fear was there and 
that they expressed it. I am a little reluctant to--I mean, I 
know you want precision and I am a little reluctant to give it 
to you because I can't. But my present recollection is that 
that type of fear was expressed.
    Mr. Casey. Earlier today, Mr. Kritzer recalled a 
conversation with you about filing a False Claims Act dealing 
with oil royalties. Do you remember that conversation?
    Mr. Banta. Yes, I do.
    Mr. Casey. Do you have a more clear recollection than he 
did about how it went and what the discussion was?
    Mr. Banta. Not much more. I think that once again it 
reflects what one of my colleagues represented, which is that 
at least certainly in my mind at the time the chances of 
recovery weren't very great. And I suppose I said something to 
Bernie, would you like to have a piece of the pie in the sky.
    And I think his characterization of it as being somewhat--I 
forget how he put it, but being rather vague probably was 
accurate. But I did have the conversation with him and my 
recollection does pretty much comport with his.
    Mr. Casey. And I promise this really is the last one, Madam 
Chairman.
    Earlier, Mr. Schaffer was asking about advice from the 
Justice Department that the payments should not be made, and I 
honestly forget--one of you represented that, yes, there was 
some kind of general discussion.
    Was that you, Mr. Mitchell?
    Mr. Mitchell. I believe I was asked if I was aware that the 
Justice Department had disapproved or told us not to do that, 
and I wasn't aware of that.
    Mr. Casey. I am sorry. You were told, but you weren't aware 
of it?
    Mr. Mitchell. I thought the question was, was I aware that 
the Justice Department had told us not to do this, and my 
answer was I was not at the time aware that that representation 
was made.
    Mr. Casey. Were you aware that any of the False Claims Act 
attorneys had reservations or objections to it?
    Mr. Mitchell. Not specifically, no, I was not.
    Mr. Casey. Does anybody else have a specific recollection 
of whether you had any impression or information that either 
the Justice Department, the office of the U.S. Attorney for the 
Eastern District of Texas, or your own False Claims Act lawyers 
had reservations or objections or qualms about proceeding with 
the payments to Mr. Berman and Mr. Speir?
    Mr. Mitchell. That is a lot broader than the question you 
asked me, but I will let Mr. Hunter field that.
    Mr. Hunter. Well, one portion of that with respect to 
discussions with our lawyers is protected by attorney-client 
privilege and we won't answer it.
    Mr. Casey. Well, the Packards specifically deny that they 
represent you on the subject of paying Mr. Berman and Mr. 
Speir.
    Mr. Hunter. That is fine.
    Mr. Casey. Okay.
    Mr. Hunter. You can repeat the question if you like, but--
--
    Mr. Casey. Excuse me?
    Mr. Hunter. That is fine.
    Mrs. Cubin. Would you like us to read the documentation we 
have from the Packards that they don't represent you?
    Mr. Hunter. No, I don't----
    Mrs. Cubin. Are you claiming they do represent you in this?
    Mr. Hunter. With respect to the payments, no. But the 
question was very broad. I didn't understand which lawyers he 
meant and I was just----
    Mr. Casey. Would it help if I stated it again more 
specifically?
    Mr. Hunter. I am sorry?
    Mr. Casey. Would it help if I stated it again more 
specifically?
    Mr. Hunter. Certainly.
    Mr. Casey. To each of you, not just Mr. Hunter, what, if 
anything, do you recall about having an impression or 
information that any of your False Claims Act lawyers--and 
among those would be the firm of Rio, Morgan and Quinn; 
Packard, Packard, and Johnson; and Packard and Packard--that 
any of those attorneys expressed qualms or reservations or 
objections about proceeding to pay Mr. Berman and Mr. Speir?
    [Mr. Hunter conferring with counsel.]
    Mr. Hunter. If I may, I would like to continue the 
objection because though they may not--the exact scope of what 
they represent or not, they did continue to be our attorneys 
within the litigation.
    Mr. Casey. Okay.
    Mr. Hunter. There may have been some conversations that are 
still protected by attorney-client privilege, and I believe 
they are.
    Mr. Casey. Okay.
    Mrs. Cubin. Excuse me. Mr. Hunter, I think I have said this 
before, but it has been a long day and so I am not sure. But 
the attorney-client privilege and other judicial privileges 
that are not grounded in the Constitution, as this is not, are 
not applicable in this hearing as a general rule.
    This includes the attorney-client privilege and the 
attorney work product privilege. Courts created these 
privileges for their proceedings. They are not applicable to 
this hearing because this Subcommittee's authority comes from 
Article I of the Constitution dealing with the Legislative 
Branch, not Article III dealing with the courts.
    In practice, some Committees have exercised discretion on 
whether to accept or reject these privileges, weighing the need 
for disclosure against the possible injury resulting from that 
disclosure. Therefore, the privileges are within the chairman's 
discretion to accept or reject.
    I find that the Subcommittee needs this information to 
understand the subject that we are investigating. Compelled 
disclosure, on the other hand, does not constitute a waiver of 
the privilege on the part of the witnesses, so possible harm is 
not great. I find that the question that is asked ought to be 
answered.
    Mr. Hunter. Thank you. I respect your position, but on 
advice of counsel, I will stand on my objection that this is 
covered by the attorney-client privilege, and I don't believe 
that what you have stated has been definitively decided 
otherwise. Thank you.
    Mrs. Cubin. Again, as in the case with Mr. Rutter, failure 
to answer these questions after the determination by the 
chairman of the Committee that privilege is not accepted could 
constitute grounds for you and the other Board members to be 
held in contempt of Congress.
    I don't want to have to go that route, but this 
Subcommittee does need the information that we have asked for. 
We need the information that we have subpoenaed in order to 
complete this oversight responsibility. So would you please 
answer the question?
    Mr. Hunter. Thank you. And, again, with all due respect and 
on advice of counsel, I will stand by the objection on the 
attorney-client privilege. Thank you.
    Mrs. Cubin. Well, your objection is overruled.
    Mr. Casey, would you----
    Mr. Casey. Thank you, ma'am. To complete the restatement, I 
will pose it again, and this time regarding any Federal 
Government lawyer, the Justice Department specifically, anybody 
employed in the office of the United States Attorney for the 
Eastern District of Texas, and this question is posed to each 
of you.
    Were you in any way aware on any level that any Federal 
lawyer--Justice Department, Civil Division, in Washington; U.S. 
Attorney out in Texas--had expressed qualms, objections, 
reservations, any such negative advice regarding the plan to 
pay Mr. Berman and Speir on November 2 of 1998?
    Are you planning an attorney-client relationship with the 
Justice Department?
    Mr. Hunter. No, I am not, but I am claiming the objection 
on advice of counsel because any information I may have with 
respect to that would have come from my attorney. Thank you.
    Mrs. Cubin. Thank you.
    As I said, my career is being a wife and a mother, and 
during the time I was raising my children I truly served on 
many, many non-profits boards. And I think it is certainly a 
noble way to spend your time, and I congratulate all of you for 
that.
    I am mystified, however, at the entire Board's reluctance, 
number one, to honor the subpoenas that were earnestly issued 
by the chairman of this Committee. I don't understand why it is 
that you would want to keep anything secret. In my opinion, 
letting the light of day shine on all of the activities of a 
non-profit is your best protection and your best insulation 
from any sort of thing like this.
    So I guess the last question of the day is I would just 
like to ask you each, did you vote as a Committee not to honor 
the subpoenas? As a Board, each one of you, did you vote on 
that?
    Mr. Mitchell. No. I would say that I received one subpoena 
and that was for the appearance today, and I have appeared and 
spent all day here at the pleasure of the----
    Mrs. Cubin. Were you aware of all of the subpoenas asking 
for documents from POGO? Were you aware of that?
    Mr. Mitchell. I am generally aware of them, and POGO and 
our counsel, our good counsel, was dealing with that. That was 
not my responsibility. I received the subpoena to appear here 
today to answer the Subcommittee's questions.
    Mrs. Cubin. And we thank you for that.
    Mr. Mitchell. And I have honored that.
    Mrs. Cubin. We thank you for that. However, being the 
responsible governing Board of the organization, and not 
granting the documents that we feel necessary to determine 
whether or not the existing policy and procedures that are in 
place are adequate to ensure that Government employees don't 
receive money in exchange for a decision on royalty evaluation, 
for example--I just don't understand why you are reluctant to 
honor the subpoenas of this Committee.
    Mr. Hunter. Madam Chair, may I answer that with respect to 
me at least and as the Chair?
    Mrs. Cubin. Well, I am not sure because you have so many 
other secrets, I am sure I am interested in this information.
    Mr. Hunter. Well, you asked the question. I assumed you 
wanted the answer.
    Mrs. Cubin. I have wanted a lot of answers that you have 
refused to give me, Mr. Hunter.
    Mr. Hunter. I would like to answer the question about why 
we didn't provide questions from this Committee and documents 
regarding our IRS status. I would like to answer that. I don't 
believe that is within your jurisdiction, and I received a 
letter from the Chair of this Committee that, in my view, was a 
veiled threat about our status. I don't think that our IRS 
status is a part of the jurisdiction of this Committee.
    Mrs. Cubin. I don't think it is either.
    Mr. Hunter. So I am comfortable not answering those 
questions. Thank you.
    Mrs. Cubin. I certainly don't think your status as a non-
profit is within the jurisdiction of this Committee either, and 
you haven't heard those words come from any Member.
    Ms. Zill. I think if you examine the long history of POGO, 
you will see that their hallmark is openness and----
    Mrs. Cubin. Well, it certainly isn't today, Ms. Zill.
    Ms. Zill. And you will see that they have a long reputation 
for openness.
    Mrs. Cubin. It certainly hasn't been since we have been 
asking, in the kindest way, first of all, to cooperate. We 
received no cooperation. We couldn't get the documents by 
request. We subpoena them, and then you refuse to honor the 
subpoena. That certainly does not indicate an open organization 
to me.
    I do thank you for your endurance. It has been a long day 
for all of us.
    Deborah, do you have questions?
    Ms. Lanzone. Yes.
    Mrs. Cubin. Certainly. The Chair yields 15 minutes to the 
Minority side staff.
    Ms. Lanzone. Mr. Hunter, why did you decide to serve on the 
Board of POGO?
    Mr. Hunter. Because I thought at the time, and I still 
think at the time, that it is one of those rare non-profit 
organizations that have a real chance of making a difference in 
this town, making Government work better. I am very proud to 
have made that decision and I am very proud to still be a 
member of it. Thank you.
    Ms. Lanzone. Ms. Rasor, why did you decide to serve on the 
Board, and how much are you paid for serving on the Board? 
Maybe that goes to all of you.
    Ms. Rasor. Well, to my knowledge, no one on the Board is 
paid to serve on the Board. I served on the Board because I 
started this organization. Danielle Brian was my employee, and 
when she agreed to come back and take over the organization, I 
was delighted. And I agreed to serve on the Board when we 
finally became our own freestanding non-profit because I knew 
that she would keep the integrity and the effectiveness of this 
organization, not make it into a large bureaucracy, not have it 
be--you know, be a place for whistleblowers to come and be 
safe.
    And that is what I wanted to do in 1981, and I am really 
proud that it is still going on and that we have--I have such a 
deep respect for all the other Board members because they have 
all dedicated their lives to the same kind of thing.
    Ms. Lanzone. How often does the Board meet? Is it once a 
month or every two months or so? Is it a regularly scheduled--
--
    Mr. Hunter. No, it is not regular. It is basically 
quarterly or thereabouts.
    Ms. Lanzone. Quarterly. So would you be the correct people 
to ask about--I mean, to what degree do you stay on top of the 
day-to-day operations of POGO and any kinds of exchanges that 
would be going on between POGO's attorneys and the Department 
of Justice or people involved in the qui tam, I mean, to the 
extent that you can answer that question?
    Mr. Hunter. As a Board, I don't think that is our role to 
stay involved in day-to-day operations of an organization as a 
Board. As individuals, I think we have different expertises and 
we bring different types of advice. Some of us have been more 
involved than others in different aspects, and I have certainly 
at times been involved in at least weekly discussions, if not 
daily, on different aspects of different cases and 
controversies.
    Ms. Lanzone. And there is some ongoing dispute about 
whether or not POGO's attorney's contacted the Justice 
Department or to what degree they contacted them, and back and 
forth. So it is not, at least to my knowledge, an absolute 
actual fact that the Justice Department told somebody that POGO 
shouldn't write these checks. Is that correct? Or maybe you 
don't know the answer to that question or you shouldn't answer 
it either. I don't know.
    Mr. Hunter. I can't answer that question, with respect, as 
I mentioned before, with privilege.
    Ms. Lanzone. You know, in the staff I have read, it looks 
like there seems to be some ongoing questions about that.
    Ms. Zill, when you were talking earlier about 
whistleblowers, I don't know that you have ever met Mr. Berman 
or Mr. Speir, but from what you do know about whistleblowers, 
is it true that they are often--their ability to get things 
done within the department that they work in is minimized 
because of their activism? And so it would not be surprising 
that, say, Mr. Berman, would say to someone that he was 
involved in one area, but he really wasn't.
    Ms. Zill. I don't know Messrs. Berman and Speir, but I do 
know a lot of other whistleblowers, and I have appeared before 
the various congressional Committees with them. And my sense, 
in general, is that you need a great sense of humor, which it 
is hard to have when you are beleaguered, and that lives of 
people who tell the truth about things that are not being done 
correctly within their own agencies are changed forever.
    And I have seen many people who commit truth, as it is also 
known, go off the deep end and lose it. So it is a hard role to 
play, and it is an unfortunate fact of a democracy today that 
isn't functioning perfectly as a democracy that we have to 
depend on whistleblowers.
    And the problem with the whistleblower rule is that it 
isn't often carried out. The law is not honored correctly. So 
there are a lot of people who do get vilified and whose lives 
are ruined, really, and so it is a sad commentary on where we 
are at this point.
    Ms. Lanzone. Ms. Rasor, did you have something to add to 
that?
    Ms. Rasor. Well, I just wanted to say that when we founded 
the Project of Military Procurement, which became POGO--and 
this is still POGO's thing--I don't think that you understand 
the situation that there are whistleblowers who decide to go 
public and decide to take the risk. And we really go through 
there and say, do you realize that your life will never be the 
same? You are going to be shunned, get ready.
    But then the Project has been for years a place for people 
to come inside corporations or inside the government 
bureaucracy to give information anonymously so that they don't 
have to ruin their lives to do the right thing. So you have to 
understand there are two levels of that, and POGO is pretty 
unique on that that this is a place for whistleblowers to come, 
give the information, let us be the front for the information, 
so that their lives are not ruined for doing the right thing.
    Ms. Lanzone. Thank you.
    Chairman Cubin, since you are the only Member left, I thank 
you for the time.
    Mrs. Cubin. Thank you.
    I think I would like to mention to this panel that despite 
POGO's self-described good intentions to fix the oil valuation 
problems--and I do believe that the intentions were good--I 
think the lack of oversight by your Board has allowed Ms. Brian 
and Mr. Banta to make a major mistake in agreeing to pay the 
Federal employees with what can only be described as a 
resultant diminishment in the ability of the government to 
recover greater sums in settlements, in future jury awards, and 
the new royalty, which it is no secret I disagreed with all 
along, but did not do anything as a Committee chairman or a 
Member to stop that from happening.
    That rule may well be struck down because of the 
involvement of these two gentlemen and because of these 
payments. And I think that is tragic because, as I said, I do 
believe and I do know that all of your intentions, as well as 
Ms. Brian's, are good and I agree with them. And I am 
personally insulted and indignant at the practices of the oil 
companies, where they tried to fleece the taxpayer out of what 
was duly owed them.
    So with that, I do thank you for your endurance. It has 
been a long day. You have been very patient and I appreciate 
that very much.
    Mr. Banta, the Subcommittee has more questions for you that 
don't require the presence of the rest of the Board, and so to 
give you a fair opportunity to answer those questions, we will 
again issue you a subpoena for the May 18 hearing, I believe it 
is, at 2.
    I thank everyone for their participation.
    [The prepared statements of Messrs. Banta, Burnham, 
Cavallo, Hamel, Hunter, Mintz, Mitchell; and Ms. Rasor, Ms. 
Sims, and Ms. Zill follow:]
    Mrs. Cubin. With that, the Subcommittee is adjourned.
    [Whereupon, at 5:49 p.m., the Subcommittee was adjourned.]

    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

                              ----------                              

                         THURSDAY, MAY 18, 2000

                  House of Representatives,
      Subcommittee on Energy and Mineral Resources,
                                    Committee on Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:13 p.m., in 
Room 1324, Longworth House Office Building, Hon. Barbara Cubin, 
[chairman of the Subcommittee], presiding.

 STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF WYOMING

    Mrs. Cubin. This oversight hearing will come to order.
    Two weeks ago, this Subcommittee held the first hearing 
conducted as part of the Resources Committee's inquiry into an 
agreement between POGO and two Federal employees to share cash 
proceeds from an oil royalty lawsuit and into the policies and 
practices of the Department of Energy and the Department of the 
Interior, which were either circumvented or inadequate to stop 
the deal.
    If that agreement had not been uncovered by the press and 
pursued by this Committee, POGO, Mr. Berman, and Mr. Speir 
would have split $5.7 million as of today, and that is only 
from 5 of 18 defendants writing settlement checks so far. After 
we hear testimony from two Justice Department officials, we 
will hear from Robert A. Berman. Mr. Berman is a highly paid 
GS-15 in the Office of the Secretary of the Interior. He has 
pocketed $383,600 already and has another million dollars 
coming to at him, at least.
    There was a secret handshake that took place in this 
agreement. That secret handshake was among Bob Berman, Danielle 
Brian, Bob Speir, and Henry Banta, and it was wrong. It was 
wrong because Federal employees are not allowed to have secret 
financial interests which may be affected by their work. 
Messrs. Berman and Speir actively pursued involvement in oil 
royalty matters. By December of 1996, when the deal was 
finalized, they were up to their eyeballs in it.
    This deal is wrong because Mr. Banta and his law firm 
relied on relationships with Mr. Berman and Mr. Speir in 
promoting the interests of their biggest oil royalty client. 
Indeed, everyone approached by POGO to share these riches has 
long ties to Lobel, Novins & Lamont and to its clients' stake 
in Federal oil valuation policies: Mr. Kritzer and former 
California State Controller Ken Cory, who prudently declined 
participation in the deal, Bob Berman, Bob Speir and Lenny 
Brock, who foolishly accepted the offer, were involved with the 
firm. In fact, as the Subcommittee learned 2 weeks ago, Mr. 
Brock had been of no service to POGO and had never heard of it, 
and he had no background in Federal royalty issues involved in 
this litigation. But Mr. Brock does have a decades-long 
association with the Lobel law firm and with its biggest 
client.
    Mr. Banta's firm claims to specialize in legal ethics. Was 
it ethical and appropriate for Mr. Banta to use his power at 
POGO to enrich those who enriched his law firm? This secret 
deal was also wrong because it was secret. Mr. Berman and Mr. 
Speir know now and they knew in 1996 that this was so. There 
were several conversations leading up to the secret handshake 
of November 1996. After that meeting, more than a year elapsed 
before the deal was put on paper. But during those 13 months, 
nobody revealed the secret to ethics officials. After the deal 
was put on paper, something that they must all regret by now, 9 
months passed before the first check was written. But still, no 
one breathes a word to their agency. Mr. Berman's ethics file 
confirms this. Mr. Speir acknowledges that he had no clearance 
for this agreement while employed at the Department of Energy.
    Each year, these two public servants filed financial 
disclosure reports. Why was the agreement with POGO left out of 
those reports? Because it was not a money maker? I am sorry, 
but that is not the rule. Losing money- as well as winning 
investments and partnerships have to be disclosed.
    If this was a public service award, what harm could come 
from getting the approval required before accepting it? If this 
was a contract to share in a lawsuit either employee could have 
filed himself, what harm could come from revealing this direct 
and predictable financial interest? Mr. Berman, and Mr. Speir, 
and Ms. Brian, and Mr. Banta know the answer. I will tell you 
what they knew all along, what Mr. Speir has already admitted 
to. If this award, or agreement which is what it really was, 
had been revealed and cleared by Interior and Energy ethics 
officials, Mr. Berman and Mr. Speir would have been barred from 
further involvement in matters directly linked to the financial 
prospects of POGO, of the Lobel law firm and of themselves. 
After the fact and in the glare of public scrutiny, they call 
that retaliation. I call that ethics.
    If Mr. Berman and Mr. Speir had put their names on the case 
and if their knowledge had been the basis for claiming status 
as the whistleblower, the Justice Department would have 
insisted on sealing them off from decisions related to the 
litigation and underlying policy. The Justice Department takes 
a dim view of Federal employees seeking to profit from False 
Claims Act suits directly related to their work. Once the 
defendants had been notified of the case and learned who Berman 
and Speir were, they would have launched an all-out effort to 
dismiss the case. They probably would have succeeded. That 
would mean nobody, not POGO, not Berman, not Speir not any 
other long-time asset of the Lobel law firm would have made a 
nickel.
    The select few of POGO's leadership who knew of the secret 
handshake include experts in the False Claims Act. The Utah 
lawyers POGO chose to file their case in Lufkin, Texas, are 
experts in False Claims Act cases. Everybody knew that putting 
Berman's and Speir's names on the case meant Federal 
whistleblower protection for both of them. But that would be at 
the price of their continued participation in vital oil royalty 
debates. The only retribution reasonably feared by this crowd 
was a motion filed by the defendants to dismiss the lawsuit.
    Before proceeding to the first panel of witnesses, let me 
summarize what I believe our oversight inquiry has learned. All 
of these statements are based on POGO's own documents to the 
limited extent that they were supplied to us and to the limited 
extent that our subpoenas were complied with. They are based on 
sworn testimony from the principal players and from staff 
interviews with cooperating sources.
    Early in December 1996, Mr. Banta, Ms. Brian, Mr. Berman 
and Mr. Speir agreed that POGO would divide its expected 
royalty litigation proceeds in equal thirds and share it with 
Berman and Speir. This deal included no other conditions. 
Further POGO board approval was not required or sought. Agency 
ethics office approval and Justice Department notification was 
not required. The January 5th, 1998, written agreement is the 
sum and substance of the pact made early in December 1996.
    In December of 1996 and thereafter, there was a wealth of 
legal, ethics, False Claims Act and whistleblower protection 
expertise available to Banta, Brian, Berman and Speir, yet no 
one ``dotted the i's'' or ``crossed the t's'' of this deal in 
advance. And everyone understood that it was an agreement to 
share the money. It was not a public service award. When asked 
under oath to cite specific acts of whistleblowing by Berman or 
Speir, after a struggle, all Ms. Brian could come up with was a 
memo or two. POGO's after-the-fact paperwork praises Mr. Speir 
for a decade of work to focus attention on royalty 
underpayment. Yet, Mr. Speir's own sworn testimony admits that 
he did not work on the issue at all until 1994. He retired in 
1997.
    But Mr. Speir, Mr. Berman and Mr. Brock, along with Mr. 
Kritzer and Mr. Cory, who declined to accept the money, can 
claim a long history of holding views on a host of valuation 
questions which directly benefitted the Lobel law firm. In late 
1993, Mr. Banta, then and now a member of POGO board of 
directors, brought together Danielle Brian and his firm's key 
Federal employee allies on oil valuation matters. Soon 
thereafter, POGO embarked on a campaign which succeeded, by 
their own claims, in changing Interior oil valuation policy. 
This benefited the Lobel firm's top client and succeeded in 
making millionaires of three of the Lobel firm's key allies.
    The same Henry Banta, who brought together this alliance; 
who agreed to pay Berman and Speir as if they were plaintiffs 
in the case; and who sits by as POGO concocts a defense that 
these Federal employees were whistleblowers who could have 
benefited had they filed a case on their own, told a different 
tale when POGO stood to lose its millions. Under penalty of 
perjury, Mr. Banta acknowledged that Danielle Brian, Bob Berman 
and Bob Speir probably could not have qualified as relators 
under the False Claims Act. He also acknowledges that the two 
public servants supposedly rewarded for 10 years of work to 
expose oil royalty underpayments could not have qualified as 
expert witnesses or as fact witnesses in Johnson v. Shell.
    This breathtaking arrogance and duplicity is not unique to 
Mr. Banta. In sworn testimony and in public, Ms. Brian has 
asserted that there was never an agreement to pay either 
Federal official. No, there was simply POGO's unilateral 
commitment to do what was morally right, to honor these men as 
the moral equivalents of plaintiffs in this case. The January 
5, 1998, agreement calls itself an agreement because that is 
what it was. But Ms. Brian says it just states what Berman and 
Speir could expect when the oil company money started flowing.
    But now that questions are being asked, she says that there 
were key conditions that were not included in that supposedly 
clear statement of her moral commitment. When a different 
question is asked, Ms. Brian acknowledges under oath that it 
was an agreement after all, but says that POGO will not live up 
to its part of the bargain. Why? Not for any moral reason, but 
because she and her board decided that neither Berman nor Speir 
would succeed in court if they tried to force POGO to comply. 
Maybe that is why, as we understand it, Mr. Berman threatened 
to pursue legal action against POGO if it did not live up to 
its agreement.
    Finally, our oversight inquiry has learned this: The 
Interior Department did a very poor job of maintaining secrecy 
over the Johnson v. Shell case while it was under seal. Even 
Mr. Speir, who was located over at Energy, admits the case was 
``coffee table conversation'' while under seal. Interviews 
indicate that dozens of MMS and Interior employees knew about 
the case. Anyone who tells us today that they did not know at 
least one sealed False Claims Act case alleging oil royalty 
underpayments was pending in Eastern Texas is the only person 
in that loop who did not know. Yet only two of these Federal 
employees have been paid from that case.
    So far, this appears to be a classic and tragic Washington 
scandal: hypocrisy, and greed and coverup. In the hunger for 
profits, a nonprofit lost sight of its guiding principles. In 
the scramble to cover the truth, rather than make a mistake, a 
watchdog refuses to be watched. In the name of public service, 
lies are told and retold. An organization once fighting to 
expose Government wrongdoing now says, ``So what? Others have 
done worse things.'' This is truly a shame.
    The board of directors and the record keeper with no 
records who sat before us 2 weeks ago have been manipulated by 
Mr. Banta and Ms. Brian. Mr. Banta, the trusted lawyer and 
chairman, recruited POGO to benefit his law firm, and he and 
Danielle Brian should both be ashamed of what they have done to 
the reputation of POGO.
    As I said at our last hearing, this oversight hearing is 
conducted as a 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 serious conflict of interest. 
The parameters of this oversight review are contained in the 
letter transmitting the inquiry to the Subcommittee from 
Chairman Young. These matters are within the jurisdiction of 
this Committee.
    The witnesses have been subpoenaed to testify today. I 
advised each witness that he or she will be sworn in. 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 be allowed to address the 
Subcommittee. Lawyers should note that the rules of the House 
of Representatives restrict counsel to advising witnesses in 
the assertion of constitutional rights and privileges. That 
means, after a consultation with a lawyer, I should hear one of 
two things: an assertion of a constitutional right or the 
answer to the question.
    Lawyers may not sit at the witness table, but I have 
reserved seats 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 remind everyone that this is a Subcommittee hearing which 
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 under those rules. This is not an 
investigative hearing.
    Witnesses will not make oral summaries of their testimony, 
but may place statements which comply with the rules in the 
record.
    As I announced at our last hearing, our exercise examines 
an instance where a private corporation made payments to 
Federal employees involved in royalty policies and rules. Our 
Subcommittee is responsible for ensuring that there is 
integrity in the Federal policy and rule-making process 
concerning oil royalties from public domain land. We are 
responsible for ensuring that the departments are organized and 
operated properly. The hearing today is to gather the facts to 
discharge our responsibility.
    At our last hearing, I became quite concerned with how the 
payments affected advice, recommendations and deliberations 
concerning the Subcommittee's proposal on royalty in-kind 
system. Did the employees have an incentive to keep the system 
in place so that they could collect their share of the 
settlements under the secret agreement with POGO? We worked on 
the R-I-K proposal and oversight for 4 years to ensure a fair 
system that allows collection of every penny of royalties that 
is owed. But did the payments affect the policy of the Interior 
Department regarding our proposal? How can any of us know?
    Now, we have a new rule for royalties, but the integrity of 
the rule-making process is in serious question because of the 
payments to Mr. Berman and Mr. Speir. POGO supported the 
approach followed in the rule, and Mr. Berman wrote the first 
paper outlining that approach.
    As we begin this hearing, I ask everyone to imagine that it 
was an oil company, instead of POGO, that made two $383,600 
payments to Federal employees who worked on oil policy. Imagine 
that the employees wrote papers that advocated a position 
similar to that of the oil companies. Imagine that the 
employees fed the companies information over the years or sat 
on task forces concerning oil valuation policies? Then imagine 
that when the payments were made the oil companies called them 
public service awards. If you are a member of the press, 
imagine what you would write. Well, write that story as you 
listen to today's testimony, but every time you write the name 
of that oil company, strike it out and insert ``the Project on 
Government Oversight.'' Agency policy advisers should not be 
silent partners of anyone.
    [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.
    Two weeks ago this Subcommittee held the first hearing 
conducted as part of the Committee on Resources inquiry into an 
agreement between POGO and two Federal employees to share cash 
proceeds from an oil royalty law suit and into the policies and 
practices of the Department of Energy and the Department of the 
Interior which were either circumvented or inadequate to stop 
the deal.
    If that agreement had not been uncovered by the press and 
pursued by this Committee, POGO, Mr. Berman and Mr. Speir would 
have split $5.7 million as of today--and that is from only five 
of eighteen defendants writing settlement checks so far. After 
we hear testimony from two Justice Department officials, we 
will hear from Robert A. Berman. Mr. Berman is a highly paid, 
GS-15 in the Office of the Secretary of the Interior. He has 
pocketed $383,600 already and has another 1 million coming to 
him--at least.
    That secret handshake among Bob Berman, Danielle Brian, Bob 
Speir, and Henry Banta was wrong. It is wrong because Federal 
employees are not allowed to have secret financial interests 
which may be affected by their work. Berman and Speir actively 
pursued involvement in oil royalty matters. By December 1996 
when the deal was finalized--they were up to their eyeballs in 
it.
    That deal is wrong because Mr. Banta and his law firm 
relied on relationships with Mr. Berman and Mr. Speir in 
promoting the interests of their biggest oil royalty client. 
Indeed, everyone approached by POGO to share in these riches 
has long ties to Lobel, Novins & Lamont and to its' clients' 
stake in Federal oil valuation policies: Mr. Kritzer and former 
California State Controller Ken Cory--who prudently declined, 
Bob Berman, Bob Speir, and Lenny Brock--who foolishly accepted 
the offer. In fact, as the Subcommittee learned two weeks ago, 
Mr. Brock had been of no service to POGO and had never heard of 
it and he had no background in Federal royalty issues involved 
in the litigation. But, Mr. Brock does have a decades-long 
association with the Lobel law firm and with its' biggest 
client.
    Mr. Banta's firm claims to specialize in legal ethics. Was 
it ethical and appropriate for Mr. Banta to use his power at 
POGO to enrich those who enriched his law firm?
    This secret deal is also wrong because it was secret. Mr. 
Berman and Mr. Speir know now and they knew in 1996 this was 
so. There were several conversations leading up to the secret 
handshake of December 1996. But neither public employee asked 
his agency ethics office for advice. After that meeting, more 
than a year elapsed before the deal was put on paper. But 
during those 13 months, nobody revealed the secret to ethics 
officials. After the deal was put on paper--something they must 
regret by now--nine months passed before the first check was 
written. But still, no one breathes a word to their agency. 
Berman's ethics file confirms this. Mr. Speir acknowledges that 
he had no clearance for this agreement while employed at 
Energy.
    Each year, these two public servants filed financial 
disclosure reports. Why was the agreement with POGO left off? 
Because it was not a certain moneymaker? I am sorry but that is 
not the rule. Losing and winning investments and partnerships 
have to be disclosed.
    If this was a ``public service award,'' what harm could 
come from getting the approval required before accepting it? If 
this was a contract to share in a law suit either employee 
could have filed himself, what harm could come from revealing 
this direct and predictable financial interest? Berman and 
Speir and Brian and Banta know the answer.
    I'll tell you what they knew all along--what Mr. Speir has 
already admitted--if this ``award'' or agreement had been 
revealed and cleared by Interior and Energy ethics officials, 
Mr. Berman and Mr. Speir would have been barred from further 
involvement in matters directly linked to the financial 
prospects of POGO, of the Lobel law firm, and of themselves. 
After the fact and in the glare of public scrutiny, they call 
that ``retaliation.''
    I call it ethics.
    If Berman and Speir had put their names on the case and 
their knowledge had been the basis for claiming status as the 
whistle-blower, the Justice Department would have insisted on 
sealing them off from decisions related to the litigation and 
underlying policy. The Justice Department takes a dim view of 
Federal employees seeking to profit from False Claims Acts 
suits directly related to their work. Once the defendants had 
been notified of the case and learned who Berman and Speir 
were, they would have launched an all-out effort to dismiss the 
case. They probably would have succeeded.
    That would mean that nobody--not POGO, not Berman, not 
Speir, not any other long-time asset of the Lobel law firm 
would have made a nickel!
    The select few of POGO's leadership who knew of this secret 
handshake include experts in False Claims Act cases. The Utah 
lawyers POGO chose to file their case in Lufkin, Texas are 
experts in False Claims Act cases. Everybody knew that putting 
Berman and Speir's names on the case meant Federal 
whistleblower protection for Berman and Speir but at the price 
of their continued participation in vital oil royalty debates. 
The only retribution reasonably feared by this crowd was a 
Motion to Dismiss filed by the defendants.
    Before proceeding to the first panel of witnesses, let me 
summarize what I believe our oversight inquiry has learned. All 
of these statements are based on POGO's own documents--to the 
limited extent they complied with our subpoenas--on sworn 
testimony from the principal players, and from staff interviews 
with cooperating sources:

        In early December 1996, Mr. Banta, Ms. Brian, Mr. Berman and 
        Mr. Speir agreed that POGO would divide its' expected oil 
        royalty litigation proceeds in equal thirds and share it with 
        Berman and Speir. This deal included no other conditions. 
        Further POGO Board approval was not required nor sought. Agency 
        ethics office approval and Justice Department notification was 
        made. The January 5, 1998 written agreement is the sum and 
        substance of the pact made in early December 1996.
        In December of 1996 and thereafter, there was a wealth of 
        legal, ethics, False Claims Act, and whistle-blower protection 
        expertise available to Banta, Brian, Berman, and Speir. Yet no 
        one ``dotted the i's or crossed the t's'' of this deal in 
        advance, and everyone understood that it was an agreement to 
        share money--not a ``public service award.'' When asked under 
        oath to cite specific acts of ``whistle-blowing'' by Berman or 
        Speir, after a struggle, all Ms. Brian could come up with was a 
        memo or two. POGO's after-the-fact paperwork praises Mr. Speir 
        for a decade of work to focus attention on royalty under-
        payment. Yet, Speir's own sworn testimony admits that he did 
        not work on the issue at all until 1994. He retired in 1997.
    But, Mr. Speir, Mr. Berman, and Mr. Brock--along with Mr. Kritzer 
and Mr. Cory who declined to accept money--can claim a long history of 
sharing views on a host of oil valuation questions which directly 
benefited the Lobel law firm. In late 1993, Mr. Banta, then and now a 
member of Lobel, Novins & Lamont and the single most influential member 
of the POGO Board of Directors, brought together Danielle Brian and his 
firm's key Federal Government allies on oil valuation matters. Soon 
thereafter, POGO embarked on a campaign which succeeded--by their own 
claims--in changing Interior oil policy. This benefited the Lobel 
firm's top client and succeeded in making millionaires of three of the 
Lobel firm's key allies.
    The same Henry Banta, who brought together this alliance, who 
agreed to pay Berman and Speir as if they were plaintiffs in the case, 
and who sits by as POGO concocts a defense that these Federal employees 
were whistle-blowers who could have file the case on their own told a 
different tale when POGO stood to lose its millions. Under penalty of 
perjury, Mr. Banta acknowledged that Danielle Brian, Bob Berman and Bob 
Speir probably could NOT have qualified as Relators under the False 
Claims Act. He also acknowledges that the two public servants 
supposedly rewarded for ten years of work to expose oil royalty under-
payments could NOT have qualified as expert witnesses or fact witnesses 
in Johnson v. Shell.
        This breathtaking arrogance and duplicity is not unique to Mr. 
        Banta. In sworn testimony and in public, Ms. Brian has asserted 
        that there was never an agreement to pay either Federal 
        official. No. There was simply POGO's unilateral commitment to 
        do what was morally right--to honor these men as the moral 
        equivalents as plaintiffs in the case. The January 5, 1998 
        agreement calls itself an ``agreement'' but Ms. Brian says it 
        just states what Berman and Speir could expect when the oil 
        company money started flowing.
        But now that questions are being asked, she says there were key 
        conditions not included in that clear statement of her moral 
        commitment. When a different question is asked, Ms Brian 
        acknowledges under oath that it was an agreement after all--but 
        says POGO will not live up to its part of the bargain. Why? Not 
        for any moral reason. Because she and her Board decided that 
        neither Berman nor Speir would succeed in court if they tried 
        to force POGO to comply. Maybe that is why we understand that 
        Mr. Berman threatened to pursue legal action against POGO if it 
        did not live up to its end of the deal.
        Finally, our oversight inquiry has learned this: the Interior 
        Department did a very poor job of maintaining secrecy over the 
        Johnson v. Shell case while it was under seal. Even Mr. Speir, 
        who was located over at Energy, admits the case was ``coffee 
        table conversation'' while under seal. Interviews indicate that 
        dozens of MMS and Interior employees knew about the case. 
        Anyone who tells us today that they did not know that at least 
        one sealed False Claims Act case alleging oil royalty under-
        payments was under seal in eastern Texas is the only person in 
        that loop who did not know. Yet, only two of those Federal 
        employees have been paid from that case.
    So far this appears to be a classic and tragic Washington 
scandal. Hypocrisy and greed and cover-up. In the hunger for 
profits, a non-profit lost sight of its' guiding principles. In 
the scramble to cover the truth rather than admit a mistake, a 
watchdog refuses to be watched. In the name of public service, 
lies are told and re-told. An organization once fighting to 
expose government wrongdoing now says, ``So what, others have 
done worse things.'' This is truly a shame.
    The Board of Directors and the record-keeper with no 
records who sat before us two weeks ago have been manipulated 
by Mr. Banta and Ms. Brian. Mr. Banta, the trusted lawyer and 
Chairman who recruited POGO to benefit his law firm, and 
Danielle Brian should be ashamed.
    As I said at our last hearing, 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. The parameters of our oversight review 
are contained in the letter transmitting the inquiry to the 
Subcommittee from Chairman Young. These matters are within the 
jurisdiction of the Subcommittee.
    The witnesses have been subpoenaed to testify today. I 
advise each witness that he or she will be sworn in. 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.
    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. That means 
after a consultation with a lawyer, I should hear one of two 
things--an assertion of a CONSTITUTIONAL right or an answer to 
the question.
    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 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 under those rules. This is not an 
investigative hearing.
    Witnesses will not make oral summaries of their testimony, 
but may place statements that comply with the rules in the 
record. (The rules afford no right to an opening statement.)
    As I announced at our last hearing, our exercise examines 
an instance where a private corporation made payments to 
department employees involved in Federal royalty policies and 
rules. Our Subcommittee is responsible for ensuring that there 
is integrity in the Federal policy and rule making process 
concerning oil royalties from public domain land. We are 
responsible to ensure that the departments are organizing and 
operating properly. The hearing today is to gather the facts to 
discharge our responsibility.
    At our last hearing I became quite concerned with how the 
payments affected advice, recommendations, and deliberations 
concerning the Subcommittee's proposal on a ``royalty in-kind'' 
(R-I-K) system. Did the employees have an incentive to keep the 
system in place so that they could collect their share of the 
settlements under the secret agreement with POGO? We worked on 
the R-I-K proposal and oversight for four years to ensure a 
fair system that allows collection of every penny of royalties 
owed, but did the payments affect the policy position of the 
department on our proposal? How can we know?
    Now we have a new rule for royalties, but the integrity of 
the rule making process is in serious question because of the 
payments to Mr. Berman and Mr. Speir. POGO supported the 
approach followed in the rule, and Mr. Berman wrote the first 
paper outlining that approach.
    As we begin this hearing, I again ask everyone, to imagine 
that it was an oil company instead of POGO that made two 
$383,600 payments to Federal employees who worked on oil 
policy. Imagine they had a three year secret written agreement 
to pay the employees money. Imagine that the employees wrote 
papers that advocated the positions similar to oil companies' 
positions. Imagine that the employees fed the companies 
information over the years or sat on task forces concerning oil 
valuation policy. Then imagine that when the payments were 
made, the oil companies called them ``public service awards.''
    If you are a member of the press, imagine what you would 
write. Well write that story as you listen to today's 
testimony, but every time you write the name of that oil 
company, strike it out and insert the ``Project On Government 
Oversight.'' Agency policy advisors should not be silent 
partners of anyone.
    I call the first panel. Mr. Schiffer and Mr. Dodd, will you 
please stand at the witness table. Mr. Dodd, will you raise 
your right hand and be placed under oath, please. (Schiffer is 
providing expert opinion and does not need to be sworn.)

    Mrs. Cubin. Now, I recognize Mr.----
    Mr. Underwood. I yield my time to Mr. Miller.
    Mrs. Cubin. Mr. Miller for an opening statement.

 STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Miller. I thank the gentleman for yielding. And first 
of all, I would like to make a request that our colleague, Ms. 
Maloney, from New York be allowed to sit with the Committee and 
make a statement at the appropriate time.
    Mrs. Cubin. The gentlelady from New York certainly is 
welcome to sit at the dais. And I have informed her that she 
can make a statement at the end of the hearing, that she can be 
the last person to testify or she also has the option, if she 
cannot stay that long, of submitting her testimony for the 
record or Mr. Underwood has asked for a day to have Minority 
witnesses, and she certainly would be welcome to testify first 
at that hearing.
    Mr. Miller. Well, that is certainly within your prerogative 
to do that, just as it is in the prerogative of this Committee 
to allow people to sit and not sit. We have had a long 
tradition. We have even had members who are not members of this 
Committee chair hearings in this Committee. And the Minority 
has agreed to that. But we have allowed numerous members from 
the other side of the aisle to sit with this Committee because 
obviously this Committee affects many Western members' 
districts who are not members of this Committee, and they have 
given statements, along with members of this Committee, and 
they have testified and they have asked questions. And if we 
are not going to allow that here, then I don't think the 
Majority should look forward to a continuation of the 
Minority's cooperation of those future requests from members of 
the Minority.
    Mrs. Cubin. Mr. Miller, I am allowing it. And you will 
recall that I allowed Ms. Maloney to sit at the dais and 
question----
    Mr. Miller. And I appreciate that, and I am asking for the 
same rights in this hearing.
    Mrs. Cubin. And certainly she has that. If she can save her 
testimony until later on in the hearing, she is certainly 
welcome.
    Mr. Miller. Well, just remember that if other members on 
the Minority side, Mr. Herger and others, who have been such 
members on the Forestry Committee and the rest if they can wait 
until after all of the witnesses are done, then they are 
welcome to do the same. We just want to understand what the 
rules are because we have tried to have that comity back and 
forth.
    Mrs. Cubin. That is good. Then, we do all understand.
    Mr. Miller. Okay.
    Finally, then, I would say that once again we find the 
Majority speaking in conclusion with regard to actions that 
have been alleged. And they are certainly entitled to put their 
spin on them. But the suggestion that these have, in fact, been 
proven yet I think is to get way ahead of the game. And I think 
once again, as I said at the previous hearing, it is to trample 
upon the rights of those who are under investigation for what 
may be illegal acts, for what may be criminal acts, for what 
may be huge mistakes in judgment and all of the rest of that. 
But that is currently under investigation, I believe by both 
the Department of the Interior and the Department of Justice.
    In one case, in the Justice Department, I think clearly 
there is much at risk for those who are under investigations. 
But this Committee has sought again to wade into the middle of 
that. It is not as though somebody is ignoring this effort. But 
rather than wait the outcomes of that to determine whether or 
not those investigations and oversight have been done properly, 
this Committee has sought to weigh in. Because the whole point 
of this Committee is to really get at the oil valuation rules, 
and to get at the oil valuation rules not because of the oil 
valuation rules not because of the conclusions they cited, but 
because they don't like the fact that finally the oil companies 
are going to have to stop bilking the people of this Nation for 
the leases and the oil that they take off of public lands.
    So this is about litigation and involvement in both 
lawsuits and in a regulatory manner to destroy the valuations 
and the determinations that have been put before the Congress, 
that have been held up time and again, but fortunately now it 
appears that they will go through. And I assert again that that 
is what is really going on here. That is not to condone or not 
to suggest that these actions did or did not take place because 
we don't know that.
    But here we are. We had these same conclusions at the 
outset of the hearing. Now we have these same conclusions at 
half-time. And I guess we will have the same conclusions at the 
end of the game. But the important conclusions will, of course, 
be what is found out both by the Department of Interior, and 
more importantly, by the Department of Justice. So I am sorry 
that that is the case.
    Also, in our discussions with the parliamentarian, I would 
just like to note for the audience that you keep suggesting 
that this is not an investigative hearing. The parliamentarian 
tells us that you may not want to call this an investigative 
hearing. But when you have gone through the process of 
subpoenaing witnesses and the rest of that, that takes on the 
nature of an investigative hearing. And I appreciate why you 
are trying not to have this be an investigative hearing, it is, 
in fact, an investigative hearing, and I yield back the balance 
of my time.
    Mrs. Cubin. Thank you, Mr. Miller.
    The chair now recognizes Mr. Tauzin for the purpose of a 
motion regarding questioning of witnesses.
    Mr. Tauzin. Madam Chairman, under Clause 2(j)(2)(b) of Rule 
XI under the Rules of the House of Representatives, I move that 
Congressmen Gibbons, Schaffer and Tancredo, Majority members, 
and a Minority member of the Committee designated by the 
Ranking Member be allowed to question the witnesses on our 
first panel for a total of 20 minutes, equally divided between 
our two parties.
    Mr. Miller. I don't understand. Are you saying that is 10 
minutes a side?
    Mr. Tauzin. Ten minutes a side.
    Mr. Underwood. Ten minutes a side, but you are allowing 
three people to ask questions.
    Mr. Tauzin. Yes. That is correct.
    Mr. Underwood. And only one on this side.
    Mrs. Cubin. No. It is 10 minutes. You can divide it up 
however you want, equally divided.
    Mr. Tauzin. Madam Chairman, what I am suggesting is the 
Minority can designate one or more members of the Minority.
    Mr. Miller. Let me ask you, we did this last hearing, and I 
didn't object to it at that time. And then we went back into 
the 5-minute rule. Are you planning on doing that again? You 
would do this and then go into the 5-minute rule because we--I 
don't know if it was intentional or not, but we lapsed back 
into the 5-minute rule.
    Mr. Tauzin. My understanding is not for this panel; is that 
correct?
    Mrs. Cubin. That is correct, not for this panel. We will 
have a motion from the Majority side for a block of time, just 
as on all of the rest of the panels as well.
    Mr. Miller. Well, then I would object because under the 
Rules of the House, not of the Committee, under the Rules of 
the House, each member has the right to ask each witness 
questions for 5 minutes. So we would be entitled to 10 minutes, 
in any case. Mr. Underwood would be entitled to 10 minutes, I 
would be entitled to 10 minutes, and Mr. Inslee would be 
entitled to 10 minutes. Those are the Rules of the House.
    Mr. Tauzin. Then I ask for a vote on the motion, Madam 
Chairman.
    Mr. Miller. You can't supersede the Rules of the House. I 
have a right to ask each witness, each member does.
    Mrs. Cubin. Then, let's see, we have----
    Mr. Miller. Why don't we just proceed because I don't think 
it is going to take any more time.
    Mrs. Cubin. I don't either. That is why I don't understand 
why you are making the point.
    Mr. Miller. Because I am just reserving my rights. Why 
would I end up with 10 minutes, when we have got three people 
here that may, in fact, want to ask questions and ask three? I 
don't know what they want to do.
    Mrs. Cubin. Would the gentleman amend his motion to 15 
minutes on each side?
    Mr. Tauzin. Would the gentleman, Mr. Miller, accept 15 
minutes on each side?
    Mr. Miller. I would object. I am just going to insist on 
the Rules of the House, which is each----
    Mrs. Cubin. All in favor of 15 minutes----
    Mr. Miller. The Committee must abide by the Rules of the 
House.
    Mrs. Cubin. All in favor, say aye.
    Those opposed?
    Mrs. Cubin. So there will be 15 minutes' questioning on 
each side.
    The chair now calls the panel forward and will swear them 
in. Would O. Kenneth Dodd and, Mr. Schiffer, since you are 
testifying as an expert and not specifically about this case, 
we don't require your being sworn in. But if you wouldn't mind, 
we can swear you in, too. But anyway, Mr. Dodd, would you----
    Mr. Miller. Madam Chairman, under the Committee rules, one 
sworn, all sworn. It doesn't matter what their status is.
    Mrs. Cubin. Would you both rise.
    [Witnesses sworn.]
    Mrs. Cubin. Thank you. Please be seated.
    The chair now recognizes Mr. Gibbons for questioning of the 
panel.
    Mr. Gibbons. Thank you very much, Madam Chairman. And I 
would simply like to begin my series of questioning with Mr. 
Dodd.
    You are a False Claim expert in your office, are you not?

    STATEMENT OF OLEN KENNETH DODD, ASSISTANT UNITED STATES 
              ATTORNEY, EASTERN DISTRICT OF TEXAS

    Mr. Dodd. I try to be.
    Mr. Gibbons. Prior to June 1997, you were working with the 
Packards on False Claims Act suits alleging health care fraud; 
is that true?
    Mr. Dodd. I couldn't hear the first part of your----
    Mr. Gibbons. Prior to June 1997, you had been working with 
the Packards involving False Claim Act suits alleging health 
care fraud issues; is that correct?
    Mr. Dodd. Yes.
    Mr. Gibbons. Where were those cases being tried?
    Mr. Dodd. They were filed in the Beaumont Division of the 
Eastern District of Texas.
    Mr. Gibbons. How far is Beaumont, Texas, from Lufkin, 
Texas?
    Mr. Dodd. It's about an hour-and-a-half drive, about 85/90 
miles.
    Mr. Gibbons. If you were a--let's hypothetically look at 
this. If I am someone looking to foster a good working 
relationship with you, might not I be doing myself a disfavor 
by filing claims at a distance from your office or where you 
normally practice?
    Mr. Dodd. Well, I know for a fact that the Packards 
considered filing cases in other divisions of the Eastern 
District of Texas and seriously considered that. I had no 
objection to that, and they knew that. So I'm not quite sure 
whether that is responsive or not. But I don't think they were 
going to get any kind of ill will from me by filing it in some 
other part of my district.
    Mr. Gibbons. It was rather a rhetorical question, and I 
appreciate your answer. But let me move on to another question.
    Before the Packards filed the POGO case on June 9th of 
1997, did they tell you about the case and that they had 
decided which court to file in?
    Mr. Dodd. Sir, they told me that at a meeting at my 
office--actually, it wasn't ``they.'' It was Von Packard--at a 
meeting at my office to discuss the health care fraud cases, at 
the conclusion of that meeting, as we were stepping out into 
the hall, Mr. Packard mentioned that he had an oil royalty 
valuation underpayment case that he was planning on bringing in 
the Eastern District of Texas. He did not say that he was going 
to be bringing that in the Beaumont Division. But clearly he 
was wanting to know if I was interested in the case and if I 
thought I had enough time to work on that case, in addition to 
the other cases that I had.
    Mr. Gibbons. Mr. Dodd, do you recall when that conversation 
took place?
    Mr. Dodd. No, I do not. It would--it would have been very 
shortly before it was filed. I would say maybe a couple of 
weeks. That is my memory.
    Mr. Gibbons. Before the June 9th, 1997 filing.
    Mr. Dodd. Yes.
    Mr. Gibbons. When they told you or this Von Packard told 
you of his plan to file a False Claims Act with regard to oil 
royalties, did you get the impression that they sought your 
views on their filing of that case and your view as to where 
they had decided to file it?
    Mr. Dodd. It was a very brief conversation in a hallway, 
sir. And it is difficult for me to remember that sort of 
impression. I know that they were considering whether or not 
they should file it in the Beaumont Division or some other 
division within the Eastern District of Texas. And I got the 
impression, it was mostly out of a concern of whether or not I 
would be able to handle it if it were in another division of 
our district or if I was going to handle it, would I have 
enough time to work on the case, given the other cases that I 
had. But I don't recall them specifically saying anything about 
any particular division that they were contemplating filing it 
in within the Eastern District of Texas.
    Mr. Gibbons. Before early November 1998, did any of the 
Packards ever tell you that their client, POGO, planned to pay 
two Federal employees who were possible witnesses in the 
Johnson v. Shell case?
    Mr. Dodd. No.
    Mr. Gibbons. Now, isn't it true that a party knowing that 
Johnson v. Shell and Mr. Wright's case were under seal in the 
Eastern District of Texas would not have needed a tipoff to 
file in Lufkin because a published order of the judge was 
already out and would have indicated to a trained eye that he 
was handling an oil royalty litigation already?
    Mr. Dodd. Well, there was a case filed in the Eastern 
District of Texas. It was U.S.A. v. Chevron, wherein the United 
States sought to compel Chevron to produce documents that we 
had subpoenaed and that they had refused to comply with. And 
the judge had issued a public ruling on that. Now, Judge Hannah 
had cases both in Tyler and in Lufkin, and I cannot recall 
right now whether or not U.S.A. v. Chevron was filed in Tyler 
or Lufkin, but it was certainly filed in Judge Hannah's court. 
So that case would have given any intelligent person looking at 
it an insight that the United States was conducting an 
investigation into at least Chevron and seeking to get 
documents from Chevron.
    Mr. Gibbons. Going back to my previous question about POGO 
and the Packards. I understand that you had many phone calls 
with the Packards on issues including Johnson v. Shell, but 
other cases as well, and that you have reviewed your records 
from our notes here and could not determine the exact date of 
the conversation that you were informed of POGO's decision or 
payments to Berman and Speir.
    But did Lon Packard ever represent to you that the payments 
had already been made to these individuals or were planned to 
be made to these individuals?
    Mr. Dodd. At the time of the phone call that both parties 
admit occurred; is that the question?
    Mr. Gibbons. Yes.
    Mr. Dodd. At this time, let me mention that I know that we 
are not to make opening statements, but there is a prepared 
statement that has been provided to the Committee that I would 
ask that would be included into the hearing record because it 
deals directly with this issue.
    Mrs. Cubin. Yes.
    Mr. Dodd. Sir, I believe my statement states, and I want to 
reiterate, that at the time of the phone call, Mr. Packard did 
not tell me that the money was already paid, and in fact, I 
believe went to some lengths to, let us just say I never during 
the conversation or afterwards felt that the money had been 
paid already or that, frankly, they agreed that it should be 
paid. The nature of the phone call to me was they were giving 
me a ``heads up'' to let me know that POGO was planning on 
making a payment and planning on having a press conversation to 
announce that payment. And I don't want to get into the rest of 
it until I have a question.
    Mr. Gibbons. Sure.
    Mr. Dodd. I think I have addressed your statement.
    Mr. Gibbons. You did. What did you respond to Mr. Packard 
with regard to that payment? Did you express an opinion or a 
statement?
    Mr. Dodd. First of all, it did come out of the blue. I had 
absolutely no hint or idea that this was going to happen prior 
to the phone call. I get the phone call, and I am told that it 
is their understanding that a payment is going to be made or 
that POGO has decided to make a payment to Mr. Berman and Mr. 
Speir. I had heard of Mr. Berman's name before, but not Mr. 
Speir. They told me he was an employee of the Department of 
Interior--Mr. Berman was an employee of the Department of 
Interior, and Mr. Speir was a former Federal employee who had 
been employed at the Department of Energy.
    Most of my comments focused on Mr. Berman because as a 
current pending Federal employee, I felt more comfortable 
making statements about him. I wasn't exactly sure what the 
rules were in regards to a former employee or the time of his 
leaving. But I hope I haven't lost the train of thought here, 
but the fact of the matter is is that I was not told prior to 
it that they had made the payment.
    And when I was told about the possibility of the payment, I 
am the one who told Lon Packard, specifically, that I felt that 
POGO should not have a press conference, that I felt that it 
was POGO's attempt to basically solicit information from 
Federal employees that if you give us your dirt that if we can 
figure out a way of making money out of it, we will share it 
with you. And I didn't think that was a good thing to do. And, 
also, that I felt that it would--I didn't comment upon this to 
them--but in my heart, I felt that it would lock, if they had a 
press conference, it would commit them to paying the money, and 
I did not want the money paid. I didn't think the money should 
be paid, and I told them that. And I told them that I did not 
see how a Federal employee could accept the money, and that if 
they could not accept the money, I did not see how POGO could 
pay the money.
    Mr. Gibbons. Mr. Schiffer, the False Claims Act permits 
suits to be filed by civilian and Federal employees, does it 
not?

  STATEMENT OF STUART E. SCHIFFER, DEPUTY ASSISTANT ATTORNEY, 
                         CIVIL DIVISION

    Mr. Schiffer. I think what I can say is that it doesn't 
expressly preclude such suits, nor does it expressly provide 
for such suits.
    Mr. Gibbons. But it also provides protections against 
retaliation from supervisors in providing for Federal 
whistleblower actions that are taking a valid course or route 
to stop fraud on the taxpayers, does it not?
    Mr. Schiffer. Congressman, the False Claims Act, indeed, 
has protections against retaliation with respect to Federal 
employee whistleblowers, and I am not sure, you know, it's a 
major distinction, but there's a separate statutory scheme 
Whistleblower Protection Act that provide protection.
    Mr. Gibbons. So if these gentlemen, Berman and Speir, were 
some kind of in fear of retaliation, they would have been 
protection putting their names on the POGO case?
    Mr. Schiffer. We would probably have moved to dismiss such 
a case, as we do without uniform success, but as we do with 
respect to most suits where Federal employees attempt to file 
suit as relators.
    Mr. Gibbons. Well, when a Federal employee files a qui tam 
case, are they permitted to work on matters directly related to 
that suit?
    Mr. Schiffer. We would certainly urge the employing agency 
that they be walled off from working on the case.
    Mr. Gibbons. I have read your very clear, very forceful 
written statement, Mr. Schiffer, and I would like to make sure 
everyone in this room understands why it is important that the 
seal on a qui tam case be strictly observed by Federal 
employees who are aware or who participate in deliberations 
leading to a recommendation that your office would subsequently 
intervene in that litigation. Could you explain why that is so 
important.
    Mr. Schiffer. Well, during the legislative process that led 
to the 1986 amendments of the False Claims Act, we expressed 
several concerns about earlier versions of the statute, 
including concerns that, for example, an ongoing criminal 
investigation might be impacted if a suit was filed. And we 
also wanted time for ourselves to investigate such suits. Of 
course, the seal is really there, it is a court seal, but we 
view it as there basically for our protection, to protect the 
integrity of the investigation we are conducting.
    Mr. Gibbons. The ethics rules generally are presented to 
every Federal employee, are they not?
    Mr. Schiffer. That is correct, Congressman.
    Mr. Gibbons. And those ethics rules would cover the 
disclosure of a secret interest in a qui tam suit, would they 
not?
    Mr. Schiffer. I am sorry. If I can ask you to repeat the 
question. They would cover the disclosure of?
    Mr. Gibbons. That is correct. They would cover the 
disclosure.
    Mr. Schiffer. This isn't something I have confronted 
before. I would certainly think, I mean, were it I--I haven't 
been so blessed--but were it I, I would obviously feel the need 
to disclose that I had an interest in such a matter.
    Mr. Gibbons. Madam Chairman, I think we have got a few 
seconds, but I will reserve the balance of my time for any 
follow-up that may be needed.
    Mrs. Cubin. Thank you, Mr. Gibbons.
    The chair now recognizes Mr. Underwood and the Minority 
side for 15 minutes.
    Mr. Underwood. Thank you. We will begin with Mr. Miller.
    Mr. Miller. Just a point of clarification, the 15 minutes 
is up, right? There is no time left or is that 15 minutes for 
each person?
    Mrs. Cubin. No, it is 15 minutes on a side, and I think 
there are about 10 seconds left on the clock. But now we 
recognize----
    Mr. Gibbons. I reserved the balance of the 15 minutes.
    Mr. Miller. Mr. Schiffer, if I could just pick up where Mr. 
Gibbons left off.
    There is nothing against the law for a Federal employee to 
file a qui tam case; is that right?
    Mr. Schiffer. I think what I was trying to say in my own 
way was that the law is not clear on that point.
    Mr. Miller. But you have challenged that, and as you said, 
without uniform outcomes. So in some cases, the courts have 
said this is fine, and other cases the courts have said they 
are going to dismiss the case.
    Mr. Schiffer. There have been a limited number of cases 
where Federal employees have been permitted to proceed as 
relators. I do want to emphasize, Congressman, though, that----
    Mr. Miller. So you may not agree with it, but as of now, it 
is not illegal.
    Mr. Schiffer. With respect to those cases in which the 
Courts have permitted them to proceed, certainly the Court has 
felt they were----
    Mr. Miller. So----
    Mr. Schiffer. But I do want to emphasize, Congressman, that 
we don't, of course, regard these cases as cases where 
employees appeared as relators, which is the term used for 
the----
    Mr. Miller. I understand. And in a case where an employee 
would be involved in one of these, you said that the Justice 
Department does what? You recommend that they be walled--the 
term we used in the earlier hearing was ``walled off.'' You 
would recommend that they be walled off?
    Mr. Schiffer. We would, and we certainly wouldn't consult 
them in any way, as the case progressed.
    Mr. Miller. And your recommendation to wall off employees 
is to whom? To the head of the other Agency, whether it is 
Defense or Interior or whatever?
    Mr. Schiffer. Yes, sir.
    Mr. Miller. And then they then take that action. Is there a 
requirement that they take that action?
    Mr. Schiffer. I guess I can't envision a situation where 
that wouldn't be done because I think we would all be worried 
about, at the very least, the appearance that might result.
    Mr. Miller. I don't know. In the law, is there a 
requirement that they then do that? I can understand clearly 
why you would do it, but does the law require that?
    Mr. Schiffer. I can't point to a statutory provision. I 
think if there was an ethical matter, it would be necessary.
    Mr. Miller. Mr. Dodd, back to you were informed by the 
Packards that, if I am correct here, that POGO might be making 
this payment, right? That is your testimony, if I read it 
correctly?
    Mr. Dodd. Yes. Yes, sir.
    Mr. Miller. And you said that they wanted your opinion and 
you gave it to them.
    Mr. Dodd. Yes.
    Mr. Miller. And the end of that conclusion was you didn't 
know what they were going to do, whether they were going to 
make the payment, not make the payment, have a press conference 
or not have a press conference; is that correct? Let me ask 
you, you were led to believe what when you hung up the phone?
    Mr. Dodd. I did not know what were going to do because 
clearly POGO wasn't my client, and I couldn't tell them to do 
anything. However, I had the impression that they would pass my 
word on, and I felt that, with somebody making a statement as 
firmly and as forcefully as I was making it, that at least they 
would delay or hesitate about making the payment. And I felt 
that I would hear something from them definitive before a 
payment was made.
    Mr. Miller. And then you did what? You notified whom?
    Mr. Dodd. I contacted the Commercial Litigation Branch of 
the Department of Justice.
    Mr. Miller. That is who? Who is that?
    Mr. Dodd. The person that I was working most directly with 
and longest with there was Dodge Wells. And so he tended to be 
the person I called routinely when I had news.
    Mr. Miller. So did you talk to Dodge Wells about this?
    Mr. Dodd. Yes, I did.
    Mr. Miller. And what did you tell him?
    Mr. Dodd. I tried to pass on, as----
    Mr. Miller. What do you mean you ``tried to pass''? what 
did you tell him?
    Mr. Dodd. In a much shorter conversation than I had with 
the Packards, I tried to pass on exactly what they had told me 
so that he and the Department of Justice would be aware of it 
and they could take what action they felt was necessary.
    Mr. Miller. And you told him what?
    Mr. Dodd. I told him that the Packards had just given me a 
call and told me that POGO was planning on having a press 
conference and announcing that they were paying Berman and 
Speir in excess of $300,000 apiece and that I had told them 
that I didn't think they should do it. I thought it was wrong. 
I thought there were all kinds of problems with it and that 
they shouldn't be having a press conference. And he listened 
and seemed to understand, and told me that he would have to 
talk to his people about it.
    Mr. Miller. So he listened to you and then he told you that 
he would talk to his people about it.
    Mr. Dodd. Yeah.
    Mr. Miller. Did he talk to his people about it?
    Mr. Dodd. As far as I know, I know he did.
    Mr. Miller. Pardon?
    Mr. Dodd. I believe he did.
    Mr. Miller. But do you know whether he did or not?
    Mr. Dodd. Based upon subsequent conversations, I have 
reason to believe he did, but I was not a participant of any of 
those discussions. And----
    Mr. Miller. Did you ever hear back from them? When did you 
first hear that they were involved in questioning whatever 
arrangement was made?
    Mr. Dodd. Well, I don't believe I heard from them on this 
issue again until I had learned that POGO had already made the 
payment.
    Mr. Miller. That was when?
    Mr. Dodd. A few days later. And I again turned around and 
called DOJ and let them know that I had just heard from I 
believe it was Von Packard at that point, but it may have 
been----
    Mr. Miller. DOJ is who?
    Mr. Dodd. My memory is a little vague on this. I believe 
that I tried to contact Dodge Wells, and I got his voice mail. 
So then I called Alan Kleinberg, his reviewer, and tried to let 
them know as well. And----
    Mr. Miller. Did you let them know?
    Mr. Dodd. Yes, I did.
    Mr. Miller. So then what did they say?
    Mr. Dodd. They were surprised, but relatively noncommittal 
to me.
    Mr. Miller. But had Mr. Wells said anything to them before?
    Mr. Dodd. I'm sorry, sir?
    Mr. Miller. Did Mr. Wells say anything to them before?
    Mr. Dodd. Say anything to----
    Mr. Miller. Was there any indication that your first 
conversation with Mr. Wells was related to anyone else?
    Mr. Dodd. Yes. I believe that it had been communicated to 
Mr.----
    Mr. Miller. How do you know that?
    Mr. Dodd. I cannot remember specific conversations, sir.
    Mr. Miller. You believe, but you don't remember?
    Mr. Dodd. I remember the sense that it had been done, but I 
cannot point to a specific conversation or a memory of 
recollection that would say that based upon this phone call or 
this conversation I know that Mr. Kleinberg knew of it the same 
day I called. But I do know that he knew about it because it 
was discussed in my presence subsequently.
    Mr. Schiffer. It was brought to my attention as well.
    Mr. Miller. So that is what you remember? I mean, I don't--
I'm sorry. But you don't remember how you remember it. But it 
was discussed. We'll just leave that there.
    But it was discussed in your presence. So you would assume 
from that, if nothing else, that Mr. Wells had passed on the 
information of the possible payment or not?
    Mr. Dodd. I believe that Mr. Wells passed it on. I know, in 
retrospect, that he did, and I have no reason to believe that 
he did not do it very contemporaneous to my conversation with 
him.
    Mr. Miller. And your second conversation was for the 
purposes of saying that the payment had been made?
    Mr. Dodd. That I had been told that the payment had been 
made.
    Mr. Miller. But you hadn't seen anything in the media 
because they had--there was no press conference, apparently.
    Mr. Dodd. My actual conversation with Mr. Packard had been 
involving something else, and it was only toward the end of it 
I asked him, ``Whatever happened about----''
    Mr. Miller. What happened to that subsequent--how was that 
followed up on by Justice?
    Mr. Dodd. At some point later on, I think much later on----
    Mr. Miller. Like how much later on?
    Mr. Dodd. I don't have a sense of that, sir.
    Mr. Miller. Months?
    Mr. Dodd. It could have been certainly weeks. It may have 
been a couple of months. I was told that the matter had been 
turned over to, I believe, Public Integrity Unit of the 
Criminal Division, where it is my understanding this matter is 
being investigated criminally.
    Mr. Miller. Do you know when that was?
    Mr. Schiffer. It was within weeks of the time that the 
payments were made.
    Mr. Miller. Excuse me.
    Mr. Schiffer. I'm sorry, sir.
    Mr. Miller. Back up and do it because I don't know all of 
the data. I don't particularly know----
    Mr. Schiffer. Well, I can't speak to the entire sequence. I 
mean, our staff attorney has a record of a call from Mr. Dodd 
on November the 4th of 1998. I was certainly informed at least 
after the payments were made. I can't recall at this time 
whether I was informed the day before we were told the payments 
had been made or the day after. Our staff discussed the matter 
with ethics experts, and with our supervisors and with me, and 
we determined that this was a matter that we should refer to 
the Criminal Division, not with any foregone conclusion, but 
because we considered it sufficiently troubling and unusual 
that we felt it merited referral to the Criminal Division. That 
referral was made I believe it was several weeks. But there was 
not a sense of time urgency as far as making an actual 
referral.
    Mr. Miller. Was there urgency because this Committee was 
indicating it was going to get involved?
    Mr. Miller. No, sir.
    Mr. Schiffer. None.
    Mr. Miller. None whatsoever.
    I'm a little bit at a loss here because if the 
determination was made that this was wrong and you conveyed 
that this was wrong to people, did anybody pick up the phone to 
the Packards and say, ``You're in a heap of trouble here. Do 
you know who these people are you are dealing with? Do you 
understand the ramifications for our lawsuit or their lawsuit 
or anybody else's lawsuit or a violation of law here?''
    Mr. Dodd. Is that a question to me, sir?
    Mr. Miller. Yeah. I just don't know what happened. I'm 
trying to--not you or anybody else. I don't know.
    Mr. Dodd. In the very first phone conversation I had with 
him, I was very blunt and somewhat profane, and I guarantee you 
rather repetitive in stating that they should not be doing 
this, that it was wrong, it was a misjudgment, it was 
potentially very complicating and potentially a violation of 
ethics rules. I went at some length to discuss how a Federal 
employee can't be accepting this sort of thing. So they clearly 
understood my viewpoint.
    Mr. Underwood. Would you yield?
    Mr. Miller. Yes.
    Mr. Underwood. I have here a letter, Mr. Dodd, from Lon 
Packard, which is addressed to both Mr. Miller and Mr. Young, 
in which he says that his records reflect that he had a 
conversation with you on or about October 27, 1998. ``And in 
that conversation, I informed Mr. Dodd that POGO was planning 
to disburse some of its share of the Mobil settlement proceeds 
arising out of the Johnson litigation to both Mr. Berman and 
Mr. Speir. Mr. Dodd did not advise me that he believed that 
POGO should not make the disbursements, and Mr. Dodd made no 
request that POGO do nothing until after he consulted with our 
Department.''
    How do you react to that?
    Mr. Dodd. Given the gentile company, I will try to moderate 
my reaction, but I will say that it is absolutely not true that 
I did not object or state my disagreement or tell them that the 
payment should not be.
    Mr. Miller. Did you write any memos to this effect?
    Mr. Dodd. No. I got off the phone call, and I called DOJ. I 
felt this was above my pay grade. Washington and Commercial 
Litigation, in particular, was someone who had had dealings 
with POGO and these kind of entities in the past. I did not 
presume to be an expert on what employees could or could not 
do. And I felt that it was above my pay grade and that somebody 
else higher up needed to deal with it, and I felt that they 
were.
    Mr. Miller. So you were very strong to POGO, but you didn't 
write any memo to the file, and yet this obviously was 
considered by you a major event within the litigation.
    Mr. Dodd. Mr. Miller, the date--let me address that first. 
Mr. Packard says that the phone call happened around the 28th 
of October. I don't know when that phone call happened. All I 
know is that when the phone call did happen, I turned around 
and called DOJ right away. And----
    Mr. Miller. Did DOJ call POGO?
    Mr. Dodd. No. DOJ says that that phone call happened on the 
4th of November.
    Mr. Miller. Which phone call?
    Mr. Dodd. The first one from me relating the Packards' call 
to me. And so I have to rely upon their date. I don't know of 
any other----
    Mr. Miller. I'm sure you do want to rely on that date. But 
we don't know yet whether it was the 27th, 28th or the 4th.
    Mr. Dodd. The important thing, Congressman, to me, is not 
the date, whether they called me before the conversation--
excuse me--before the payment was made or after the payment was 
made; to me, the important thing was that I expressed to them 
my belief that the payment should not be made. And they 
understood that. They understood that directly.
    And, in fact, one of the last things that I said to them, 
and you have to keep in mind that I felt very friendly toward 
the Packards. They had brought a lot of cases to my district. I 
had had a good relationship with them. The context of the phone 
call was that they didn't necessarily agree with this thing 
either, that they were just running it by me to give me a 
``heads up.''
    And I told them that I was--one of the very last things I 
said to them was that I was going to have to call DOJ and let 
them know. In fact, I told them I was going to have to call 
Dodge. And they said, ``Oh, well, we think that's premature----
''
    Mr. Miller. I understand that. So we still don't know the 
date of that phone call. We know the date of your phone call to 
DOJ, and that's your testimony and that's your fine. But the 
Packards dispute that, and I guess that's----
    Mr. Dodd. It's their word against mine.
    Mr. Miller. I guess that's what the investigation is about.
    Mr. Dodd. If I tried to call Dodge Wells and not gotten him 
and not been able to get anybody at DOJ, I probably would have 
done an e-mail memo to them to record the fact that the call 
happened and the context of the call and what was said. But 
since I had an opportunity to talk with him so quickly after 
the call and while it was still fresh in my mind, and I had 
sort of put it in their court, I didn't feel the need to 
memorialize it in writing. Because, frankly, while it was an 
important thing, and I had taken a strong and forceful stand on 
it, I think, it was just one of many things that happened in 
this case that were important things that I had to deal with.
    Mr. Miller. Dodge Wells didn't do anything with respect to 
contacting POGO after he received your call.
    Mr. Dodd. I don't think so. POGO wasn't our client. We 
would have had to call POGO's lawyers.
    Mr. Miller. I understand that. I thought--but it's about 
your lawsuit.
    Mr. Dodd. I couldn't hear the last comment.
    Mr. Miller. I understand they are not your client. But it 
was about your lawsuit.
    Mr. Dodd. Yeah. We would have communicated with POGO 
through their attorney.
    Mr. Miller. But Mr. Wells did not.
    Mr. Dodd. No, I did.
    Mr. Miller. Okay.
    Mrs. Cubin. The gentleman's time has expired.
    Mr. Miller. Thank you.
    Mrs. Cubin. Mr. Dodd, did the Packards ever follow up with 
a letter to you confirming your conversation and stating that 
they understood that you had no objection to the payments?
    Mr. Dodd. No, ma'am. And in fact, Madam Chairwoman, I guess 
is the proper term----
    Mrs. Cubin. Either way.
    Mr. Dodd. I did not know about Mr. Packards' letter to the 
Committee even until it came out in, I believe, Mr. Berman's 
deposition or maybe it was Ms. Brian's deposition, when the 
Department of Justice mentioned it and courteously sent me a 
copy. Up until that moment, I had no reason to believe that Mr. 
Packard, any of the Packards, were disagreeing with my 
statement.
    Mrs. Cubin. Well, I think it's odd that a lawyer would not 
protect his client by following up that way, that you had no 
objection certainly is odd. I would hope for better 
representation.
    Mr. Dodd. If I could just state, I read that letter rather 
late. And frankly it made me sort of angry. The letter 
essentially says that they ran this by me or they informed me, 
and I did not make any statement that it should not be paid. 
And as I have stated before, that was absolutely untrue. But I 
would have thought, and I thought at the time when I read that 
letter, that in all decency he should have sent me a copy of 
the letter that he sent to the Committee contradicting what I 
had said, and he never did that.
    Mrs. Cubin. Is there anything either of you would like to 
add to your testimony?
    [No response.]
    Mrs. Cubin. Then thank you very much.
    Mr. Miller. If I might, I would only----
    Mrs. Cubin. No, 15 minutes passed. Your side----
    Mr. Inslee is recognized for 5 minutes.
    Mr. Inslee. Mr. Schiffer had a comment, I believe, Madam 
Chair, it sounded like he wanted to make.
    Mrs. Cubin. Excuse me. I didn't mean to interrupt.
    Mr. Schiffer. I'm sorry. I was only going to respond to 
your invitation to add anything. I would, by the way, ask that 
my statement also be included in the record.
    Mrs. Cubin. Without objection.
    Mr. Schiffer. But I also want to stress that we at least 
see a separation between two issues: On the one hand, the 
propriety of these payments, which is something that is being 
investigated in the Department, and on the other hand, our 
strong view that the integrity of the litigation has not, in 
any discernable way, been affected by the payments that were 
made. The decision to intervene in the litigation was our 
decision in the Department, along with lawyers in the 
Department of Interior. The litigation has produced, to date, 
actual or anticipated payments for the Federal Treasury of over 
$300 million. In other words, I think the litigation itself has 
proceeded the way one could have expected it to proceed. And 
Messrs. Berman and Speir had no major roles in any of our 
decision-making process.
    Mr. Dodd. If I could make a very brief comment. I would 
like to share in Mr. Schiffer's statement and also state that 
until the phone call from Mr. Packard, I don't recall ever even 
hearing Mr. Speir's name. As I said, I had heard Mr. Berman's, 
but he played absolutely no role in my office's, and as I 
understand it, Commercial Litigation's decision to intervene in 
these cases, an evaluation of the merit of the cases against 
the oil companies, any settlements or settlement discussions 
with any of the oil companies or any of the computations of 
damage analysis that were done, which, as Mr. Schiffer has 
stated, has resulted in I believe it is now in excess of $300 
million recovered from major oil companies for underpaying the 
government.
    Mr. Inslee. Thank you, Madam Chair.
    Mr. Underwood. He should get 5 minutes from now because 
they were just finishing up their comment.
    Mrs. Cubin. Actually, I have the rules, and Mr. Miller was 
mistaken. But if you want to press the subject, I will cite the 
rules for you. This is certainly a silly thing to waste our 
time on.
    Is there anybody else on the Minority side that has any 
questions?
    Mr. Inslee. I do, Madam Chair.
    Mr. Miller. Let me tell you in 6 years----
    Mrs. Cubin. They are in the book, Mr.Miller. In 18 years, 
you didn't do anything about collecting all of the unpaid 
royalties that the oil companies owed. In the last 4 years, I 
have had hearings to do the job. For the life of me, I don't 
understand why you are trying to protect and defend corruption 
and at the same time collecting royalties.
    Mr. Miller. I'm not protecting----
    Mrs. Cubin. This Subcommittee has done more to collect 
royalties----
    Mr. Miller. Look, Madam Chairman, you don't get away with 
characterizing my position. I don't characterize your position.
    Mrs. Cubin. [continuing] than you ever have.
    Mr. Miller. I don't characterize your position. I am asking 
questions here because you have drawn conclusions about what 
has taken place. I asked a series of questions about what took 
place and not took place. This Committee will decide what they 
think took place or didn't. Hopefully, they will do it after 
the evidence is presented. The Department of Interior will make 
a decision at the end of the process, as will the Justice 
Department. And so----
    Mrs. Cubin. So they don't need your defense, Mr. Miller. 
The panel is----
    Mr. Miller. Your two witnesses just said they had no impact 
on the determination----
    Mrs. Cubin. The panel is dismissed.
    Mr. Miller. [continuing] or the rulemaking, and you keep 
saying they do.
    [The prepared statement of Mr. Dodd follows:]
    [The prepared statement of Mr. Schiffer follows:]

Statement of Mr. Stuart E, Schiffer, Deputy Assistant Attorney General, 
                             Civil Division

    Madam Chairwoman and Members of the Subcommittee, I 
appreciate the opportunity to appear before you today to talk 
about the False Claims Act. I have been asked to describe 
briefly the structure of the Act and the qui tam, or citizen 
suit, provisions in particular. We are also aware that the 
hearings are focused on certain payments which were made to two 
current and former government employees. Although the 
circumstances under which these payments were made are under 
current investigation by the Department, I will attempt to 
speak briefly to these payments as well.
    The False Claims Act was significantly amended in 1986 to 
encourage insiders (known as relators) with new and valuable 
information about fraud to file complaints under seal in 
Federal court. The Government then investigates and determines 
whether to intervene in the suits. Since 1986, over 3,000 of 
these suits, known as qui tam actions, have been filed and the 
Department of Justice has recovered more than $3.5 billion in 
the cases in which it has intervened, It has paid private 
persons in those actions more than half a billion dollars. The 
Treasury has thus obviously benefited greatly from the 1986 
amendments of the qui tam provisions of the False Claims Act.
    The False Claims Act provides that to be a relator, and 
enjoy the substantial benefits that come from this status, the 
private person must file a complaint, identify himself as the 
relator, and provide the government with all material 
information in the person's possession relevant to the case. In 
providing monetary awards to relators, and protection against 
retaliation, the statute contemplates an identifiable person 
who comes forward with valuable information, and who can be a 
witness, and recognizes that, by coming forward, that person 
takes risks, including the risk of dismissal if he or she is a 
corporate insider. A relator therefore cannot file a legitimate 
qui tam complaint but hide his identity from the Government. In 
other words, there is no valid status called ``undisclosed 
relator.''
    Since the 1986 Amendments, a substantial number of suits 
have been filed by government employees. I need speak only 
briefly about these since, in our view, the two government 
employees who received payments from the Project on Government 
Oversight did not file suit and were not relators. Suffice it 
to say that qui tam suits filed by government employees cause 
us substantial concern for the obvious reason that relator 
status generally strikes us as in conflict with the fiduciary 
duties owed by government employees to their employer, the 
United States. While the courts have dismissed the majority of 
efforts by government employees to appear as relators, the 
results have not been uniform and relator status has been 
upheld in a small number of cases. To the extent that there is 
a common thread, one can generalize by saying that the courts 
have been most troubled by these suits where the government 
employee relators were in positions such as investigators or 
auditors whose pre-existing duties involved uncovering or 
acting on the very information which formed the basis of their 
suit.
    As evidenced by our referral for investigation, we share 
the concern of many regarding payments made by POGO to Messrs. 
Berman and Speir of a portion of the Mobil qui tam relators 
share. We had no knowledge of any kind of an arrangement among 
POGO, Berman, and Speir until we were informed by a lawyer for 
POGO of the payments. Had we known that such an arrangement 
might exist, Berman and Speir would have been walled off from 
the internal Government investigation of the complaints which 
had been filed. At most, information conveyed to them would 
have been similar to the types of information provided to other 
non-government relators.
    As you know, Mr. Speir left the Department of Energy before 
the Mobil settlement, After leaving Energy, he worked for a 
consulting firm which was retained by the Department of Justice 
to analyze sales contracts for both the. Johnson v. Shell case 
and for a gas royalty underpayment case. Although Mr. Speir 
worked primarily on the gas sales contracts, had we known of 
his relationship with POGO, we likely would have not permitted 
him to work on either of these matters. Indeed, shortly after 
we learned of the payments, we terminated his participation in 
these cases.
    Finally, Madame Chairwoman, I would like to note that many 
of the defendants in the Johnson v. Shell case have chosen to 
settle rather than dispute the allegations of royalty 
underpayments. The Federal treasury and Indian Tribes have 
benefited by more than $200 million. Additional settlements are 
under discussion. Our own decisions to intervene against 
certain defendants in the oil and gas royalty underpayment 
cases were made independent of any views of Robert Berman or 
Robert Speir, and we believe that those decisions were correct, 
Department counsel did discuss the allegations in the case with 
Messrs. Berman and Speir, at a time when the Department had no 
knowledge that they were possibly considering attempting to 
benefit personally from this type of information. Our ultimate 
decision to intervene, however, was based on our own analysis 
and on the recommendation by the Solicitor of the Department of 
the Interior, and not on any information that we obtained from 
Messrs, Berman or Speir.
    In sum, while we share the Committee's concern about these 
payments, we firmly believe that the integrity of the 
underlying case was in no way compromised.

    Mrs. Cubin. Would Mr. Bob Berman please come forward. Thank 
you very much Mr. Dodd and Mr. Schiffer, for your testimony and 
your time in answering the questions. Thank you very much.
    Mr. Inslee. Madam Chair, may I be recognized for a moment?
    Mr. Miller. Under the rules, members have rights to ask 
questions.
    Mr. Inslee. Madam Chair, may be I recognized? I'd like to 
make an inquiry.
    My understanding----
    Mr. Miller. You have a right to ask questions.
    Mr. Inslee. My understanding is I would be entitled an 
opportunity to ask 5 minutes of questions of the witnesses. 
Now, that was my understanding of how we were progressing here.
    Mrs. Cubin. Actually, the rules say that we don't have to 
allow 5 minutes of questions after we have an extended 
questioning time. We can do that. And I certainly want to 
accommodate the Minority so that they have all of the time to 
ask all of the questions that they want. That is what I am 
trying to do. And Mr. Miller's continued petty objections to 
how we are doing it, it stands up under the rules. Mr. Inslee, 
you are absolutely welcome to ask all of the questions that you 
might have.
    Mr. Inslee. Thank you. I appreciate that, except the panel 
just left.
    [Laughter.]
    Mr. Inslee. I can ask them, but I can't answer them very 
well.
    Mrs. Cubin. Well, you had said already that you had no 
further questions. So I think----
    Mr. Inslee. No, no, no, ma'am. Excuse me, Madam Chair. I am 
really sorry, and I know this looks bad to the public, 
appropriately so.
    Mrs. Cubin. It really does.
    Mr. Inslee. The reason I yielded to the witnesses, they 
wanted to say something in response to your question about 
making further comments. I did mean to indicate I didn't have 
any questions. I have some questions of the witnesses. I will 
try to keep them brief. I would appreciate an opportunity to 
ask them.
    Mrs. Cubin. Well, you can submit them in writing.
    Mr. Berman, would you please stand and take the oath.
    [Witness sworn.]
    Mrs. Cubin. Thank you. Please be seated.
    The chair recognizes Mr. Thornberry for the purpose of 
making a motion.
    Mr. Thornberry. Madam Chair, I move, under Clause 
2(j)(2)(b) of Rule XI of the Rules of the House of 
Representatives that myself, Mr. Schaffer, Mr. Gibbons and the 
chairwoman, as members of the Majority, and Minority members 
designated by the Ranking Member be allowed to question the 
witness, Mr. Berman, for a total of 60 minutes, equally 
divided.
    Mrs. Cubin. All in favor?
    [Chorus of ayes.]
    Mrs. Cubin. Any opposed?
    [No response.]
    Mrs. Cubin. The ayes have it.
    Mr. Thornberry. Madam Chair?
    Mrs. Cubin. Mr. Thornberry?
    Mr. Thornberry. Under Clause 2(j)(2)(c) of Rule XI of the 
Rules of the House of Representatives, I move that Mr. Tom 
Casey, a Majority staff member, and a Minority member or staff 
member designated by the Ranking Member each be allowed to 
question the witness, Mr. Berman, for 60 minutes, equally 
divided.
    Mrs. Cubin. Is there an objection?
    Mr. Inslee. I object, Madam Chair. Let me tell you why I 
object. Let me state my objection.
    The chair, a few minutes ago, recognized me to ask 5 
minutes of questions of two witnesses. Now, I understand the 
chair was uncomfortable for doing that. The chair did that. I 
then deferred, out of comity, to the witnesses who wished to 
make a statement to you, and the result of it is is a U.S. 
Member of the Congress doesn't get to ask questions of a 
witness in an investigatory hearing. And I object to further 
proceedings until I am allowed to do so.
    I just was trying to show courtesy to these witnesses, and 
I would just suggest to you to reconsider what you are doing 
here. I think it looks bad to the public, it looks bad for the 
Committee. And if we are going to investigate this, let me have 
5 minutes to ask these questions.
    Mrs. Cubin. Mr. Inslee, the Minority side and the Majority 
side have a half an hour each. I should think that your Ranking 
Member of the Subcommittee and the Ranking Member of the full 
Committee would be able to find 5 minutes out of their 30 
minutes for you to ask questions.
    Mr. Inslee. The problem is, Madam----
    Mr. Miller. He is entitled to his own 5 minutes. You gave 
the time, and you are properly doing that. But when you are all 
done aggregating the time, to screw a member out of his 5 
minutes that he's entitled to under the House rules----
    Mrs. Cubin. Mr. Miller, would you read the rules.
    Mr. Miller. Yes. It says, ``Subject to (a) and (b)----''
    Mrs. Cubin. Subject to (a) and (b), that is correct.
    Mr. Miller. [continuing] you are going to aggregate the 
time. Members are still entitled to their 5 minutes.
    Mr. Thornberry. Madam Chair, I have a motion.
    Mrs. Cubin. Yeah. There is a motion on the floor. All in 
favor of allowing the counsel to question the witness after the 
members have finished their testimony say aye.
    [Chorus of ayes.]
    Mrs. Cubin. Opposed?
    [Chorus of noes.]
    Mrs. Cubin. The ayes have it.
    Mr. Miller. Call for the roll.
    Mrs. Cubin. The Clerk will call the roll.
    The Clerk. Mrs. Cubin?
    Mrs. Cubin. Aye.
    The Clerk. Mrs. Cubin votes aye. Mr. Tauzin?
    Mr. Tauzin. [No response.]
    The Clerk. Mr. Thornberry?
    Mr. Thornberry. Aye.
    The Clerk. Mr. Thornberry votes aye. Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon votes aye. Mr. Brady?
    [No response.]
    The Clerk. Mr. Schaffer?
    Mr. Schaffer. Aye.
    The Clerk. Mr. Schaffer votes aye. Mr. Gibbons?
    Mr. Gibbons. Aye.
    The Clerk. Mr. Gibbons votes aye. Mr. Walden?
    [No response.]
    The Clerk. Mr. Tancredo?
    [No response.]
    The Clerk. Mr. Underwood?
    Mr. Underwood. No.
    The Clerk. Mr. Underwood votes no. Mr. Rahall?
    [No response.]
    The Clerk. Mr. Faleomavaega?
    [No response.]
    The Clerk. Mr. Ortiz?
    [No response.]
    The Clerk. Mr. Dooley?
    [No response.]
    The Clerk. Mr. Kennedy?
    [No response.]
    The Clerk. Mr. John?
    [No response.]
    The Clerk. Mr. Inslee?
    Mr. Inslee. No.
    The Clerk. Mr. Inslee votes no.
    Mrs. Cubin. The Clerk will call the names of those members 
not present.
    The Clerk. Mr. Tauzin?
    [No response.]
    The Clerk. Mr. Brady?
    [No response.]
    The Clerk. Mr. Walden?
    [No response.]
    The Clerk. Mr. Tancredo?
    [No response.]
    The Clerk. Mr. Rahall?
    [No response.]
    The Clerk. Mr. Faleomavaega?
    [No response.]
    The Clerk. Mr. Ortiz?
    [No response.]
    The Clerk. Mr. Dooley?
    [No response.]
    The Clerk. Mr. Kennedy?
    [No response.]
    The Clerk. Mr. John?
    [No response.]
    Mrs. Cubin. The Clerk will announce the vote.
    The Clerk. On this vote, there are 5 ayes and 2 nays.
    Mrs. Cubin. The motion is passed.
    This morning, I received a letter from Mr. Berman's 
attorney, Mr. Steven Tabackman, stating that Mr. Berman objects 
to the conduct of a public hearing as violative of the Rules 
for the House Committee on Resources, which expressly 
incorporates by reference Rule XI of the House of 
Representatives. ``As chairperson of the Subcommittee, you must 
be aware that Section (g)(1) of Rule XI requires that the 
Subcommittee meetings be held in executive session when 
disclosure of matters to be considered would tend to defame, 
degrade or incriminate any person.'' That quote is from Mr. 
Tabackman's letter.
    Members have been provided a copy of Mr. Tabackman's letter 
raising this objection. It is in your folders.
    In an earlier effort, Mr. Berman asked the Committee for 
immunity to provide testimony today, but he refused to provide 
any information which would permit the Committee to assure 
itself that the cause of justice would not be harmed by 
granting him immunity. The Subcommittee must now decide if the 
cause of justice, the public interest and our legislative need 
for the information will be aided by hiding Mr. Berman's 
testimony. By one estimate, Mr. Berman has refused to answer 
questions about his agreement with POGO 205 times. Before we 
address the issue, I ask Mr. Berman whether, if we go behind 
closed doors, you will fully describe all of the discussions 
and events leading to the December 1996 agreement, the January 
1998 memorialization, and the October 8th, 1998, letter to you?

   STATEMENT OF ROBERT A. BERMAN, DEPARTMENT OF THE INTERIOR

    Mr. Berman. Madam Chairwoman, I object to this hearing 
being held in public as a violation of House Rule XI(g)(1), 
which requires the Subcommittee meeting to be held in executive 
session when there will be a discussion that intends to defame 
any person, among other things.
    Two weeks ago, virtually every member of the Majority, 
including you, defamed me. One of the members, Mr. Brady, went 
so far as to call me, on the record, a common thief. That type 
of conduct exceeds any appropriate balance of proper public 
discourse and discloses the illegitimate nature of this 
Subcommittee's inquiry.
    As my lawyer advised you by letter yesterday, but for the 
Speech and Debate clause immunity that you and your colleagues 
enjoy, I would have already brought suit against at least Mr. 
Brady. But unless he and other members waive their immunity, 
which I call on them to do today, right now, on the record, 
that remedy, unfortunately, is not available to me.
    However, because of the defamatory conduct of the Majority, 
I will not answer any questions put to me by any member of this 
Subcommittee unless one of the following occurs:
    One, every member of the public, every member of the 
Majority, publicly waives immunity from suit brought under the 
Speech and Debate clause so that the allegations made against 
me can be brought to a court of law, where they will have to 
defend scurrilous accusations or every member of the Majority 
publicly retracts any statement in which they describe me as a 
common thief, stated that public officials--clearly referring 
to me--were up for the highest bidder or otherwise stated that 
I had engaged in illegal conduct and publicly acknowledge that 
he or she has no basis to refer to me or to describe my conduct 
in that fashion.
    Mrs. Cubin. The rule that Mr. Tabackman cites in his letter 
is not applicable to this proceeding. Rule XI 2(g)(1) applies 
to Committee meetings, such as markups, not Committee hearings. 
The chair has announced, and the Committee clearly indicates 
that this is an oversight hearing and not a Committee meeting 
for the transaction of business. Procedures for oversight 
hearings are governed by Rule XI 2(g)(2), not Clause 2(g)(1). 
And the chair has made this clear repeatedly.
    The chair notes that Committee Rule 3(e) speaks only to 
participation in Committee proceedings by members, not by 
attorneys representing witnesses. Indeed, the rule makes it 
clear that attorneys are here only to advise these clients as 
to their constitutional rights, not to address the Committee. 
So Mr. Tabackman can't enter objections or make motions.
    Nonetheless, in order to be fair, the chair will describe 
the situation and enter an objection properly for Mr. Berman, 
even though Mr. Berman's attorney cannot be recognized to make 
that objection for him. And then the Subcommittee will dispose 
of the issue.
    Rule XI 2(g)(2)(a) requires open hearings. However, under 
Rule XI 2(g)(2)(b), the Subcommittee may take the significant 
and very rare step of closing a hearing, of closing our open 
process of government for only one of two purposes:
    First, we may, and I say ``may,'' close the hearing to 
discuss whether the testimony violates 2(k)(5), and that is 
only for discussion as to whether or not the testimony would 
violate that clause. Or, second, we may, again ``may,'' close 
the hearing, as provided under Investigative Hearing 
Procedures, spelled out in Clause XI 2(k).
    To take either of these actions and to close the doors of 
this hearing room and hide the details of these agreements and 
transactions that led to huge payments to two public servants, 
a majority of those present must agree to hide that information 
from the public.
    So that we can dispose of this issue, even though the chair 
will vote no, I will now enter a motion, under Rule XI 
2(g)(2)(b), that the Subcommittee agree to close the hearing 
for the sole purpose of discussing whether testimony or 
evidence to be received would violate the Clause 2(k)(5) 
regarding investigative hearings.
    All in favor?
    Mr. Miller. Madam Chairman, if I might, just for a point of 
clarification----
    Mrs. Cubin. Yes, sir?
    Mr. Miller. You are moving under (k)(5), under 
Investigative Hearings; is that what you are saying?
    Mrs. Cubin. No, I am not.
    Mr. Miller. You are not moving under that.
    Mrs. Cubin. No. I am moving under (g)(2)(a).
    Mr. Miller. Let me ask you a question, if I might.
    Mrs. Cubin. Yes?
    Mr. Miller. Our discussions were that, with the 
parliamentarian, that this was, in fact, an investigative 
hearing, and I realize you have said that this is not an 
investigative hearing. And we were informed that Rule 
(k)(5)(a), if I am reading this right, would come into order, 
which basically says that ``such testimony and evidence shall 
be presented in executive session in the presence of the number 
of members required under the rules of the Committee for the 
purposes of taking testimony,'' which I assume is a quorum for 
this purpose.
    ``The Committee determines, by a vote of the majority 
present, that such evidence or testimony may tend to defame, 
degrade or incriminate any person.''
    The only time I know--I don't know if we have used this on 
this Committee before or not, but I think we used this when the 
Committee was doing the Alyeska pipeline investigation----
    Mrs. Cubin. That is correct.
    Mr. Miller. Is that right?
    Mrs. Cubin. That is correct.
    Mr. Miller. Where there was some concern by members, I 
think it was actually by the now chairman, about what was going 
to be said and not be said in open hearing with respect to 
people's reputations and what have you.
    But you are not using that. You are using----
    Mrs. Cubin. I am not using that clause. That is correct.
    Mr. Miller. So you are using what clause? I don't under--
the basis for the motion would be what?
    Mrs. Cubin. What is your question? The basis for the motion 
would be what?
    Mr. Miller. You are putting a motion to us. The question is 
what?
    Mrs. Cubin. The question is whether or not the Committee 
should go behind closed doors to discuss whether testimony or 
evidence to be received would violate Clause 2(k)(5) regarding 
investigative hearings. And that is the motion.
    The reason I say this is an oversight hearing, is that 
certainly, the parliamentarian hasn't made any such ruling to 
us that this is an investigative hearing. This is strictly an 
oversight hearing, and it has been stated many times, but I 
will state it one more time for the record, the object of this 
hearing is to examine the laws, policies, practices, and 
operations of the Department of the Interior, Department of 
Energy and other agencies pertaining to the payments to their 
employees, including payments relative to mineral royalty 
programs and policies from public lands and Indian lands.
    Now, we have already heard that the, not testimony here 
today, but in the documents that we have, that it was common 
knowledge that there were sealed qui tam suits related to oil 
valuation. Now, it was common knowledge in the Department of 
the Interior. That certainly indicates there is a breakdown in 
the operation or the administration in the Department of the 
Interior. This is what our oversight is. This is what we are 
trying to achieve.
    And so, therefore, this is not an investigative hearing, 
and I will now call for the vote.
    Mr. Gibbons. I move the previous question.
    Mr. Miller. Madam Chairman, in the quest for your 
oversight, are you not investigating whether or not these 
things took place or not? You have issued subpoenas. I mean, 
you should not be ashamed it is an investigate hearing. I think 
it is a rather dramatic investigative hearing.
    Mr. Gibbons. I move the previous question.
    Mr. Miller. Yeah, move it. I think we ought to discuss it.
    Mrs. Cubin. All in favor of the motion, say aye.
    Mr. Miller. This is to discuss whether or not we should go 
into executive session to discuss whether or not we go into 
executive session.
    Mrs. Cubin. No, that is not what it is, Mr. Miller. But if 
that is what you----
    Mr. Miller. Oh, no, you just said this is to go in to 
discuss whether or not we should go into----
    Mrs. Cubin. I enter a motion, under Rule XI 2(g)(2)(b), 
that the Subcommittee agree to close the hearing for the sole 
purpose of discussing whether the testimony or evidence to be 
received would violate 2(k)(5) regarding the investigative 
hearings. In other words, does the Committee believe, is the 
Committee's intention that this is an oversight hearing or does 
the Committee intend for this to be an investigative hearing? 
And a vote of aye says this is an oversight hearing, and we 
will----
    [Laughter.]
    Mr. Miller. Go ahead and vote.
    Mrs. Cubin. So all in favor. Are you guys in favor of going 
behind closed doors? You would vote aye if you are.
    [No response.]
    Mrs. Cubin. All opposed?
    [Chorus of noes.]
    Mrs. Cubin. The motion is not agreed to.
    Mr. Miller. I don't understand the motion, Madam Chairman. 
But you are going to vote no matter what.
    I would raise an objection, and I think our witness, Mr. 
Berman, may want to wait before he responds to this Committee 
so the parliamentarian can rule whether or not this is an 
investigative hearing or an oversight hearing because it may 
determine whether or not the members of this Committee would 
vote whether or not----
    Mrs. Cubin. There you are, Judge Wapner.
    Mr. Miller. [continuing] on whether or not this defames or 
doesn't defame. But that is just a matter of justice. But what 
the hell, we are a little short on that here today.
    Mrs. Cubin. We did vote not to close the hearing, Mr. 
Miller.
    I would like to start the questioning.
    Mr. Berman, did you threaten to sue POGO if they did not 
make the payments to you?
    Mr. Berman. Madam Chairman, I object to this hearing----
    Mrs. Cubin. You don't have to read the whole thing. Go 
ahead.
    Mr. Berman. [continuing] being held as a violation of House 
Rule XI (g)(1), which requires that the Subcommittee meetings 
be held in executive session when there will be a discussion 
that tends to defame any person, among other things. Two weeks 
ago, virtually every member of the Majority, including you, 
defamed me. One of the members, Mr. Brady, went so far as to 
call me, on the record, a common thief. That type of conduct 
exceeds any appropriate bounds of proper public discourse and 
discloses the illegitimate nature of this Subcommittee's 
inquiry.
    As my lawyer advised you by letter yesterday, but for the 
Speech and Debate clause immunity that you and your colleagues 
enjoy, I would have already brought suit against at least Mr. 
Brady. But unless he and the other members waive their 
immunity, which I call on them to do today----
    Mrs. Cubin. Mr. Berman, we have just disposed of the 
issue----
    Mr. Berman. [continuing] right now, on the record----
    Mrs. Cubin. And I call on you to answer the question or----
    Mr. Berman. [continuing] that remedy, unfortunately, is not 
available to me. However, because of the defamatory conduct of 
the Majority, I will not answer any questions put to me----
    Mrs. Cubin. Mr. Berman----
    Mr. Berman. [continuing] put to me by----
    Mrs. Cubin. You can be subject to Contempt if you don't 
answer the question or claim a constitutional privilege to not 
answer the question.
    Would you like me to repeat the question?
    [Witness conferring with counsel.]
    Mr. Berman. Are you waiving your immunity, ma'am?
    Mrs. Cubin. No, sir. Would you like me to repeat the 
question?
    [Witness conferring with counsel.]
    Mr. Berman. No.
    Mrs. Cubin. And your answer is?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. I am sorry. I didn't understand what you said.
    Mr. Berman. I said I adopt my previous statement.
    Mrs. Cubin. Mr. Berman, did you threaten to sue POGO if 
they did not make the payments to you?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. Mr. Berman, please look at the document. Does 
he have the document, dated January 5, 1998, and the document, 
dated October 8, 1998?
    If you will take a look at those for the moment. At what 
point, before October 8, 1998, did you become concerned that 
POGO might not pay you a full one-third share of the Mobil 
settlement, and thus notify POGO that you were considering 
steps to enforce the agreement?
    Mr. Berman. Are you waiving your immunity, ma'am?
    Mrs. Cubin. Mr. Berman, you are subject to Contempt of 
Congress if you don't answer the question or exercise your 
constitutional right to take the Fifth Amendment on this.
    So do you want me to repeat the question or----
    Mr. Berman. I don't need the question repeated.
    Mrs. Cubin. Are you going to answer the question?
    Mr. Berman. Are you going to waive your immunity, ma'am?
    Mrs. Cubin. Mr. Berman, will you please look at the 
document that is, I hope, going to be handed to you. It is a 
paper authored by you in December of 1996. Does he have that? 
Would the staff please get that to him.
    Mr. Miller. [Off microphone.]
    Mrs. Cubin. They are all in the records, Mr. Miller, but 
surely staff will give them to you.
    Mr. Miller. But I don't have them in front of me. You are 
referring to them.
    Mrs. Cubin. They will give them to you.
    This is a paper that was authored by you in December 1996, 
as you entered into an agreement with POGO to share its 
expected lawsuits proceeds. Your paper recommends a new 
regulatory policy for valuing crude oil and assessing 
royalties. The cover note sending this copy to a Justice 
Department lawyer says, ``You should have already received a 
fax of my recommended preamble.'' Does that refer to a preamble 
of a draft regulation or just what is that a preamble to?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. Will you produce that recommended preamble to 
the Committee within 7 days?
    Mr. Berman. I adopt----
    Mrs. Cubin. Do you have that?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. Did you discuss with Mr. Speir your concerns 
about POGO living up to your expectations under the December 
1996 agreement?
    Mr. Berman. I adopt my previous statement, ma'am.
    Mrs. Cubin. Did you discuss it with Mr. Banta?
    Mr. Berman. I adopt my previous statement, ma'am.
    Mrs. Cubin. Did you discuss it with Mr. Hunter?
    Mr. Berman. I adopt my previous statement, ma'am.
    Mrs. Cubin. Did you discuss it with Ms. Brian?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. Did you hire a lawyer to help you resolve your 
problem with POGO?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. Did that lawyer contact the Packards, Ms. 
Brian, Mr. Banta or Mr. Hunter?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. Mr. Berman, I truly don't wish to have to 
pursue Contempt of Congress charges against you, but you are 
treating the institution in a contemptful way. You are 
displaying your contempt, and for your own sake, either answer 
the question or take the Fifth.
    Have you or your lawyer agreed with POGO or its lawyer that 
neither of you will discuss your differences about your share 
of the POGO settlement checks?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. POGO informed the court hearing Johnson v. 
Shell that it will not make further payments to you under any 
circumstances, even if the Justice Department does not charge 
you with a crime. Has POGO informed you or your lawyer that it 
intends to make no further payments to you?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. Did they do that--when did they do that? And 
did they put it in writing or did they just tell you?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. As of December 1996, did you understand that 
POGO would split all of its lawsuit proceeds with you or did 
you clearly understand that it would share only the portion 
which remained after Mr. Brock got his 25-percent share?
    Mr. Berman. I adopt my previous statement.
    Mrs. Cubin. Mr. Berman, Mr. Hunter and Ms. Brian have 
testified that the October 1998 letter addressed to you is the 
result of your agitating for assurance that one-third of the 
Mobil money would be paid to you. They testified in their 
deposition to that.
    On October 2, 1998, you received a check for $383,600, 
which included interest earned by POGO on the Mobil settlement. 
Did you or your lawyer request or insist on having part of that 
interest as well?
    Mr. Berman. I have already given you the conditions under 
which I would answer your questions, ma'am.
    Mrs. Cubin. Well, Mr. Berman, I see no need to continue 
questioning. I would like to warn you, in the words of the 
Supreme Court, that ``an erroneous determination on his part 
that the question is not pertinent, even if made in the utmost 
good faith, does not exculpate him if the Court would later 
rule that the questions were pertinent to the question under 
the inquiry.'' That is Watkins v. United States.
    Sir, please answer the question.
    Mr. Berman. I have already given you the conditions under 
which I will do that, ma'am.
    Mrs. Cubin. This is your last chance, Mr. Berman. I need 
one more time to ask you to answer the question.
    Mr. Berman. I have given you my conditions, ma'am.
    Mrs. Cubin. Thank you. I reserve the balance of our time, 
and we recognize the Ranking Member, Mr. Underwood, and that 
side for 30 minutes.
    Mr. Inslee. Madam Chair, may I make just a parliamentary 
inquiry? I think it might be helpful to all of us before you 
proceed and while the witness is still at the desk.
    I know the chair is profoundly interested in this subject, 
and I want to tell you that the chair brought a motion earlier, 
before we started testimony of this witness, and despite 3 
years of legal training and 18 years of practicing law, I 
couldn't make heads or tails of what the chair intended by it. 
I point this out to you because I think in the event that this 
matter moves to a contempt issue, I think it will be very 
important to have a very clear record on this issue as to how 
the Committee proceeded. I think it is very unclear right now. 
I know the court reporter was having difficulty catching up 
with all of this.
    I just want to suggest to you that you take a look at 
Rule--my eyesight fails me--XXI (k)(1). And I just----
    Mrs. Cubin. I didn't hear the cite.
    Mr. Inslee. Excuse me. Rule XXI (k)(1). And I just want to 
read it because I think there is a motion that has not been 
made yet that really needs to be made before you proceed. And 
that basically states that ``in an investigative hearing,'' and 
I realize the chair believes this is not one. I disagree with 
you in your assessment, but ``in an investigative hearing,'' 
this is subparagraph (5), ``whenever it is asserted that the 
evidence or testimony at an investigative hearing may tend to 
defame, degrade or incriminate any person (a) notwithstanding 
paragraph (g)(2), such testimony or evidence shall be presented 
in executive session if, in the presence of the number of 
members required under the rules of the Committee for the 
purpose of taking testimony, the Committee determines by vote 
of a majority of those present that such evidence or testimony 
may tend to defame, degrade or incriminate any person.''
    Now, I don't think there has been a motion to find that 
there is such a tendency here. Until that is done, I think that 
your efforts really to address this issue of contempt might not 
be consistent with this rule.
    Now, if the chair believes this rule is entirely 
nonconsistent and tends to ignore it, we will respect that 
decision. I think it is grievously wrong. I think it will not 
result in a contempt citation of this witness because there is 
an issue about that. I just point it out for your 
consideration.
    Mrs. Cubin. Mr. Inslee, I thank you for your concern and 
advice, and I do believe that it was sincerely given, and I 
appreciate that.
    Mr. Underwood. Madam Chair, I think we have the time.
    Mrs. Cubin. Certainly.
    Mr. Underwood. I don't want to ask Mr. Berman a series of 
questions for fear that he would give me the same answers, but 
I did want to point out that I think that the whole nature, and 
I wanted to simply amplify on the point that Mr. Inslee has 
already made. And that is that this is a little bit more than 
an oversight hearing. It may be framed that way, but I think, 
clearly, by the nature of the kinds of questions that we are 
asking, I think by the nature of the detailed questions that we 
are asking, and I think by the nature of the kinds of questions 
that we are asking about specific acts, it inevitably involves 
questions of the rights of this individual and how he is 
perceived in public. And he does have a right to some 
protection of his person, no matter what we may believe he has 
done.
    And it is of some serious concern to me, even though I must 
admit that normally, in this whole particular issue, I did not 
come to this hearing, I did not come to the initial hearing, 
even though I am Ranking Member, with any preconceived notion 
about the nature of the case that we are looking at or the 
nature of the alleged acts that occurred in the Department of 
Energy and Department of Interior that we are examining. But I 
cannot help but feel that we have gone down the road of an 
investigative hearing.
    I mean, you can cite all of the rules you want, and I know 
you have the votes to impose those rules. So it may not do well 
to try to appeal to those rules. But I did just simply want to 
appeal to the common sense of all of the members here. And that 
is, under a dictionary definition of oversight, it has two 
definitions, ``an unintentional omission.'' Well, there is 
nothing unintentional about this hearing. And secondly, 
``watchful care or management.'' ``Watchful care or 
management,'' and that implies some responsibility on our part 
to be watchful as we manage and as we look at the events that 
we are investigating.
    Investigation is to inquire in detail and to examine 
systematically. Now, given the nature of all of the inquiries 
and the nature of the questions that are lined up here, I can't 
help but feel that this is a very detailed examination 
involving something that we know is under investigation in a 
different venue. And while I have no idea or not whether Mr. 
Berman or Mr. Speir or any of these other individuals did 
something which is beyond the--which is outside the law or 
simply unethical or perhaps poor judgment on their part, I 
don't know those facts. I don't know, and I am not prepared to 
make that determination. But it certainly seems clear to me 
that all of these individuals deserve some opportunity to 
protect themselves.
    So I would have to concur, along with Mr. Inslee, that as 
we proceed with this and if we are going down the road of 
citing these individuals with contempt, we better be on some 
very firm ground because I think we are clearly treading on 
ground here regarding the way that they are treated and the way 
that they are held. And it is clearly an investigation into 
very specific activities that they engaged in rather than the 
watchful care or management, which oversight implies.
    I yield to Mr. Miller.
    Mr. Miller. Thank you. I tend to concur with my colleagues. 
Mr. Berman has chosen his path and his answer. And given how 
this hearing has been run, I think he has probably chosen 
wisely. That doesn't mean he has chosen without jeopardy, but 
that is a decision that is for him to make because as it was 
quoted in the Supreme Court opinion, it is for the Court to 
determine, and you don't know whether you have jeopardized 
yourself or not, and people don't know that. And that is why 
this matter could be pursued to determine whether or not you 
are or are not in contempt if it is pursued in that fashion or 
whether or not you were within your rights. But I think at a 
minimum you would want to know whether this is an investigative 
hearing under which you have one set of protections, and 
members have one set of questions in an oversight hearing.
    All of these witnesses were testified. Most of them were 
not given an opportunity to testify voluntarily, so they were 
subpoenaed. So this goes way beyond that notion. I don't know 
whether these people are guilty, not guilty or whether they 
show real bad judgment or they have engaged in criminal acts. 
And this is not about defending them. But there is something 
terribly wrong here, when the full force and effect of this 
Committee can come down in such an arbitrary fashion, run a 
Committee in such an arbitrary manner. There is contempt for 
Congress. It is out there in the country when people see this 
kind of activity being taken by the Congress against our own 
citizens.
    They may have engaged in criminal activity or civil 
violations or judgment call, all of the rest of that, but there 
has got to be some rules how you properly determine it, and it 
has to be protected. And it is not just the chair of a 
Committee banging a gavel and moving on and taking votes yes or 
no. It is about protecting the rights of citizens. They may 
have not done anything. You know, the only Court determination 
I think we have had so far was the Court told Mr. Johnson every 
man is entitled to his bargain. Now, we are going to determine 
whether or not that bargain was ethical or not or whether it 
was legal or not and all of the rest of that. But for the 
moment, that is all that I think has passed muster in a court, 
in a legal determination.
    The Justice Department, as the two witnesses previous to 
this said, they are apparently in an investigation, and part of 
their conclusion was that part of this hearing was directed at 
and has been changed subsequent to those conclusions are the 
same as the Interior Department that it didn't have an impact 
on various decisions made by Justice or Interior.
    So, so far, we don't know if these people have done 
anything. I have got to admit it looks pretty bad, but we don't 
know. But that doesn't give us a right to trample on your 
rights, and it doesn't give you a right to trample on the 
rights of Members of Congress. Mr. Inslee was precluded from 
asking questions. And it doesn't give you a right to trample on 
the rules of the House.
    We are not raising these points to be arbitrary or to 
protect people or to bias the hearing. We have gone to the 
parliamentarian. We asked him because we didn't know how these 
hearings are going to be proceeding because you are not exactly 
communicating with the Minority. So we are asking people what 
do we think is going to happen, what the contingencies are. And 
as they come up, we are raising points of order and based upon 
rules and interpretations that have been given to us by the 
parliamentarian. But all we have is your ruling because the 
parliamentarian is not here, so we will have to determine that 
later. And Mr. Berman will have to determine that later, and it 
will be determined later.
    But this Congress ought not to be about trampling on 
people's rights, whether we think that--whatever our previous 
disposition is about whether we think people have done 
something wrong or not, we ought to arrive that in a reasoned 
and in a fashion that is somewhat consistent with justice. And 
certainly that ought to include the members of this Committee 
to fully participate, even members who are not members of this 
Committee, who have some expertise and some knowledge in this 
to participate. But those determinations have been made.
    I don't know what Mr. Berman is going to do or not do, and 
I don't know what you are going to do or not do, Madam 
Chairman. But I think, clearly, we have exceeded the bounds in 
terms of the rules of the House, the rules of this Committee, 
and basic protections for American citizens.
    We still have time.
    Mr. Inslee. May I be recognized, Madam Chair?
    Mrs. Cubin. You have the time.
    Mr. Inslee. Thank you.
    I will just tell you there is something I know and 
something I don't know about this and something we may never 
know. The one thing I do know is the chair did make reference 
to a scandal when she started this hearing. There is one thing 
I do know that there is and was a scandal that American 
taxpayers' money was not guarded and that some oil and gas 
companies got into the pocket of American taxpayers for about 
$300 million, and that was a scandal. There is no question 
about that. And it has since seemed to me that these hearings 
have exposed that scandal. We know about that scandal.
    The second issue as to whether or not there is a scandal in 
some other sense regarding the whistleblowers that protected 
the taxpayers and allowed the taxpayers to get the $300 million 
they had coming to them, I just don't think this Committee is 
helping to find that out, unfortunately, for two reasons: 
Number one, I am concerned that the way this has been managed 
will jeopardize the ongoing criminal investigation of this 
matter. I am a former prosecutor. I wasn't the biggest 
prosecutor in the world. I prosecuted misdemeanor cases for a 
small town in Eastern Washington. But I was enough of a 
prosecutor to know that when the U.S. Congress acts more for 
political purposes than to help really discover the truth, you 
can foul up a criminal investigation. And I believe we have a 
high tendency and likelihood to do that in this case.
    The second thing is----
    Mr. Cannon. Would the gentleman yield?
    Mr. Inslee. Just for a minute, I'll finish and then I'll 
yield in just a moment.
    The second thing I would say is, and this is kind of 
professional advice, and I won't even send a bill in this 
regard to the chair, when you are attempting to impose 
contempt, and you may decide to attempt to do so, it is very, 
very important to follow the rules. And I really believe the 
chair has not followed the rules in regard to this witness, in 
regard to the rule that I have cited. And I want to reiterate 
that the chair has not brought the motion contemplated by this 
rule that would otherwise waive the necessity of this hearing 
be in executive session. And absent that, I believe ultimately, 
should you seek contempt of this witness, you will probably 
fail or you may fail, assuming that this witness has the right 
to bring that issue, which is a legal principle that, frankly, 
I am not sure of.
    But I just want to reiterate that I think that we have not 
followed the rules here, and it will jeopardize this 
Committee's ability ultimately to get to the truth.
    Mr. Cannon. Would the gentleman yield for just one 
question?
    Mr. Inslee. Certainly. We'll charge you for this one, 
though.
    [Laughter.]
    Mr. Cannon. Okay. We'll have dinner on the outcome or 
something.
    Has the Justice Department objected at all to the inquiry 
we are having here?
    Mr. Inslee. My understanding, through staff, is there is a 
concern that has been raised, and let me ask to confirm that. 
Is that accurate?
    Mr. Cannon. I mean, there is a formal process for----
    Mr. Inslee. Let me answer your question.
    Apparently, we have been asked to restrict the questions of 
the previous witness. I don't know if they have said in all 
cases. But I will say this: I really do believe there is a 
legitimate issue to be in executive session for the purposes 
while this investigation is proceeding. That is my view, 
realizing the connection between Congress and the judicial 
body. And I just tend to prefer to defer, when there is an 
ongoing criminal investigation, to the judicial branch.
    Somebody has just handed me a letter here, and it 
says,``Committee staff has several specific----''
    Do you want to point out exactly what is pertinent here to 
help me out? I want to answer your question, Mr. Cannon.
    Mr. Cannon. While we are waiting for staff on that, is that 
a letter to the chairman of the Committee, to the Minority----
    Mr. Inslee. Yes. It is a letter to Mr. Young. And I will 
have somebody hand it to you here in a minute. But is there a 
pertinent point, do you think?
    I will just read the part that is highlighted, and I can't 
promise that it is relevant because I haven't seen it before.
    Mr. Cannon. And I won't charge you for the advice.
    Mrs. Cubin. What is the date on the letter?
    Mr. Inslee. This is January 28, year 2000, to Chairman 
Young. It is from Robert Rabin, assistant attorney general.
    It says, ``Congressional inquiries during the pendency of a 
matter, however, pose an inherent threat to the integrity of 
the Department's law enforcement and litigation functions. Such 
inquiries inescapably create the risks that the public and the 
courts will perceive undue political and congressional 
influence over law enforcement and litigation decisions. The 
open matters concern is especially significant with respect to 
ongoing law enforcement investigations,'' and I ask this to be 
given to Mr. Cannon.
    And I will just tell you, we all recognize what politics 
can do to people's perception, and I think it is very important 
for criminal investigations to be able to proceed without 
political pressure. And I just think that is something we have 
ignored in this Committee, and I don't think that will help us 
in the long run.
    Mrs. Cubin. Does the Minority yield back the balance of 
their time?
    Mr. Cannon. Madam Chairman, may I just follow up and point 
out I haven't had a chance to read the whole letter.
    I don't believe this is even a request. It ends up, ``I 
hope this information is helpful and want to assure you, et 
cetera.'' This is not a request that we back off what we are 
doing here, just to be careful, and we want to be careful all 
of the time, of course.
    Mrs. Cubin. Excuse me. Would the clerk make sure that the 
balance of the Minority's time is reserved, and this is now the 
time reserved by the Majority.
    Go ahead.
    Mr. Cannon. So we are now on our own time.
    Mrs. Cubin. We are on our own time.
    Mr. Cannon. Well, I will be careful.
    We had DOJ here testifying here today. Thank you, by the 
way, Madam Chairman, for recognizing me.
    My understanding is that the DOJ has understood what the 
witnesses were going to be here today--they actually were here 
testifying today, and I think they are doing that. My 
understanding is that that is because they understand the 
distinction which I sense that the minority side is not 
getting, which is the distinction between an investigative 
hearing and an oversight hearing. It is pretty straightforward. 
It is pretty simple. What we are doing here is oversight.
    There is an appropriate time. And even when you have a 
majority, which is a different party from the administration, 
there is an appropriate time to investigate. And when you find 
that that, in conjunction with the Justice Department, is 
appropriate, we do that. I just don't see any problem, and all 
of the emotion from the other side doesn't cover over the fact 
that there are many problems in government. And let me just 
agree with Inslee, we don't know about the $300 million yet. We 
have to take a look at that. That may be significant. But we 
have an action here that we are looking into and doing so, I 
think, very appropriately.
    Thank you.
    Mrs. Cubin. Will the gentleman yield?
    Mr. Cannon. Yes, I yield back to the chair.
    Mrs. Cubin. I have to point out that the two witnesses on 
the previous panel were not subpoenaed. Their testimony was 
cleared, their appearance was cleared by the Department of 
Justice. So I think that----
    Mr. Miller. They weren't subpoenaed?
    Mrs. Cubin. They were not subpoenaed. No, they were not.
    And I have to point out that the Minority is just putting 
up a bunch of smoke screens. They talk about whistleblowers 
being protected. The real whistleblowers were Johnson and 
Martinek. They were the whistleblowers. They were the ones who 
exposed the fact that affiliated oil companies were not valuing 
the oil properly, and therefore had been defrauding the 
government, the taxpayers of this country, of royalties. Those 
were the two whistleblowers. These two government employees 
were not whistleblowers.
    Then the Minority side says that we are jeopardizing an 
ongoing investigation, that we are not following the rules. The 
bottom line is they want to divert the attention away from the 
fact that two government employees who were involved in royalty 
valuation policy took checks for $383,600 with an expectation 
to get millions more. Now, they can rant, and rave, and whine 
about procedures and be as petty as they want to be and argue 
about 3 minutes or 5 minutes, but the bottom line is this: We 
are here to determine if, in fact, the way the Department of 
the Interior and the Department of Energy operate oil valuation 
policies allows this sort of thing to happen, and if it does, 
we need to change it. Or if it doesn't, we need to see that the 
rules are followed. And it would appear from the testimony of 
the previous panel, that ethical rules were not followed.
    So blow all the smoke you want, but the bottom line is the 
wrongdoers are not sitting up here. The wrongdoers are sitting 
there.
    Mr. Brady, I recognize you for as much time as you may 
consume.
    Mr. Brady. Thank you, Madam Chairman.
    I guess my question is fairly simple. When will Mr. Berman 
answer the question: What services did you provide to POGO in 
return for $383,000?
    Mr. Berman. Mr. Brady, will you waive your Speech and 
Debate clause immunity?
    Mr. Brady. I will not. We are giving you an unprecedented 
opportunity to tell the truth and your side of the story. And 
as someone who I understand has pled the Fifth more than 200 
times in deposition, I wouldn't be the one asking others to 
waive their rights. You are taking full use of yours, and I 
think it is reasonable that each of us take full use of our 
rights.
    This is very simple, in essence, and this gives you a 
wonderful opportunity. It appears, in fact, the facts show that 
you used a position of trust of many years within our Federal 
Government, financed by taxpayers, used that information, 
worked with a special interest group to develop a lawsuit and 
reached an agreement to split the proceeds of that lawsuit. You 
spent more than a year on the phone with the true 
whistleblowers in this case developing more information, 
stopped those calls a mere week before the lawsuit was filed, 
reached an agreement, got upset when you didn't get your share 
of the loot, finally did get your share of the loot, neglected 
to tell, in violation of law and ethics, your Agency or anyone 
in a position to rule on whether this was right or wrong. You 
purposely did not do that.
    And so it is very clear that the public, in a very 
reasonable way, simply wants to know what services you provided 
to POGO in return for $383,000. It is a simple question. 
Perhaps there is a good answer, and I invite you to answer it.
    Mr. Berman. Mr. Brady, do you waive your immunity?
    Mr. Brady. As I said, no. Are you willing to tell the 
truth? Is it time to tell the American public what you did in 
return--nothing in life is free. What did you do, what services 
contractually did you provide to POGO in return for $383,000? 
And it is a simple question.
    Mr. Berman. Mr. Brady, I have already given my conditions 
for answering.
    Mr. Brady. Thank you, Madam Chairman.
    Mrs. Cubin. The Majority reserves.
    Mr. Miller. We'd reserve for the moment. I don't know if 
you have other questions.
    Mrs. Cubin. No, we don't. So we recognize the Minority.
    Mr. Miller. Do you have any questions?
    Mr. Inslee. Just as an inquiry, Madam Chair. Has the 
Committee, and I am sorry, I missed a part of the meeting. I 
was late for it. My apologies. Has the Committee considered 
compelling testimony of this witness by granting him immunity 
and compelling him to testify? Has the chair considered that at 
all?
    Mrs. Cubin. This has been considered. Mr. Berman asked for 
immunity. And the information that he was apparently willing to 
give was not--it was strictly about policy, and it had nothing 
to do with the arrangements, the details of the agreement and 
whatnot.
    Mr. Inslee. I just throw it out, and I don't make a motion 
in that regard at the moment. But I do----
    Mrs. Cubin. That what, sir?
    Mr. Inslee. I don't make a motion. I am just asking a 
question of the chair at the moment, and the reason I say that 
is I suspect that if we are successful in compelling the 
witness to answer, despite his current objections, that there 
may be a Fifth Amendment objection thereafter.
    Mrs. Cubin. Well, he hasn't expressed any objections. He 
has just given conditions under which he will answer the 
question, which clearly is Contempt of Congress.
    Mr. Inslee. Well, I appreciate it. I am not making a motion 
on that. I just wanted to inquire if the chair had considered 
that.
    Thank you.
    Mr. Miller. Madam Chairman, do I understand that the 
Majority is done with this witness for the purpose of 
questioning? You may not be done with him, but----
    Mrs. Cubin. I have one question. I do appreciate, Mr. 
Inslee, as I said earlier, your--I believe your sincere effort 
to clarify what my motion was about. So I'm going to do that at 
this time.
    Mr. Berman's attorney made an objection about whether or 
not he should have to furnish this information, if you will. He 
based it on a rule that we are not operating under. I made the 
motion under Rule XI 2(g)(2)(b) that the Subcommittee agreed to 
close the hearing for the sole purpose of discussing whether 
the testimony or evidence to be received would violate the 
clause that I believe you cited, which is 2(k)(5), regarding 
investigative hearings.
    So then I do have a question I am going to ask one 
question, and then I do want to close, but then we will yield 
back, other than my closing.
    Mr. Berman, last question. Will you provide this 
Subcommittee with testimony or evidence that you did not intend 
an agreement with POGO to share oil royalty litigation 
proceeds?
    Mr. Berman. You have my conditions for answering your 
questions, ma'am.
    Mrs. Cubin. I reserve 60 seconds of our time to close and 
yield back the rest.
    Mr. Miller. I would just say, in closing, I think Mr. 
Berman has made his position clear as to any questions from any 
members of this Committee. I would then, again, register our 
objection because I appreciate what you have said--the rules on 
which you believe you are operating. We have been told by the 
parliamentarian contrary to that. It is for the parliamentarian 
to decide whether or not the rules are being followed or being 
interpreted. And I would stand by that, what we have been told 
by him; that this is, in fact, an investigative hearing which 
would then present a different question for the members of this 
Committee as to whether or not they want to go into executive 
session.
    And we will yield back the balance of our time.
    Mrs. Cubin. Thank you.
    The last statement that I would like to make while you are 
here, Mr. Berman, is that the very actions of POGO to proffer 
money to you and to Mr. Speir has jeopardized the new oil 
valuation rule, and the likelihood that the remaining 
defendants will settle their litigation claims. In other words, 
they have every reason to want to go forward because your 
actions, at the very least, appear to have tainted that rule. 
These payments have poisoned the well for the very changes in 
oil valuation that you, Mr. Speir, Mr. Banta and Ms. Brian all 
profess to want.
    And as I said in the last hearing, I believe that the 
intentions of the POGO board were not malicious, and I believe 
that collecting the oil royalties that we are due is important 
and that that's a good thing. But, unfortunately, what 
transpired between then and now is not good and has very well 
damaged the mission you tried to accomplish.
    So you are dismissed, Mr. Berman.
    Mrs. Cubin. The chair now calls Mr. Robert Speir to the 
table.
    [Witness sworn.]
    Mrs. Cubin. Thank you, Mr. Speir. Please be seated.
    The chair now recognizes Mr. Brady for the purpose of a 
motion regarding questioning of witnesses.
    Mr. Brady. Under Clause 2(j)(2)(b) of Rule XI of the Rules 
of the House of Representatives, I move that Congressman Brady, 
members of the Majority and the Minority member or members 
designated by the Ranking Member be allowed to question the 
witness, Mr. Speir, for a total of 60 minutes, equally divided.
    Mrs. Cubin. All in favor say aye?
    Are there any objections?
    [No response.]
    Mrs. Cubin. All in favor, say aye.
    [Chorus of ayes.]
    Mrs. Cubin. Opposed?
    Mr. Miller. Opposed.
    Mrs. Cubin. The motion is passed.
    The chair now recognizes Mr. Schaffer.
    Mr. Schaffer. Thank you, Madam Chairman.
    Mr. Speir, can you tell the Committee when you first met 
Mr. Banta.

  STATEMENT OF ROBERT A. SPEIR, RETIRED, DEPARTMENT OF ENERGY

    Mr. Speir. I'm sorry?
    Mr. Schaffer. Can you tell the Committee when you first met 
Mr. Banta?
    Mr. Speir. Oh, I believe it was in 1985 or 1986.
    Mr. Schaffer. Have you ever discussed oil valuation 
subjects other than the filing of the qui tam suit with Mr. 
Banta?
    Mr. Speir. Oh, many, many subjects.
    Mr. Schaffer. I am sorry?
    Mr. Speir. Many, many different variations on that subject.
    Mr. Schaffer. How would you describe your personal and 
professional association with Mr. Banta? Has it existed outside 
of the discussion concerning--let me just restate that.
    Your personal and professional association with Mr. Banta 
existed outside discussions concerning POGO's efforts to file a 
lawsuit and advocate for a new royalty rule; is that correct?
    Mr. Speir. I am not sure I understand your question, 
frankly.
    Mr. Schaffer. Well, I just want to find out if your 
association with Mr. Banta existed outside of discussions 
concerning----
    Mr. Speir. The royalty rule and other matters?
    Mr. Schaffer. Right. And POGO's effort to file a lawsuit.
    Mr. Speir. Well, yes. We had had a long informal, technical 
relationship regarding California issues--oil prices and 
valuation of oil in California. That is how the relationship 
initially got started in 1986--1985/1986.
    Mr. Schaffer. You mentioned California. Do you know the 
identity of the client which motivated the Lobel law firm's 
work on California oil valuation?
    Mr. Speir. Well, over that period, no. I really don't know 
specifically who their client was. I know that in the latter 
part of the period we were--the most recent part of the period, 
I think that the firm represented some entity within the State 
of California. Who they represented, if anyone, at the time our 
relationship originally developed, I don't know.
    There was not any discussion between me and Hank about 
exactly who they represented. That was not the nature of the 
relationship.
    Mr. Schaffer. When did you first learn of Mr. Banta's 
association with POGO and Ms. Brian?
    Mr. Speir. Well, if you mean by that question when did I 
first learn that he was involved with the Project on Government 
Oversight's board, it may seen surprising to you, but I really 
didn't know about that until perhaps as late as 1997. And I 
think the precipitating event was when he mentioned at one 
point he had recused himself from the board or something. I 
knew that they had a common interest in the sense that they 
were both interested in California oil valuation. But I didn't 
know whether they had simply a common public interest 
relationship or exactly what that relationship was.
    Mr. Schaffer. The 1993 Lobel Christmas party----
    Mr. Speir. The Christmas party was not all that good, by 
the way.
    [Laughter.]
    Mr. Schaffer. My point was that party is now pretty 
legendary as a starting point for your relationship with POGO 
and POGO's efforts regarding oil valuation.
    Mr. Speir. Cheap beer and bad food.
    Mr. Schaffer. What's that?
    Mr. Speir. Cheap beer and bad food.
    Mr. Schaffer. Got it. Well, we have been to those.
    [Laughter.]
    Mr. Schaffer. Is there a trend associated with that? I am 
curious as to how many of those parties have you been invited 
to? You probably won't be invited this year.
    [Laughter.]
    Mr. Speir. I'm lucky if I can get up from this table after 
that. Well, never mind.
    I don't--I don't really know. I probably started going to 
their Christmas party in the late 1980s, I suppose, and missed 
a few along the way.
    Mr. Schaffer. So you have been to more than one.
    Mr. Speir. Oh, yeah.
    Mr. Schaffer. Got it. All right. In your discussions about 
taking part in POGO's lawsuit, the question of independent 
legal advice was raised. POGO has long experience dealing with 
whistleblowers and advertises for whistleblowers and qui tam 
lawyers on its web site. Did POGO ever offer to refer you to 
any lawyer specializing in whistleblower protection or False 
Claims Act law?
    Mr. Speir. Not that I recall.
    Mr. Schaffer. Not that you recall. So POGO never took any 
steps to make sure you had advice, other than what it offered?
    Mr. Speir. At one point, Ms. Brian recommended that I get 
legal counsel, but she didn't refer me to any legal counsel, 
that I recall.
    Mr. Schaffer. As I read your June 1999 deposition, Mr. 
Speir, when receiving the check, you relied on POGO's 
assurances that lawyers on its board, outside lawyers, and the 
Justice Department had found nothing objectionable about the 
payment. Our first hearing revealed that POGO's board knew 
almost nothing about this, and debated it even less in that Mr. 
Banta claims that he took no part in it. You probably heard 
that testimony.
    Today, you heard the Justice Department testify that it 
expressed grave concerns about the payments before the checks 
were written. An investigation of those payments has been 
underway since shortly thereafter. Do you feel that POGO was 
fully candid with you on this point?
    Mr. Speir. Well, yes, yes, I do. You are referring to my 
deposition testimony last summer, correct? I think I said in 
that deposition that I felt like there were, after I, in my 
view, first accepted their offer, contingent as it was, in 
January of 1998, that there were several more hurdles this had 
to pass, the last of which was what I considered to be the trip 
wire, and that was notifying the Justice Department because I 
always felt that if the Justice Department was notified, and 
they raised questions, then the whole process leading to the 
award would be abrogated and would go into review phase.
    And, yes, I thought she was candid at all points because 
there was no incentive on her part----
    Mr. Schaffer. ``She'' being who?
    Mr. Speir. Ms. Brian.
    Mr. Schaffer. Okay.
    Mr. Speir. Because there was no incentive to do otherwise. 
When she notified me the week before she gave the awards that 
Mr. Packard had notified the Justice Department of the 
impending award, she was quite excited about that because she 
said they had been notified, and they raise no objections.
    So, you know, I thought about that, and I thought, all 
right, now what incentives would she have to misrepresent that 
conversation that she had with her own attorney? And I couldn't 
figure it out, and I couldn't find any. So, and the long answer 
to your question is that I thought she was always candid.
    Mr. Schaffer. Well, I know you have been pretty forthcoming 
about these things. You have spent hours on the phone with 
Senate and House staff.
    Mr. Speir. Yes, against my counsel's advice, I might add.
    Mr. Schaffer. Give the Subcommittee what your colleagues 
will not; an account, if you will, of the events leading up to 
the December 1996 offer from POGO to share its litigation 
proceeds with you.
    Mr. Speir. You want me to describe events leading up to 
that?
    Mr. Schaffer. Yes, please.
    Mr. Speir. Well, again, referring back to my deposition 
testimony last summer, I expressed----
    Mrs. Cubin. Excuse me, Mr. Speir. Your answer might take a 
little bit of time, and Mr. Schaffer might possibly have more 
questions relating to it. So we do have a vote. We actually 
have a series of four votes. So if everyone would like to take 
a break, it will take about 35 or 40 minutes. So we will be 
back in here at 10 minutes after 5.
    Mr. Speir. Can I have my chair back?
    Mrs. Cubin. Pardon me?
    Mr. Speir. Can I have my chair back?
    Mrs. Cubin. You bet. Thanks.
    The Committee will recess.
    [Recess.]
    Mrs. Cubin. The Subcommittee will please come to order.
    The chair recognizes Mr. Brady, in Mr. Schaffer's absence, 
to continue the questioning of Witness Speir.
    Mr. Brady. Thank you. Thank you, Madam Chairman.
    Mr. Speir, thank you for being here today. I am sorry that 
Mr. Berman did not take this opportunity to be open and honest 
about his role in this scandal. He had an opportunity, clearly, 
in front of all of America to refute and knock down any 
challenges to the facts about his role in this scandal.
    And this is an opportunity for you to do just the opposite. 
I would like, if you would, to tell the Subcommittee what your 
colleagues will not. Would you just give us a narrative account 
of the events leading up to the December 1996 offer from POGO 
to share its litigation proceeds with you.
    Mr. Speir. Well, I'm a little imprecise about exact dates. 
But my general recollection is that in the few weeks before 
that meeting--and I might inject here that what I am saying may 
be somewhat at variance with my testimony from last summer, 
primarily because I really don't have a precise knowledge or 
recollection of the exact dates--my general perception is a lot 
of this took place in early 1997, but I am referencing it to 
that December 9th meeting.
    Mr. Brady. Sure.
    Mr. Speir. Ms. Brian and I had a few phone calls in which 
we did not discuss at length, but the subject came up of being 
a relator in a qui tam suit that she was thinking about filing. 
And I didn't accept or decline that suggestion from her in 
those discussions we had. They weren't really in-depth 
discussions at all. I wasn't sure at the time what a relator 
was, legally, and what my obligations were and what I could do.
    I was concerned about a number of things, but that led to 
me neither accepting nor declining the possibility of being a 
relator. And that was kind of the nature of the discussions. 
They were very shallow. And then, finally, at one point, and it 
is hard for me to pin down the exact date, she suggested that 
we get together face-face-to-face and have a meeting about 
this. And we did meet at Mr. Banta's office. And as I recall 
it, the people present were Ms. Brian, Mr. Banta and Mr. Berman 
and I.
    And we talked a little bit about being a relator. Mr. 
Banta, I believe, conveyed a general pessimism about whether or 
not the project could actually attain standing in such a case, 
and even if they did, what their chances were of staying in 
that case.
    We talked about several other peripheral issues. And, 
finally, I was left with the impression that Ms. Brian wanted 
me to say, you know, are you going to be a relator or not, and 
wanted me to answer that question. And my general recollection 
of that was that I said not at this time or something along 
those lines.
    And then immediately following that, within the same 
general conversation, she just made an off-handed comment 
about, well, recognize your difficulties with this. And if we 
do this and if we ever get any money from it, we want to 
recognize your contributions to this area with what was implied 
to be an award, in my mind.
    Mr. Brady. She said this would be an award, in her mind, or 
that isn't how you said it.
    Mr. Speir. No. The way that--I can't recreate the precise 
words. But in my mind, that was the way I interpreted what she 
said: In recognition of your contributions of this area, 
calling attention to the crude oil underpricing in California, 
and the royalty matters and so on. It was an offhanded comment. 
It didn't require acceptance or rejection at that point.
    Mr. Brady. At that point, you didn't accept or decline, you 
simply knew of the offer. You had knowledge of the offer?
    Mr. Speir. Yes. She made what should be viewed, I think, as 
a very speculative offer or what I viewed, anyway, as being a 
very speculative, hypothetical-type suggestion that if they 
ever got, if they filed a suit and they ever got money from it, 
that she would like to recognize our contributions.
    Mr. Brady. My understanding is that the ethics rules are 
fairly clear about Federal employees not being able to accept 
awards of more than $200, not allowed to accept money from 
organizations or persons with financial interests that might be 
affected by your duties, that you cannot accept money seeking 
to influence the Agency or to supplement your salary, to reward 
for duties that you are already doing. That offer that she made 
at that time, which you did not accept or declined, but had 
knowledge of, was in violation of Federal ethics laws and 
regulations at the time, was it not? An offer of financial 
reward for the work that you had been doing and were doing at 
the Agency.
    Mr. Speir. I guess I should probably try to break your 
question down into the different components. But, frankly, I am 
not that conversant in the ethics rules. I felt that, at the 
time, the situation was so tentative that it didn't require me 
to, inasmuch as it didn't require me to make any decision one 
way or another, that I was not entering into an agreement with 
her, and therefore----
    Mr. Brady. When it became less tentative, you were given a 
check, did you then disclose to all relevant agencies the 
dollars that you had gotten, that hypothetically were illegal 
when you first knew of the offer, but then moved from 
hypothetical to reality when you did accept the check?
    Mr. Speir. Well, I knew, my extent of knowledge about the 
ethics rules at that time were that if there was a concrete 
offer there, where someone, for example, was saying, you know, 
``Here is a check, will you accept it?'' during the time I was 
in the government, that there were certain hurdles I would 
probably have to pass. And I was not aware specifically of what 
I would have had to have done to receive this award during the 
time I was in the Federal service. But during the remaining 
time I was in the Federal Government, which was until October 
of 1997, the offer remained hypothetical. There was nothing to 
it, in my mind.
    And then--I want to correct or at least clarify the timing 
here, then, in January, or perhaps at the earliest a week or so 
before that January 5th document was signed, Ms. Brian called 
me and said, ``It looks like there really is going to be money 
flowing as a result of this qui tam case because it looks like 
there's an impending settlement. And we would like to know, for 
planning purposes, if, in fact, you are going to accept this if 
we offer it to you.''
    And in my mind, simply her desire to have me sign that 
document at that point was to signify to her whether or not I 
was going to receive that award if it should become available 
in the future. And that was the context I put that document in.
    At that point, I didn't feel like there was any need to go 
back and notify the department that I had worked for or anyone 
else about that offer.
    Mr. Brady. Let us focus on that, if I could. At the time of 
the meeting, and I want to come back to the meeting because 
there is some information----
    Mr. Speir. This was in December of 1996.
    Mr. Brady. At the time of the meeting when she made, Ms. 
Brian made a hypothetical offer that would have been illegal 
and unethical at the time had it been executed, it then moved 
from hypothetical to a reality. And based upon your services 
and your work as a Federal employee, as inside the government 
on this issue, it was illegal and unethical, as a hypothetical. 
When it became a reality, why did you not either decline it or 
disclose it?
    Mr. Speir. Well, I don't----
    Mr. Brady. Because you have been a long-time member of the 
Federal Government, well respected within it. You clearly have 
a long history of knowledge in this area and passion for it, 
and you are a very smart man. I can't imagine--I don't know how 
many $383,000-checks you have been given in your life. I don't 
have that many. They tend to stick out. And as a Federal 
employee, wouldn't, you know, wouldn't a red flag have been 
raised to you at that time?
    Mr. Speir. Well, I think you are kind of mixing up your 
time line here a little bit.
    Mr. Brady. Well, now, the time, as you said, you have been 
a little general as to time, and perhaps I have been as well. 
But the question still stands, didn't, as a long-time employee 
who lived by, hopefully, and knew the Federal agency 
regulations, ethics regulations, why didn't you disclose that 
or decline it at that time?
    Mr. Speir. I didn't think it was necessary for me to do it 
because it was not an offer that could be fulfilled and had, in 
my view, an extremely low possibility of ever coming true at 
that time.
    Mrs. Cubin. Will the gentleman yield?
    Mr. Brady. Yes.
    Mrs. Cubin. Thank you.
    I would like to read, just for the record, what the 
agreement, the January 5th, 1998, agreement actually says that 
Mr. Speir says he didn't think was really an agreement. But 
here is what the document says: ``This is to put in writing the 
standing oral agreement between the Project on Government 
Oversight, Mr. Robert Speir and Mr. Robert Berman concerning 
our False Claims Act suit regarding the underpayment of--'' 
excuse me. I will start again.
    ``This is to put in writing the standing oral agreement 
between the Project on Government Oversight, Mr. Robert Speir 
and Mr. Robert Berman concerning our False Claims Act suit 
regarding the underpayment of royalties by oil companies to the 
Federal Government. Any and all proceeds to come to the Project 
on Government Oversight or Danielle Brian, through this 
lawsuit, will be shared equally, 33\1/3\ percent, between POGO, 
Mr. Speir and Mr. Berman.''
    That sounds awfully specific to me, Mr. Speir. I don't 
really see how there can be much confusion over that.
    Mr. Speir. Well, I can only testify to what was in my mind 
at the time. In retrospect, I probably would go back and 
quibble with that standing oral agreement being at least 
ambiguous, if not meaning the wrong thing. I never treated this 
as being anything more than a tentative offer or an agreement 
on the project's part to make the offer.
    Now, I may be splitting hairs here, but I want to refer 
you----
    Mrs. Cubin. But you did sign the agreement, Danielle Brian 
signed it and Robert Berman signed it.
    Mr. Speir. I am just saying it doesn't mean what you are 
saying it means or didn't mean that way----
    Mrs. Cubin. I am only reading it. I am not saying it means 
anything. I am only reading it.
    Mr. Speir. But it didn't mean that I had a standing 
agreement dating back--agreement in the context of they said, 
``Will you accept this?'' and I said, ``Yes,'' going back into 
1996. That simply did not--that agreement did not exist.
    Now, why did I sign this? Well, I just didn't quibble about 
the wording because I knew, I thought, what was in Ms. Brian's 
mind. That, in her mind, the agreement was synonymous with 
``offer.'' And it was their agreement. It was a unilateral 
agreement, I think using the words that you or someone else 
used earlier.
    I can only talk about what was in my mind and how I 
interpreted this document at the time.
    Mrs. Cubin. The unilateral agreement is somewhat of an 
oxymoron. It takes more than one to agree.
    Mr. Speir. Exactly. That is why it is inappropriate 
wording.
    Mrs. Cubin. Mr. Brady, would you like to continue?
    Mr. Brady. Thank you, Madam Chairman.
    Mrs. Cubin. Thank you for yielding.
    Mr. Brady. No. Thank you for clarifying that.
    Let's step out of your mind for a minute and back to real 
life. You are a Federal employee. Someone comes up to you, 
talks to you about becoming involved in a lawsuit. You decide 
you don't want to, but they say, ``Look, we're going to file it 
anyway, and we're going to give you a ton of money should we 
win this lawsuit.'' You say it is hypothetical, but the fact of 
the matter is you are knowledgeable in this area. You do have a 
relationship with that special interest group, and in fact, 
just what was predicted occurs. They come back to you several 
years later or a year later or so and say, ``Here is that moola 
we talked about earlier. It is $383,000 now, and it is for what 
we said it was--the services that you have provided throughout 
the years in your Federal role.''
    That is both the offer and the fact that it was proven to 
be a realistic offer at that time is illegal and unethical, and 
as a long-time employee, you either knew that or should have 
known that. Is there any of that----
    Mr. Speir. I don't----
    Mr. Brady. I mean, that is how it occurred.
    Mr. Speir. I don't accept that what the situation was, that 
was proposed to me in 1996 was illegal or unethical. If this 
had been----
    Mr. Brady. Is that because it happens a lot or--does this 
happen a lot, special interests groups saying, ``Hey, we'd love 
to have you in a lawsuit, and if we get some money out of it, 
we'd love to give it to you because you're doing lots of good 
work?''
    Mr. Speir. No. I'm just saying that I don't, I don't 
necessarily accept the premise in your statement. I can only 
say that the reason that I didn't report it to anyone was 
because I didn't feel like I had to because I didn't feel like 
someone had been asking me to do something for money. That was 
clearly not the case, and I didn't go into researching whether 
I could receive this money because there was no need to do it 
at the time.
    Mr. Brady. Now, are you sure there was no need to do it? 
Because you know, as a Federal employee, former Federal 
employee, you are under ethics laws, as well, for the work that 
you did. The payment was exactly what the offer was made at the 
time, verified in another letter to Mr. Berman, verified in the 
minutes of POGO. And the amount happened to be, as you know, as 
an expert, exactly a third of that Mobil settlement and exactly 
a third of that interest to POGO. That didn't raise a red flag 
to you that the ``award,'' which has never been given before 
and hasn't been given since, was exactly the share of an offer 
that was made to you in 1996 or 1997?
    Mr. Speir. Does your question mean to infer that somehow in 
1996 anyone knew that there would be a subsequent settlement?
    Mr. Brady. Absolutely not.
    Mr. Speir. And that there was an agreement of sharing one-
third, one-third, one-third back in 1996? That didn't happen.
    Mr. Brady. The facts show that POGO, in their documents, I 
believe they reached an agreement with you and Mr. Berman to 
share the proceeds of this lawsuit. You declined that. You say 
that it is not the case, but it continues, in reality, between 
the agreement, then subsequent follow-up to Mr. Berman's demand 
of some type, and then the actual dollars themselves are 
exactly as they were presented to you in 1996.
    Mr. Speir. No, they weren't.
    Mr. Brady. You dispute that?
    Mr. Speir. Yeah, I do dispute that there was any discussion 
of shares or any comment about future rewards.
    Mr. Brady. Wait a minute. You said the whole discussion was 
about that if we win this lawsuit, we want to reward you for 
the work that you are doing as a Federal employee.
    Mr. Speir. Yes, but you are extending that and implying, I 
think, and correct me if I am wrong, implying that the offer 
that is embodied in this January 5th, 1988, document was 
spelled out very definitively in 1996, and that was not the 
case.
    Mr. Brady. I am saying common sense tells you, if someone 
makes you an offer that is unethical and illegal at the time, 
that in subsequent years that agreement is executed exactly as 
was outlined, in violation of ethics laws and rules that you--
and it is exactly one-third of a legal lawsuit settlement that 
you are an expert in--why would that not raise red flags to 
you?
    Mr. Speir. There was----
    Mr. Brady. Why did you accept that money? You knew it 
couldn't have been by circumstance. You knew they hadn't given 
award before then. You knew you had never been given $383,000 
in your life for an award, but you did know you had been 
offered that money previously. I mean, you did know you had 
been offered that money previously.
    Mr. Speir. Under circumstances that were hypothetical and 
remained hypothetical during the entire time I was in the 
Federal service.
    Mr. Brady. But they were real.
    Mr. Speir. Well, they turned out to be real, yes. But who 
knew at that time?
    Mr. Brady. Well, let's go back to the services that you 
might have provided. Have you read----
    Mr. Speir. Let me----
    Mr. Brady. Have you read----
    Mr. Speir. Can I close out your question here? I am still 
trying to understand exactly the nature of your question, 
whether it is why did I receive the money in November of 1998 
or why did I not report it to the Department when----
    Mr. Brady. Both.
    Mr. Speir. Well----
    Mr. Brady. And I think your answer was you didn't--you 
weren't aware of the law?
    Mr. Speir. No, I am not sure that that law--that the law 
would have required me, in 1996, to report this highly 
tentative suggestion of an award.
    Mr. Brady. When you cashed the check, that didn't----
    Mr. Speir. No, I don't think----
    Mr. Brady. I guess that common sense----
    Mr. Speir. I don't think I was under any obligation, at 
that point, to notify the Department I had worked for. I don't 
think the ethics rules step back and say that you have to 
notify the Department that you worked for.
    Mr. Brady. Common sense tells you that position of trust, 
but let me ask this----
    Mr. Speir. Yeah, but we're talking about ethics rules here, 
Mr. Brady.
    Mr. Brady. Did you read the POGO or have you read the POGO 
lawsuit?
    Mr. Speir. The qui tam suit?
    Mr. Brady. Yes.
    Mr. Speir. No.
    Mr. Brady. You haven't--you have not read it at all?
    Mr. Speir. No.
    Mr. Brady. You are not aware of any of the information in 
it?
    Mr. Speir. I don't know whether I'm--I'm not specifically 
aware of anything that is in that lawsuit because I have never 
read it. Now, if you ask me about certain facts that are in 
that lawsuit, I might be familiar with those facts, but not--
you would have to tell me, ``Here is what the lawsuit says. Are 
you familiar with that fact?''
    Mr. Brady. Are you--well, let's probe some of those facts.
    Mr. Speir. I'm not trying to split hairs here. I'm just 
trying to understand your question.
    Mr. Brady. Are the facts that you are aware of that are in 
that lawsuit, did you develop any of that information or were 
those facts and issues before you as a Federal employee?
    Mr. Speir. I don't know what facts you are referring to.
    Mr. Brady. The facts you just said you were aware of.I 
don't want you to recite the lawsuit. I was asking your 
knowledge to it. You said, ``I know certain facts about it, 
but, no, I have not read it.''
    A logical question was, the facts that you are aware of 
were those issues, was that information under your purview as a 
Federal employee?
    Mr. Speir. I don't----
    Mr. Brady. I mean, it is very easy----
    Mr. Speir. I don't know what's in the lawsuit that you are 
asking about. That is the question I have got in my mind. Now, 
I don't want to put words in your mouth. But if you asked me if 
I was familiar with royalty underpayment or the sequence of 
events or the oil trading practices and accounting practices 
that lead to royalty underpayment, I would tell you yes. 
Whether or not that is spelled out in that lawsuit or not, I 
don't know.
    Mr. Brady. So, I guess, maybe a yes or no on this one. Did 
the work that was within your purview as a Federal employee, 
was that included in or did it contribute to the collection of 
millions of dollars of unpaid oil royalties?
    Mr. Speir. I think the direct answer to that is no, and the 
reason is that I helped document, along with this California 
task force that we have been discussing here in this hearing or 
at least in the previous hearing, helped document that 
royalties were probably underpaid in California to the tune of 
hundreds of millions of dollars.
    Point of fact, I don't believe that the Interior Department 
has ever collected monies against those billings, but I am not 
really real sure about that. But I think that they never have 
collected monies.
    Mrs. Cubin. The Majority's time has expired.
    Mr. Brady. Thank you.
    Mrs. Cubin. Thank you, Mr. Brady.
    The chair now recognizes the Minority for their 30 minutes 
of questions.
    Mr. Underwood. Thank you, Madam Chair.
    I yield to Mr. Inslee for some questions.
    Mr. Inslee. Thank you.
    Mr. Speir, do you believe your efforts or some actions, in 
some regard, assisted the taxpayers' recovering payments that 
should have been paid to the government?
    Mr. Speir. Well, I think I helped call attention to a 
situation that may have led the government in that direction. 
Whether or not they aggressively pursued those collections or 
not is a matter of debate, I supposed.
    Mr. Inslee. In what form did you do that? Did you tell 
somebody about it or write memos or just give me an idea.
    Mr. Speir. Well, I tried, over a period of years, to call 
attention to market imperfections or irregularities in 
California. And correcting those market imperfections or 
irregularities would have had had the effect of raising posted 
prices in California, which in turn would have brought 
independent producers in California more money for their oil. 
And in a great sense, the Federal Government is an independent 
producer in California because of our royalty interests.
    So I attempted to do this over a period of time. Now, the 
Department of Energy does not have any direct responsibility in 
collecting royalties or calling attention to royalty 
underpayments. So my thrust there was somewhat more indirect, 
although I certainly had in my mind all along that my actions, 
if they were carried out, would have an indirect effect to 
raise royalties.
    And then in the period of 1994 to 1996, on sort of a 
volunteer and ad hoc basis, I participated in this California 
task force and more specifically looked at company trading 
practices, company documents and so on, along with, of course, 
looking at the existing regulations that the Minerals 
Management Service pursued in collecting royalties and helped 
document the fact that royalties had been underpaid. I think 
this was a big change.
    I don't want to take responsibility for that because it was 
a task force decision that royalties had been underpaid, and 
there were five main working people in that group, but it was 
certainly a change because the Interior Department had an 
opportunity to address this problem several times in the 
preceding years and managed to avoid it. So I think I made a 
contribution there, although I don't want to say I was the only 
one.
    Mr. Inslee. Well, some of us believe that it is beneficial 
to the taxpayers to collect the money that is owed to the 
government. And to that extent, some of us would be 
appreciative of yours and other efforts to the extent you 
helped the taxpayers collect what was coming to them. But there 
are other issues here, as you are well aware, involving qui tam 
and the whole host of issues. And let me just kind of tell you 
what I am thinking here, which is a question. And I would like 
some of your thoughts about it.
    It seems to me that there is a real benefit of qui tam 
suits, of allowing Federal employees and encouraging them to 
blow the whistle on inappropriate conduct in the Federal 
Government. And at least my view is that Federal employees 
ought to be able to participate in that if, number one, it can 
act as an incentive to weed out inappropriate conduct by the 
Federal Government in some way, in a thousand different ways. 
That is a healthy thing if Federal employees have some 
incentive to do that, to take the risks associated with blowing 
the whistle, and there are risks associated with that.
    But there are issues when that occurs that we do want to 
avoid conflicts of interest, we do want to avoid inappropriate 
incentives for employees to make decisions based on their own 
self-interests rather than in the Federal Government's 
interests. And I guess I would like to ask you an open-ended 
question. Do you see anything that we can do to improve our 
rules or personnel or ethics rules to accommodate both of those 
desires, both the desire to encourage whistleblowers and the 
desire to assure that that incentive does not distort anyone's 
decision making? It is an open-ended question. I would 
appreciate your thoughts.
    Mr. Speir. Well, it is pretty broad and definitely out of 
my field. I think some of the things that you heard the Justice 
Department people saying here today suggests that the Justice 
Department looks with a very skeptical eye on qui tam suits 
filed by Federal Service people. And to the extent that, if I 
interpreted the gentleman's comments correctly, they almost 
automatically reject those. And if you can bridge that gap 
where a person with direct knowledge of some sort of improper 
action--waste, fraud and abuse are the buzz words that are 
often used--the person can bridge that gap and come forward and 
provide them some sort of incentive for doing it, that would be 
great. And I don't know whether it would be a policy decision 
at the Justice Department level to entertain these in a more 
friendly environment or whether it would be a legislative 
solution.
    I know--I am told, at least, at one point, the False Claims 
Act statute was strengthened a few years ago substantially. And 
I am not really familiar with the details of that statute. I 
have never read it. I am not sure I would fully understand it 
if I did. But if you could do something either legislatively or 
through some sort of administrative procedure to make the 
Justice Department look in a much more friendly way toward 
people who would be willing to come forward and expose waste, 
fraud and abuse, then I think that would be a great step 
forward.
    There is always the problem, and I am sure that they will 
say this, there is always the problem of someone coming forward 
and saying--trying to turn in someone or report on something 
that really was their responsibility, and that is what they 
tend, I think, to step behind, in many cases. So you have to 
deal with that.
    I am not sure that I really answered your question very 
well, but that's kind of my thoughts.
    Mr. Inslee. In your case, do you believe you made any 
inappropriate decision or took any inappropriate action 
damaging to the Federal Government or even to the appearance of 
propriety with the Federal Government as a result of the 
potential that you would have received some economic benefit?
    Mr. Speir. Well, I don't think I damaged the government's 
ability to collect money at all.
    Mr. Inslee. Apparently not.
    Mr. Speir. And as to their future ability to collect under 
the current royalty rules or the royalty rules that are 
contemplated, it is not something that I did that is slowing 
that process down. I was not involved with those rules or the 
new rule.
    So I don't think I did anything that was harmful. There is 
always the question of the publicity surrounding something like 
this and a question about whether, in accepting this award, 
which can be interpreted in negative ways, I caused a problem. 
And I think that if--well, I have to really rely on Ms. Brian's 
interpretation of that award, but it's not my own. But if she--
if one looks at the spirit and accepts the spirit in which it 
was given, there shouldn't be anything by way of impropriety 
about it.
    Mr. Inslee. What was your understanding as to in what 
circumstances you should notify other people in the Federal 
Government about the potential of receiving award in this 
regard? At the time you were employed, what was your 
understanding as to the threshold when you should notify 
someone in that regard?
    Mr. Speir. Well, my general sense, and I can't cite a 
section of the ethics rules in answering this question, but my 
general sense is that if someone had the ability to deliver you 
money, then you had to subject that to a review by the ethics 
group of the general counsel, and that situation never arose 
during the time I was in the Federal Government. This very 
tentative, hypothetical offer could not have been fulfilled. We 
tend to look back at it in retrospect and say, well, of course, 
it was logical because it happened. But I consider it to be, 
you know, like, you know picking a number on a roulette wheel, 
and it just happens to turn up. You can't tell that on an a 
priori basis.
    So there was nothing in place that suggested that this 
would ever take place. And most importantly, there was no quid 
pro quo associated with it. It was a statement that we would, 
if we ever were able, would like to reward you for events in 
the past. And my thought, and still is, that the Project on 
Government Oversight had no financial reward--they were not 
asking for anything from me, and they had no financial position 
that would be affected by anything I was likely to do in the 
future.
    So there just wasn't anything wrong with it, but yet I 
always kind of, as I stored this back in the back of my mind 
and, you know, then filed it back there, I thought, well, if at 
some time in the future there actually are monies and they come 
forward and they say, ``Well, now, we have got this money. We 
want to give you this award now,'' I would have to subject it 
to review.
    Now, as I left the Federal Government, that was still a 
very hypothetical situation. And the whole complexion of what I 
was required to do changed when I left the government or at 
least in my view it did.
    Mr. Inslee. Do you think that there ought to be a rule, 
statute, ethical rule that in any circumstance where that even 
potential is raised with a Federal employee, knowing what you 
know now--I am not asking you to say what you knew then--but 
knowing what you know now, do you think it would be appropriate 
for us to have some rule that any time a Federal employee in 
any way, shape or form, is given even the potential of that or 
there is any discussion of that, that it would be a rule that 
management be notified of that potential? Do you think that 
would make sense?
    Mr. Speir. I don't know. It might be a useful thing to do, 
but I think that there are an ample number of checks in place 
right now that would suggest that if someone was making you an 
offer and they had attached to that some sort of contingency, a 
quid pro quo, that is--implied or not implied--there are rules 
and regulations that are in place to cause you to, I believe, 
to bring that forth as a possible bribe. I'm not trying to 
say--I'm not trying in that answer to subject that to a legal 
analysis because I am not qualified, but I think that anyone 
that entertained the idea of accepting something that was 
offered, to which there was a quid pro quo, particularly where 
the person that was offering it would derive some sort of 
financial benefit from it or your future actions, I think that 
that ought to ring a lot of bells, and persons--and at that 
point, you should probably report it, and I think that you 
would I guess probably be required to report it now, although 
I'm really not sure.
    Mr. Inslee. This is really, at least I find it kind of a 
devilish problem because I find it appropriate and healthy for 
the Federal Government if whistleblowers have the incentive of, 
in a sense, a quid pro quo, meaning if eventual litigation 
shows that there was waste, fraud and abuse, and if the 
taxpayer does save money, it is appropriate, and right and a 
smart idea to give that an incentive of the employee to root 
that out. So, to me, that is an appropriate, fair thing to have 
happen. But I also think that to guard against appearance of 
fairness issues, that at some threshold, we have to figure out 
where management gets to know about that relationship so that 
it can make decisions about who has what responsibility for 
what decision. And I think that is the proper area of inquiry 
of our Committee, and that is kind of why we are asking these 
questions of you.
    Do you feel that you would have acted differently in the 
timing then; that had you remained a Federal employee, you 
believe you certainly would have had to obtain management 
approval for this had you remained a Federal employee?
    Mr. Speir. I believe that that is required, based on what I 
know now and what I generally thought to be the case back when 
I was in the Federal Government.
    I had an--I don't want to belabor you with war stories--but 
I did have an incident take place I think probably in the 
summer of 1996, wherein I was being offered a plane ticket by a 
U.N. subcommittee to go to Africa to give a speech on some 
things. And I was immediately kicked into the Ethics Office. 
And that sort of heightened my attention, I think, to the 
issue. And I ultimately was, after first being rejected by the 
Ethics Office, which they always do, I then went back to them, 
and they determined that that was not a gratuity or anything in 
violation of the rules. I am not sure ``gratuity'' is the right 
word.
    But I was generally alerted to the fact that before you, in 
the Federal Government, before you receive anything of any 
value, it does have to go through an ethics check. So my 
general perception and understanding of the rules now and my 
general sense of them back then was that before I actually 
received money, I would have had to do something with the 
Ethics Office, and I just never reached that threshold. Again, 
I use the word ``trip wire.'' The trip wire is you take an 
action, and you receive something of value. And before you can 
receive that something of value, then you have to report it to 
the Ethics Office and have them review it.
    Mr. Inslee. If you had become a relator in a qui tam suit 
while still a Federal employee, from your knowledge of your 
responsibilities, do you think that would have resulted in a 
change or limitation in your then-current responsibilities? 
Would that have required that, in your view?
    Mr. Speir. Well, I was--it would certainly have resulted in 
an enormous amount of problem for me, careerwise and otherwise.
    Mr. Inslee. Let me, I am going to--I am asking a little 
different question, I think. Let me try it a little different 
way, if I can. What I mean is had you notified management of 
your interest and you had remained an employee--let's go back 
and say you did not leave the Department--and you became a 
relator in a qui tam lawsuit, do you think management would 
have been compelled to change your division, your 
responsibilities, limit your responsibilities? Do you think 
that there would have been conflict as a result of that?
    Mr. Speir. Based on what I was doing and what I heard the 
Justice Department people here say earlier, I don't think they 
would have been required to do that. The way I interpreted the 
Justice Department's people's comments is that I would be 
walled off from the specific issue, which in this case is 
probably royalty valuation, royalty undercollection and that 
sort of thing, and walled off from the case. And that actually 
is what they specifically said, ``walled off from the case.''
    And because I was not actually engaging in, at the time, in 
any further royalty-related issue, it sounds like they would 
not have been required to do anything to me. Yet I know for a 
fact that that would have caused me an enormous amount of 
trouble had I come out and identified myself as a participant 
in a lawsuit against oil companies.
    Mr. Inslee. Why do you say that? What were your----
    Mr. Speir. Well, because the Department was very oil-
company friendly, and I think that immediately that there would 
have been a controversy there. And I can't really tell how that 
would have ended up. I thought I was, in fact, I think I was 
working on some things at the time which were totally unrelated 
to not only royalties, but unrelated to crude oil, that I was 
very interested in pursuing. And I knew that if I had 
identified myself as a relator, that would certainly have 
complicated my ability to pursue those other things which were 
unrelated to royalties and crude oil, if not cause me to be 
closeted or stuck in an organization where I had no expertise 
at all. I mean, you know, so you end up in Congressional 
Affairs doing congressional correspondence. You know, what kind 
of life is that?
    [Laughter.]
    Mr. Inslee. We consider it the highest honor, actually.
    [Laughter.]
    Mr. Inslee. Well, I guess, I would just leave with a 
comment. I think that is one of the reasons, at least my view 
is we ought to find a way that Federal employees can have this 
incentive, so that they will take the risk that you have 
identified to root out waste, fraud and abuse. And if we don't 
find a way to do that while at the same time protecting the 
integrity of the process, I think we are going to lose the 
ability to help the taxpayer, and I appreciate your willingness 
or your honoring the subpoena to come here to help us do that.
    Mr. Speir. Well, I share your views because I was a 
government employee for 30 years, perhaps a little more--first, 
at the Defense Department, and second at the Energy Department. 
And I know a lot of people that know things about impropriety, 
about waste, fraud and abuse, that possibly would come forward, 
but they are scared to death. I know some people who I consider 
to be consummate heroes, as far as what they have done, and 
they have all been unduly punished for it. So I certainly share 
your ideas there. I wish I had a quick solution I could tell 
you.
    Mr. Inslee. Thank you, sir. I would yield back my time, Mr. 
Underwood.
    Mr. Underwood. Thank you. Thank you very much for asking 
questions which we generally would consider oversight 
questions----
    [Laughter.]
    Mr. Underwood. Questions actually leading to some 
recommendations which would call for changes, which would 
actually enhance and improve the operation of government. And 
along those lines, Mr. Speir, the point has been made that 
perhaps one of the reasons that we are having this hearing is 
that we are not so much trying to provide additional 
information to oil companies, but actually we are concerned 
that oil companies may, in fact, use the experience which you 
and Mr. Berman have undergone, as former government employees, 
as a way to argue that they should not be required to pay 
royalties, that this provides them some additional kind of 
defense for their disinclination to pay these additional 
royalties. How would you respond to that?
    Mr. Speir. Well, I don't know. If--I hate to think that 
this matter of the Project on Government Oversight and these 
awards is slowing down the correction of what I think to be 
inadequacies in the current royalty rule, I don't--I'm just 
sorry if that is taking place. And I certainly, you know, 
expect that the oil companies are looking at this as possibly a 
way of slowing down implementation of that new royalty rule. 
And I can't say I would do any different than they are if I was 
in their shoes because they clearly have a financial interest 
in slowing the royalty rule down, the new rule.
    I only hope that I was not really personally responsible 
for doing that. As to holding me up as an example of what 
happens when you step in the way of royalty underpayments, if 
that is the essence of your question, I don't have any personal 
knowledge that that is being done.
    Mr. Underwood. I wasn't speaking to the issue of whether 
the kinds of trials and tribulations you are facing is going to 
keep people from being whistleblowers in the future, I was 
speaking more in the nature that the kind of activities that 
you may be accused of or you are currently under investigation 
for would be used to, in a way, subvert the royalty rules and 
regulations.
    Mr. Speir. Well, if there is a single thing that slowed 
down the implementation of the royalty rule up to this point, 
it is the Congress, I think. And I think we have moved into a 
different phase now, where my understanding is that the 
Interior Department has said we are going ahead with this, and 
the companies have sued. And we could have been here 2 years 
ago, and in that meantime, there was probably a considerable 
amount of time that royalties, to the extent they ever were 
being underpaid, are still being underpaid because of the 
existing rule.
    Mr. Underwood. Well, isn't the basis of that effort the 
fact that this whole POGO thing has somehow tainted the royalty 
rulemaking process? Isn't that the basis for that?
    Mr. Speir. That is the allegation. But in point of fact, 
the Congress has two letters from the Interior Department that 
say that Mr. Berman and I were not involved in that royalty 
rule process, and I can underscore what they wrote in those 
letters. So----
    Mr. Underwood. Could you just speak to any involvement you 
had in that rulemaking process? Were you involved in the new 
Interior rules on royalties?
    Mr. Speir. Well, no, I wasn't. The principal comment that 
is being made to infer that I was involved or two e-mails, I 
believe, that I, personally, pulled out of my files last summer 
before I was asked to file a deposition in the qui tam case, 
and they were both--the first one was written to one of the 
people who were involved with the royalty rule, conveying one 
of my supervisor's direction to me to identify myself as the 
point of contact for the Department of Energy and the new 
royalty rule. And I sent that e-mail, and it was never 
returned, nor did I get any sort of phone call or anything else 
back from the people at the MMS on that. And I did it because I 
was directed to do it, not because I wanted to work on the 
royalty rule.
    Mrs. Cubin. Would the gentleman yield?
    Mr. Underwood. I will yield to you in just a second, in the 
interests of comity, even though I know you are going to ask a 
question that may not be favorable to Mr. Speir here. But just 
one more additional question.
    The POGO payments were made after you left DOE, were they 
not?
    Mr. Speir. Yes, sir.
    Mr. Underwood. I just wanted to make sure that that is 
clear on the record.
    I yield to the chairwoman.
    Mrs. Cubin. Thank you, Mr. Underwood.
    Mr. Speir, you said that neither you nor Mr. Berman were 
involved in the new royalty rule?
    Mr. Speir. Well, I can only speak for my personal 
knowledge, for myself.
    Mrs. Cubin. Okay, for yourself. Thank you for that 
correction. You are absolutely right. But you were a 
participant in this study, the final interagency report on the 
valuation of oil produced from Federal leases in California, 
right? That is the task force.
    Mr. Speir. That is the task force study?
    Mrs. Cubin. That is right. And indeed, the e-mails that you 
talked about, and some other notes that we have shown that you 
were heavily involved in pushing the oil valuation rule that 
you had recommended all along to the task force, and also show 
the fact that you thought the rule needed to be changed. The 
genesis of the new March 15th, 2000 rule was the report of May 
16, 1996, that you were on the task force for. You were one of 
the people who pressed Mr. Armstrong to adopt a new rule and to 
adopt the rule that you wanted. The genesis of the new rule is 
this report. You're were on the task force. So while you didn't 
necessarily have direct authority over making the rule, you 
certainly had influence in developing the rule, making the 
recommendation that the rule needed to be changed. Is that 
fair?
    Mr. Speir. No, I don't think so. Almost none of that is 
true.
    Mrs. Cubin. Pardon me?
    Mr. Speir. Almost none of that is true, in all due respect. 
If you go back and you look at the records correctly--and there 
is one instance that I will call into account in just a minute 
if I get through this--if you go back and you look at the 
timelines of what happened in the task force study, in 1994, 
when we first got under way, we went out to California, and we 
looked at some of the records that were held in secret in the 
California Long Beach case. And we began to get a sense that 
there was a very complex situation here, and that we were going 
to have to step back and look at the royalty rule and determine 
exactly how it should be interpreted in the context of the 
trading type operations we saw going on.
    The supervisor of the gentleman who was the head of the 
task force at MMS participated in a lot of these meetings, and 
once we reviewed that data initially, he jumped in and he said, 
``Well, this whole thing is too confusing. There may not be any 
fraud or underpayment here at all. Maybe what we need to do is 
just rewrite the royalty rule.'' And there is actually a record 
in the file that shows sometime in 1994 he made that 
suggestion. It's in notes taken by Dave Hubbard, the director 
of the task force. The rewriting of the royalty rule had its 
genesis in that attempt by him to, in my view at the time, 
derail the whole royalty investigation and move it off into a 
royalty rule rewrite.
    Mr. Kritzer and I looked at that from a tactical standpoint 
and said, ``Wait a minute. The last thing we want to get 
involved in is a royalty rule rewrite hassle.'' I mean the last 
one took four years or three years. And we have a thoroughly 
narrow objective here. And so we said, ``You guys go ahead and 
do that if you want to take it offline, but our objectives are 
different from that.''
    And the record then shows, I believe, that throughout 1995 
the Interior Department embarked on preliminary activities 
aimed at beginning to rewrite the royalty rule, and I think the 
first official act was in late 1995, when they issued a notice 
of intended preliminary rule-making, or something like that. I 
am not sure what the terminology is.
    Now, one thing that you have in your records, again pulled 
from my records last summer, is what I consider in retrospect a 
somewhat grandiose statement to one of our people in DOE that 
the task force activity led to the rewrite of the royalty rule, 
and at the time, it was just to establish my credentials in 
this correspondence. And I looked at it in detail last summer 
because there was this question about whether a sidebar to the 
royalty investigation in California was development of the new 
rule. And I went back and I developed this time history that I 
just related to you. And in retrospect I have to say that that 
comment was inappropriate at the time.
    Mrs. Cubin. But you did make the comment.
    Mr. Speir. Well, I made it, but it just--it wasn't true.
    Mr. Underwood. Could I just ask one brief question, Mr. 
Speir? In this rule-making process, obviously as a result of 
your expertise, perhaps you made some suggestions or 
commentaries along the way?
    Mr. Speir. On the royalty rule?
    Mr. Underwood. Yes.
    Mr. Speir. Well, in the first little e-mail I wrote to Mr. 
Hubbard in, I think, September or October of 1996, after I had 
been told to identify myself as the point of contact, I made a 
comment about taking a certain perspective when you write the 
new royalty rule, and that was an outgrowth of an extended 
conversation that Mr. Hubbard and I had in that task force. 
Again, he didn't pick up on that at all. I mean, there was 
never any return to that.
    Mr. Underwood. I am glad you pointed that out, because even 
though you may have been asked to make a comment or you may 
have made some comments along the way, we have a letter from, 
at that time, Acting Assistant Secretary Land & Minerals 
Management, Sylvia Bacca, who said that they have found no 
basis in their review to suggest that MMS either initiated or 
altered its rule-making efforts in response to any comment that 
you have made.
    Mr. Speir. Yes, that is one of the two letters I referred 
to earlier I think.
    Mr. Underwood. So how do you feel that your comments were 
ignored?
    [Laughter.]
    Mr. Speir. Well, they didn't write, they didn't call and 
send flowers. You know, I got no response.
    Mr. Underwood. Thank you.
    Mrs. Cubin. The chair recognizes Mr. Gibbons for the 
purpose of a motion.
    Mr. Gibbons. Madam Chairman, I have a motion under clause 
2(j)(2)(c) of Rule XI of the Rules of the House of 
Representatives. I move that Mr. Tom Casey, a Majority staff 
member, and a Minority staff member designated by the Ranking 
Member, be allowed to question the witness, Mr. Speir, for 60 
minutes equally divided.
    Mrs. Cubin. Are there any objections?
    Mr. Underwood. Yes. Could I just--in the interest of time, 
since we really don't--obviously we are not as prepared for 
detailed questioning on this side of the aisle, if we could 
somehow limit that time because we have no questions at the 
staff level.
    Mrs. Cubin. Well, then that would limit the time to a half 
an hour.
    Mr. Underwood. But you know, really, we are really 
prolonging this, and I would just ask if we could limit it to 
something like 10 minutes.
    Mr. Gibbons. Let me say to the gentleman, in answer to his 
question on this motion, it certainly does appear that our side 
has questions that relate to significant issues which are being 
covered by this oversight procedure. I would not want to state 
emphatically, because your side does not have those questions, 
that we should restrict this side. If we give you the 30 
minutes on this, it certainly seems fair that you be allowed to 
have that time, to deal with that time and those issues as seen 
fit.
    Mr. Underwood. Well, I appreciate the fact that you have 
the numbers to make your suggestion, your motion stick, but you 
know, under that kind of logic, why don't we make it an hour, 
two hours equally divided? The point is, is that we are really 
at a point where we have two more panels, and I am just asking 
if there is some way to limit the amount of time. That is all. 
And if you are not willing to do so, that is fine.
    Mr. Gibbons. Thank you.
    Mrs. Cubin. The objection is heard. All in favor of the 
motion say aye.
    [Chorus of ayes.]
    Mrs. Cubin. Opposed?
    Mr. Underwood. No.
    Mrs. Cubin. The motion passes. The Chair recognizes Tom 
Casey, staff for the Majority, for 30 minutes.
    Mr. Casey. Thank you, Madam Chairman. I think Mr. Brady had 
wanted some time.
    Mr. Brady. Yes, I will be very brief. Again, I want to go 
back to this hypothetical offer that turned out not to be 
hypothetical. As I understand it, this offer was made in 
December of 1996 in a meeting. You later signed an agreement 
sharing those oil royalty proceeds, so you memorialized that 
offer, and then that offer was executed with a check for 
$383,000. Now, reading the statutes against illegal gratuities 
that was in effect at the time you were both a public official 
and as a former public official. It is very clear that it is 
illegal for anyone to offer or promise anything of value to any 
public official--that would be you--or former public official--
that would be you--for or because of any official act 
performed, which you did, by such public official--that is 
you--or former public official--that is you.
    It is very clear that that offer became actually reality 
when you signed an agreement and then it was executed. In 
effect, you have said today that while a plane ticket trip-
wired an ethics issue with you, a check for $383,000 didn't. If 
we are to believe you--and I will conclude here, if we were to 
believe you, in effect, if I were to offer you $10,000 right 
now to lie under oath, you are saying you would neither decline 
it nor accept it; you would simply ignore it. A week from now 
we would sign an agreement of some nature, referring to the 
earlier oral agreement, and then a month later I pay you 
$10,000 which you then cash. And you are going to tell the 
American people that that is not a conflict of interest; it is 
not illegal to do that?
    Mr. Speir. I guess the simple answer to your statement is 
that, in my view, the facts are known here, what we did, and 
there are different interpretations on the wording.
    Mr. Brady. There is a misinterpretation law. An offer was 
made. It was agreed to in writing and then executed, which is 
in violation of a number of ethics issues, but specifically law 
against accepting illegal gifts. And it is not believable that 
this was a hypothetical offer, because it was executed exactly 
as presented, as you presented it today.
    Mr. Speir. Well, the offer--I can only continue to repeat 
that the offer, when it was originally made, was highly 
speculative, and the organization had no possibility of 
fulfilling it. Now at some point, January 1998, it looked like 
they may have a higher possibility of fulfilling it. And Ms. 
Brian asked me, at that point, ``Are you going to accept it if 
we can offer it to you?'' That was the time she asked me if in 
fact I was going to accept it.
    Now, my overriding position on this is that the facts are 
known, and I believe that ultimately, because this is under 
investigation at the Justice Department, they will make a 
judgment about it one way or the other, and at that time we 
will present probably a defense of my actions based on what the 
record shows.
    The case I offered up for the airplane ticket now, your 
analogy is not very good there, and I was not meaning to say 
that that was analogous or even imply it was analogous to the 
POGO situation. What I was saying was that because someone had 
made me a very specific offer that they could fulfill at that 
time of a airline ticket, and I had to make a decision on 
whether to accept it or not while I was in the Federal 
Government, that I went to the Ethics Office--or I was kicked 
into the Ethics Office, actually--to have them review that. All 
I was saying about that was that that was an offer that could 
have been fulfilled and was fulfilled while I was a Federal 
service employee, and I had to make a decision about it right 
then, and it required Ethics Department review. This offer 
didn't require me to make a decision, and in fact, I didn't 
make a decision; I didn't accept the----
    Mr. Brady. Well, actually, you did. You had to make a 
decision on whether to be a relator and to remove yourself from 
the conflict of interest that you would have entered. You chose 
to stay inside government. You then, after you left, almost 
immediately signed an agreement to share proceeds, and then it 
was executed. So there wasn't a hypothetical offer. It was an 
offer. And it wasn't illegal or proper because it didn't stand 
a likelihood of succeeding; it was an illegal offer on its 
face, which was later agreed to by you, then executed, and you 
cashed that money willingly. We do agree the facts are very 
clear in this case.
    And at this point let me return the time to you, Mr. Casey.
    Mr. Casey. Thank you, Mr. Brady.
    I am going to try, as best I can, Mr. Speir, to frame 
questions which require short answers or ``yes'' or ``no'' 
answers so we can move this along, and perhaps you will be able 
to cooperate.
    Mr. Speir. I will have to say, Mr. Casey, that I may or may 
not answer those yes or no, because I think that some things 
might require some amplification.
    Mr. Casey. Here we go killing time already, okay. After the 
December '96 meeting, at which you did or didn't accept the 
offer, did Ms. Brian or Mr. Banta ever mention to you again 
their plans and progress in filing the qui tam suit?
    Mr. Speir. Their plans and progress in----
    Mr. Casey. Filing the qui tam suit?
    Mr. Speir. I don't recall any specific discussion we had 
about that.
    Mr. Casey. Ever again until January of '98?
    Mr. Speir. I can't say that those--in the part of some 
other discussion or meeting, that that subject didn't come up. 
I just don't remember any discussion about their plans or 
progress.
    Mr. Casey. So are you saying that between December of 1996 
and January 5, 1998, neither Mr. Banta nor Ms. Brian ever 
mentioned to you a qui tam suit again?
    Mr. Speir. No, I didn't say that. I said I couldn't recall 
any discussions we had about it, which I think was what your 
question is.
    Mr. Casey. Were you generally aware that they were 
proceeding with their plans and had in fact filed their suit?
    Mr. Speir. No, I wasn't aware when they filed their suit 
specifically until long after the fact, in fact, last summer. I 
knew at some point--and I can't say----
    Mr. Casey. When did you become aware they had filed their 
suit.
    Mr. Speir. I was going to answer that question next. I 
can't say when I knew that they filed their suit, if at some 
point an offhanded comment was made that let me know that they 
had filed a suit. I mean, at some point, and I can't say when. 
I specifically had to go back and consult with--because I 
wanted to know the timing of this--last summer I went back to 
the Justice Department and asked the people, ``When did they 
file their suit?'' And I guess it turned out to be June 1997.
    Mr. Casey. Have you ever told anyone that, after the time 
POGO and you and Mr. Berman had the December of '96 meeting, 
that Ms. Brian or Mr. Banta did in fact mention a suit and the 
potential for sharing money to you again?
    Mr. Speir. Did I ever tell anyone that they had made this 
offer?
    Mr. Casey. Have you ever told anyone that, after the 
December '96 meeting, you did in fact hear from Ms. Brian or 
Mr. Banta again about their lawsuit and about their plans, 
hopes, offer, however you characterize it, of sharing money 
with you?
    Mr. Speir. I can't recall doing that.
    Mr. Casey. Okay. Mr. Berman, one of the clerks, has a piece 
of paper I would like you to look at. Did you receive a piece 
of paper like this with your check or letter in November of 
1998?
    [No response.]
    Mr. Casey. You don't need to check the math. Do you 
remember getting a piece of paper like this?
    Mr. Speir. No, I don't remember getting something like 
this.
    Mr. Casey. Well, this was faxed by POGO to Mr. Berman on 
November 2nd of 1998. What can you tell us about Mr. Berman's 
concerns leading up to the October 8, 1998 letter? Mr. Berman's 
concerns that POGO might not provide to him the payment he 
perhaps expected?
    Mr. Speir. Well, I think all that I can really say is that 
Mr. Berman and I had some conversations in which he expressed 
some concerns about when the payment would actually be made. We 
talked about this, and he seemed to have some urgency in his 
mind, and as we talked about it, it was fairly clear in--I 
think in both of our minds, that the longer period of time that 
went on between the time that the project got the money and the 
time that they actually made the award, that the longer time 
that went by would probably lessen the probability that the 
project would actually live up to its intended--expressed 
intentions. That was just kind of a general acceptance. It was 
a--you know, something that we didn't discuss at length. It was 
just a general attitude both of us had.
    And Mr. Berman seemed to be a little bit more emotional 
about this than I felt, and that, you know, in general is the 
nature of our conversations about that time.
    Mr. Casey. Did Mr. Berman mention to you that he was 
considering hiring a lawyer or that he had hired a lawyer to 
advise him or to contact POGO on the subject of following 
through on the payments?
    Mr. Speir. Well, I knew that he--I think he expressed in 
those conversations that he was associated with a lawyer, who I 
believe was not an attorney who practiced in this field. I 
believe it was someone else that he was related to or 
something. And I can't remember exactly what he said about what 
he was going to do, I mean, going to do. He threw out quite a 
few ideas, as I recall it, but--and said a number of things 
that seemed to be a bit emotional at the time.
    Mr. Casey. Could you name a few of those things?
    Mr. Speir. Well, he did, I think, at one point or another 
mention suit, but I don't recall that it was an expression of 
immediate intent like, ``I'm going to get my lawyer and go sue 
POGO.'' I think it----
    Mr. Casey. It was hypothetical?
    Mr. Speir. Huh?
    Mr. Casey. It was hypothetical?
    Mr. Speir. Well, that's the way I treated it because of my 
long-term knowledge of Mr. Berman and his temperament.
    Mr. Casey. In December of '96, after the meeting in Mr.--
well, let's go back to the meeting in Mr. Banta's office.
    Mr. Speir. When----
    Mr. Casey. December of '96.
    Mr. Speir. This is the one that supposedly took place in 
December of '96, yes.
    Mr. Casey. Do you think it didn't take place in December 
of----
    Mr. Speir. Well, I have always said that I'm not sure about 
that date, and I don't want any testimony that I give here 
right now to infer that I'm much more certain about it now than 
I was when I was deposed last summer. I still am very 
``squishy'', if you will, on the exact dates.
    Mr. Casey. You mentioned that two weeks or so leading up to 
that meeting, Ms. Brian had--you and she had had a few phone 
calls in which the subject of a qui tam suit was at least 
touched upon; is that right?
    Mr. Speir. In perhaps the weeks leading up to that meeting.
    Mr. Casey. Was that the first time that Mr. Banta or Ms. 
Brian had ever mentioned to you the subject of oil royalty 
litigation?
    Mr. Speir. Which time? In that----
    Mr. Casey. During the two weeks of phone calls leading up 
to the meeting?
    Mr. Speir. Well, the reason I was talking about those two 
weeks, I think, was in the context of when did she first 
suggest to me that maybe I should consider being a relator in 
that case.
    Mr. Casey. But it wasn't the first time you had heard Ms. 
Brian or Mr. Banta discuss the subject of oil royalty 
litigation, was it?
    Mr. Speir. I rather doubt--and I'm speculating now--rather 
doubt that in the first conversation in which I had her 
discussing qui tam cases she asked me to be a relator.
    Mr. Casey. I didn't ask you that question.
    Mr. Speir. Well, I'm trying to answer it as near as I can. 
Go ahead and ask it again.
    Mr. Casey. Without asking you to be a relator, prior to the 
two weeks preceding the meeting which was late November, early 
December of '96, had Mr. Banta or Ms. Brian ever mentioned to 
you the subject of oil royalty litigation?
    Mr. Speir. As in qui tam cases.
    Mr. Casey. We'll start with that.
    Mr. Speir. I don't--and I have to answer that in a sort of 
a conjectural way. I don't recall that in the first 
conversation that we had, or the first conversation that I 
overheard that involved qui tam cases, she asked me to be a 
relator. So in answer to your question, if one accepts the 
fuzziness of my memory, I would say probably not. The first 
conversation in which I heard her discuss the matter of qui tam 
cases--or Mr. Banta discuss it or whoever it was--was earlier 
than that two-week period, two weeks being a very tentative 
thing.
    Mr. Casey. We'll just work with the date December '96. That 
appears to be what most people recollect. So understanding you 
can't pin it down, let's just use that date.
    At that December '96 meeting, did Mr. Banta and Ms. Brian 
tell you that POGO was planning or intending to file a qui tam 
suit?
    Mr. Speir. I believe that was clear from the conversation, 
so that they were----
    Mr. Casey. So, they were working towards the goal of filing 
a qui tam suit. That would be your understanding?
    Mr. Speir. That was my understanding, yes.
    Mr. Casey. What did Mr. Berman say when given the offer 
that was given to you in that meeting?
    Mr. Speir. The offer being of some future award?
    Mr. Casey. As I understand it, the first offer was: ``Would 
you like to be a relator with us.''
    Mr. Speir. So you're talking about the offer of being a 
relator, not the offer of some future award.
    Mr. Casey. We'll take them in sequence. When--as I 
understand your recollection of that meeting, the first of the 
two offers was, ``Would you like to be a relator with us? Put 
your name on this filing.''
    Mr. Speir. Well, this was not the first time that the 
subject of relator came up to either one of us, but my 
recollection at that point was Mr. Berman said no, or negative.
    Mr. Casey. No or negative?
    Mr. Speir. He was negative on the subject.
    Mr. Casey. Was he like you: he did not accept or decline? 
Or was he negative?
    Mr. Speir. I can't discriminate over this period of time 
that precisely about whether he said, ``No, I'm not going to do 
it'', or whether he said, like I thought I implied, ``I just 
don't have enough information to make a positive decision right 
now.'' So I can't say that he said, ``No, absolutely not.''
    Mr. Casey. At that meeting during when the subject came up 
of, ``All right, your name will not be on the suit, but we will 
share with you at a later time when money is received if money 
is received'' What did Mr. Berman say?
    Mr. Speir. I don't recall him saying anything positive or 
negative. It wasn't--the way it was discussed in that meeting 
was just as an off--what appeared to be an offhanded comment by 
Ms. Brian at the end of the meeting or toward the end of the 
meeting, and it was like--well, you know, she had recognized at 
that point that we were not at that point going to sign up as 
being relators, and she said something along the lines of, 
``Well, if we file, and if we ever receive any money from this, 
we want to share it to you--with you in recognition of your 
long-term contributions.''
    Mr. Casey. All right. You say that there were also 
peripheral issues discussed at that meeting. You didn't list 
them. What were they?
    Mr. Speir. Well, Mr.--the discussion about--and I'm trying 
to recreate this in my mind now, and I may be quite faulty in 
doing so, but I remember that a general topic of conversation 
was whether this had any possibility of forcing the government 
into--or being successful enough to force or embarrass the 
government into going after the California underpayments.
    Mr. Casey. Did the peripheral issues include the potential 
problems, complications, weaknesses of having Federal employees 
as relators?
    Mr. Speir. Not in any depth. I think that Mr. Banta may 
have said something along the lines of having questions about 
whether, you know, we could qualify, or whether Ms. Brian would 
be able to get standing with us relators, not so much because 
of our involvement, just as Federal employees.
    Mr. Casey. During the two weeks of phone calls leading up 
to that meeting and at that meeting?
    Mr. Speir. During the period of time that we had phone 
calls on that subject. I don't want to be precise about that 
two weeks.
    Mr. Casey. Now, during that period of phone calls leading 
up to the meeting and at the meeting, did you discuss with 
POGO, mention to POGO, that you had any wish, or desire, or 
need for assurance that this was legal or ethical?
    Mr. Speir. I don't think that I put it to her in the words 
of legal or ethical. I think what I said was that I didn't know 
whether I could be a relator as a Federal service employee.
    Mr. Casey. Did you take any steps on your own to resolve 
that question?
    Mr. Speir. No, I didn't. I felt at that point that I would 
have had to go out on my own and spend a substantial amount of 
money getting a legal opinion on that subject. That was just my 
attitude about the time, and I actually suggested that she if 
was in contact with attorneys who were very familiar with qui 
tam cases, that she might bring someone forward to consult with 
me on it.
    Mr. Casey. Did she?
    Mr. Speir. No, she didn't.
    Mr. Casey. Okay. Shortly after this meeting, Ms. Brian and 
Mr. Banta report to their board of directors that they do in 
fact have an agreement with you to share the proceeds with the 
oil litigation that they had decided to pursue. Can you account 
for that misinterpretation on their part?
    Mr. Speir. No.
    Mr. Casey. Did you ever correct them on that?
    Mr. Speir. No, I didn't see that document until----
    Mr. Casey. Did you ever become aware that they were 
anticipating that you would share with them, and did you ever 
say, ``No, folks, remember, I never accepted that''?
    Mr. Speir. No, I don't think I made that statement to them. 
I remained entirely detached from this and carried forward by 
the same posture I had in that meeting we're discussing.
    I never saw the wording that was in those--that is in those 
board minutes.
    Mr. Casey. I understand you didn't see it.
    Mr. Speir. And so there was nothing for me to object to.
    Mr. Casey. Okay. Did you work on issues involving the Naval 
Petroleum Reserve in California while you were at Energy?
    Mr. Speir. From time to time I did, yes.
    Mr. Casey. When did you and Mr. Banta first begin 
considering a qui tam suit involving the Naval Petroleum 
Reserve?
    Mr. Speir. Well, you're probably talking about--we had this 
discussion on the telephone, of course, and you're probably 
talking about a matter I tried to expose when I was a Federal 
service employee and basically had thrown back in my face. And 
I wrote a staff paper on that, and----
    Mr. Casey. When did you and Mr. Banta begin discussing the 
possibility of filing that suit?
    Mr. Speir. I wrote that staff paper in July of 1997, and 
shortly after I wrote it, in a conversation with Mr. Banta, I 
told him that, you know, ``I'm doing this, and if the 
government doesn't go ahead with this, then, you know, there's 
a possibility of filing a False Claim suit. Would you be 
interested in this?'' It was my initiative.
    And he was sort of generally affirmative, as I recall it, 
and so I floated that staff paper among the staff in DOE, and 
got no response. And then getting no response, I actually tried 
to formalize it by sending a memo up my chain and over to the 
Assistant Secretary who was over the naval petroleum reserve. 
And----
    Mr. Casey. Mr. Speir, when did you and Mr. Banta first 
discuss filing that suit?
    Mr. Speir. As near as I can put it down, it's near that 
date that the official memo that I've been describing was----
    Mr. Casey. July of '97?
    Mr. Speir. I believe the date is July '97. I have some 
copies of that staff paper if you'd like me to submit them to 
me.
    Mr. Casey. That's fine. You can provide it later. Mr. 
Speir----
    Mr. Speir. I note that your letter of invitation did 
suggest that possibly we bring along materials, and since you 
and I did discuss this on the telephone, I do have copies of 
that staff report if you'd like to look at it. Would you like 
me to submit that to the Committee?
    Mr. Casey. You can submit----
    Mr. Speir. Not as evidence, but I mean, would you like a 
copy of it?
    Mr. Casey. If you could submit it after the hearing, that 
would be very helpful.
    After your December '96 meeting, did you have the sense 
that Mr. Banta was encouraging or discouraging you to be a 
relator?
    Mr. Speir. Well, he was certainly being very negative on 
the possibilities of the suit achieving what was intended at 
the time, which was basically forcing the Interior Department 
to collect the monies or the Justice Department to collect the 
monies. So he was being negative. He wasn't----
    Mr. Casey. Not on the prospects of the success of the 
litigation, but on you becoming a relator. Was he encouraging 
or discouraging?
    Mr. Speir. Oh, he was being factual, I think. He was 
providing his assessment about the likelihood that this would 
go anywhere.
    Mr. Casey. You're talking about a different----
    Mr. Speir. He wasn't saying----
    Mr. Underwood. Could you wait for a second, please?
    Yes. The report that Mr. Speir was referring to earlier, 
could I ask unanimous consent to enter that into the record?
    Mrs. Cubin. Without objection, so ordered.
    Mr. Underwood. Thank you.
    [The information follows:]

                   Memo from the Department of Energy

    During 1994-96, the Policy Office participated in an 
interagency study of Federal royalty payments for crude oil 
produced in California and administered by the Department of 
the Interior. The study determined that royalties have been 
underpaid and led to companies being billed more than $350 
million to date. The attached paper concludes that the same 
situation probably applies to Naval Petroleum Reserve 2 (NPR-2) 
production.
    Underpayments are the result of oil companies' use of crude 
oil posted prices as a basis for valuing production from 
Federal leases. Our analysis employs information developed in 
the interagency study, more direct evidence of higher values 
gained from competitive sales of both NPR I and NPR-2 oil, and 
comparisons of spot and posted prices for oil of quality 
similar to that produced at NPR-2.
    A rough estimate of the amount that might be owed by 
lessees for the period 1980-96 totals $4.75 million ($1.12 
million in royalty underpayment and $3.63 in accrued interest). 
Starting in 1980 was somewhat arbitrary, but aimed at making 
our conclusions temporally consistent with those of the 
interagency study. Seeking restitution for underpayments over a 
much longer period easily could be justified based on evidence 
produced in lawsuits on this matter in California.
    While it is clear that posted prices in California have 
understated oil value by a sizable margin, several additional 
steps must be taken to pursue this issue. The first is to 
Valyze company payments on NPR-2 production to confirm the 
basis of valuation rigorously. (The NPR Office in California is 
now providing for our review more detailed data than that 
published in annual reports.) The second is to confirm that, 
legally, leases and their authorizing statutes require that 
royalties be paid on market value. As noted in the paper, this 
seems obvious from the lease. Two other points that require 
confirmation are that no statute of limitations applies to 
underpaid royalties, and that interest payments on unpaid 
royalties are authorized. Both are true for Federal leases 
managed by the Department of the Interior, but our informal 
request to the DOE Office of General Counsel for information on 
this matter was not productive.
    California settled its pioneering lawsuits initiated. 
Fifteen years ago for approximately $400 million--an action 
that led to the interagency study and subsequent billings by 
the Interior Department. Recently, States east of the Rockies 
(Texas, Alabama, and others) have taken action to collect 
underpaid royalties for State production wherein the producers 
paid based on posted prices. Texas and Alabama have settled 
with Chevron and Mobil, respectively, in the last few months 
for tens of millions of dollars. In this context, even though 
the NPR-2 amount seems small, it would be in the public 
interest to initiate action as soon as possible.
    Advanced drafts provided to:
    R. Dobie Langenkamp, DAS, Naval Petroleum and Oil Shale 
Reserves (FE-60)
    OT Williams, Director, Naval Petroleum Reserves-California
    Kenneth Meeks, Admin Contracting Officer, Naval Petroleum 
Reserves-California
    James White, Assistant General Counsel for Fossfl Energy 
(GC-40)
                                ------                                

                       POTENTIAL ROYALTY RECOVERY

                       FOR NPR-2 CRUDE OIL SALES

                               BACKGROUND

    NPR-2 is located in the Buena Vista Hills oil field of the 
southern San Joaquin Valley, California. Production comes from 
8 zones in the Buena Vista field. Much of the crude is shipped 
to Los Angeles for refining. Arco's Line 63 from the southern 
San Joaquin Valley to Hynes Station in Los Angeles has been a 
major shipper of Buena Vista quality crude oil to Los Angeles 
for some time. In the 1980s, it became a common carrier and a 
Los Angeles spot market developed for Line 63 Mix--a blend of 
San Joaquin Valley crudes that averages about 28 degrees API. A 
substantial amount of NPR-1 and NPR-2 crude oil probably enters 
Line 63 as part of its homogeneous mix.
    Posted prices are published for Buena Vista or Buena Vista 
Hills crude by the major integreated California refiners and, 
from time to time, a few others. Nominally, Buena Vista 
postings apply to 26 degree API gravity crude oil, with price 
adjustments of 15 to 25 cents per degree per barrel.\1\
---------------------------------------------------------------------------
     \1\During much of the 1980s, the adjustment was at the higher 
value, but usually close to $0.15 per API degree in the 1990s. As of 
the time this paper was written, the NPR office in California had not 
responded to information requests regarding the quality of NPR-2 crude 
oil, so the exact quality of the NPR-2 crude has not been determined. 
Examination of field/pool specific data for California, however, 
indicates that the average API gravity for production in the NPR-2 
zones is about 8.5 degrees. It follows that NPR-2 crude oil would be 
worth 50 cents per barrel more than the notional Buena Vista 26 degree 
API gravity crude in the 1980s and about 30 cents more since 1990.
---------------------------------------------------------------------------
    While the U.S. Government (USG) share of NPR-1 (Elk Hills) 
crude oil usually has been sold in competitive bids, NPR-2 has 
been operated by lessees since the 1920s. During that period, 
the USG has been entitled to a royalty share of NPR-2 
production. In the late 1970s, the royalty crude oil was about 
330 barrels per day (b/d); by 1995, that had fallen to about 
211 b/d.
    For the most part, the USG has received cash for its NPR-2 
royalty share. Conversations with NPR staff in California 
indicate that the basis of value for these royalties has been 
the highest of California refiners' posted prices for similar 
oil (e.g., Buena Vista postings) at least since 1980. The 
exception was that royalty from the 555 Stevens Zone Unit was 
taken in kind during 1977-86 and sold to refiners directly or 
to the Defense Department.
    In the 1980s, the City of Long Beach and the State of 
California sued a number of the larger refiner/crude oil 
posters to recover under payments for State oil sold from the 
Wilmington Field. The companies that operated the publicly 
owned portion of the field had payed the City and State amounts 
based posted prices for the oil. The State and City alleged 
that posted prices were not a valid measure of the oil's value, 
and that the companies conspired to hold posted prices well 
below the proper value. The body of evidence obtained under 
discovery showed that companies routinely traded oil at higher 
prices than posting and recognized that posted prices 
undervalued California crude oil.
    When some success was seen in this suit, the Department of 
Interior's Minerals Management Service (MMS) briefly considered 
actions to recover under payments of Federal California 
royalties that had been based on posted prices. For various 
reasons, NIMS did not pursue the case until the early 1990s 
when the oil companies settled with California out of court 
under pressure of the issue being brought to trial.
    In 1994, MMS convened an interagency study group to 
evaluate the evidence and make recommendations on how to 
proceed. Representatives from NIMS, Interior's Solicitor's 
Office, and the Departments of Justice, Commerce, and Energy\2\ 
comprised the group. Over a two-year period, the study group 
reviewed the Long Beach suit records and considered what could 
be done under MMSs royalty valuation rules. Two consultants 
were hired directly by the MMS, both of whom had beeh involved 
in the Long Beach suit, and MMS royalty auditors were 
dispatched to two companies (Texaco and Shell) to confirm 
directly and independenty the interagency group's findings.
---------------------------------------------------------------------------
    \2\ The author of this paper, Robert A. Speir of DOE's Policy 
Office, was the representative from the Department of Energy.
---------------------------------------------------------------------------
    In May of 1996, the group concluded that royalties and 
interest due to the USG over the period 1978-93 totaled between 
$250 and $850 million. MMS auditors' findings supported the 
conclusion that royalties were underpaid. Since that time, the 
Department of Interior has issued bills totaling over $350 
million \3\ to recover these underpayments.
---------------------------------------------------------------------------
    \3\ The principal reasons for the lower amount of the bills issued 
is that, shortly before the interagency study began, the Interior 
Department entered into global settlements with Exxon and Chevron that 
probably foreclosed the opportunity to collect on under payments for 
California royalties. A significant amount of California royalty oil 
was also sold in kind by MMS in an essentially non-competitive process 
at posted prices. MMS has subsequently attempted to obtain additional 
payments from small refiners that received this oil.
---------------------------------------------------------------------------
    Over the period examined'in the MMS interagency study, the 
USG royalty share from NPR-2 totals over a million barrels. 
Furthermore, the NPR-lessees included most of the companies 
sued by California and billed by the MMS.\4\ In 1997, the 
author of this paper, by virtue of his experience in the MMS 
California matter, and on his own initiative, examined the 
possibility that royalties for NPR-2 crude oil also were 
underpaid \5\
---------------------------------------------------------------------------
    \4\ For example, ``The current lessees of NPR-2 Government lands 
include: Mobil Oil Corporation, Atlantic Richfield Company (Arco), 
Union Oil of California, General American Oil Company of Texas, Getty 
(now Texaco), and Standard Oil Company of California (now Chevron).'' 
Naval Petroleum Reserve Annual Report, FYI 978, p. 19.
    \5\ The NIMS investigation broadly addressed all Federal oil 
production in California, but did not specifically examine the issue of 
NPR-2 leases-, nor did the subsequent audits and billings include NPR-
2.

---------------------------------------------------------------------------
FINDINGS

    In the MMS California study, the participants quickly 
concluded that it would be impossible to track royalty crude 
oil specifically. Most of the lessees are integrated companies 
that transfer crude between their production and trading 
divisions at posted prices (i.e., in intra corporate 
``sales''). The marketing/trading affiliates then exchange, and 
less frequently sell, the production, or transfer it to the 
refining divisions of the companies.
    Royalty oil is not invoiced separately. It is part of the 
common physical flow of oil from the production area, which, in 
turn, often is commingled with oil from other leases, or even 
other fields. Detailed data on NPR-2 royalty payments was 
requested from the NPR office in California and, as of this 
writing, are being provided. In the interim it is adequate to 
note that, based on the comments of the NPR staff, royalty 
payments were based on posted prices. Assessing value, 
therefore, must involve examining market transactions involving 
similar oil in the markets Buena Vista crude oil serves, and/or 
reviewing the companies' own analyses of the value of the oil. 
This was the approach followed in the MMS study.

Evidence of NPR-2 Oil Undervaluation

    The recent history of California oil markets can be divided into 
three distinct periods:
         Pre-oil price decontrol--Prior to decontrol of 
        California oil in the late 1970s, prices were fairly low and 
        posted price undervaluation, while present, was low in absolute 
        terms.
         After decontrol, but before 1986, prices and 
        undervaluation were both large. In the MMS study, about 75 
        percent of the royalty underpayment estimated to have occurred 
        between 1978 and 1993 took place during 1980-85.
         When prices fell in 1986, royalty under payments on a 
        per-barrel basis also dropped in absolute terms.
    The examples below apply primarily to the last two periods.
    The best evidence that NPR-2 oil was underpriced by postings 
resides in the royalty in kind (RIK) sales from the Reserve. In 1977, 
the government elected to take its royalty oil in kind from the 555 
Stevens Zone Unit (about 230 b/d). Initially, it received and accepted 
bids that were discounted about $0.60 per barrel from the highest 
stripper oil postings in the area.\6\ That changed as oil prices were 
decontrolled in 1980 and climbed due to several world oil emergencies.
---------------------------------------------------------------------------
    \6\ The royalties had been previously paid by the producer based on 
a controlled price that was about half the stripper oil posting. Thus, 
the government actually increased its take substantially by going to 
RIK.
---------------------------------------------------------------------------
         By 1980, the RIK bid discount had disappeared and the 
        555 Stevens Zone Unit oil sold competitively for $2.65 per 
        barrel higher than the remaining NPR-2 crude (which was, on 
        average, about the same quality).
         In 1981, competitive sales drew a premium of $1.30 per 
        barrel.
    In FY 1982, open market sales ceased and the crude was ``sold'' to 
the Defense Department at the posted price. No information is available 
at this writing as to what value the Defense Department obtained when 
it subsequently sold or exchanged the crude oil. In FY1986, these 
transfers ceased and the lessees were again allowed to pay cash based 
on posted prices for the government's royalty share of the Unit.
    NPR-1 Shallow Zone oil is similar to that from NPR-2, but is about 
3 degrees API heavier. In the early 1980s, Shallow Zone oil was sold 
competitively, using local postings as indices, drawing substantial 
premia in various bids:
         In FY 1980-81, two sale periods, (August 1, 1980-
        December 1, 1980, and December 1, 1980-December 1, 1981) 
        obtained average premia over postings of more than $3.00 per 
        barrel.
         In FY 1982, the sale period November 1, 1981-May 1, 
        1982 drew a $1.27 per barrel premium over posting.
         In FY 1984,\7\ two sales were made that netted the 
        government a weighted average of $26.20 for the 25 degree API 
        NPR-1 Shallow Zone crude. In that fiscal year, royalties from 
        the 28 API NPR-2 crude, which were based on posted prices, 
        brought $24.68 per barrel. After adding $0.75 per barrel to the 
        differential to account for the differences in gravity, this 
        yields an average $2.27 premium for competitively bid NPR-1 
        crude oil.
---------------------------------------------------------------------------
    \7\ In FY 1983, the Defense Department was ``sold'' all NPR-2 crude 
oil at posted prices.
---------------------------------------------------------------------------
         The October 1 1984-March 31, 1985 sale in FY 1985 
        obtained a premium of $1.37 over posting for NPR-1 Shallow Zone 
        crude. Two contracts were awarded in the spring of 1985 for a 
        total of 1339 b/d to be delivered over April 1-September 30, 
        1985. One was at a $0.05 premium over posting and one was 15 
        cents below posting. The volume weighted average was 
        essentially equal to posting.
    During FY 1986, all Shallow Zone oil was delivered to the 
Department of Defense, which traded it for jet fuel. Ironically, in the 
spring of 1986 as oil prices crashed, companies were reluctant to 
endorse the spot market moves downward and kept their postings high for 
a time. Unfortunately, the NPR was in the process of receiving bids for 
the April 1-Septernber 30, 1986 sale cycle. Seeing the high postings, 
prospective buyers bid discounts on NPR-1 Stevens Zone crude that 
averaged $4.49 below posting. Shortly after bids were awarded, the 
major refiners lowered postings, thereby forcing the government to sell 
their crude at huge discounts to its market value by any measure. In 
the next bid cycle, the government gave up using postings as a basis 
for bids, turning to spot prices instead. That practice continued until 
recently.
    In the 1990s, Shallow Zone sales continued to indicate underpricing 
by posted prices. Comparing the average of daily Buena Vista postings 
over the fiscal year to Shallow Oil Zone sales, one sees that, in FY 
1991, posted prices were low by $2.3 per barrel. In the fiscal years of 
1992-95, posted prices were lower by $0.13, $0.57, $0.65, and $0.27, 
respectively, compared to the quality-adjusted sales from NPR-1 Shallow 
Oil Zone.
    In the above, prices for NPR-1 oil were indexed to the average of 
Line 63 and Alaskan North Slope spot prices in Los Angeles. A more 
direct comparison of inland prices is made by adjusting Line 63 spot 
prices by subtracting out pipeline costs of about $0.50 per barrel to 
net back to the Buena Vista area. After adjusting for gravity 
differences the following undervaluation by posted prices is seen: 
FY1991-$0.80; FY1992-$O.43, FY1993-$0.35; FY1994-$0.53.\8\ It is likely 
that the lower differentials, compared to the Shallow Oil Zone prices 
above, are due to eliminating the more volatile Alaskan North Slope oil 
price.
---------------------------------------------------------------------------
    \8\ Line 63 prices for FYI 995 not available at this writing.
---------------------------------------------------------------------------
    One might contend, with some validity, that the Shallow Oil Zone 
bonus over posting is really only indicative of the brief period when 
bids for a six-month contract are submitted. Winners are then bound by 
the terms of their contract for the next six months while conditions 
change. However, the fact that adjusted Line 63 spot prices are higher 
than postings by a significant margin on average throughout the year 
indicates that the low bias of posted prices is persistent and only 
varies in magnitude.
    The primary information reviewed by the MMS-led interagency group 
during 1994-96 was obtained through discovery actions by the State of 
California and the City of Long Beach. Although it was sealed by court 
order, the study group gained access by signing confidentiality 
agreements with the companies. Since the study group members are still 
bound by the terms of the agreement, specific documents cannot be 
discussed here. In general, however:
         At the outset of the study, two notebooks of contracts 
        and company documents were provided by the California legal 
        staff. These contained numerous contracts between companies 
        where premia over postings were clear. There were also many 
        internal company documents that pointed out that the companies 
        themselves were aware how much postings undervalued California 
        crude oil. Appendix 4 to the study team's report shows two 
        company analyses (with company identities properly concealed) 
        wherein Buena Vista crude oil is noted as undervalued.
         Examination of the contract data bases for just three 
        companies (Texaco, Shell, and Arco) shows over 70 crude oil 
        sales contracts for San Joaquin Valley light crude produced in 
        the vicinity of the Buena Vista Field (e.g., Yowlumme, Coles 
        Levee, Lost Hills and Buena Vista itself) with significant 
        premia over posted prices. The premia varied up to $2.00 per 
        barrel in the early 1980s, and tended to be in the $0.25 to 
        $0.75 after the 19.86 price drop.
         One of the consultants (Innovation and Information 
        Consultants, Inc.--IIC) hired by the MMS for the study had 
        helped compile the database for the California case. In its 
        report for the MMS study group, IIC concluded that postings 
        undervalued California crude oil by $2.00 to $3.00 prior to 
        1986 and $0.50 to $1.00 per barrel thereafter. This is well 
        supported by the contract data bases.

Potential Collections of Underpaid Royalty and Interest

    As noted earlier, royalties based on posted prices in California 
have always been too low because posted prices themselves have not 
reflected the market value of California production. Only in the last 
few years, a number of States east of the Rockies have realized that 
the same situation applies and have undertake collection efforts--
usually through lawsuits. Several companies have settled on these suits 
and have agreed to change their basis of valuation to more market-
oriented public prices. Inasmuch as the MMS and several States have 
initiated actions to recover unpaid public funds, it seems that the 
Department of Energy should also.
    Before attempting to collect payments from the lessees, three 
components of DOE's case should be formalized:
         Confirm that Leases Require that Royalties be Paid on 
        Market Value of Production--It is clear from the leases that 
        this was the intent. After describing when royalty is to be 
        paid, the leases further require the lessee, ``To file with the 
        Secretary of the Interior copies of 0 sales contracts for the 
        disposition of oil and gas hereunder, except for production 
        purposes on the land leased, and in the event that the United 
        States shall elect to take its royalties in money instead of 
        oil and gas, not to sell or otherwise dispose of the products 
        of the land leased except in accordance with a sales contract 
        or other method first approved by the Secretary of the 
        Interior.''
    Wile it is doubtful that lessees have provided their sales 
contracts to the government (NPR staff could not recall this being 
done), the implication of this clause is that the lessees must justify 
the royalties paid by relating the value to their subsequent sales of 
the oil.
         Confirm that Statute of Limitations Provisions do not 
        Apply--Until the Royalty Fairness Act was implemented, the 
        Federal Government did not recognize any time limitations on 
        the Interior Department's abilities to pursue unpaid royalties. 
        The philosophical underpinning seemed to be that a royalty was 
        a fee, not a fine for wrong-doing. No limitations are imposed 
        by the Royalty Fairness Act since it is not to be applied 
        retrospectively.
         Confirm that Interest is Due on Underpaid Royalties--
        The Federal lessees are charged interest by the Interior 
        Department according to a schedule that is statutorily 
        mandated. The rates are computed according to Interior's 
        published rule and changed monthly.
    During the period 1980-1996, royalties on about 1.2 million barrels 
of NPR-2 oil were take in value by the USG. Making the reasonable 
assumption that the three issues above can be settled in the USG's 
favor, underpayment estimates can be derived using observations from 
the MMS interagency study discussed above. During 1980-85, the study 
suggests that a reasonable range of undervaluation was about $2.00 per 
barrel, after 1985, a (conservative) figure of $0.50 per barrel can be 
used.
    Subtracting out production from the 555 Sevens Zone Unit when it 
was sold RJK, the royalty underpayment estimate becomes $1.12 million. 
Interest on these underpayments, computed using the statutory rates 
published by the Department of the Interior, totals $3.63 million. It 
should be noted that we have only gone back to 1980 to remain 
conservative and consistent with the procedure adopted by Interior in 
pursuing unpaid royalties. Evidence of oil undervaluation was 
established by the State of California and the City of Long Beach as 
far back as the 1960s and was alleged to have existed since the 
California oil fields were originally opened in the early part of this 
century.

    Mr. Casey. Not on the likelihood of whether the suit would 
succeed or not, but on you becoming a relator; was Mr. Banta 
encouraging or discouraging?
    Mr. Speir. I don't know that he was trying to sway my 
opinion one way or the other. He was simply stating his views 
of the possibility of this ever going anywhere.
    Mr. Casey. Did anybody in that meeting observe or suggest 
that because of the complications and problems inherent in 
having Federal employees as relators, and as long as POGO was 
willing to share with you anyhow, perhaps it would be best if 
you were not a relator?
    Mr. Speir. No.
    Mr. Casey. And so the answer is no?
    Mr. Speir. As I understood the question, the answer is no. 
There was never any comment or inference that we would 
substitute status as a relator for a status as a potential 
awardee of monies in the future.
    Mr. Casey. After that December '96 meeting, did you ever 
again discuss with Mr. Banta other oil valuation questions 
outside of that suit?
    Mr. Speir. Outside of that suit. I'm not sure what that 
means.
    Mr. Casey. Excluding the subject of POGO's qui tam suit, 
before your retirement, did you discuss with Mr. Banta matters 
related to oil markets, oil valuation, California prices, et 
cetera?
    Mr. Speir. Probably. Probably discussion of California 
markets. I mean, for example, in the NPR issue that you just 
addressed, you can't discuss that at all without bringing in 
the overriding situation in California, so that would be at 
least one instance of that.
    Mr. Casey. You observed earlier that you did not believe 
that you were working on any issues that affected POGO's 
interests; is that correct?
    Mr. Speir. No. During the time after that December '96 
meeting?
    Mr. Casey. Correct. At that time or later.
    Mr. Speir. I didn't consider myself to be working on 
anything that affected POGO's interest, yes.
    Mr. Casey. Were you working on anything which bore on the 
interest of Mr. Banta's clients, as you understood him to be 
discussing them?
    Mr. Speir. Well, not that I recall.
    Mr. Casey. Why would he be calling you if not in the 
pursuit of interests of his clients?
    Mr. Speir. My focus during the fall of 1996, in fact, 
almost exclusively the things I was consumed with were 
unrelated to crude oil.
    Mr. Casey. What were they related to?
    Mr. Speir. Heating oil.
    Mr. Casey. Heating oil?
    Mr. Speir. Yes, in the northeast.
    Mr. Casey. Common carrier pipelines?
    Mr. Speir. For heating oil?
    Mr. Casey. No. Did you also work on that issue?
    Mr. Speir. Well, in the past, yes.
    Mr. Casey. Did you ever again, before retiring from Energy, 
work on matters affecting California royalties and valuations?
    Mr. Speir. I don't think that anything I worked on 
affected----
    Mr. Casey. Concerning. I didn't mean that in the sense of 
cause and effect, but touching on, relating to.
    Mr. Speir. I provided some advice or interpretation to a 
fellow staff member in the department, who was being lobbied by 
the independent oil producers about the royalty rule. That's, 
of course, a matter of record. The ultimate end of that 
involvement with him was that I suggested to him pretty 
strongly that the department stay out of the royalty issue.
    Mrs. Cubin. The Majority's time has expired. The Chair now 
recognizes the Minority for their 30 minutes.
    Mr. Underwood. We won't use our time.
    Mrs. Cubin. You'll yield back?
    Thank you, Mr. Speir. We truly do appreciate your openness 
and your willing to talk to the Committee. You may be 
dismissed.
    The Chair now calls Henry Banta forward.
    [Witness sworn.]
    Mrs. Cubin. Please be seated. The Chair recognizes Mr. 
Gibbons for a motion.
    Mr. Gibbons. Madam Chairman, under Clause 2(j)(2)(b) of 
Rule XI of the Rules of the House of Representatives, I move 
that Congressman Brady, Congresswoman Cubin, myself, 
Congressman Gibbons, members of the Majority, and a Minority 
member be allowed to question the witness, Mr. Banta, for a 
total of 60 minutes, equally divided.
    Mrs. Cubin. Are there any objections?
    [No response.]
    Mrs. Cubin. Hearing none, all those in favor say aye.
    [Chorus of ayes.]
    Mrs. Cubin. Those opposed, no.
    [No response.]
    Mrs. Cubin. So the time will be divided 30 minutes per 
side. I will begin the questioning of Mr. Banta.
    Mr. Banta, as you know, you are here today because you are 
an eyewitness to and a participant in critical events leading 
to the payments by POGO to Mr. Berman and to Mr. Speir. You 
claim to have recused yourself because of an apparent or 
possible conflict of interest with a client.
    But the December 1996 agreement was made in your office. 
The January 1998 written version of that pact was hammered out 
in your office. Well before that, you introduced POGO to the 
oil valuation issue and to your firm's key allies in an ongoing 
effort to change Federal royalty policy. You then oversaw 
POGO's campaign to boost royalty collection by the Federal 
Government, much of which would be shared with your California 
client.
    Then two weeks ago, Mr. Banta, you could not recall when or 
how you recused yourself from POGO's dealings with Mr. Berman 
and Mr. Speir, and you were also unable to verify the December 
1996 and the January 1998 meetings took place in your office. 
The Committee subpoenaed records that could establish the 
details of your recusal and those meetings. Both matters are 
directly and clearly relevant to your dealings with two Federal 
employees and payments based on how they did their jobs.
    Those matters are under the jurisdiction of this Committee 
and are directly related to this oversight inquiry. You did not 
produce those records. Do you have them with you today?

   STATEMENT OF HENRY M. BANTA, FORMER CHAIRMAN AND CURRENT 
DIRECTOR OF POGO (PROJECT ON GOVERNMENT OVERSIGHT), AND MEMBER, 
                     LOBEL, NOVINS & LAMONT

    Mr. Banta. There are none.
    Mrs. Cubin. There are no records of your recusing yourself?
    Mr. Banta. Right.
    Mrs. Cubin. Did you at any time disqualify yourself from 
discussions and decisions concerning POGO's oil royalty 
lawsuit?
    Mr. Banta. Yes, after--whenever I resigned as chairman of 
the board, sometime before then I did.
    Mrs. Cubin. You can't tell me when that was, when you 
disqualified yourself?
    Mr. Banta. It was sometimes----
    Mrs. Cubin. Before what?
    Mr. Banta. Before--there's a board meeting--you have the 
minutes--when I resigned as chairman. It was sometime before 
then. I can't give you a precise date.
    Mrs. Cubin. We don't have those minutes. So you don't know 
when you disqualified yourself?
    Mr. Banta. It's in February of '98. It's prior to February 
or '98.
    Mrs. Cubin. So before February of '98?
    Mr. Banta. Yeah.
    Mrs. Cubin. Why did you recuse yourself?
    Mr. Banta. I was afraid that the qui tam litigation was 
actually going to go someplace, and that it would appear to 
have some conflicts with other--with other client interests. I 
just wanted to avoid all appearances of any impropriety.
    Mrs. Cubin. Can you tell me what the interests of the 
clients involved were?
    Mr. Banta. No.
    Mrs. Cubin. Even without the names of the clients, you 
can't tell me what those interests were that might have been in 
conflict?
    Mr. Banta. I didn't say they would be in conflict. I said 
there may be the appearance of a conflict.
    Mrs. Cubin. Given that, the appearance of conflict, you 
can't say, even without naming who the clients were, what the 
appearance of conflict would be?
    Mr. Banta. Well, there was clearly going to be litigation 
over proceeds. I'm sorry. There was clearly going to be 
litigation over money involved in the underpayment of 
royalties, and I did not want to be in the middle of that.
    Mrs. Cubin. Did you at any time disqualify yourself from 
discussions and decisions concerning POGO's agreement to share 
oil royalty litigation proceeds with Mr. Berman and Mr. Speir?
    Mr. Banta. I suppose you could say--yes, and we're talking 
about the same thing, aren't we?
    Mrs. Cubin. Well, not exactly. We're talking about recusing 
yourself----
    Mr. Banta. Right.
    Mrs. Cubin. [continuing] officially, and then discussions 
to disqualify yourself.
    Mr. Banta. Right, yes.
    Mrs. Cubin. And so you did that also?
    Mr. Banta. Yes, sure.
    Mrs. Cubin. So you stopped having discussions.
    Mr. Banta. Yes.
    Mrs. Cubin. When did you do that?
    Mr. Banta. At the same time.
    Mrs. Cubin. At the same time that you recused yourself?
    Mr. Banta. Yes.
    Mrs. Cubin. But you have no record to protect your client 
that you recused yourself, so the appearance that you were 
trying to avoid is a giant specter.
    Mr. Banta. Well, I did it. I didn't do anything after that.
    Mrs. Cubin. How did you recuse yourself?
    Mr. Banta. I told Ms. Brian and I told the board.
    Mrs. Cubin. And what did you tell them?
    Mr. Banta. I was no longer participating in any activity 
relating to the qui tam action or anything relating to the 
matter of Mr. Berman and Mr. Speir.
    Mrs. Cubin. Now, we are told that we have all of the 
minutes that had anything pertaining to his agreement, this 
public service award, whatever you wish to call it, and that 
recusal isn't in any of the minutes that we have. So if you 
told the board and you told Ms. Brian, why isn't that in any of 
the minutes? You have no record that you recused yourself, and 
there's no record in the minutes that you disqualified 
yourself.
    Mr. Banta. I thought there was something in the board 
minute when I resigned as chairman.
    Mrs. Cubin. Will you give us those----
    Mr. Banta. You have them. I--you have everything I have, so 
I didn't----
    Mrs. Cubin. Well, you are still a board member of POGO?
    Mr. Banta. Yes.
    Mrs. Cubin. Would you give to us the minutes where you 
disqualify yourself or recuse yourself; can you get those 
minutes for us?
    Mr. Banta. I can get you the minutes where I resigned as 
chairman. I haven't a clue what it says in it.
    Mrs. Cubin. But you said that you recused yourself and 
disqualified yourself at the same time you resigned as 
chairman.
    Mr. Banta. Right. Well, somewhat prior to that.
    Mrs. Cubin. We don't have those minutes where you resigned 
as chairman, and we certainly don't have any reference in there 
to your recusal or disqualification.
    Mr. Banta. I would suggest the minutes are incomplete.
    Mrs. Cubin. And by whose hand would that--who would be 
responsible for those incomplete minutes?
    Mr. Banta. I don't know. Whoever was taking minutes at that 
time.
    Mrs. Cubin. At the next meeting, when you approved the 
minutes, when the board approved the minutes, did you bring up 
the fact that you had recused yourself and disqualified 
yourself and it wasn't reflected in the minutes? Because that's 
a big thing you did. Did you bring that up at that meeting?
    Mr. Banta. I did not. I didn't consider it a big thing at 
the time.
    Mrs. Cubin. Well, it must have been big if you disqualified 
yourself or recused yourself. You must have thought it was big 
enough to do that.
    Mr. Banta. Sure.
    Mrs. Cubin. Mr. Banta, we are looking for the truth.
    Mr. Banta. I should hope so.
    Mrs. Cubin. You have sworn to tell the truth. Some of the 
answers that you are giving don't lend to believability, if you 
will. You say it was important enough, the possible appearance 
of a conflict was important enough that you would recuse 
yourself and disqualify yourself. And you say that you 
announced that to the board and to Ms. Brian.
    Mr. Banta. Sure.
    Mrs. Cubin. But you have no personal or professional legal 
memo that does that. You say someone else made a mistake by not 
recording that in the minutes, and then that person, whoever it 
was, made a mistake, but you didn't bother to correct them when 
the minutes were approved the next time. In fact, you probably 
voted to approve the minutes.
    Mr. Banta. Yes.
    Mrs. Cubin. That's just not believable, Mr. Banta.
    Mr. Banta. Well, are you suggesting I did something as a 
board member after that time? Do you have any evidence I did 
anything?
    Mrs. Cubin. I am not here to answer your questions, Mr. 
Banta. You are here to answer mine.
    Mr. Banta. I didn't do anything after that date.
    Mrs. Cubin. I'm not sure you did anything on that date. Why 
did you recuse yourself from matters affecting Mr. Berman and 
Mr. Speir?
    Mr. Banta. My whole recusal was simply a matter of 
appearances. The question of whether the--Mr. Berman and Mr. 
Speir's award was going to come out of the qui tam money, as I 
said, the dispute over that money was something that I felt 
that I should not become involved in, period.
    Mrs. Cubin. Mr. Banta, the fact that you have no documents 
to back up what you say, even to protect your clients from 
whatever it is you were trying to protect them from, do you 
think it's considered good legal practice not to commit in 
writing actions that you take to protect your clients' vital 
interest?
    Mr. Banta. I'm not suggesting I was protecting a vital 
interest. All I'm saying is I was protecting myself from some 
appearances, period.
    Mrs. Cubin. Your firm also had contacts with Mr. Berman and 
Mr. Speir concerning a number of oil valuation issues such as 
the common carrier status of California pipelines. Was it 
reasonable and prudent to assume that Mr. Berman and Mr. Speir 
could meet in your offices and be offered an enormous amount of 
money by you, and put that out of their minds the next time 
someone from Lobel, Novins and Lamont called them?
    Mr. Banta. First, you have a whole bunch of premises in 
your question. First of all, you're assuming that they were 
offered a whole bunch of money, and----
    Mrs. Cubin. Well, they were offered a whole bunch of money. 
They were offered a third of whatever settlements came, of 
whatever money came from the settlement. That is a bunch of 
money, Mr. Banta.
    Mr. Banta. Well, at the time it certainly wasn't.
    Mrs. Cubin. $383,600?
    Mr. Banta. It wasn't at the time.
    Mrs. Cubin. It's a bunch of money, Mr. Banta.
    Mr. Banta. It wasn't at the time. It was the promise of 
something----
    Mrs. Cubin. It was an interest----
    Mr. Banta. [continuing] very vague.
    Mrs. Cubin. It was an interest.
    Mr. Banta. It was an interest which was highly unlikely to 
come true.
    Mrs. Cubin. But it did come true. Did you file a frivolous 
lawsuit if it was so unlikely to come true?
    Mr. Banta. I didn't file the lawsuit.
    Mrs. Cubin. You're the chairman of the board.
    Mr. Banta. I didn't file the lawsuit. My name is not on it.
    Mrs. Cubin. Yeah, right. Says who?
    The purpose of financial disclosure rules for Federal 
employees and professional responsibility rules for attorneys 
is to avoid the commingling of public and private interest. 
Would you agree with that?
    Mr. Banta. Sure.
    Mrs. Cubin. Who is Ken Cory?
    Mr. Banta. Mr. Cory was the state controller of California 
for a number of years.
    Mrs. Cubin. Do you agree that Mr. Cory, Bernard Kritzer, 
Leonard Brock, Bob Berman, and Bob Speir, have been known to 
members of your law firm for many years?
    Mr. Banta. Well, Mr. Cory was certainly known to us for a 
lot longer than the other people, but I certainly know the 
other ones.
    Mrs. Cubin. In the period from December 1996 to January 
1998, how many times did the POGO board of directors hear a 
report about or discuss the agreement between Danielle Brian, 
Mr. Berman and Mr. Speir? Did the board discuss that at all?
    Mr. Banta. Well, first of all, I disagree with your 
characterization of an agreement, but we've been through that, 
and we'll just note my objection to that.
    Mrs. Cubin. Right.
    Mr. Banta. Yes, the board discuss that.
    Mrs. Cubin. The board did discuss that between----
    Mr. Banta. Oh, I'm sorry. You've lost me on the dates.
    Mrs. Cubin. Okay. In the time period between December '96 
and January '98, how many times did the board discuss that?
    Mr. Banta. I don't remember.
    Mrs. Cubin. But they did, they did discuss it?
    Mr. Banta. It did come up, yes, I think so.
    Mrs. Cubin. I think their testimony was that none of them 
knew about it until the checks were written. That was their 
testimony two weeks ago.
    Mr. Banta. I'm sorry. I'm lost on your dates. I don't 
remember that being the testimony.
    Mrs. Cubin. Pardon me?
    Mr. Banta. I don't remember that being their testimony. I 
thought that the question of an award to Mr. Speir and Mr. 
Berman was raised very early before the board.
    Mrs. Cubin. According to the board, they didn't know about 
it. You were here in the room, you heard it. Only one board 
member acknowledged knowing about it, and she didn't remember 
when she learned about it.
    I yield to Mr. Gibbons.
    Mr. Gibbons. Thank you very much, Madam Chairman. And I 
know that we have a vote coming up here shortly. I'll try to 
take just a few minutes and ask a few very curious questions, 
and hopefully Mr. Banta can help me understand.
    Mr. Banta, you're a very bright man. I've read your 
biography, your education and the publications you've made. 
You're a very experienced lawyer, a very well-respected lawyer, 
I must admit, in the Washington area.
    The statement you said, that you have no records, early on 
to the Chairwoman's question, is that because there are no such 
records that were ever written or created, or is it that they 
were destroyed?
    Mr. Banta. No, I made no records with regard to the 
recusal.
    Mr. Gibbons. And you know of no one else that would have 
made a record?
    Mr. Banta. I don't think so, unless somebody at the board 
was taking notes that I didn't know about, or whatever.
    Mr. Gibbons. Did you ever enter into a contingency fee, Mr. 
Banta?
    Mr. Banta. Have I ever been involved in a contingency fee?
    Mr. Gibbons. Case.
    Mr. Banta. I don't know. I don't recollect one.
    Mr. Gibbons. Do you think they're valueless, contingency 
fee cases?
    Mr. Banta. I haven't any idea. I mean, what's the 
pertinency here? I'm not an expert on contingency fees. I don't 
do that----
    Mr. Gibbons. Relevancy. It's not pertinency here. It would 
be relevancy, Mr. Banta. The relevancy would be whether or not 
$386,000 is a relevant fee for doing something, and you said 
there was no value to it when it was assigned.
    Mr. Banta. I'm sorry. I've--I don't know what your question 
is.
    Mr. Gibbons. Well, I just asked you a hypothetical, whether 
you thought contingency fee cases, which are very similar to 
the agreement that you have established here with Berman and 
Speir, was a valueless, meaningless sum.
    Mr. Banta. I don't accept that, that it was analogous to a 
contingency agreement.
    Mr. Gibbons. Well, so then it was a contract to pay.
    Mr. Banta. It was not a contract to pay.
    Mr. Gibbons. Did you draft this agreement up?
    Mr. Banta. I did not.
    Mr. Gibbons. Were you present when it was drafted?
    Mr. Banta. I was not.
    Mr. Gibbons. Were you present when it was ever discussed?
    Mr. Banta. Yes. I'm sorry. I know I've testified previously 
that I was. I clearly had discussions with Ms. Brian about it.
    Mr. Gibbons. Did you ever talk to Mr. Berman and Mr. Speir 
about it before it was put on paper?
    Mr. Banta. No.
    Mr. Gibbons. Did you talk to them after it was put on 
paper?
    Mr. Banta. The agreement? I mean this thing that's called 
an agreement?
    Mr. Gibbons. Yes. The January 5th, 1998 document.
    Mr. Banta. I don't think so. I don't think I would have had 
occasion to.
    Mr. Gibbons. Well, following December--sometime in the 
first days of 1996, you met in your office with Danielle Brian, 
Bob Berman and Bob Speir.
    Mr. Banta. Right.
    Mr. Gibbons. Now, that meeting was preceded by other 
discussions about Berman and Speir joining POGO as realtors--as 
relators--excuse me.
    Mr. Banta. Right.
    Mr. Gibbons. And after that meeting a decision was made 
that Berman and Speir would not put their names on the filing, 
but would each receive one-third of any proceeds.
    Mr. Banta. All that was done was that Ms. Brian expressed 
an intent that if there was ever any success in the case, that 
she was willing to award Mr. Berman and Mr. Speir a piece of 
it.
    Mrs. Cubin. If you'd allow me to interrupt at this point. 
Is this a good time for your questioning, Mr. Gibbons, or would 
you like to continue?
    Mr. Gibbons. Madam Chairman, whatever you decide, I sit 
clear over here, I'm willing to go with your decision.
    Mrs. Cubin. I think we will go vote. We have two votes. The 
first one is a 15-minute vote and the second is a 5-minute 
vote, so I would like to resume at 7:30 in this room. The 
Committee is in recess.
    [Recess.]
    Mrs. Cubin. The meeting will please come to order. The 
Chair recognizes Mr. Brady.
    Mr. Brady. Thank you, Madam Chairman.
    Mr. Banta, you've objected--despite repeated POGO documents 
that outline this contractual agreement with Mr. Speir and Mr. 
Berman, you've objected to the use of that term. For this line 
of questioning, what phrase would you like to use for the 
agreement between POGO and the two government insiders?
    Mr. Banta. I don't know. I----
    Mr. Brady. Well, secret deal?
    Mr. Banta. No.
    Mr. Brady. Act of friendship?
    Mr. Banta. It's been, I think, accurately characterized. I 
thought Mr. Speir----
    Mr. Brady. And that would be?
    Mr. Banta. That it was a offer to share what might come 
from this, what might come from the qui tam action.
    Mr. Brady. Well, then we'll substitute ``this offer.''
    Let's start at the beginning. You first visited with the 
board in December '96. You said you informed them that POGO was 
pursuing false claims law. You, as chairman of the board, noted 
that POGO was the only relator that is public; the others are 
in private offers. That was confirmed by Ms. Brian, who said 
that an offer had been worked out with--if there's an award, 
for these individuals for the work they've been doing for years 
that would be compensated. That was confirmed then.
    It was then confirmed a second time with the legal document 
signed in your office between Mr. Speir, Mr. Berman and Ms. 
Brian, putting in writing the standing oral offer, as you put 
it. It's confirmed yet a third time in the October 8th memo 
from Ms. Brian, saying ``This is our firm commitment to live up 
to our existing offer.'' And then this offer was executed in 
fact.
    My question to you is, besides the facts just don't hold up 
for your explanation, when did this oral offer conclude, the 
one that you identified, was confirmed four times, and then 
executed. When did that oral offer reach agreement?
    Mr. Banta. First of all, you had a lot of characterizations 
in that----
    Mr. Brady. No, actually, I didn't. I used your documents 
and read directly from them.
    Mr. Banta. Well, I disagree.
    Mr. Brady. Well, they are yours. And a lawyer of your 
stature, don't go there, because it doesn't make any sense for 
you. Come back and help us understand the original offer, as 
you put it. When was it concluded?
    Mr. Banta. It--I'm not sure I understand your question.
    Mr. Brady. Well, what do you understand the question is? 
It's simple. When was the understanding, agreement, offer, 
between POGO and the two individuals, Mr. Berman and Mr. Speir, 
when was that oral--standing oral agreement, when was it 
reached?
    Mr. Banta. I don't think it was. You're characterizing a 
lot of things here, and I'm not sure that----
    Mr. Brady. No. That is your document. It is not ours. You 
know, when do you say this oral understanding was reached, that 
you confirm repeatedly, with your own legal documents?
    Mr. Banta. You keep saying that, and you keep 
characterizing these things as legal documents. I don't. And 
you're trying to----
    Mr. Brady. This is to put in writing the standing--``This 
is to put in writing the standing oral agreement between POGO, 
Mr. Speir and Mr. Berman, concerning our false claims act suit 
regarding the underpayment of royalties by oil companies to the 
Federal Government. Any and all proceeds to come to POGO or 
Danielle Brian through this lawsuit will be shared equally, 
one-third each between POGO, Mr. Speir and Mr. Berman.''
    That is not a characterization. Those are simply your 
documents. So again, rather than avoid the question----
    Mr. Banta. Well, first of all----
    Mr. Brady. Rather than avoid the question, please, as 
chairman of that organization, as a leader in this whole 
movement, surely you do know when the oral understanding was 
reached, because you told the board it had.
    Mr. Banta. I'm not sure what you mean by oral agreement. I 
mean, I think that what happened, as has been testified to 
here, that Ms. Brian told Mr. Berman and Mr. Speir that if 
there was going to be any money, she was willing to share it. 
Ultimately that happened. I----
    Mr. Brady. Do you believe it happened prior to you telling 
the board there was an agreement? Is it safe to say you didn't 
make that up, it's true?
    Mr. Banta. No.
    Mr. Brady. No, it's made up, or no, it's true? You told the 
board, ``We have an agreement.'' Is that true?
    Mr. Banta. I'm not sure what I told the board now, but----
    Mr. Brady. Is it true you told the board you have reached 
an agreement?
    Mr. Banta. That is not--I don't know what I told the board. 
What I know happened is, is that Ms. Brian made this offer to 
Mr. Berman and Mr. Speir.
    Mr. Brady. When?
    Mr. Banta. There wasn't an agreement.
    Mr. Brady. Well, but, okay. The facts say you are lying 
about that, not me. I mean, your documents, and I wish----
    Mr. Banta. You're asking me to testify.
    Mr. Brady. I wish you could say----
    Mr. Banta. I'm under oath.
    Mr. Brady. I know, and you know, I wish you'd honor that, 
because the fact of the matter is you do have knowledge when 
that agreement was reached. Now you don't want to talk about 
it, but the fact of the matter is, if POGO is open and honest 
about this arrangement, you won't hesitate to tell us when that 
oral agreement that you confirmed repeatedly and executed, when 
it was reached. A simple question. When?
    Mr. Banta. I don't know. I just--I disagree with your 
characterization of the matter. I can't----
    Mr. Brady. That's fine.
    Mr. Banta. I can't go any further.
    Mr. Brady. Well, no, you can go further. You choose not to 
go further. Let me ask you this then, under oath: Mr. Banta, do 
you have--did you have any knowledge of the discussions, 
offers, intent, oral agreement, that was reached with Mr. 
Berman and Mr. Speir? Did you have any knowledge of that 
agreement prior to the December 9th, 1996 board meeting?
    Mr. Banta. I knew that Ms. Brian had made that offer to Mr. 
Berman and Mr. Speir.
    Mr. Brady. But you were still in question that it had been 
agreed to?
    Mr. Banta. Yeah.
    Mr. Brady. But you told the board you'd reached an 
agreement.
    Mr. Banta. I don't remember what I told the board.
    Mr. Brady. Unfortunately, this again damages your 
credibility to a degree that's almost stunning, for all the--we 
may disagree on the issue of oil royalties, but I know what 
your reputation is, and it isn't what you're doing tonight. 
I'll just tell you that.
    Let me ask you a final question. Did you have any knowledge 
of the Johnson lawsuit while it was under seal? Did you as an 
individual or professional, in any role, have knowledge of the 
Johnson lawsuit while it was under seal? And you are under 
oath, Mr. Banta.
    [Conferring with counsel.]
    Mr. Banta. I believe that that issue is not pertinent to 
the inquiry of this Committee.
    Mr. Brady. So you refuse to answer?
    Mr. Banta. I do.
    Mr. Brady. Thank you. I think that----
    Mr. Banta. On advice of counsel.
    Mr. Brady. I think that speaks volumes.
    Mrs. Cubin. Would the clerk please stop the time?
    The Chair understands that Witness Banta has entered an 
objection because he believes that the answer to the question 
is not pertinent to the subject under inquiry. The Chair will 
address the issue and poll the members as to whether they 
believe the question is pertinent.
    The Chair announced in the opening statement that the 
purpose of this hearing includes an explanation of the 
policies, practices and operations of the Department of the 
Interior and Department of Energy related to payments by 
organizations or individuals to employees of those departments 
who deal with oil royalty policy. The Chair further announced 
that we were examining one instance of where such payments were 
made to Mr. Berman and to Mr. Speir by POGO. We are examining 
where the money for the payments came from, the agreements and 
transactions that resulted in the payments, the work of the 
government employees who took the payments, and differing 
accounts of the payments.
    The gentlemen who took the payments were policy advisors 
concerning subjects and programs that are within the 
jurisdiction of this Committee. Our purposes for this oversight 
relates to the integrity of the Executive Branch and regulatory 
decision-making concerning programs within the Department of 
Energy, the Department of the Interior, and the Minerals 
Management Service, about matters under the jurisdiction of the 
Committee on Resources.
    As we learned more, our purpose was spelled out in the 
following documents which have been made available publicly: my 
opening statement for the May 4, 2000 hearing of this 
Subcommittee; the opening statement of this hearing; a letter 
from Mr. Young to me, dated March 21st, 2000, that transmitted 
this inquiry to the Subcommittee; and numerous pieces of 
correspondence, including letter requests for records to the 
witnesses and their organizations.
    I want to make sure that our purpose is clearly understood, 
because the Chair rules that the question put to the witness 
can yield an answer that allows the Subcommittee to better 
understand the subject matter we are examining. Specifically, 
the answer to the question will reveal facts about the 
transactions and true policy agreements related to the payments 
and their influence on the public domain oil royalty policy; 
facts about whether the operation of the departments and the 
Minerals Management Service was subject to influence by the 
1996 agreement between POGO, Mr. Berman, Mr. Speir, at a time 
when you were chairman of the board of POGO; facts about the 
operation of the departments and possible effects on oil 
royalty policy rules that have recently been promulgated; facts 
related to the formulation of agency responses to congressional 
proposals for new oil valuation systems such as the royalty-in-
kind proposal considered by this Subcommittee; facts related to 
how the payments were able to be made and accepted by employees 
who worked in oil royalty policy areas, so that the 
Subcommittee can formulate legislation if need be to raise 
standards to ensure that these types of payments and side 
agreements that bring windfalls to Federal employees will never 
be allowed to happen again; facts that may be in evidence where 
the Department of the Interior or personnel within the 
Department of the Interior have access to sealed lawsuits, and 
where the information is leaked out to many people.
    The answer is necessary to understand the issues and 
subject matter of our hearing. The Chair therefore determines 
that the question relates to a constitutionally legitimate 
purpose. The Chair also determines that the question falls 
within the authority granted to Congress by the Constitution 
and by the House to the Committee and Subcommittee. I also want 
to be clear that our jurisdiction comes in part from Article 
IV, Section 3 of the U.S. Constitution, which states that, 
quote: ``That Congress shall have power to dispose of and make 
all needful rules and regulations, respecting the territory or 
other property belonging to the United States.'' Unquote. Thus, 
our jurisdiction and authority is directly conferred by the 
Constitution, which is unlike the jurisdiction and authority 
for inquiries of other committees, and this enhances our 
jurisdiction and authority.
    Article I of the Constitution, related to Legislative 
Branch power, also serves as a basis for our jurisdiction over 
the subject matter of this hearing. This jurisdiction has also 
been delegated under House Rule X (1)(l)(11), (12), (17) and 
(19) to the Committee on Resources, and further delegated to 
this Subcommittee under Rule VI of the Rules for the Committee 
on Resources.
    Finally, our jurisdiction is additionally based on Rule X 
(2) of the House Rules, which confers general oversight 
authority and jurisdiction over the organization and operation 
of the departments that administer programs under the 
jurisdiction of the Committee and the Subcommittee. Clearly, 
oil royalties fall within the Subcommittee's jurisdiction, as 
do factors that influence oil royalty policy development and 
implementation within the department, which is clearly an 
aspect of the operation of the department.
    Thus, the question asked falls within the grant of my 
authority made by the Constitution to the Congress and to the 
Committee and the Subcommittee by the House.
    The Chair wishes to inform the witness that the question 
meets the two requirements of pertinency. We have a 
constitutionally legitimate legislative purpose, and the 
question is within the grant of authority to the Subcommittee. 
Let me further explain why the question is pertinent. Payments, 
let alone payments of the magnitude received to date by policy 
advisors in the departments, certainly can and likely will 
influence agency decisions. We heard testimony at our last 
hearing that the payments to Berman and Speir were agreed to in 
1996 and that the operation of the department was used to 
develop the POGO/Brian lawsuit, which led to the payments to 
Mr. Berman and Mr. Speir. Rules and procedures must be in place 
to prevent the department and its resources from being used to 
help litigants learn how to frame competing lawsuits, develop 
their cases, and prosecute their claims, if in fact that is 
what was done.
    But to determine what was done, we must ask this question 
and have it answered, or you can be held in contempt. That is 
why the question and all the questions that relate to the 
subject of this inquiry are pertinent.
    The question, Mr. Banta, is: did you know about the lawsuit 
that was filed by Benjy Johnson, while it was under seal in the 
U.S. District Court in Lufkin?
    Mr. Banta. I'll stand on my objection, Madam Chairman.
    Mrs. Cubin. Again, I ask the witness to answer the 
question, and I remind you, sir, that you can be held in 
contempt if you do not.
    Mr. Banta. I'll stand on my objection.
    Mrs. Cubin. I warn the witness in the words of the Supreme 
Court, that, quote, ``An erroneous determination on his part 
that the question is not pertinent, even if made in the utmost 
good faith, does not exculpate him if the Court should later 
rule that the questions were pertinent to the question under 
the inquiry.'' That's Watkins v. the United States.
    This is your last chance, Mr. Banta. Will you please answer 
the question?
    Mr. Banta. Thank you, Madam Chairman. I'll stand on my 
objection.
    Mrs. Cubin. Do you have further questions, Mr. Gibbons?
    Mr. Gibbons. Yes, Madam Chairman. I just want to go back 
for a moment with Mr. Banta, and sort of search for some other 
answers that might help me understand a little bit more.
    Mr. Banta, at some point throughout this process, did you 
ever become aware that Mr. Berman was concerned that POGO might 
not pay him as expected for his share of its lawsuit money, and 
that he was considering taking steps to assure POGO performed 
as he had expected?
    Mr. Banta. No.
    Mr. Gibbons. The agreement that we're talking about, 
January 5th, 1998--and I label it an agreement because, in the 
words of the drafter, ``This is to put into writing the 
standing oral agreement.'' So it is a writing of an oral 
agreement, relating therefore to being an agreement. Why was it 
put into writing?
    Mr. Banta. I don't think I know. I don't think I remember.
    Mr. Gibbons. Did--let me see if I can help you--did Mr. 
Berman or Mr. Speir ask for it to be put into writing?
    Mr. Banta. Not to my knowledge.
    Mr. Gibbons. Who asked it to be put into writing?
    Mr. Banta. I don't know. I know I didn't.
    Mr. Gibbons. We've already discussed your role in this 
agreement, that you did work on it.
    Mr. Banta. I'm sorry?
    Mr. Gibbons. Didn't you, or you had some role in the 
construction of this agreement?
    Mr. Banta. No.
    Mr. Gibbons. You didn't draft it?
    Mr. Banta. No.
    Mr. Gibbons. As chairman of the board of POGO, would you 
have expected an agreement like this, which obligated POGO to 
have a board approval?
    Mr. Banta. It was--I know that the relationship with Mr. 
Speir and Mr. Berman was brought to the attention of the board.
    Mr. Gibbons. Well, that didn't answer my question. You know 
what my question was, and you're looking for another answer to 
make sure that you don't have to answer it. Do you expect that 
an agreement, which would obligate POGO, to be approved by the 
board of directors?
    Mr. Banta. The POGO board of directors did not put a lot of 
things to a vote. It was brought to their attention, and it was 
not voted on. But no objections were raised.
    Mr. Gibbons. Well, this agreement was signed in your 
office, was it not?
    Mr. Banta. I know I said that before. I've later come to 
the conclusion it probably wasn't, but I knew when it was being 
signed. I'm not quibbling with you.
    Mr. Gibbons. Did you, as chairman of the board, authorize 
Ms. Brian to sign it?
    Mr. Banta. I don't think I took a position with her, I 
mean, authorizing it. I knew she did it. I didn't disapprove.
    Mr. Gibbons. So by tacit omission of your role as chairman, 
you did, by de facto, agree to her to sign it if in fact you 
knew about it.
    Mr. Banta. I knew about it.
    Mr. Gibbons. So you could say you did agree to have her 
authorized to sign it.
    Mr. Banta. Sure.
    Mr. Gibbons. It sure took us a long time to get to that 
point. Do you know of any other terms that might have been 
omitted in this agreement?
    Mr. Banta. Well, you keep characterizing it as an 
agreement.
    Mr. Gibbons. I'm only going to say this one more time, Mr. 
Banta, because----
    Mr. Banta. You know, I keep disagreeing with that.
    Mr. Gibbons. [continuing] you're an attorney, you've 
studied law, you're an articulate individual, you've been in 
this business for a long time, and for you to say that this is 
a writing which summarizes and puts the standing oral agreement 
on paper, does not change it to be something other than an 
agreement.
    Mr. Banta. I still reject your characterization.
    Mr. Gibbons. This is the most remarkable testimony for 
somebody with your background, your education, your experience, 
your reputation, to take and say that such a document, which 
clearly on its face--that you have read, that you're aware of--
is not an agreement. And I would say that--or ask if Mr. Speir 
or Mr. Berman had sued for failure to comply with this 
document, do you think they would have recovered their fee?
    Mr. Banta. No.
    Mrs. Cubin. The Majority time has expired.
    Mr. Gibbons. Thank you.
    Mrs. Cubin. Now, just for the purposes of clarification, 
the Chair would like to poll the members on whether or not they 
believe the question, quote, ``Did you know the lawsuit was 
sealed--did you know about the lawsuit in Lufkin while it was 
under seal?'' I'd like to poll the panel on the pertinency of 
it. So vote aye if you believe the question is pertinent, and 
no if it isn't. And I will just call the roll.
    Mr. Gibbons?
    Mr. Gibbons. Aye.
    Mrs. Cubin. Mr. Schaffer?
    Mr. Schaffer. Aye.
    Mrs. Cubin. Mr. Brady?
    Mr. Brady. Aye.
    Mrs. Cubin. And the Chair votes aye. There are no Democrat 
members present.
    So, Mr. Banta, I'd like to give you one more chance to 
answer that question. Did you----
    Mr. Banta. I'll stand on my objection. Thank you.
    Mrs. Cubin. Thank you. The Chair recognizes Mr. Brady for a 
motion.
    Mr. Brady. Madam Chairman, under Clause (2)(j)(2)(c) of 
Rule XI of the Rules of the House of Representatives, I move 
that Mr. Tom Casey, a Majority staff member and a Minority 
member staff member designated by the Ranking Member, each be 
allowed to question the witness, Mr. Banta, for--I reluctantly 
say 60 minutes, equally divided.
    Mrs. Cubin. Are there any objections?
    [No response.]
    Mrs. Cubin. Hearing none, all in favor say aye.
    [Chorus of ayes.]
    Mrs. Cubin. The motion passes. Before Mr. Casey begins his 
questioning, however, I take note that there are no Minority 
members present, so therefore, they yield back that time. And 
the staff will be allowed to question for 30 minutes. Mr. 
Casey?
    Mr. Casey. Thank you, Madam Chairman.
    Mr. Banta, can we assume that whenever your recusal 
occurred, it occurred after January 5, 1998?
    Mr. Banta. I'm sorry. January 5--what's the date you're----
    Mr. Casey. After January 5----
    Mr. Banta. I'm just asking you what January 5 is.
    Mr. Casey. January 5, 1998.
    Mr. Banta. Yes.
    Mr. Casey. Had you recused yourself by that day?
    Mr. Banta. I'm asking you what the significance of that 
date is.
    Mr. Casey. I'm asking you if you had recused yourself 
before that day?
    Mr. Banta. Yes. Why are you using January----
    Mr. Casey. Let's take it one step at a time, Mr. Banta. Had 
you recused yourself before January 5, 1998?
    Mr. Banta. No.
    Mr. Casey. So you would have been fully aware--you would 
not have disqualified yourself from knowledge of or 
participation in the agreement that was signed on that day?
    Mr. Banta. That's true.
    Mr. Casey. Do you have a copy of that agreement handy?
    Mr. Banta. No.
    Mr. Casey. Could the clerks pass one to Mr. Banta, along 
with the board meeting minutes from December 9 of '96. It's 
Attachment A. Do you have both, Mr. Banta, the January 5, '98 
agreement and the board meeting minutes?
    Mr. Banta. I don't have the board minutes.
    Mr. Casey. Do you know who did write the January 5, 1998 
agreement?
    Mr. Banta. No, I do not.
    Mr. Casey. Can you venture a guess?
    Mr. Banta. I won't.
    Mr. Casey. Do you know if Ms. Brian wrote that agreement?
    Mr. Banta. If I knew that, I would have said it.
    Mr. Casey. Can you exclude the possibility that Ms. Brian 
authored that agreement?
    Mr. Banta. I can exclude--no, I can't exclude the 
possibility that she wrote it.
    Mr. Casey. At that time was POGO using an outside law firm?
    Mr. Banta. I'm sorry?
    Mr. Casey. Did POGO have any sort of outside legal counsel 
on January 5, '98?
    Mr. Banta. I don't think so.
    Mr. Casey. So it was probably not written by any outside 
attorneys.
    Mr. Banta. I think that's probably a fair bet.
    Mr. Casey. Do you consider Ms. Brian to be a reliable and 
trustworthy executive director at POGO?
    Mr. Banta. Certainly.
    Mr. Casey. Excuse me?
    Mr. Banta. Certainly.
    Mr. Casey. You said certainly?
    Mr. Banta. Yes. Sorry.
    Mr. Casey. Do you know why she would sign a document which 
calls itself an agreement if it was not an agreement?
    Mr. Banta. She's not a lawyer.
    Mr. Casey. Were you on the POGO board in 1991, Mr. Banta?
    Mr. Banta. 1991. Yes, I think so.
    Mr. Casey. Were you the chairman at the time?
    Mr. Banta. Yes.
    Mr. Casey. Did you take part in drafting the articles of 
incorporation filed in 1991?
    Mr. Banta. I don't think so. I think a partner of mine did 
it.
    Mr. Casey. A partner of yours?
    Mr. Banta. Yes.
    Mr. Casey. As chairman, you signed them, however.
    Mr. Banta. Sure.
    Mr. Casey. Sure.
    Mr. Banta. I don't know. You're saying that. I----
    Mr. Casey. Are you aware of the provision in those articles 
of incorporation which prohibits POGO from paying anybody other 
than for services rendered?
    Mr. Banta. Did not know that.
    Mr. Casey. Ms. Brian has testified that the POGO board 
policy was that expenditures in excess of $1,000 had to be 
approved by the chairman of the board and the treasurer. Do you 
agree with that?
    Mr. Banta. I can't--I don't have independent knowledge of 
that.
    Mr. Casey. In your experience as chairman was that the 
practice?
    Mr. Banta. I can't remember.
    Mr. Casey. Can't remember ever approving an expenditure 
over a $1,000?
    Mr. Banta. Yes. It's the dollar limit that I have no 
specific----
    Mr. Casey. Do you recall approving significant expenditures 
by POGO?
    Mr. Banta. Yes.
    Mr. Casey. So as of January 6, 1998, if I understand the 
testimony from various POGO witnesses, the Mobil money was a 
reality; Mobil had entered settlement talks; they were going to 
settle; so it was felt it was an appropriate time to make the 
written agreement signed by the three individuals on that day. 
Certainly, that's--committing POGO to an expenditure over 
$1,000, isn't it?
    Mr. Banta. Had you asked me on that day was there a chance 
of POGO making any money on the agreement--on the settlement, I 
would have said no.
    Mr. Casey. On January 5, 1998----
    Mr. Banta. Yes, yes. Even in January 5, '98.
    Mr. Casey. Did you believe Mobil was dealing in bad faith 
at the time?
    Mr. Banta. No. Well, I have no idea what Mobil was doing at 
the time. I shouldn't be testifying on that point.
    Mr. Casey. If Mobil was in settlement talks, why did you 
believe that it was of no probability, if I understand you 
correctly, that Mobil would indeed consummate a settlement and 
write a check?
    Mr. Banta. I didn't say that.
    Mr. Casey. I believe you just said that if asked on January 
5, 1998, you would have said there was no chance----
    Mr. Banta. I said there was no chance of POGO getting 
money, or insignificant chance.
    Mr. Casey. You were a party to the Multi-Relator/Counsel 
Agreement by that day, weren't you?
    Mr. Banta. I didn't know about the Multi-Relator Agreement.
    Mr. Casey. You did not know about it?
    Mr. Banta. No.
    Mr. Casey. When did you learn of it?
    Mr. Banta. I don't know.
    Mr. Casey. But after January 5 of '98?
    Mr. Banta. Sure.
    Mr. Casey. Did you learn of it between January 5 of '98 and 
February 5 of '98?
    Mr. Banta. No.
    Mr. Casey. So you learned of it after you had recused 
yourself?
    Mr. Banta. Long after.
    Mr. Casey. When the agreement was made--and you'll forgive 
me for using that word, ``agreement''; it is the word that your 
own documents use--when the agreement----
    Mr. Banta. And I still object.
    Mr. Casey. When the agreement was made in 1996, did you 
believe that there was no chance POGO would ever have to pay 
Mr. Berman and Mr. Speir?
    Mr. Banta. Yes.
    Mr. Casey. Is that why you entered into the agreement, 
because you did not intend to live up to it?
    Mr. Banta. No, I--whoa. No.
    Mr. Casey. Wasn't it POGO's intention, POGO's plan, to file 
a qui tam lawsuit, to succeed in it, and then to have money 
that could be distributed to Mr. Berman and Mr. Speir?
    Mr. Banta. It was POGO's intent to file a lawsuit.
    Mr. Casey. Did you file the lawsuit with no intention of 
succeeding in it?
    Mr. Banta. Well, first of all, as I testified earlier, I 
didn't file the lawsuit.
    Mr. Casey. Mr. Banta, you were the chairman of the board at 
the----
    Mr. Banta. Let me----
    Mr. Casey. [continuing] time it was filed. You caused it to 
be filed. That's a legal fact. Did you walk down to the 
courthouse in Lufkin, Texas? I'll accept that you didn't.
    Mr. Banta. No.
    Mr. Casey. But you were the chairman of the board. You 
caused it to be filed in the name of the Project on Government 
Oversight.
    Mr. Banta. I didn't cause it to be filed, but let me--wait 
a minute. There was another piece to your question. I'm sorry.
    Mr. Casey. When you filed that suit, wasn't it your 
intention to succeed in it?
    Mr. Banta. My intention was that that lawsuit would call 
attention to the fact of under-valuation and underpayment of 
royalties to the Department of Justice. I did not think that 
POGO could succeed as a relator.
    Mr. Casey. Was it POGO's sole intention to draw attention 
to the underpayments?
    Mr. Banta. POGO as a corporate entity, I suppose, doesn't 
have an intent. My intent was that it would call attention of 
the--to the under-valuation by the Department of Justice.
    Mr. Casey. And when you learned that Mr. Johnson and Mr. 
Wright had already filed suits that would do exactly that, and 
if you had no intention of taking any money out of the 
litigation, why did you pursue the matter? Why didn't you 
withdraw your suit when you learned that the job you sought to 
accomplish, that you intended, would in fact be done?
    Mr. Banta. Excuse me.
    [Conferring with counsel.]
    Mr. Banta. Sorry. At that time I did not know that there 
was a lawsuit that covered California.
    Mr. Casey. At what time?
    Mr. Banta. What was your question?
    Mr. Casey. You just answered it. I assume you know what the 
question was that you're answering.
    Mr. Banta. You had a time frame in your question and it's 
out of my mind. So if you can just go back to it, please?
    Mr. Casey. When did you learn that there was another qui 
tam suit which covered California?
    Mr. Banta. That's the question I refuse to answer on the 
grounds of pertinency.
    Mr. Casey. I'm sorry. On the grounds of pertinency?
    Mr. Banta. Pertinency, yes.
    Mr. Casey. Well, Mr. Banta, you learned of other suits 
perhaps 30 days after you filed your suit on June 9th of 1997. 
The Justice Department informed you and Mr. Wright and Mr. 
Johnson of the existence of your three suits.
    Mr. Banta. I was not aware of that.
    Mr. Casey. I understand that you recused yourself at some 
point----
    Mr. Banta. Yes.
    Mr. Casey. [continuing] from the matters involving Mr. 
Berman and Mr. Speir and the lawsuit.
    Mr. Banta. Right, right.
    Mr. Casey. Did you recuse yourself from POGO board 
discussions involving POGO's tax exempt status or other tax 
filing matters?
    Mr. Banta. No.
    Mr. Casey. Did you ever participate in or witness a board 
discussion involving the tax implications of the payments to 
Mr. Berman and Mr. Speir? I'm not asking if you complied with 
tax requirements. We're only asking if there was a discussion.
    [Conferring with counsel.]
    Mr. Banta. We have objected to the pertinency of all 
questions relating to the tax exempt status of POGO other than 
what was put on the forms relating to the payments.
    Mr. Casey. It's a question about the payments to Mr. Berman 
and Mr. Speir. Was that assessed by the board in the light of 
its tax implications? A yes or no. I don't need to know what 
you said, what you judged of it, only if you assessed it.
    [Conferring with counsel.]
    Mr. Banta. I think you asked two different questions there. 
I think your second question was different from your first one. 
Where are we?
    Mr. Casey. Do you have any knowledge that the POGO board of 
directors ever was briefed on, discussed, or assessed, the 
Federal tax implications of the payments made to Mr. Berman and 
to Mr. Speir, or the payments contemplated to be made?
    [Conferring with counsel.]
    Mr. Banta. No.
    Mr. Casey. You are not aware of any discussion? Do you know 
of any discussion--well, you wouldn't know if it didn't take 
place. Did you--all right.
    You testified that in the meeting in December of '96 Ms. 
Brian made the offer; is that correct?
    Mr. Banta. Yes.
    Mr. Casey. Well, you were the chairman at the time, weren't 
you?
    Mr. Banta. Yes.
    Mr. Casey. And so it was done in your presence?
    Mr. Banta. Yes.
    Mr. Casey. Did you object to it?
    Mr. Banta. No.
    Mr. Casey. All right. Do you--did you understand, as of 
December 9, 1996, that the arrangement that is called an 
agreement in the board meeting minutes of that date, called for 
POGO to share its litigation proceeds with Mr. Berman and Mr. 
Speir on equal thirds?
    Mr. Banta. Yes.
    Mr. Casey. The board did understand in '96 that it was to 
be an equal one-third sharing?
    Mr. Banta. No, wait. You're getting me--no. I mean, there 
was an agreement that--an agreement--there was an offer to 
share the proceeds. The equal thirds I have no recollection on.
    Mr. Casey. No recollection?
    Mr. Banta. No.
    Mr. Casey. Do you recall being deposed on November 16, 
1999?
    Mr. Banta. Yes.
    Mr. Casey. In that deposition, a document labeled as 
Exhibit 7 was a copy of the January 5, 1998 memorialization of 
the agreement between POGO, Robert Speir and Robert Berman. You 
were under oath in that deposition, weren't you, Mr. Banta?
    Mr. Banta. Yes.
    Mr. Casey. I would like to read an exchange to you from 
that deposition.
    Mr. Banta. Do you want to let me read it too?
    Mr. Casey. I'm afraid I only have one copy. I'll try to be 
distinct and slow. And I'd like to ask you at the end if that 
is still your testimony.
    Mrs. Cubin. If you'll wait just a moment, Mr. Casey, I 
think there is another copy of that that he could refer to. It 
will be just a moment, Mr. Banta.
    Mr. Casey. I'm looking at page 45, which is the lower 
right-hand quadrant. And I'm going to start on line 11. Are you 
with me?
    Mr. Banta. Got you.
    Mr. Casey. The questioner says: ``Do you remember if there 
was anything any different than what is reflected in Exhibit 
No. 7?'' And Exhibit 7, being the January 5, '98 agreement. You 
answered, ``No, no.'' You were asked: ``You don't remember, or 
it was not different?'' You answered: ``I know it was not.'' 
You were asked again: ``Not any different?'' And you answered: 
``Not any different.''
    Is that still your testimony?
    Mr. Banta. I'm looking at the language up above. I'm not 
sure that you're----
    Mr. Casey. What you're looking at isn't what I asked about.
    Mr. Banta. I understand.
    [Pause.]
    Mr. Banta. I see the testimony.
    Mr. Casey. So you stand by that testimony?
    Mr. Banta. Well, I'm not sure that my recollection at that 
time was----
    Mr. Casey. Well, we're looking at what you said, not what 
you think now about what you said.
    Mr. Banta. I understand. I'm not----
    Mr. Casey. What you said at the time was that you did 
remember, you did understand.
    Mr. Banta. Well, that was my testimony at the time. I'm not 
sure if that comports with my current recollection, but that 
was my testimony at that time.
    Mr. Casey. Thank you. Do you know the name Clayton Dark, 
Mr. Banta?
    Mr. Banta. I'm sorry?
    Mr. Casey. Do you know the name Clayton Dark?
    Mr. Banta. No, I don't.
    Mr. Casey. Have you ever spoken to him?
    Mr. Banta. No.
    Mr. Casey. I want to go back and explore the recusal issue, 
but not the dates, because I understand we can't pin that down. 
The concern that you had of an apparent conflict, why did that 
not exist in December of '96 when POGO decided to file the 
lawsuit?
    Mr. Banta. Well, there were a number of factors, the most 
important of which being that----I think the actual reality of 
the lawsuit focused my thinking. I don't think there was 
anything more than that.
    Mr. Casey. All right. Why did that apparent conflict not 
exist on June 9th, '97, when you indeed filed the lawsuit? 
That's pretty real.
    Mr. Banta. I didn't say that it--I'm sorry, I'm losing 
your----
    Mr. Casey. The lawsuit became real on June 9th, 1997 when 
it was filed----
    Mr. Banta. Right.
    Mr. Casey. [continuing] in the Lufkin Division of the 
United States District Court for the Eastern District of Texas.
    Mr. Banta. Right.
    Mr. Casey. Did you have no concerns at that time that there 
was an apparent conflict of interest?
    Mr. Banta. No.
    Mr. Casey. Why----
    Mr. Banta. I didn't know the suit had been filed on that 
date. I don't think I became aware of when the suit was filed 
until quite sometime afterwards, and I frankly didn't focus on 
the issue.
    Mr. Casey. But you knew POGO intended to file the lawsuit?
    Mr. Banta. Sure.
    Mr. Casey. And why did you believe that there would be no 
conflict apparent or real arising when that lawsuit was filed?
    Mr. Banta. I didn't say that.
    Mr. Casey. But I think we can exclude the possibility that 
you recused yourself as early as June 9th of '97, can't we?
    Mr. Banta. Oh, sure, yes. Yes.
    Mr. Casey. Okay. When you did give us the chairmanship, Mr. 
Banta, did you inform the rest of the POGO board of this--did 
you explain to them the nature of your apparent conflict?
    Mr. Banta. No.
    Mr. Casey. No. When you participated in the meetings of the 
Department of the Interior's interagency study of California 
oil valuation, did you disclose to the task force or to 
Interior, your role at POGO?
    Mr. Banta. No. I only attended one meeting of the task 
force, and I was just there as an observer, so there was no--I 
played no role.
    Mr. Casey. After December 9th of 1996, did you ever again 
speak with Mr. Berman about matters relating to California oil 
valuation?
    Mr. Banta. I have no recollection of any such conversation.
    Mr. Casey. Do you have any recollection of deciding at the 
time that, because you had participated in offering Mr. Berman 
a sum of money, you should no longer deal with him on matters 
related to your law practice?
    Mr. Banta. Well, first of all, I didn't participate in 
offering him a sum of money, but I'm not sure I understand--
your question is that earlier--I didn't talk to him because of 
what?
    Mr. Casey. You described--earlier you asked to use the word 
``offer'' in the place of ``agreement.''
    Mr. Banta. I understand.
    Mr. Casey. It took place in your office in front of you. 
You did not object to it.
    Mr. Banta. Right.
    Mr. Casey. Were you the proverbial potted plant? You had no 
participation in what was happening between the three people 
sitting in front of you?
    Mr. Banta. I didn't--but what's your question?
    Mr. Casey. Did you participate in Ms. Brian's offer to Mr. 
Berman and Mr. Speir in December of '96?
    Mr. Banta. Yes, I think that's fair.
    Mr. Casey. After participating in that offer to Mr. Berman 
and Mr. Speir, did you make any decision that it would no 
longer be proper for you, having participated in making that 
financial offer, to deal with those gentlemen on matters 
related to their work and yours?
    Mr. Banta. I did not deal with them in any matter relating 
to the royalty question after that point.
    Mr. Casey. How about California valuation in general, crude 
oil valuation in general?
    Mr. Banta. I had no contact with Mr. Berman or Mr. Speir 
regarding those issues after that point.
    Mr. Casey. So you--I want to clarify--your testimony is--
and correct me if I'm wrong--that after December 12 of 1996, 
you had no contact with Mr. Berman or Mr. Speir on matters 
involving the valuation of crude oil in California?
    Mr. Banta. Yeah, the substantive issue of crude oil 
valuation. I don't--I have no recollection of any conversation 
with them on that issue. I mean, I didn't have any reason to 
have a conversation with them, which is the reason why I'm 
saying I didn't. I don't remember any.
    Mr. Casey. So the conversations they recall with you about 
matters affecting California crude oil valuation are incorrect?
    Mr. Banta. I'm sorry. I'm not following you.
    Mr. Casey. If they recall conversations with you about 
those subjects, are they incorrect?
    Mr. Banta. I just don't remember them. I mean, if they 
remember something--I don't know.
    Mr. Casey. But you made no conscious decision that you 
should no longer--having participated in that financial offer, 
you should no longer intermingle your work and their work; is 
that correct?
    Mr. Banta. I had no reason to have a conversation with them 
on that issue.
    Mr. Casey. I didn't ask you if you had any reason to.
    Mr. Banta. And I don't remember any such.
    Mr. Casey. We have asked earlier if you know the name Ken 
Cory, and you do. Would you agree that Mr. Cory, Bernard 
Kritzer, Leonard Brock, Bob Berman and Bob Speir, all shared a 
general view that crude oil pumped from Federal and Indian 
leases in California was undervalued for state and Federal 
royalty purposes?
    Mr. Banta. I'm sorry. There was a name on that list that 
took my be surprise.
    Mr. Casey. Ken Cory, Bernie Kritzer, Lennie Brock, Bob 
Berman, Bob Speir.
    Mr. Banta. Yes. They all knew that crude oil was 
undervalued in California, yes.
    Mr. Casey. A sworn deposition give by Martin Lobel 
indicates that the business on oil matters given to Lobel, 
Novins and Lamont by Mr. Cory, made possible the founding of 
the firm. Do you have any basis to disagree with Mr. Lobel on 
that?
    Mr. Banta. No, I don't think so. I wasn't there at the 
time, but----
    Mr. Casey. Okay. When Ms. Brian approached Mr. Cory about 
taking part in POGO's qui tam lawsuit, were you aware of it 
before it happened or after it happened?
    Mr. Banta. I don't think I knew that Ms. Brian approached 
Mr. Cory. I can say that I had conversations with Mr. Cory 
about his participation in a qui tam action regarding oil--the 
under-valuation of crude oil and the underpayment of royalties.
    Mr. Casey. Did you ask him to join as a relator?
    Mr. Banta. I did not. I don't remember that my conversation 
even involved POGO. I simply suggested to Mr. Cory that he 
would be a good relator in a lawsuit, period. The conversation 
didn't get any further than that.
    Mr. Casey. You are on the POGO board of directors today, 
correct?
    Mr. Banta. Yes.
    Mr. Casey. What is the current intent of the POGO board of 
directors regarding the resumption of payments to Mr. Berman 
and Mr. Speir if the Justice Department declines to charge them 
or you with a crime?
    Mr. Banta. It's my recollection at the last--well, first of 
all, I have recused myself from these discussions, so that my--
I'm not the right person to be asking the question. It's my 
under--well, period.
    Mr. Casey. You seem to have an answer though.
    Mr. Banta. I won't speculate.
    Mr. Casey. I thought you were about to say, ``It is my 
understanding.''
    Mr. Banta. I started to speculate.
    Mr. Casey. Have you taken part in any discussions with 
anybody at POGO about whether--have you shared with them the 
view you shared with the Subcommittee a little while ago, that 
if Mr. Berman and Mr. Speir were to sue to enforce that 
contract, that they would likely fail?
    Mr. Banta. I'm sorry? Did----
    Mr. Casey. A few minutes ago----
    Mr. Banta. Did I share that view with who?
    Mr. Casey. You gave the Subcommittee your view a few 
minutes ago that if Mr. Berman or Mr. Speir sued to enforce the 
agreement, that they would likely fail.
    Mr. Banta. Yes.
    Mr. Casey. Have you shared that view with anybody on the 
POGO board?
    Mr. Banta. I don't think anybody on the POGO board--the 
subject never came up. I don't think I had that discussion with 
anybody. I don't recall it.
    Mr. Casey. Have you had that discussion with Ms. Brian?
    Mr. Banta. I don't think so. I don't recall it.
    Mr. Casey. Did you take part in the consultations with 
attorneys, I believe, Harmon and Charles Tiefer, in the Fall of 
1998 regarding the payments to Mr. Berman and Mr. Speir?
    Mr. Banta. I did not.
    Mr. Casey. Were you aware of them?
    Mr. Banta. Not until relatively recently.
    Mr. Casey. Did you take part in the discussions with the 
accountants in that time frame about the anticipated payments 
to Mr. Berman and Mr. Speir?
    Mr. Banta. I did not.
    Mr. Casey. Do you know why Mr. Berman and Mr. Speir were 
paid interest on the money earned by POGO?
    Mr. Banta. I just learned it from your lips, if it's true.
    Mr. Casey. Do you understand--can you confirm that Mr. 
Berman and Mr. Speir were also paid a portion of interest 
earned on POGO's own funds?
    Mr. Banta. I didn't know that.
    Mrs. Cubin. The gentleman yields back. The Chair recognizes 
the Minority side for 30 minutes questioning.
    Ms. Lanzone. Thank you, Madam Chairman. Since it's now 8:55 
p.m. at night, we do not have additional questions at this 
time, so we yield back, yield the Minority's time back.
    Mrs. Cubin. Thank you. Thank you, Mr. Banta, for your 
testimony. You are released to go.
    Mr. Banta. Thank you, Ms. Cubin.
    Mrs. Cubin. The Chair now calls Danielle Brian to the 
witness table. Would you please stand and be sworn?
    [Witness sworn.]
    Mrs. Cubin. Please be seated.
    The Chair recognizes Mr. Brady for the purpose of a motion.
    Mr. Brady. Madam Chairman, under Clause (2)(j)(2)(b) of 
Rule XI of the Rules of the House of Representatives, I move 
that Congressman Schaffer, Congressman Brady, Chairman Cubin, 
members of the Majority, and a Minority member designated by 
the Ranking Member, be allowed to question the witness, Ms. 
Brian Stockton, for a total of 60 minutes equally divided.
    Mrs. Cubin. Are there any objections?
    [No response.]
    Mrs. Cubin. Hearing none, all in favor say aye.
    [Chorus of ayes.]
    Mrs. Cubin. Any opposed?
    [No response.]
    Mrs. Cubin. The motion is passed. Mr. Brady?
    Mr. Brady. Yes, Madam Chairman. Under Clause (2)(j)(2)(c) 
of Rule XI of the Rules of the House of Representatives, I move 
that Mr. Tom Casey, a Majority staff member, and a Minority 
member of staff member designated by the Ranking Member, each 
be allowed to question the witness, Ms. Brian Stockton, for 60 
minutes equally divided.
    Mrs. Cubin. Are there any objections?
    [No response.]
    Mrs. Cubin. Hearing none, all in favor say aye.
    [Chorus of ayes.]
    Mrs. Cubin. The motion passes. The Chair now recognizes Mr. 
Schaffer.
    Mr. Schaffer. Thank you, Madam Chairman.
    Ms. Brian, on May 4th, the Subcommittee learned that your 
board abdicated its authority in favor of you and Mr. Banta. In 
this hearing the Subcommittee expects answers, truthful and 
complete answers.
    You claim that POGO is proud to have provided these so-
called public service awards to two public servants. Now the 
public's elected representatives want a full account of the 
December 1996 meeting with these public employees. The public 
wants a full account of the hidden story behind the January 
1998 agreement that you signed with two public employees, and 
the October 1998 restatement of that deal. And the public's 
elected representatives want to know why you conceived and 
followed through on a deal to compromise the integrity of the 
public's government, when your organization is dedicated to 
exposing and eradicating just this kind of cozy secret dealing.
    Before beginning the questions, I'll read to you a quote. 
``We still believe the best way to keep the government honest 
is to work with people inside the system, and let the 
government's own documents speak for themselves.'' That's the 
end of the quote. And you wrote those words. Today we'll see if 
you apply that standard to yourself.
    My first question involves testimony that you gave under 
penalty of perjury on August 8th, 1998. The lawyer questioning 
you, and the public at large, did not know that seven months 
earlier you signed a document pledging to give Mr. Berman and 
Mr. Speir one-third each of the Mobil settlement, then expected 
as well as all other Johnson v. Shell settlement proceeds 
received by POGO. Sworn testimony by Mr. Banta confirms that 
this was simply the written version of details agreed to in 
December of 1996. By August 8th of 1998 you were fully aware 
that the Mobil settlement was final and your share was soon to 
be sent to your lawyers. But when asked specifically if POGO 
ever shared money with whistleblowers, you answered in the 
negative, but were careful to use past tense. Do you still 
consider that a truthful answer?

  STATEMENT OF DANIELLE BRIAN STOCKTON, EXECUTIVE DIRECTOR OF 
                              POGO

    Ms. Stockton. Yes, I do, but I'd like to point out the many 
inaccuracies that you led that question up with. For example, 
suggesting that my board said that they had abdicated their 
authority to me and Mr. Banta, when I was listening to my 
board, and it was quite clear that they were fully supportive, 
and in no way suggested that they were unaware of what we were 
doing, and were in fact proud of our decision.
    You also characterize this as ``hidden'', which is fairly 
ridiculous, considering that we not only disclosed it to the 
IRS and the Justice Department, but we were talking about 
having a press conference regarding it.
    And finally, you also suggested that we compromised the 
integrity of the government's procedures, when your witnesses 
from the Justice Department earlier today made it clear that 
neither the rule-making--excuse me?
    Mr. Schaffer. When did you have that press conference? I'm 
curious.
    Ms. Stockton. We didn't have it, in fact, because, as the 
staff is aware, we were torn on the question of whether or not 
that would in fact solicit people who wanted to come with 
information simply in order to make money, and when--it's true, 
Ken Dodd did suggest that that wasn't a good idea, we decided 
not to do it for that reason. But I think when you hear all of 
that evidence, it's fairly hard to suggest that this was all a 
secret.
    But I wanted to make the final point. When you had 
witnesses earlier today from the Justice Department, that the 
two procedures that the Subcommittee has suggested they're 
actually concerned about, which are the rule-making and the 
lawsuit, and the Justice Department has clearly said, as has 
the Department of the Interior, that those processes have not 
been compromised at all.
    Mr. Schaffer. Thank you for that. But your answer is yes, 
you do believe that--you do consider that a truthful answer, 
that----
    Ms. Stockton. Yes, I do.
    Mr. Schaffer. Based on the tense, I suppose, of the 
question that was posed to you.
    Ms. Stockton. The tense and the fact that at that point we 
hadn't gone through the steps we planned to take and we did 
take, to insure that what we were doing was done properly.
    Mrs. Cubin. Will the gentleman yield?
    Mr. Schaffer. Yes, Madam Chairman.
    Mrs. Cubin. As I recall from your deposition, when you were 
asked this question before, your reaction was: ``Well, I can't 
help it if they asked the wrong question.'' So it seems truly 
that you were trying--in my opinion, that you were trying to 
deceive, that you knew very well that using the past tense 
didn't answer the question, and you weren't being upfront and 
honest about it.
    Ms. Stockton. Well, that could be your opinion. I mean, if 
you want to talk about deceiving, what about that first bullet 
when you say POGO----
    Mrs. Cubin. Now----
    Ms. Stockton. Excuse me. I want to respond----
    Mrs. Cubin. You will please come--you will come to order.
    Ms. Stockton. No, I'd like to respond to your 
characterization----
    Mrs. Cubin. You are not in charge----
    Ms. Stockton. [continuing] that I was intending to deceive.
    Mrs. Cubin. You are not in charge here. Ms. Brian----
    Ms. Stockton. I can respond to your characterization that--
--
    Mrs. Cubin. Ms. Brian----
    Ms. Stockton. [continuing] I intended to deceive.
    Mrs. Cubin. I will maintain order----
    Ms. Stockton. How can you say that POGO and Banta and Lobel 
and Novins have financial interests affected by Interior and 
DOA decisions?
    Mrs. Cubin. Ms. Brian----
    Ms. Stockton. I'd love to hear what those are.
    Mrs. Cubin. Ms. Brian, you will be found in Contempt of 
Congress if you do not abide by the rules.
    Ms. Stockton. Is there a rule that I can't raise my voice?
    Mrs. Cubin. I am in control of this hearing. I will tell 
you when you can speak, and you will answer the questions, and 
answer the questions only, please.
    Mr. Schaffer?
    Mr. Schaffer. Thank you, Madam Chairman.
    Ms. Brian, under oath you have claimed that Mr. Rutter made 
a poor choice of words when writing the minutes of the December 
9th, 1996 board meeting. You claim that there was never an, 
quote, ``agreement'' with Berman and Speir, yet the minutes 
attribute use of the word ``agreement'' separately to you and 
Mr. Banta. The Subcommittee learned two weeks ago that Mr. 
Rutter authored those minutes while the meeting was still fresh 
in his mind. The Subcommittee also learned that the board later 
approved those minutes without altering the description of your 
arrangement with Berman and Speir as an agreement. Thirteen 
months later you and Mr. Banta wrote a document signed by you, 
Mr. Berman, Mr. Speir, and that document uses the term 
``agreement'' to define itself and to describe the pact formed 
in December of 1996.
    Now, in October of 1996 you wrote a letter to Mr. Berman, 
reassuring him that you would live up to the January agreement. 
Do you still contend that all of that resulted from a slip of 
Mr. Rutter's pen?
    Ms. Stockton. No. I think it would be very unfair to blame 
Keith for the multiple use of the word ``agreement.'' I think 
the bottom line on the word ``agreement'' is that all of us who 
used it weren't lawyers, didn't realize that others looking at 
it, hoping to find nefariousness after the fact, were going to 
place some sort of significance on it. It was simply a 
memorialization of what I thought was the right thing to do. 
And that's a word. It didn't have any significance, and it 
certainly isn't a pact or a contract, which is what I detect 
you're trying to draw from the word ``agreement.'' I don't know 
that agreement even has any legal meaning.
    Mr. Schaffer. But just to clarify your answer, you answered 
in the negative, that you do not believe that all of that was a 
result of a mistake by Mr. Rutter; is that correct?
    Ms. Stockton. That's correct.
    Mr. Schaffer. Okay. And secondly, you stated that you 
intended to use the word ``agreement'' at one point, but now 
you think that might have been improper.
    Ms. Stockton. No. I think what I said was that I used the 
word. Obviously, I am--and you've spent a lot of time trying to 
find out who wrote it. I wrote it. No one asked me to write it.
    Mr. Schaffer. Wrote what?
    Ms. Stockton. The agreement. I wrote it.
    Mr. Schaffer. Okay.
    Ms. Stockton. I didn't have any lawyers looking to decide 
what words to use. I'm not a lawyer. I just thought it was a 
prudent thing to do, and I used the word ``agreement'', and it 
still doesn't, frankly, mean that it has any legal 
consequences, but it certainly never occurred to me that it 
would be, after the fact, described as a contract.
    Mr. Schaffer. Do you remember at any point any discussion 
of those minutes when they were approved? Were they--was there 
discussion before they were approved?
    Ms. Stockton. I don't know that there was a discussion, no.
    Mr. Schaffer. Do you recall any objection?
    Ms. Stockton. No, because I said, I don't think--the word 
doesn't raise any red flag to me as meaning anything 
particularly.
    Mr. Schaffer. Who is Clayton Dark?
    Ms. Stockton. He is one of the legion of lawyers who were 
in the qui tam case, that was jointly representing us and Benjy 
Johnson.
    Mr. Schaffer. And he--well, in April of last year, after 
learning of your initial payments to Berman and Speir, he asked 
for and was granted permission from the court, to resign his 
representation of POGO. Why was that?
    Ms. Stockton. I believe any communications between myself 
and Mr. Dark are attorney/client privileged.
    Mr. Schaffer. Fair enough. Two weeks ago the Subcommittee 
received credible evidence from Mr. Johnson, Mr. Martineck, and 
from their lawyers, which indicated that on September 23rd, 
1996, you telephoned Mr. Johnson, and stated that you knew his 
case was still under seal, and asked that he call your lawyers 
to join forces. And under oath in September of last year, 
knowing that Mr. Johnson might provide damaging testimony 
against you in court, you claimed it was the other way around. 
You swore that you invited him to join your litigation, but 
when the Committee subpoenaed evidence that would prove your 
version of the call, you did not turn over a single scrap of 
paper about the call or the conversation. Do you still admit to 
calling Mr. Johnson on September 23rd, 1996?
    Ms. Stockton. I know this will frustrate you, but anything 
to do with the litigation is not pertinent to this inquiry. But 
I can tell you--which may satisfy one of the many conspiracy 
theories that you guys have been operating on--that neither Mr. 
Berman nor Mr. Speir, and our decision to share money with 
them, had anything whatsoever to do with any litigation under 
seal or not. We didn't learn any information about any lawsuits 
of any kind from Mr. Berman or Mr. Speir. So it's not pertinent 
because it has nothing to do with our decision to share the 
money.
    Mr. Schaffer. So you will not admit to calling Mr. Johnson 
on September 23rd, 1996?
    Ms. Stockton. I will not discuss anything that's not 
pertinent to this inquiry, and because I'm explaining to you it 
has nothing to do with Berman or Speir. That's why----
    Mr. Schaffer. I'd like to give you a chance to deny for the 
Committee at this point in time. Could you refute the claim--my 
claim that you called Mr. Johnson on September 23rd, 1996?
    Ms. Stockton. And as I've said, that question is not 
pertinent to the inquiry because it has nothing to do----
    Mrs. Cubin. The Chair understands that Witness Brian has 
entered an objection because she believes that the answer to 
the question is not pertinent to the subject under inquiry. The 
Chair will address the issue--please stop the clock. The Chair 
will address the issue and poll the members as to whether they 
believe the question is pertinent.
    The Chair announced in the opening statement the purpose of 
this hearing--and has repeatedly reiterated why the 
Subcommittee has jurisdiction and authority. The Chair 
furthermore announced that we are examining one instance of 
where such payments were made to Mr. Berman and Mr. Speir by 
the Project on Government Oversight, and where the money came 
from.
    We are examining where the money for the payments came 
from--and it was from the lawsuit, so the question is 
pertinent--the agreements and transactions that resulted in the 
payments--that is pertinent as well--and the work of the 
government employees who took the payments, and differing 
accounts of the payments.
    Our purposes for this oversight relates to the integrity of 
the Executive Branch and regulatory decision-making concerning 
programs within the Department of Energy, the Department of the 
Interior, and the Minerals Management Service about matters 
under the jurisdiction of the Committee on Resources.
    I want to make sure that our purpose is clearly understood, 
because the Chair rules that the question put to the witness 
can yield an answer that allows the Subcommittee to better 
understand the subject matter we are examining. Specifically, 
the answer to the question will reveal facts about the 
transactions and the true agreements related to the payments 
and their influence on public domain oil royalty policy; facts 
about whether the operation of the departments and the Minerals 
Management Service was subject to influence by the 1996 
agreement between POGO, Berman and Speir; facts about the 
operation of the departments and possible effect on royalty 
policy and rules recently promulgated; facts related to the 
formulation of agency responses to congressional proposals for 
new oil valuation systems such as the royalty-in-kind proposal 
considered by this Subcommittee; facts related to how the 
payments were able to be made and accepted by employees who 
worked in oil royalty policy areas, so that the Subcommittee 
can formulate legislation, if need be, to raise the standards 
to ensure that these type of payments and side agreements that 
bring windfalls to Federal employees will never be allowed to 
happen again.
    The answer is necessary to understand the issues and 
subject matter of our hearing. The Chair therefore determines 
that the question relates to a constitutionally legitimate 
purpose. The Chair also determines that the question falls 
within the authority granted to Congress by the Constitution 
and by the House to the Committee and the Subcommittee. Our 
jurisdiction comes in part from Article IV, Section 3 of the 
U.S. Constitution, which states that, quote: ``That Congress 
shall have power to dispose of and make all needful rules and 
regulations, respecting the territory or other property 
belonging to the United States.'' Unquote.
    Article I of the Constitution, related to Legislative 
Branch power, also serves as a basis for our jurisdiction over 
the subject matter of this hearing. This jurisdiction has been 
delegated under House Rule X.1 (2)(11), (12), (17) and (19) to 
the Committee on Resources.
    Finally, our jurisdiction is additionally based on Rule X.2 
of the House Rules, which confers general oversight authority 
and jurisdiction over the organization and operation of 
departments that administer programs under the jurisdiction of 
the Committee and Subcommittee. Clearly, oil royalties fall 
within the Subcommittee's jurisdiction, as do factors that 
influence oil royalty policy development and implementation 
within the department, which is clearly an aspect of the 
operation of the department.
    The question asked falls within the grant of my authority 
made by the Constitution to the Congress, then to the 
Committee, and the Subcommittee by the House.
    The Chair informs the witness that the question meets the 
two requirements of pertinency. We have a constitutionally 
legitimate legislative purpose, and the question is within the 
grant of authority to the Subcommittee. Let me furthermore 
explain why the question is pertinent. Payments, let alone 
payments of the magnitude received to date by policy advisors 
in these departments, certainly can and likely will influence 
agency decisions. We heard testimony at our last hearing that 
the payments to Berman and Speir were agreed to in 1996 and 
that the operation of the department helped to develop the 
POGO/Brian lawsuit, which led to the payments to Mr. Berman and 
Mr. Speir. Rules and procedures must be in place to prevent the 
department and its resources from being used to help litigants 
learn how to frame competing lawsuits, develop their cases, and 
prosecute their claims, if that in fact is what was done.
    But to determine what was done, we must ask the question 
and have it answered, or you can be held in contempt. That is 
why this question and all the questions that relate to the 
subject of this inquiry are pertinent.
    Mr. Schaffer, would you please ask the question of the 
witness again.
    Mr. Schaffer. Thank you, Madam Chairman.
    Do you still admit to calling Mr. Johnson on September 
23rd, 1996?
    Ms. Stockton. Let me explain to you why my organization, in 
its entirety----
    Mr. Schaffer. Just a yes or no. Just a yes or no.
    Ms. Stockton. [continuing] if going to continue to assert 
our pertinence privilege, because, frankly, I would love to 
answer your questions----
    Mrs. Cubin. Excuse me, Ms. Brian----
    Ms. Stockton. I would love to answer these questions 
because they----
    Mrs. Cubin. The question put to you was whether or----
    Ms. Stockton. [continuing] deflect all of these silly 
conspiracies that you keep coming up with.
    Mrs. Cubin. Again, I ask you to----
    Ms. Stockton. But let me tell you why I have to assert----
    Mrs. Cubin. [continuing] you can be held in contempt if you 
do not.
    Ms. Stockton. You've asked me a question, Madam 
Chairwoman----
    Mrs. Cubin. I warn the witness----
    Ms. Stockton. [continuing] and I'm answering why I'm not 
telling you----
    Mrs. Cubin. [continuing] in the voice of the Supreme Court.
    Ms. Stockton. [continuing] the answer you want.
    Mrs. Cubin. That an erroneous determination on her part 
that the question is not pertinent, even if made in the utmost 
good faith, does not exculpate her in court if----
    Ms. Stockton. I can save you the time. I heard this before.
    Mrs. Cubin. [continuing] if later ruled that the questions 
were pertinent to the question under inquiry. Would you please 
answer the question?
    Ms. Stockton. Let me explain why we are aggressively 
protecting----
    Mrs. Cubin. Would you please restate the question, Mr. 
Schaffer?
    Mr. Schaffer. Thank you, Madam Chairman.
    Ms. Stockton. [continuing] our defense of pertinence, which 
is this----
    Mr. Schaffer. Ms. Brian, do----
    Ms. Stockton. [continuing] Subcommittee has asked us 
questions about our tax exempt status----
    Mr. Schaffer. [continuing] you still admit calling Mr. 
Johnson on September 23rd of 1996?
    Ms. Stockton. [continuing] and has asked for phone records 
for a year and a half period of my home and organization. It 
has asked for publications written by our board----
    Mrs. Cubin. You're out of order, Ms. Brian.
    Mr. Schaffer, would you please ask the question?
    Mr. Schaffer. Ms. Brian, do you still admit to calling Mr. 
Johnson on September 23rd, 1996? Yes or no would be fine, would 
suffice.
    Ms. Stockton. If I could finish what I was trying to say. 
The reason we----
    Mrs. Cubin. The witness will answer the question with a 
``yes'' or ``no.''
    Ms. Stockton. I will not answer the question because of my 
pertinence----
    Mrs. Cubin. Again I ask the witness to answer the question, 
and again I warn the witness that you can be held in contempt 
if you do not. This is your last chance. Please answer the 
question.
    Ms. Stockton. I am going to have to assert our pertinence 
defense because this Subcommittee has abused its authority and 
jurisdiction dramatically, and we realize if we open any doors, 
they'll never end.
    Mrs. Cubin. We don't need a reason. The Chair rules that 
the question is pertinent, and now I will poll the members. An 
aye vote determines whether the Subcommittee agrees that the 
question is pertinent. Mr. Schaffer?
    Mr. Schaffer. I vote aye.
    Mrs. Cubin. Mr. Brady?
    Mr. Brady. Aye.
    Mrs. Cubin. And the Chairman votes aye. No other members 
are present, so the vote is unanimous. The question is 
pertinent, and this is the last time I will ask the question, 
Ms. Brian. Would you restate the question one more time?
    Mr. Schaffer. Thank you, Madam Chairman.
    Ms. Brian, do you still admit to calling Mr. Johnson on 
September 23rd, 1996?
    Ms. Stockton. My objection remains.
    Mrs. Cubin. Would you proceed, Mr. Schaffer?
    Mr. Schaffer. Your claim that you invited him to join your 
lawsuit is one that you have made before. Do you still maintain 
that you invited him to join your lawsuit?
    Ms. Stockton. Yet again, because this has nothing to do 
with our decision to share the proceeds from the Mobil 
settlement with Mr. Berman or Mr. Speir, I'm not going to 
answer any questions that have nothing to do with----
    Mr. Schaffer. Is there any evidence you can provide this 
Committee to corroborate your version of the story as you have 
previously testified under oath?
    Ms. Stockton. Which story?
    Mr. Schaffer. Your previous statement under oath that you 
called Mr. Johnson on September 23rd, 1996, and that you 
claimed that you had invited him to join your lawsuit?
    Ms. Stockton. As I've said, since that has nothing to do 
with Mr. Berman or Mr. Speir, I'm not answering it.
    Mrs. Cubin. The Chair again rules that the question is 
pertinent for the same reasons that I've just outlined. I don't 
need to go through the script again. But do you understand why? 
Do you understand the ruling of the Chair or would you like me 
to go through this again?
    Ms. Stockton. No, I certainly understand.
    Mrs. Cubin. So I must ask you to answer the question again, 
and Mr. Schaffer, will you please restate the question?
    Mr. Schaffer. Can you offer any evidence to the 
Subcommittee to corroborate your version of this phone call on 
September 23rd, and the claim that you made at that point in 
time that--or during your previously sworn testimony, that you 
invited Mr. Johnson to join your suit?
    Ms. Stockton. As I've said, and in fact, you have the 
transcripts of 14 hours of testimony that I have given. I am 
not afraid of answering these questions. It's simply that in 
this particular forum it's not relevant and not pertinent.
    Mr. Schaffer. Is it fair to say that you will not provide 
evidence to this Committee to corroborate your testimony?
    Ms. Stockton. Not to this Subcommittee I won't.
    Mrs. Cubin. Again I ask the witness to answer the question, 
and warn the witness that you can be held in contempt if you do 
not.
    Ms. Stockton. My objection remains.
    Mrs. Cubin. Once again I will poll the members as to 
whether or not the Committee determines that the question is 
pertinent. Mr. Schaffer?
    Mr. Schaffer. Aye, the information is pertinent.
    Mrs. Cubin. Mr. Brady?
    Mr. Brady. Aye.
    Mrs. Cubin. And the Chair votes aye. The question is 
pertinent. I warn the witness in the words of the Supreme 
Court, that an erroneous determination on her part that the 
question is not pertinent, even if made in the utmost good 
faith, does not exculpate her, if the court should later rule 
that the questions were pertinent to the question under 
inquiry. This is your last chance to answer the question, Ms. 
Brian.
    Ms. Stockton. I'm not answering it to the Subcommittee.
    Mrs. Cubin. Mr. Schaffer, would you like to continue?
    Mr. Schaffer. Thank you, Madam Chairman.
    Ms. Brian, can you offer any evidence to this Subcommittee 
to corroborate your version of this phone call and the nature 
of it as you provided in your sworn testimony in September of 
last year?
    Ms. Stockton. Are we back to the Benjy Johnson phone call?
    Mr. Schaffer. Yes.
    Ms. Stockton. Well, I mean, you're wasting everyone's time, 
because I'm not going to talk about it.
    Mr. Schaffer. So the answer is no, you cannot provide 
evidence to the Committee?
    Ms. Stockton. The answer is I'm not talking about something 
that's not pertinent to your inquiry. You can skip down to the 
next set of questions. I'm just not going to do it.
    Mr. Schaffer. You're not going to do it? Very good, thank 
you.
    Last November, Henry Banta gave a deposition under oath in 
a successful effort to defend your continued sharing in cash 
settlements paid in Johnson v. Shell. A central issue in that 
hearing was whether paying Mr. Berman and Mr. Speir constituted 
paying witnesses in that case, and that Mr Banta, an attorney 
of long experience and great expertise in oil valuations, 
stated that both Berman and Speir lacked the knowledge to be--
the knowledge to be fact or expert witnesses--or expert 
witnesses in Johnson v. Shell. Do you agree with him?
    Ms. Stockton. I actually am not a lawyer, so I don't know 
what it takes for someone to be a witness, but I do know that 
the Justice Department has said that they never were going to 
be witnesses.
    Mr. Schaffer. Well, do you have any reason to disagree with 
Mr. Banta's----
    Ms. Stockton. Well, as I said, I'm not----
    Mr. Schaffer. [continuing] assessment?
    Ms. Stockton. [continuing] in a position to judge, because 
I'm not a lawyer. But if Mr. Banta, who is a lawyer, and the 
Justice Department also say that, then----
    Mr. Schaffer. I understand the explanation of what you are 
or are not, but do you have any reason for disagreeing with Mr. 
Banta?
    Ms. Stockton. Well, I don't speculate on things I don't 
have knowledge, so I can't say whether they would or not. I'm 
just telling you what I know, which is that those two parties 
have suggested that.
    Mr. Schaffer. If you have any reason to disagree, would you 
share it with the Committee now?
    Ms. Stockton. I don't understand why you keep asking the 
same question. I mean, I'm not a lawyer.
    Mr. Schaffer. Because I'd like an answer.
    Ms. Stockton. I don't know what it takes--I don't know what 
it takes for someone to be a witness.
    Mr. Schaffer. Did you have any reason to disagree? Sounds 
like you did not. That's the way I'm hearing you. Am I wrong, 
or did you have a reason to disagree?
    Ms. Stockton. I'm just--I'm not going to answer that 
because I don't know what it takes to be a witness. To answer 
something like that I feel like I would have to make my own 
judgment, and I can't make my own judgment on that.
    Mr. Schaffer. So you have nothing to go on as far as making 
a judgment on that matter?
    Ms. Stockton. I mean, I really don't mean to be 
impertinent, but as I've said, I'm not a lawyer. I don't know 
what it takes for someone to be a witness.
    Mr. Schaffer. Well, not being a lawyer, do you have any 
reason to disagree with Mr. Banta's assessment of the 
credibility of Mr. Berman and Speir, and their usefulness in 
the case?
    Ms. Stockton. I can keep saying the same thing over and 
over again. I am not going to speculate about it. I don't know 
what it takes to be a witness, but I do know that Justice said 
they never were going to be witnesses.
    Mr. Schaffer. In one of your own depositions under oath you 
were asked about some 11,000 pages of oil-valuation documents 
collected by POGO and turned over to the oil company 
defendants. Now, among those 11,000 pages, the only original 
work done by POGO were newsletters, press releases, and reports 
provided to supporters. There appeared to be no independent 
analysis or investigation of oil trading done by POGO. At the 
time, you conceded that to be true. Do you still take that 
position?
    Ms. Stockton. At that time did we have the--well, let's 
see--we had asked Peter Ashton to do that one analysis for our 
first report, but are you asking analysis done by myself?
    Mr. Schaffer. Independent analysis done by POGO.
    Ms. Stockton. Well, as I said, we asked Peter Ashton to do 
that analysis for us, so I'm not sure if that counts in what 
you're asking.
    Mr. Schaffer. Well, it wasn't your analysis; it was his; is 
that correct?
    Ms. Stockton. Correct. Again, because I am not an expert in 
oil--still I'm not--we rely on documentation provided by other 
people, our experts.
    Mr. Schaffer. At the time you gave that testimony under 
oath, you said that it was true that POGO did not contribute 
any independent information in those 11,000 documents. Do you 
still take that position?
    Ms. Stockton. I think that's correct.
    Mr. Schaffer. Think it is correct. Two weeks ago, and 
today, Mr. Banta could not recall when he recused himself from 
POGO board discussions of the lawsuit and the payments to 
Berman and Speir. Do you know when that happened?
    Ms. Stockton. I don't know when it happened, but I 
certainly do know it did happen.
    Mr. Schaffer. Can you tell us how you came to be aware of 
that?
    Ms. Stockton. Because I know that it is in our minutes.
    Mr. Schaffer. It's in your minutes?
    Ms. Stockton. Yes.
    Mr. Schaffer. Can the Committee have them?
    Ms. Stockton. Well, we turned them over to our attorneys, 
and they judged what was pertinent to your subpoenas, so if you 
don't have them, our attorneys made that judgment.
    Mr. Schaffer. Could you direct them to give those minutes 
to the Committee?
    Ms. Stockton. I leave the legal decisions up to my 
attorneys.
    Mr. Schaffer. Can you direct--could you direct them to give 
those to the Committee?
    Ms. Stockton. No. If they made a judgment that it wasn't 
pertinent to your subpoena, wasn't relevant to your subpoena, 
then I'm going to----
    Mr. Schaffer. Without a subpoena, would you give it 
voluntarily, or does it require a subpoena?
    [Conferring with counsel.]
    Ms. Stockton. I think because of the conduct over the last 
year by this Subcommittee, I'm not inclined to be voluntarily 
doing anything.
    Mr. Schaffer. Was the board notified of this recusal?
    Ms. Stockton. It was at the board meeting that he recused 
himself.
    Mr. Schaffer. Did he leave the room during relevant 
discussions?
    Ms. Stockton. As I recall.
    Mr. Schaffer. As you recall, he did?
    Ms. Stockton. Uh-huh.
    Mr. Schaffer. At what function as chairman on these 
matters--I'm sorry. Who functioned as chairman on these matters 
in place of Banta?
    Ms. Stockton. As you may have seen from my board's 
testimony two weeks ago, it's not a formal group. So I don't 
know that anyone actually took over the role of chairman. I 
generally--when Hank was the chairman, I generally, you know, 
ran through the agenda for those meetings.
    Mr. Schaffer. You did?
    Ms. Stockton. I guess I continued----
    Mr. Schaffer. When you say it's not a formal group, you 
mean it doesn't act, conduct itself with formal rules, or----
    Ms. Stockton. It conducts itself very professionally, but 
there wasn't a concern about titles and who was sitting at the 
front of a table where there were discussions.
    Mr. Schaffer. So the term you just used, ``formal'', 
relates to the conduct, not any legal standing or anything like 
that, I take it?
    Ms. Stockton. I suppose so.
    Mr. Schaffer. Okay. Let's see. On the May 4th hearing, 
nobody on your board would admit to knowing when and why Mr. 
Banta gave up the board chair. When did Mr. Banta give up his 
post?
    Ms. Stockton. I don't recall that testimony at all. I was 
here. What are you referring to? Can you point to where that is 
in the testimony from the last----
    Mr. Schaffer. No, I can't. But if you can't recall it, can 
you recall anybody being knowledgeable of when and why Mr. 
Banta gave up the board chair?
    Ms. Stockton. It was sometime in '98, which I thought you 
did have the minutes of when he--well, our attorneys again 
decided that it wasn't pertinent to your subpoenas. And he had 
been the chairman for over eight years, and because--I think 
the second factor was simply because the litigation was 
becoming more serious, that because he had recused himself from 
it, it became more important to have someone who had not 
recused themselves as chairman.
    Mr. Schaffer. So once again, when do you recall that he 
gave up the chair or gave up the post?
    Ms. Stockton. I recall it sometime in '98, but I don't 
remember when in '98.
    Mr. Schaffer. Sometimes in '98. Was it about the time, or 
the same day, perhaps, that Mr. Hunter rose to the 
chairmanship?
    Ms. Stockton. Oh, it would be the same day, certainly.
    Mr. Schaffer. It was the same day, sometime in 1998. Ms. 
Brian, the Committee is concerned that POGO has not provided 
complete and unaltered board of director meeting minutes 
concerning the matters under inquiry. Did the board discuss the 
lawsuit or the payments to Berman and Speir on any occasion 
other than on December 9th, 1996 and October 27th, 1998?
    Ms. Stockton. If those are the minutes you have, I believe 
those are the only--certainly those are the only minutes where 
they were discussed. And that raises something else that I 
found fairly outrageous in the conduct of the Subcommittee, 
which was a press release sent by the Subcommittee, accusing us 
of obstruction of justice. It turned out it was because our 
board minutes had been excerpted rather than redacted, and so 
the Subcommittee didn't get four blank pages with the section 
that was relevant. And based on that, a press release accusing 
us of obstruction of justice, I find really extraordinary and 
very unfair.
    Mrs. Cubin. I have to object to one thing: that the 
behavior of this Subcommittee over the last year prompted you 
to hold the Congress in contempt. We were only----
    Ms. Stockton. No. Madam Chairman, I do not hold the 
Congress in contempt.
    Mrs. Cubin. This was only transmitted to us two months ago, 
so we haven't even been working on it for a year.
    Ms. Stockton. You're right.
    Mrs. Cubin. Go ahead, Mr. Schaffer.
    Ms. Stockton. It's the full Committee that has operated 
this way, not just the Subcommittee, and I do not hold the full 
Congress in contempt.
    Mr. Schaffer. You mentioned that it's your general 
agreement that the board did discuss the lawsuits of payments--
or the payments to Berman and Speir on December 9th and 
December 27th. Do you recall any other--any other meetings 
where these discussions might have taken place?
    Ms. Stockton. December 27th I'm not familiar with. I think 
our offices were closed.
    Mr. Schaffer. December 9th, October 27th.
    Ms. Stockton. Oh. And what was----
    Mr. Schaffer. December 9th of 1996, December--or October 
27th, 1998.
    Ms. Stockton. And what was the question? Do I recall any--
--
    Mr. Schaffer. Do you recall any other occasions when the 
board might have discussed the lawsuit or payments to Berman 
and Speir?
    Ms. Stockton. Well, as--I believe it was Dina Rasor on our 
board, who testified, the board members speak with us 
frequently outside of board meetings, and so I'm sure that many 
board members on occasion were in touch with us and were aware 
of what was going on.
    Mr. Schaffer. Can you explain why we were only given short 
segments of only two meetings almost two years apart?
    Ms. Stockton. Because those are the only times that our 
board, in a meeting, talked about this. There was no--let me 
explain something, because I know you find this so hard to 
believe. There was no discomfort within the organization or on 
the board that there was anything wrong or improper about our 
decision to share the money with these guys.
    Mr. Schaffer. So did the board never----
    Ms. Stockton. Let me just finish because maybe it will help 
you understand. You know, there's been such an effort to find 
nefariousness and mal-intent. Because our organization has 
always worked with whistleblowers and we've never filed any 
kind of lawsuit--false claims lawsuit before, and there's been 
so much made of, you know, you've never had public----
    Mr. Schaffer. Ms. Brian, I appreciate the detail, but I'm 
under limited time here, and this is really more information 
than I want. Let me go into the next question. Did the board 
never visit----
    Ms. Stockton. Maybe it doesn't fit your conspiracy 
theories, but it's the truth.
    Mr. Schaffer. Did the board never visit these matters 
within that two-year time period?
    Ms. Stockton. As I said, there were many board members, who 
would, on occasion, talk to us, but not formally during board 
meetings.
    Mr. Schaffer. When did you first learn that POGO had 
endangered its tax exempt status by launching a new major 
program without amending the Form 1023, and especially by 
undertaking a lawsuit which would be seen as designated--excuse 
me--designed to enrich Mr. Brock, Mr. Berman and Mr. Speir?
    Ms. Stockton. Well, we certainly never learned that we had 
endangered our tax status, because we haven't.
    Mr. Schaffer. Did POGO amend its IRS 1023 form?
    Ms. Stockton. That's not pertinent to the inquiry.
    Mr. Schaffer. Let me ask again. Did POGO amend its IRS Form 
1023 to reflect a new program of cash public service awards 
exceeding three times the annual budget?
    [Conferring with counsel.]
    Ms. Stockton. Could you repeat the question, please?
    Mr. Schaffer. Did POGO amend its IRS Form 1023 to reflect a 
new program of cash public service awards exceeding three times 
the annual budget?
    Ms. Stockton. No, we don't have to. No, we didn't.
    Mr. Schaffer. You did not amend----
    Ms. Stockton. No, we did not.
    Mr. Schaffer. POGO did not amend its IRS 1023 form?
    Ms. Stockton. No. And that raises something that happened 
in the last Committee meeting that needs to be cleared up. The 
Committee has had the relevant tax forms from us for over a 
year. You've had our 1998 990s----
    Mr. Schaffer. Nonetheless----
    Ms. Stockton. [continuing] which reflect the fact that we 
did--we recorded that we received the money and the fact that 
we distributed the money to both Mr. Berman and Mr. Speir.
    Mr. Schaffer. Just to be clear, you did not amend your tax 
form?
    Ms. Stockton. No, we didn't, but I think that the--in the 
last hearing, when the Committee disingenuously badgered Keith 
Rutter over something the Committee knew it already had, I 
found really appalling.
    Mr. Schaffer. In December 1991, when the IRS granted POGO 
tax exempt status, you were specifically cautioned that if cash 
distributions are made to individuals, POGO must create a 
complete written record, including the purpose of awards and 
the manner of selection. That file must also fully detail the 
relationship of any awardee to any director of POGO. Two weeks 
ago your board of directors could not recall any such 
documentation supporting the selection of Mr. Berman or Mr. 
Speir for your public service awards. Please listen carefully, 
because I'm not going to ask about compliance with the IRS 
requirements. I'm asking you, Ms. Brian, whether such 
documentation exists, and why it was not produced under any 
subpoena from this Committee?
    Ms. Stockton. You're making reference to documentation I'm 
completely unfamiliar with. That we were required to do what?
    Mr. Schaffer. Whether--well, the documentation that I'm 
asking about----
    Ms. Stockton. These are 990s?
    Mr. Schaffer. No.
    Ms. Stockton. Then what are you talking about?
    Mr. Schaffer. It's a separate requirement. Under tax exempt 
status you were specifically cautioned that if cash 
distributions are made to individuals----
    Ms. Stockton. Who cautioned me?
    Mr. Schaffer. [continuing] POGO must----
    Ms. Stockton. Who----
    Mr. Schaffer. The IRS, ma'am.
    Ms. Stockton. No, they haven't.
    Mr. Schaffer. In 1991 they did. That POGO must create a 
complete written record, including the purposes of awards and 
the manner of selection. That file must also fully detail the 
relationships of any awardee to any director of POGO.
    Now, two weeks ago your board could not recall any such 
documentation supporting the selection of Mr. Berman or Mr. 
Speir for your public service awards.
    Ms. Stockton. Well, I don't know----
    Mr. Schaffer. So I want to know----
    Ms. Stockton. [continuing] if the 1991 regulations that 
you're talking about are still in effect, but I can guarantee 
you there are accountants who are experts on tax exempt law, 
were very careful, as we went through this process, to insure 
we fulfilled all requirements. So I totally trusted our 
accountants had us do whatever we needed to do. And I'm not 
familiar with those requirements at all.
    Mr. Schaffer. You believe--your guarantee that you just 
made to the Committee is one that we--that should place 
confidence----
    Ms. Stockton. I'm not sure I said ``guarantee.'' I said we 
had our accountants, who are experts in this--and I don't think 
Mr. Casey is.
    Mr. Schaffer. Do you recall making any documentation at 
all?
    Ms. Stockton. I don't recall that there's any requirement 
for such documentation, never heard of such a thing.
    Mrs. Cubin. The time of the Majority has expired. Since 
there are no Minority members, the time is yielded back. And 
now I will recognize Mr. Casey for 30 minutes of questioning by 
staff.
    Mr. Casey. Thank you, Madam Chairman. I believe Mr. Brady 
has a question.
    Mr. Brady. Thank you, Mr. Casey, Madam Chairman.
    Mrs. Brian Stockton, you had knowledge of the Johnson v. 
Shell qui tam lawsuit while it was under seal, didn't you?
    Ms. Stockton. As I've said before, that has nothing to do 
with our decision to--the question has nothing to do with our 
decision to share----
    Mr. Brady. Mrs. Stockton, you had knowledge, personal 
knowledge of the Johnson v. Shell qui tam lawsuit while it was 
under seal. Do you disagree with the accuracy of that 
statement?
    Ms. Stockton. We're just going to go through this whole 
exercise all over again.
    Mr. Brady. Well, really, for a group that prides itself in 
honesty and openness by exposing----
    Ms. Stockton. I've answered these questions over 14 hours 
in depositions. You already got the transcripts.
    Mr. Brady. You have every opportunity to answer simple 
questions.
    Ms. Stockton. You already know my answers. You've got the 
transcript. But simply, this is not the forum for your 
question.
    Mr. Brady. It is not the forum of your choosing, but it is 
a constitutional forum. And the bottom line is, what we all 
know here, is that you as a special interest contracted with 
two government insiders to provide information for a lawsuit 
that legally you were not to know of. You then agreed and 
confirmed repeatedly that you would split the proceeds of that 
lawsuit with these two government insiders. You specifically 
went out of your way to count it as a award, which is 
ludicrous. And now you----
    Ms. Stockton. Why is that ludicrous, Mr. Brady?
    Mr. Brady. [continuing] have basically----
    Ms. Stockton. Why is that so hard for you to understand?
    Mrs. Cubin. The witness will please just answer the 
question.
    Ms. Stockton. No, I'm sorry. I keep getting----
    Mrs. Cubin. The witness doesn't have----
    Ms. Stockton. [continuing] interrupted.
    Mrs. Cubin. [continuing] right to ask the panel questions.
    Ms. Stockton. I want to understand why that's ludicrous to 
you, that we would think it was the right thing to do to share 
the money with these guys? Why can't you understand that?
    Mr. Brady. Madam Chairman, I think this is actually 
helpful, because your asking that question, why is it 
ludicrous, tells me that you no longer believe that these 
questions aren't pertinent. You want to know an answer about 
why we are questioning you. So let's go down that line of 
information. Now that you said you want to know the 
information, let's talk about it.
    Ms. Stockton. No. I said what--I want to know why you find 
it's ludicrous that we shared the money with these two men? And 
I'll talk to you all night about why we shared the money, about 
these two men.
    Mr. Brady. You had a signed contract.
    Ms. Stockton. It is not a contract----
    Mr. Brady. Because you've given awards----
    Ms. Stockton. Are you--you know----
    Mr. Brady. You've never given money----
    Ms. Stockton. [continuing] it's not a contract. There was 
no consideration. You know it's not.
    Mr. Brady. No, actually, the bottom line----
    Ms. Stockton. This Committee continues to say things you 
know aren't true.
    Mr. Brady. No, you did not give this as an award. You have 
not given $383,000 to other--other of your ``beyond the 
headlines'' award winners, have you? And they have done 
wonderful----
    Ms. Stockton. We had never filed a qui tam lawsuit before.
    Mr. Brady. You didn't provide an award because--out of 
graciousness. It was exactly one-third of your share of your 
lawsuit, plus--exactly one-third, which is exactly what was 
testified was the agreement, which was then confirmed four 
times and then executed by you. Everyone knows----
    Ms. Stockton. Do you know why I did one-third?
    Mr. Brady. Everyone in America knows that that is 
ludicrous. And for an agency that--an organization that claims 
to be for open and forthright government, to stonewall behind 
pertinency issues, when all you simply need to do is be as 
truthful as you insist others be, and open as you insist others 
be. To me, it is so hypocritical, when all you need to do is to 
tell the truth and to clear your name. But you won't, so let me 
finish.
    Ms. Stockton. Mr. Brady----
    Mr. Brady. You had--who imparted----
    Ms. Stockton. [continuing] you know these questions have 
already been answered by me.
    Mr. Brady. [continuing] or related knowledge of the Johnson 
v. Shell lawsuit to Mr. Banta while the suit was under seal. Do 
you disagree with the accuracy of that statement?
    Ms. Stockton. I'd like to answer the last point you were 
making about the one-third, one-third, as though there was some 
significance to that. That was, frankly, something I just came 
up with off the top of my head because it seemed the even 
share. And also the issue that's been raised before on 
interest, was completely my idea, because when we got the money 
and we saw--because I had never dealt with that much money--how 
quickly interest grows, I thought that was a significant amount 
of money, and that the right thing to do would be to share that 
as well. So that was not anyone else's idea but my own.
    Mr. Brady. Well, it doesn't matter whose idea it was. The 
agreement was executed, confirmed, and the checks were cashed.
    Ms. Stockton. I wrote it. I wrote it. Those were my--that 
was my idea completely.
    Mr. Brady. Okay. So you're saying it is pertinent about the 
agreement in your discussion of it, but it is not pertinent for 
us to ask questions about that agreement and how you arrived at 
it?
    Ms. Stockton. No, it is absolutely pertinent, obviously, 
about this agreement.
    Mr. Brady. Good, good. Then let's do that.
    Ms. Stockton. About the agreement.
    Mr. Brady. Let's do that.
    Ms. Stockton. Or any sharing with Berman and Speir.
    Mr. Brady. The agreement dealt with the lawsuit that you 
filed. The question is: how did you develop the information for 
the lawsuit for the agreement which you now agree is pertinent.
    Ms. Stockton. The agreement is pertinent.
    Mr. Brady. The question to you: did you have personal 
knowledge of the Johnson v. Shell qui tam lawsuit while it was 
under seal?
    Ms. Stockton. I can say that neither Mr. Berman nor Mr. 
Speir gave me any information about any lawsuit or to help me 
file any lawsuit.
    Mr. Brady. Okay. The question is: did you have personal 
knowledge of the Johnson v. Shell qui tam lawsuit while it was 
under seal?
    Ms. Stockton. Well, to get my answer, which is under oath, 
you can refer to the testimony I've already given on the 
subject, but in this forum I cannot----
    Mr. Brady. But for openness and honesty, is it----
    Ms. Stockton. No, I can't, because this Subcommittee--I 
have to protect my organization from this Subcommittee's 
insatiable desire to go into every corner of our----
    Mr. Brady. Excuse me. I'm not asking for the whole 
organization. I'm asking you. Now that you have said it is 
pertinent about how you reached this agreement, let's start at 
the beginning. Did you have personal knowledge of the Johnson 
v. Shell qui tam lawsuit while it was under seal? Yes or no.
    Ms. Stockton. And my answer is, it is pertinent.
    Mr. Brady. Thank you. So yes or no.
    Ms. Stockton. No. My answer is it is pertinent with regards 
to Mr. Berman and Mr. Speir, and neither of those gentlemen had 
anything to do with that lawsuit.
    Mr. Brady. Actually, the question isn't about Mr. Berman 
and Mr. Speir; it is only about your personal knowledge.
    Ms. Stockton. But that's my point, because that is the only 
part that's pertinent, is with regards to our sharing money 
with Mr. Berman and Mr. Speir.
    Mr. Brady. You said--you just testified you came up with 
one-third, one-third, one-third split on how to divvy up this 
lawsuit. So let's go back and ask you, since it was your idea 
and you initiated it. So, as the initiator, did you have 
personal knowledge of the Johnson v. Shell lawsuit under--while 
it was under seal? Simple yes or no.
    Ms. Stockton. The simple answer is you can find the answer 
to that in my transcript.
    Mr. Brady. Is it yes or no?
    Ms. Stockton. And I'm not answering it in this forum. I've 
already answered it.
    Mr. Brady. It is in your transcript.
    Ms. Stockton. Right.
    Mr. Brady. So we must dig through it, but for the sake of--
--
    Ms. Stockton. Well, I'm sure Mr. Casey has the answers 
there already.
    Mr. Brady. [continuing] timeliness, is the answer yes or 
no?
    Ms. Stockton. I have to protect our interest and preserve 
our defenses against this Subcommittee.
    Mrs. Cubin. Ms. Brian, it is--it has already been ruled as 
pertinent. Pertinency is decided by the Committee, not the 
witness. That is the authority of the Committee to do that, and 
the Committee has determined that the question is pertinent. 
So----
    Ms. Stockton. But if you want the answer, you've already 
got it. You've got the answer in your----
    Mr. Brady. For the sake of brevity, what is the answer?
    Mrs. Cubin. Now, this--I mean this really is silly. You do 
realize that you can be held in contempt for not answering this 
question, and----
    Ms. Stockton. I'm not doing this lightly, Madam Chairman--
I'm sorry--Madam Chairwoman, but the reality is, this 
Subcommittee has been so abusive in its treatment of us that we 
have to be very aggressive in protecting our rights.
    Mrs. Cubin. Ms. Brian, that is irrelevant to the issue of 
pertinency.
    Ms. Stockton. No, it's really not irrelevant.
    Mrs. Cubin. So I will go through the script. We have to do 
this properly so that when contempt charges are--yes, please 
restore some time back on the clock for all this--so that when 
contempt charges are pursued, then we will have done it 
correctly. So forgive me--I guess you don't need to forgive me; 
you are requiring this.
    The Chair understands that the Witness Brian has entered an 
objection because she believes the answer to the question is 
not pertinent to the subject under inquiry. The Chair will 
address the issue and poll the members as to whether they 
believe the question is pertinent.
    The Chair announced in the opening statement that the 
purpose of this hearing--the Chair announced the purpose of 
this hearing, and has repeatedly reiterated why this 
Subcommittee has jurisdiction and authority. The Chair 
furthermore announced that we are examining one instance of 
where such payments were made to Mr. Berman and Mr. Speir by 
the Project on Government Oversight.
    We are examining where the money for the payments came 
from; the agreements and transactions that resulted in the 
payments; the work of the government employees who took the 
payments and differing accounts of the payments.
    Our purposes for this oversight relates to the integrity of 
the Executive Branch and the regulatory decision-making 
concerns within the Department of Energy, the Department of the 
Interior, and the Minerals Management Service about matters 
under the jurisdiction of the Committee.
    I want to make sure that the purpose is clearly understood, 
because the Chair rules that the question put to the witness 
can yield an answer that allows the Subcommittee to better 
understand the subject matter we are examining.
    The answer is necessary to understand the issues and 
subject matter of our hearing. The Chair therefore determines 
that the question relates to a constitutionally legitimate 
purpose. The Chair also determines that the question falls 
within the authority granted to Congress by the Constitution 
and by the House to the Committee and Subcommittee. Our 
jurisdiction comes in part from Article IV, Section 3 of the 
U.S. Constitution, which states, quote: ``That Congress shall 
have power to dispose of and make all needful rules and 
regulations, respecting the territory or other property 
belonging to the United States.'' Unquote.
    Article I of the Constitution, related to Legislative 
Branch power, also serves as a basis for our jurisdiction over 
the subject matter of this hearing. This jurisdiction has also 
been delegated under House Rule X.1(l)(11), (12), (17) and (19) 
to the Committee on Resources.
    Finally, our jurisdiction is additionally based on Rule X.2 
of the House Rules, which confers general oversight authority 
and jurisdiction over the organization and operation of the 
departments that administer programs under the jurisdiction of 
the Committee and Subcommittee. Clearly, oil royalties fall 
within the Subcommittee's jurisdiction, as do factors that 
influence oil royalty policy development and implementation 
within the department, which is clearly an aspect of the 
operation of the department.
    The question asked falls within the grant of authority made 
by the Constitution to the Congress, then the Committee, and 
the Subcommittee by the House.
    The Chair informs the witness that the question meets the 
two requirements of pertinency. We have the constitutionally 
legitimate legislative purpose, and the question is within the 
grant of authority to the Subcommittee. Let me further explain 
why the question is pertinent. Payments, let alone payments of 
the magnitude received to date by policy advisors in these 
departments, certainly can and likely will influence agency 
decisions. We heard testimony in the last hearing that the 
payments to Berman and Speir were agreed to in 1996 and that 
the operations of the department were used to develop the POGO/
Brian lawsuit, which led to the payments to Mr. Berman and Mr. 
Speir. It is pertinent because the funds that made the payments 
came from the Johnson v. Shell case, and the subject matter of 
the suit is in our jurisdiction.
    Rules and procedures must be in place to prevent the 
department and its resources from being used to help litigants 
learn how to frame competing lawsuits, develop their cases, and 
prosecute their claims, if in fact that's what was done.
    But to determine what was done, we must ask the question 
and have it answered, or you can be held in contempt. This is 
why the question and all questions that relate to the subject 
of this inquiry are pertinent.
    Mr. Brady, would you please restate the question?
    Mr. Brady. Yes. Do you have--Ms. Stockton, do you have any 
knowledge, personal knowledge or otherwise, of the Johnson v. 
Shell qui tam lawsuit while it was under seal?
    Ms. Stockton. My objection stands.
    Mrs. Cubin. I again ask the witness to the--I again ask the 
witness to answer the question, and remind the witness that you 
can be held in contempt if you do not.
    Mr. Brady, would you state the question one more time?
    Mr. Brady. Ms. Stockton, do you have any knowledge, 
personal knowledge or otherwise, of the Johnson v. Shell qui 
tam lawsuit--I have trouble pronouncing--while under--while it 
was under seal?
    Ms. Stockton. My objection stands.
    Mrs. Cubin. I warn the witness in the words of the Supreme 
Court, that, quote, ``An erroneous determination on her part 
that the question is not pertinent, even if made in the utmost 
good faith, does not exculpate her if the court should later 
rule that the questions were pertinent to the question under 
the inquiry.'' Cite, Watkins v. United States. This is your 
last chance, Ms. Brian. Would you please answer the question?
    Ms. Stockton. My objection stands.
    Mrs. Cubin. Would you proceed, Mr. Brady?
    Mr. Brady. Yes. I will note that the witness did agree to 
answer this question by referring to other documents, and so it 
seems very hypocritical that she would not simply answer this 
question.
    Ms. Stockton. Can I ask what document you're referring to?
    Mr. Brady. You referred to it. You said that you had 
provided the answer to the Committee in earlier testimony.
    Ms. Stockton. So?
    Mr. Brady. Surely your memory is not that short.
    Ms. Stockton. I said I've never answered to the 
Subcommittee those questions.
    Mr. Brady. You directed us--to answer that question that I 
asked you, you directed us to our own records which you have 
provided us. Do you say you didn't?
    Ms. Stockton. Oh, I didn't provide you anything. No.
    Mr. Brady. What's that?
    Ms. Stockton. You're talking about the transcripts of the 
oil companies deposition.
    Mr. Brady. Okay. Well, let me wrap it up real quickly for 
you. Ms. Stockton, you imparted or related knowledge of the 
Johnson v. Shell lawsuit to Mr. Banta while the suit was still 
under seal. Do you disagree with the accuracy of that 
statement?
    Ms. Stockton. I'm going to continue to object to that line 
of questioning.
    Mr. Brady. Mrs. Stockton, you had knowledge gained from 
Department of Interior and department of Energy employees, both 
current and former employees, about the Johnson v. Shell 
lawsuit while it was under seal. Do you disagree with the 
accuracy of that statement?
    Ms. Stockton. I can answer that question because it is--if 
you're referring to Mr. Berman and Mr. Speir, the answer is no.
    Mr. Brady. That you had no knowledge?
    Ms. Stockton. No.
    Mr. Brady. That is a pertinent question then?
    Ms. Stockton. Because you're asking about Mr. Berman and 
Mr. Speir giving me any information. That's what I told you, if 
you ask me about them. They did not tell me anything about any 
losses including Johnson v. Shell.
    Mr. Brady. And so no knowledge, no information developed by 
Mr. Berman or Mr. Speir, or included in their purview of work 
responsibilities, wasn't provided for or incorporated into the 
POGO qui tam lawsuit?
    Ms. Stockton. Say that again, because, of course, during 
the years that I was learning about the underpayments, both Mr. 
Berman and Mr. Speir explained a lot to me about how it works, 
and so I certainly can't separate out what I learned and how 
things worked from them and how that ended up in the lawsuit 
ultimately, but certainly----
    Mr. Brady. Actually, the question wasn't on the process. 
The question was: is there information contained in your 
lawsuit that was provided by or in the work purview of Mr. 
Berman and Mr. Speir--not the process; that's not included in 
the lawsuit--the facts of your lawsuit.
    Ms. Stockton. I don't believe so, no.
    Mr. Brady. That's a no?
    Ms. Stockton. I said I don't believe so. I haven't looked 
at that lawsuit in years.
    Mr. Brady. Okay. So since we are dealing with the 
pertinency of your knowledge of this lawsuit, again I'll ask 
you----
    Ms. Stockton. No. Pertinence was--you were asking about 
whether Mr. Berman or Mr. Speir, right?
    Mr. Brady. Yes.
    Ms. Stockton. Okay.
    Mr. Brady. Now, the pertinency again, we probably won't go 
back over that. Final question. Do you have any personal 
knowledge of a phone call from U.S. Attorney Mike Bradford to 
Mr. Benjy Johnson prior to the filing of your qui tam lawsuit?
    Ms. Stockton. I guess that's also not pertinent.
    Mr. Brady. Thank you, Madam Chair.
    Mrs. Cubin. The chair recognizes Mr. Casey.
    Mr. Casey. Thank you, Madam Chairman.
    Who did tell you about Johnson v. Shell before you filed 
your suit?
    Ms. Stockton. That's not a pertinent question.
    Mr. Casey. Who told you about Mr. Wright's suit before you 
filed your own?
    Ms. Stockton. Mr. who?
    Mr. Casey. Gene Wright.
    Ms. Stockton. Oh. That's not pertinent.
    Mr. Casey. Do you know the name Pat Holloway?
    Ms. Stockton. Yes.
    Mr. Casey. Have you ever had a phone conversation with Mr. 
Holloway?
    [Conferring with counsel.]
    Ms. Stockton. That's not pertinent. I'm sorry. I didn't--
that has nothing to do with Mr. Berman or Mr. Speir at all.
    Mr. Casey. Do you acknowledge having a telephone 
conversation with Mr. Holloway in which you admitted to having 
knowledge of more than one sealed oil royalty qui tam suit?
    Ms. Stockton. I'm sorry. What?
    Mr. Casey. Do you admit to having a conversation with Mr. 
Holloway, telephone conversation, in which you admitted to 
having knowledge of more than one sealed qui tam oil royalty 
suit.
    Ms. Stockton. That's not pertinent.
    Mr. Casey. Do I correctly understand something you said 
earlier, that the only decision that has been made by POGO is 
to share the Mobil settlement with Mr. Berman and Mr. Speir?
    Ms. Stockton. Originally our intent had been to share any 
money received through the lawsuit. We had no idea how 
settlements would fall out. But once we discovered that Justice 
had concerns about our deciding to share with them, we 
obviously decided that we were going to wait while we did that 
again, and make sure that Justice was completely satisfied.
    Mr. Casey. What is POGO's current intention regarding----
    Ms. Stockton. Our intention is to do what Justice tells us 
to do.
    Mr. Casey. I don't imagine the Justice Department would 
ever tell you to share with Mr. Berman and Mr. Speir.
    Ms. Stockton. Well, if the Justice Department says they 
have no concerns about it, then I--you know, we still have only 
thought it was the honorable thing to do, and if Justice says 
they have no concerns, then they have no concerns.
    Mr. Casey. Well, I don't think they'll ever say, ``We have 
no concerns'', but if they conclude their investigation without 
charging POGO or Mr. Berman or Mr. Speir with a crime, will 
POGO resume one-third payments to Mr. Berman and Mr. Speir from 
oil royalty settlements?
    Ms. Stockton. I can't commit the board. We'll have to 
revisit that at that time. But the board continues to believe 
that it was the honorable thing to do, so.
    Mr. Casey. Are you saying now that the board has made no 
decision regarding that as yet?
    Ms. Stockton. The board's decision is to wait and see what 
the Justice Department finds.
    Mr. Casey. Haven't you testified under oath that in fact 
the staff and board of POGO have decided that because you 
deemed the agreement not to be legally enforceable, it is 
nullified, and you will make no further payments?
    Ms. Stockton. I've never said--no. I've never said it was 
nullified.
    Mr. Casey. You have never used that term ``nullified'' in 
relation to the agreement?
    Ms. Stockton. You can show me a transcript. I don't 
remember ever using that word.
    Mr. Casey. I'm calling on your memory, not on the 
transcript.
    Ms. Stockton. Excuse me?
    Mr. Casey. I'm calling on your memory, not on the 
transcript. Do you recall ever using the word----
    Ms. Stockton. I don't recall using the word ``nullified'', 
no. I do certainly know that no one on the board or the staff 
is concerned about it being legally binding. It's simply a case 
of whether once--if Justice comes, as we believe they will, to 
the conclusions that there is nothing wrong with having done 
this, then we'll have to revisit whether we want to continue 
doing it. We certainly didn't expect all of the hubbub.
    Mr. Casey. Did I just understand you to say that nobody on 
the board or staff at POGO has any concerns about whether the 
agreement is legally binding?
    Ms. Stockton. Yes. It's not.
    Mr. Casey. I'm sorry. It is not legally binding; is that 
what you're saying?
    Ms. Stockton. Absolutely.
    Mr. Casey. And did you also say that nobody on the board or 
on the staff at POGO has ever discussed whether it is legally 
binding?
    Ms. Stockton. Well, since your Subcommittee has, in the 
Washington Times, characterized it as such, we--that was really 
the first time it ever----
    Mr. Casey. I'm asking what the POGO board and staff has 
decided, not what the Washington Times has decided.
    Ms. Stockton. Well, that's when it came up as an issue.
    Mr. Casey. And what is the answer?
    Ms. Stockton. By being characterized as a contract, and we 
couldn't imagine why anyone would have thought it was a 
contract. It's not a contract.
    Mr. Casey. Do you consider it a moral commitment?
    Ms. Stockton. I do consider it a moral commitment.
    Mr. Casey. Will you live up to that commitment if the 
Justice Department declines to charge you, Mr. Berman or Mr. 
Speir, you, or POGO with a crime?
    Ms. Stockton. If the Justice Department has no concerns----
    Mr. Casey. How do you define ``no concerns?''
    Ms. Stockton. I don't know. I'll have to find out what 
happens at the end of--when Justice concludes their inquiry. 
We'll then have to revisit this. I mean, the reality is we've 
gone through a year of a lot of people making accusations. So I 
don't know, after that, if the board----
    Mr. Casey. I think Mr. Brand will confirm for you that the 
typical practice is that the Justice Department, at the end of 
an investigation, either informs the targets, if there are any, 
or the subjects, that they're either going to keep it open or 
that they have concluded it and have decided not to indict 
anybody at that time. If you are notified that the Justice 
Department has concluded its investigation and that they do not 
intend at that time to charge you, Mr. Berman or Mr. Speir with 
a crime, do you consider yourself morally obligated to resume 
payments to Mr. Berman and Mr. Speir?
    Ms. Stockton. I don't think obligated, no. I think none of 
us would have dreamed we'd go through this year of whatever you 
call it, so we'll have to revisit it then and see is it worth 
it.
    Mr. Casey. So what's happened in the last year, tempers or 
defines the moral obligation you say you made to these 
gentlemen in '96? Because it's been living hell, you don't have 
to do it?
    Ms. Stockton. Well, not just because it's been a living 
hell, but because we have never wanted in any way to do 
anything and have never done anything improper, or look like 
anything was improper. So if at the end of the day people other 
than the Washington Times think there was something improper in 
appearances, we wouldn't want to do that.
    Mr. Casey. Before the December 9, 1996 meeting--or the 
announcement of that meeting to the board, before that meeting, 
which was described in detail earlier with Mr. Banta, did you, 
on behalf of POGO, take any steps to assure yourself that it 
would not be improper to ask Mr. Berman and Mr. Spear to join 
your suit, or in the alternative, to offer to share with them?
    Ms. Stockton. Before December----
    Mr. Casey. Before you met with them in Mr. Banta's office, 
in evidently early December of '96, did you take any 
independent steps to assure yourself that it was proper to ask 
these Federal employees to join your suit as relators, or in 
the alternative, to share with you in the proceeds?
    Ms. Stockton. No, but I'm familiar enough with qui tam law 
to know that there's nothing improper about someone being a 
relator.
    Mr. Casey. But they weren't relators.
    Ms. Stockton. Well, you asked me if it was improper to ask 
them to be relators.
    Mr. Casey. Did you also take independent steps to assure 
yourself that it was not improper to offer or to commit or 
promise or agree to share the proceeds with them in the 
alternative to being a relator?
    Ms. Stockton. No, I didn't.
    Mr. Casey. You didn't. Could I ask one of the clerks, 
please, to hand to you the letter or memo dated October 8th, 
1998?
    Did you write that letter?
    Ms. Stockton. Yes.
    Mr. Casey. Could you read it for us, please?
    Ms. Stockton. You want me to read it out loud?
    Mr. Casey. Yes, please.
    Ms. Stockton. ``This is to confirm''--this is from me to 
Bob Berman--``This is to confirm our commitment to live up to 
our existing understanding that POGO will share in equal thirds 
with you and Bob Speir all past and future settlement amounts 
we received through our filing of the false claims act case 
regarding the underpayment of oil royalties. We will distribute 
the shares already received, as well as the accrued interest on 
or before November 2nd, and will distribute shares from any 
other settlements promptly upon receipt. You may reach me for 
any further discussion of this or any other matter through 
POGO's attorney, Lon Packard'', and his phone number.
    Mr. Casey. At the time you wrote that, did you mean it?
    Ms. Stockton. Yeah.
    Mr. Casey. Since that time has POGO informed Mr. Berman 
that it has revoked that commitment?
    Ms. Stockton. No.
    Mr. Casey. Has the POGO board of directors made a decision 
to revoke that commitment?
    Ms. Stockton. No.
    Mr. Casey. I would also ask one of the clerks to give you 
the page of arithmetic, please.
    Have you seen that before?
    Ms. Stockton. I don't think I have, no.
    Mr. Casey. Do you recognize the----
    Ms. Stockton. It's from our fax, so it's obviously from us.
    Mr. Casey. So you would concede that somebody at POGO 
created this document?
    Ms. Stockton. Well, no, I don't know that. All I know is 
that it was provided to the Subcommittee by us, but I don't 
know who created it.
    Mr. Casey. Do people often walk in off the street and use 
your fax machine?
    Ms. Stockton. No. I mean, it could have come into our 
office, could have been mailed to us, and we faxed it out. I 
don't know who created it.
    Mr. Casey. Would you agree that this appears, at least at a 
glance--I'm not very good at math, maybe you are----
    Ms. Stockton. No, I'm awful.
    Mr. Casey. That this appears to demonstrate how the total 
of $383,600 was arrived at?
    Ms. Stockton. Oh, yeah. Yes, that certainly is what it 
appears to be.
    Mr. Casey. Do you know why that might have been sent to Mr. 
Berman but not to Mr. Speir?
    Ms. Stockton. I have no idea. As I said, I haven't seen 
this.
    Mr. Casey. Would you describe for us your view of Mr. 
Berman's concern that POGO might not pay him as he expected?
    Ms. Stockton. He was agitating. He was excited that the 
Mobil settlement had actually become a reality. And we had, as 
you know, a number of steps that we wanted to take before we 
shared the money with them, to make sure--not that we had any 
concerns, but there was any illegality--we wanted to make sure 
we did it properly. And it took a couple of months to go 
through those steps. We got the money in August, and we went to 
attorneys, we went to accountants. We had another meeting of 
the board just to make sure everyone was comfortable that this 
was what we were doing, and we told the Justice Department. And 
that took a while. And Bob was excited and wanted to get his 
money, and I wrote him a letter that said our intentions, ``But 
you're not getting it yet.''
    Mr. Casey. Had a lawyer contacted you about Mr. Berman and 
this concern of his?
    Ms. Stockton. No.
    Mr. Casey. Had Mr. Berman told you that he was considering 
or would consider suing POGO?
    Ms. Stockton. No.
    Mr. Casey. Did he tell you or suggest to you that he was 
considering taking any kind of legal steps to secure his 
payment?
    Ms. Stockton. No.
    Mr. Casey. Did you hear Mr. Speir's testimony on that 
subject?
    Ms. Stockton. Yes, I did.
    Mr. Casey. Do you disagree with anything Mr. Speir said 
about this?
    Ms. Stockton. Well, I certainly can't disagree with what 
Mr. Speir knew.
    Mr. Casey. During the course of your conversations with Mr. 
Berman, when he was agitating, as you say, for his money, did 
he suggest to you, did he state that he felt you had committed 
to pay him that money and he expected it to be done?
    Ms. Stockton. I don't really recall that being the terms he 
was using. He was just excited about the money and wanted it, 
and----
    Mr. Casey. So he was merely impatient?
    Ms. Stockton. Yeah. I mean, that's probably----
    Mr. Casey. Then why refer him to Lon Packard?
    Ms. Stockton. Because I was annoyed, I was angry a little 
bit. I didn't want to deal with him any more. I told him to 
talk to my lawyer about it.
    Mr. Casey. But Mr. Packard doesn't represent you on this 
subject, does he?
    Ms. Stockton. Well, Mr. Packard was our lawyer for this 
litigation, and anything--I suppose I can't----
    Mr. Casey. Mr. Packard has told the world he doesn't 
represent you on this subject. He isn't privileged.
    [Conferring with counsel.]
    Ms. Stockton. I do have attorney/client privilege with 
regard to discussions with Mr. Packard, although I can say that 
we as an organization actually had separate counsel who had 
more experience on non-profit law.
    Mr. Casey. But any discussion you had with Lon Packard 
about the payments to Mr. Berman and Mr. Speir was not an 
attorney/client communication.
    Ms. Stockton. He's my lawyer.
    Mr. Casey. He has told the world that he is not your lawyer 
on the subject of the payments to Berman and Speir.
    Ms. Stockton. He's still my lawyer, so I can't tell you 
what I was talking to him about. I mean, the bottom line it----
    Mr. Casey. Did you ever talk about the weather with Mr. 
Packard?
    Ms. Stockton. I can't tell you that either. That's also 
attorney/client.
    Mr. Casey. Okay. I would also ask if the clerks would hand 
you a copy of the e-mail.
    Do you recollect that e-mail?
    Ms. Stockton. Actually, I don't recollect it, but I believe 
it.
    Mr. Casey. Could you read it aloud, please?
    Ms. Stockton. It's to Bob, and--Berman, on November 2nd, 
which was the day that we shared the money with them, and it 
says: ``Bob, thanks so much for the beautiful flowers. I'm so 
glad things have all worked out. I hope we can look forward to 
more of the same. Danielle.''
    Mr. Casey. Did you mean more flowers or did you mean more 
payments?
    Ms. Stockton. More settlements, sure.
    Mr. Casey. More payments to Mr. Berman?
    Ms. Stockton. More settlements, which meant--I know you 
find it hard to believe, but really, what was thrilling to us 
was that we finally got somewhere on this underpayment.
    Mr. Casey. Right. But as of November 2, '98, before the 
Washington Times was making your life difficult, would you have 
been meaning more of the same, meaning settlements resulting in 
one-third shares to Mr. Berman?
    Ms. Stockton. Or settlements resulting in hundreds of 
millions of dollars to the Treasury.
    Mr. Casey. And a little bit to you too, one-third----
    Ms. Stockton. And that too, absolutely right.
    Mr. Casey. One-third of which would go to Mr. Berman?
    Ms. Stockton. Absolutely right.
    Mr. Casey. So that's what you mean when you say you look 
forward to more of the same.
    Ms. Stockton. To all of that, yeah.
    Mr. Casey. Can you state categorically today that POGO will 
make no further payments at any time from the qui tam suit to 
Mr. Berman or Mr. Speir?
    Ms. Stockton. Do you think that's what I've said?
    Mr. Casey. I'm asking you if you will make that categorical 
statement?
    Ms. Stockton. No, I won't make that categorical statement. 
We've never believed it was wrong.
    Mr. Casey. I understand--you've already discussed that Mr. 
Dodd suggested or advised Mr. Packard that there should be no 
press conference. So it appears you're willing to discuss what 
Mr. Packard told you about his conversation with Mr. Dodd.
    Ms. Stockton. No, I'm willing to discuss what Mr. Dodd 
testified in his opening statement, and----
    Mr. Casey. Was that the first you had ever heard that Mr. 
Dodd did not wish you to have a press conference? You already 
cited it as a reason for not having a press conference.
    Ms. Stockton. Yes, but as you know, I hadn't cited it 
before Mr. Dodd publicly discussed it.
    Mr. Casey. Yes, but I'm saying that, today----
    Ms. Stockton. Yes, that's right.
    Mr. Casey. [continuing] you cited it, when asked why you 
didn't have a press conference, as one of the reasons you 
cited, the fact that ``Mr. Dodd didn't want us to have one.''
    Ms. Stockton. That's right, because today Mr. Dodd spoke of 
it, and also included that in his opening statement.
    Mr. Casey. But you didn't know that on November 2nd of 
1998. You didn't know that until an hour ago.
    Ms. Stockton. I didn't say that. I didn't tell you that.
    Mr. Casey. A couple hours.
    Ms. Stockton. Excuse me?
    Mr. Casey. You didn't know it until a couple of hours ago 
that Mr. Dodd didn't want you to have the press----
    Ms. Stockton. No, that's not what I said. I said I didn't 
discuss it with you or anyone publicly because before that, it 
would have been attorney/client privilege, but since he has 
spoken of it, it's not now.
    Mr. Casey. All right. Then we agree that the things Mr. 
Dodd has discussed are things you will talk about.
    Ms. Stockton. What he's discussed, I think I can.
    Mr. Casey. What was the purpose----
    [Conferring with counsel.]
    Ms. Stockton. Go ahead.
    Mr. Casey. Did you direct Mr. Packard to call Mr. Dodd 
about the payments?
    [Conferring with counsel.]
    Ms. Stockton. My communication with my attorney is 
attorney/client privileged, but I have said before tonight that 
one of our conditions for doing this was insuring that Justice 
knew we were doing it.
    Mr. Casey. And in order to fulfill that condition, did you 
direct him to notify Mr. Packard?
    Ms. Stockton. And as I said, I can't speak to you of what I 
said to my attorney, but you can draw your own conclusion.
    Mr. Casey. My conclusion is you didn't direct him.
    Ms. Stockton. Your conclusion is that I didn't direct him?
    Mr. Casey. That you did not direct Mr. Packard----
    Ms. Stockton. It doesn't surprise me, actually, that that's 
your conclusion, but I can't help that.
    Mr. Casey. What was the purpose of this notification to the 
Justice Department?
    Ms. Stockton. Because it was important to me, now that the 
money actually was happening, that the attorneys at Justice who 
were working on the litigation, were aware that these two men 
had a financial interest.
    Mr. Casey. If you were aware that they had told you not to 
do it, if you had been made aware of that, would you have not 
made the payments?
    [Conferring with counsel.]
    Ms. Stockton. Yes. I would absolutely not have done it had 
I been aware that Justice had said not to do it.
    Mr. Casey. Okay. Mr. Packard's version is that in the first 
telephone call with Mr. Dodd, Mr. Dodd did not express any view 
one way or the other about the payments. Why didn't you wait 
until the second conversation with Mr. Dodd if you wanted the 
department's approval, affirmative approval of the payments? He 
had said--by your own lawyer's version, he had said nothing one 
way or the other. He had not approved of it.
    Ms. Stockton. Let me read to you what my attorney wrote to 
your Committee last year.
    Mr. Casey. I've read it, and it doesn't represent that Mr. 
Dodd approved.
    Ms. Stockton. I'd like to read it for the record. ``Mr. 
Dodd did not advise me that he believes that POGO should not 
make the disbursements, and Mr. Dodd made no request that POGO 
do nothing until after he consulted with the department. If Mr. 
Dodd had told me that he felt the disbursements should not be 
made or had requested that POGO refrain from making such 
disbursements until after he had consulted with others within 
Justice, I certainly would have relayed this information to my 
clients, but as he did not do so, I did not relay any such 
information to POGO.''
    Mr. Casey. So you went to the trouble, according to your 
testimony, of notifying the Justice Department of your 
intention to do it. If they had told you not to do it, you 
would have heeded that advice. Is that correct?
    Ms. Stockton. That is correct.
    Mr. Casey. But in fact, you went ahead and made the 
payments without an approval from the Justice Department or 
even any indication one way or the other?
    Ms. Stockton. Well, as I have testified before, I wasn't 
concerned that there was anything wrong in doing it. I just 
wanted them to know.
    Mr. Casey. As you have just testified now, that if the 
Justice Department had said, ``Don't do it'', you would not 
have done it.
    Ms. Stockton. That's correct.
    Mr. Casey. Why didn't you wait----
    Ms. Stockton. I wasn't waiting for approval. There was 
nothing, as I've just demonstrated from our attorney, to wait 
for.
    Mr. Casey. So you were merely notifying them to give them a 
veto?
    Ms. Stockton. No, I was notifying them so they were aware, 
because as I said, I wanted them to be aware as the 
litigation----
    Mr. Casey. You're contradicting yourself.
    Ms. Stockton. No, I'm not.
    Mr. Casey. You were notifying them, but you had no purpose 
in notifying them.
    Ms. Stockton. No. The purpose was to insure that as they 
moved along with their litigation, that they were aware that 
these two gentlemen, if they were to turn to them for any 
information, had a financial interest.
    Mr. Casey. And if you had been made aware before you wrote 
the checks that Mr. Dodd objected to it, you would not have 
written the checks, correct?
    Ms. Stockton. That is absolutely correct.
    Mr. Casey. But the fact is, you went ahead and wrote the 
checks without knowing that Mr. Dodd approved of them, or 
anybody else at Justice, correct?
    Ms. Stockton. Well, actually, I'd like to go on because----
    Mr. Casey. Is that correct?
    Ms. Stockton. No, it's not correct.
    Mr. Casey. So did you have assurance before you wrote those 
checks that the Justice Department had affirmatively approved 
of them in the person of Mr. Dodd or anybody else?
    Ms. Stockton. No, because as I said, I wasn't concerned 
about approval, and Mr. Packard went on to say, after his--
October 27th with Mr. Dodd.
    Mr. Casey. I know the letter. I think it's simple. Maybe 
I've gotten you confused. You notified the Justice Department, 
not because you were concerned that anything was wrong with it; 
you just want them to know about it.
    Ms. Stockton. Right.
    Mr. Casey. But if they were to tell you, ``Don't do it'', 
you would have heeded that advice?
    Ms. Stockton. Yes.
    Mr. Casey. Why then didn't you----
    Ms. Stockton. I'd like to point out they have still not 
said that.
    Mr. Casey. Why then did you proceed without an affirmative 
approval?
    Ms. Stockton. It didn't even strike me Justice approves or 
disapproves things.
    Mrs. Cubin. The time of the gentleman has expired. I thank 
the witness for her testimony. Oh, excuse me. Yes, I yield to 
the Minority side.
    Ms. Lanzone. Ms. Brian, you were not allowed to make an 
opening statement. That decision was made by the Majority over 
the objections of our Minority members, as you know. And I 
meant to preface this by saying that Mr. Miller and Mr. 
Underwood apologize for not being here at 10:15 this evening to 
hear your testimony. But they did ask me to give you the 
opportunity to make any additional comments for the record, if 
you would like to do so on our time.
    Ms. Stockton. Thank you very much for the opportunity, but 
I am going to decline.
    Ms. Lanzone. Well, I'm assuming that your opening statement 
is submitted, it's in the folder as part of the record.
    Ms. Stockton. Could I have it inserted in the record?
    Mrs. Cubin. That's correct.
    [The prepared statement of Ms. Stockton follows:]

                  Statement of Danielle Brian Stockton

    The Committee Majority is not holding this hearing in an 
attempt to find the truth. Instead, this hearing marks the 
continuation of the Majority's efforts to punish and intimidate 
POGO and government whistleblowers. By doing so, the Majority 
hopes to silence those of us opposed to the rip-off perpetrated 
by the oil companies and to ensure that no whistleblower ever 
dares to stand up to Big Oil and its allies in the Congress 
again. It won't work.
    This constant barrage of unsubstantiated allegations of 
every imaginable impropriety only strengthens our resolve to 
investigate and expose oil industry fraud. We know that Big 
Oil's attacks on us are simply an admission that they cannot 
fight us on the substance of the issues. Organizations such as 
ours aren't doing our jobs if moneyed interests aren't 
concerned about our work. Having overcome Big Oil's best 
efforts, POGO will now focus on investigating and preventing 
future underpayment of natural gas royalties--an underpayment 
estimated to dwarf those of oil royalties.
    Sometimes I have to remind myself what we did to elicit 
such malicious attacks on my organization. In 1993, we began 
investigating the major oil companies for underpaying royalties 
to the Federal Government. We issued four reports, briefed 
Members of Congress, testified before this Subcommittee, and 
worked with the media to raise public awareness of the billions 
of dollars stolen from the public by oil companies.
    At that time it was abundantly clear that, other than 
Assistant Secretary Armstrong and Representatives Maloney and 
Miller, no one in power in the Federal Government had the 
stomach to pursue Big Oil's fraud. Interior found excuses not 
to collect the money owed the Federal treasury; Interior and 
Justice signed global settlements that gave away the 
government's right to collect the unpaid royalties; and months 
after we provided the names of knowledgeable people to Justice 
investigators, the Department was still relying on recalcitrant 
Interior officials for technical information.
    That was the environment at the end of 1996 and in early 
1997. Under those conditions, we decided to explore filing a 
qui tam suit. It is a good thing that we did. Ultimately, $300 
million has been returned to the taxpayer, with an expected 
$200 million more on the way. We have also worked aggressively 
to ensure the fraud could not reoccur by pushing for the new 
oil royalty rule that was so vehemently opposed by Committee 
Chair Young and Subcommittee Chair Cubin. We are here today 
simply because we won.
    Our organization has always operated on an idealistic 
belief that government can and should do better. We are not 
anti-government, and we thrill in our victories when we help to 
push the government toward the public interest and away from 
powerful moneyed or bureaucratic interests.
    This past year's ordeal has made it difficult to maintain 
our idealism. We even chose--although we could have retained 
the entire recovery--to share the money with the only two men 
in the entire Federal bureaucracy who had been pushing their 
superiors to address the fraud for a decade before we arrived 
on the scene. POGO's attackers have assailed our motives, both 
for our work and for sharing our recovery with whistleblowers. 
Our attackers could not fathom that people would choose to 
share money for no other reason than that it was the right and 
honorable thing to do. To suggest that such a proposition is 
preposterous reflects more on the skeptic's code of ethics than 
on our own.
    I specifically want to clarify a point that the Committee 
was aware of prior to last week's hearing but neglected to 
mention: POGO provided our 1998 tax form 990 to the Committee 
last year. That form reflected both the Mobil recovery that we 
received, as well as our sharing of this recovery with Mr. 
Berman and Mr. Speir. We simply object to the Committee's 
subpoena for our previous tax filings--none of which are 
remotely pertinent to the Committee's investigation into our 
decision to share the proceeds from the oil royalty settlements 
with the two whistleblowers. It is over those records that we 
asserted the pertinence defense--and over which the Committee 
disingenuously bullied and badgered our Assistant Director. As 
we have discovered over the past year--after such thinly veiled 
threats as questioning our tax-exempt status and issuing 
subpoenas for all of POGO's and my home phone records for a 
year and a half period--we must constantly exercise our rights 
in response to this Committee's harassment campaign.
    I have already addressed these non-issues in over 14 hours 
of depositions taken by oil company lawyers. The Committee has 
had those transcripts for months. As I stated at the beginning 
of my statement, these hearings are not about finding the 
truth. The members of the Committee already know the truth--it 
just doesn't support their conspiracy theories. Despite the 
Committee Majority's opposition, we are comforted in knowing 
that our motives were pure and our actions were proper.

    Ms. Stockton. Thank you very much. Is it--was my board's 
testimony also inserted in the record from the hearing, the 
earlier hearing?
    Mrs. Cubin. Yes.
    Ms. Stockton. Thank you.
    Ms. Lanzone. I yield back our time.
    Mrs. Cubin. Again, thank you for your testimony. The 
Subcommittee is now adjourned.
    [Whereupon, at 10:16 p.m., the Subcommittee adjourned.]
    [Additional material submitted for the record follows.]

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