Suspicious Cut

Less money for petroprobes

Outraged congressional critics considered it the most shocking Executive pardon since Richard Nixon was let off the Watergate hook. Under the budget that President Reagan sent to Capitol Hill last week, the Department of Energy division charged with prosecuting oil companies for past violations of price-control regulations would have its annual allocation slashed from $35 million to $6 million. Fumed Democratic Congressman John Dingell of Michigan: "This adds up to amnesty for the oil companies and the public be damned."

Since its creation in 1977, the special DOE office has accused 33 of the 35 largest oil producers and refiners of price overcharges and other offenses amounting to $11 billion. Before leaving office, the Carter Administration dropped $3.5 billion of the claims against 15 companies after they agreed to make cash payments totaling $550 million to consumers and the Government. But many of the biggest firms, including Exxon, Texaco and Mobil, refused to settle. In view of the new President's budget proposals, they may have been wise. Says Paul Bloom, who headed Carter's oil-price investigation: "These cutbacks would constitute a death blow to any credible effort to pursue prosecutions against major refiners."

Some of Reagan's own Energy Department staffers share that opinion. Avrom Landesman, the man now in charge of prosecuting the oil companies, told a House Government Operations subcommittee last week that he had written a report describing how the reduced budget would cripple his efforts. But his new superiors at DOE, Landesman testified, urged him to rewrite the report and downplay the impact of the budget cuts. An internal DOE memo obtained by Subcommittee Chairman Toby Moffett of Connecticut maintained that the oil probe could earn the Treasury at least $600 million in additional payments from the companies--much more than would be saved by budget reductions.

These revelations caused congressional Democrats to question Reagan's motives in the spending cuts. Said Representative Barney Frank of Massachusetts: "If this was a budget decision, then I'm Lady Diana Spencer." Added Congressman Thomas Lantos of California: "Calling this a budget decision is a smokescreen. It's a policy change based on the Administration's relationship with the oil companies." Responding just as vehemently, Energy Secretary James Edwards insisted that the prosecutions would proceed even under the new budget. Said he: "By God, there'll be no amnesty." Meanwhile, the oil companies sit silently and survey the confusion.

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