In a move that will cost the federal government tens of millions of dollars the Interior Department has dropped claims against Chevron Corp. (CVX)--claims that they systematically underpaid the government for natural gas produced in the Gulf of Mexico.
This decision sets a precedent that will allow other energy companies to avoid paying hundreds of millions of dollars in royalities. The agency orderd Chevron to pay $6 million in additional royalties but could have sought tens of millions more had it prevailed, according to this NYTimes.com article.
This decision makes it possible for other oil and gas companies to lower the value of what they pump each year from federal property, which would then affect their payments to the government.
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