Oil Shale Inquiry Opens

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"There are serious questions about whether those lease addenda are in fact legal. . ."

Interior Secretary Ken Salazar asked the Interior Department's inspector general Tuesday to investigate a controversial, last-minute move by the Bush administration to lock in favorable royalty rates and lenient environmental regulations for a series of oil shale leases on federal land in Colorado and Utah.

The investigation represents a significant expansion of the department's probe of Bush-era oil shale policy—and the oil industry's role in shaping it.

Investigators are expected to examine whether Interior officials followed department protocol when pushing through an unusual set of lease amendments, and whether those officials bowed to pressure from industry or other outside groups.

Salazar said the investigation could result in a "range of options," including leaving the amendments in place or canceling them.

"There are serious questions about whether those lease addenda are in fact legal," he said to reporters, "and in fact whether or not they should be rescinded."

In a news release, Salazar added: "Taxpayers deserve answers to serious questions about why these lease addenda were granted at the 11th hour, under what circumstances, and at what potential expense to the federal treasury."

Along with the new investigation, he announced a second round of research, development and demonstration leases for oil shale, as an effort to ensure "responsible" development of the vast stores of petroleum trapped in the rocks of the Mountain West, and to ensure that the oil shale program provides "a fair value to taxpayers."

Salazar said the research leases would help answer questions about the long-sought technology, including how much water and electricity it would require and how the development would affect wildlife, climate change and surrounding communities.

The second round of leases differ significantly from the first leases issued under the Bush administration—most notably by limiting leaseholders to a maximum 640 acres, instead of 5,120 acres.

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