Oil-and-Sex Scandal Spawns Criticism, Hill Hearing
Government officials, lawmakers and watchdog groups today called for action and further investigation into the ethics scandal at the Department of Interior's Denver oil-royalties office.
Yesterday, the department's inspector general released three reports detailing how officials at the office had accepted gifts, steered contracts and engaged in drug use and illicit sex with employees of energy firms.
Interior Secretary Dirk Kempthorne says he will unveil a plan to reform the management of the program, which collects billions of dollars worth of royalties each year from energy companies that drill on federal or Indian land or offshore.
"I am outraged by the immoral behavior, illegal activities, and appalling misconduct of several former and current long-serving career employees in the Minerals Management Service's Royalty in Kind program," Kempthorne said in a statement this morning. "These individuals have eroded the trust the American citizens deserve to have in their public servants."
Sen. Bill Nelson (D-Fla.) today sent a letter to Kempthorne asking him to fire the head of Interior's Minerals Management Service, Randall B. Luthi, who supervises the troubled royalties office.
The House Natural Resources Committee is planning a congressional hearing to discuss the scandal, tentatively scheduled for next Thursday. Witness lists have not yet been compiled but Kempthorne and Interior Inspector General Earl B. Devaney are expected to testify, committee spokeswoman Allyson Groff said.
Rep. Darrell Issa, R-Calif., pushed for Democratic lawmakers to reopen an investigation of the agency that began in 2006 by House Republicans. "Looking into and fixing these problems would have meant highlighting the enormous revenues that domestic oil and natural gas production contributes to our treasury. This just didn't fit into their anti-drilling campaign," he said.
Rep. Louise M. Slaughter (D-N.Y.), chairwoman of the House Rules Committee, said "The Bush Administration put an 'America for Sale' sign on the White House lawn from day one and has been courting Big Oil ever since.
"Democrats have been saying it for some time, but this proves it," she added. "This Administration is literally in bed with Big Oil. Little did we know they were such a cheap date."
Danielle Brian, the executive director of the watchdog group, Project on Government Oversight (POGO), said the reports' findings were "easily the worst instance of government misconduct that POGO has seen."
The Post has also learned that a review by the Government Accountability Office shows the government may not be getting the best possible return on oil and gas leases with companies drilling in the Gulf of Mexico.
The report obtained by The Post (PDF) says that among federally owned oil producing regions, the Gulf of Mexico ranks among the lowest in terms of what the government collects in royalties despite its vast oil resources. The report cites management problems such as restrictions in the ability to change lease agreements with companies to reflect rising or falling oil prices.
"Interior does not routinely evaluate the federal oil and gas fiscal system, monitor what other governments or resource owners are receiving for their energy resources, or evaluate and compare the attractiveness of federal lands and waters for oil and gas investment with that of other oil and gas regions," the report said.
Auditors recommended an independent panel be convened to conduct an across-the-board review of the Gulf leases. Interior Department officials disagreed with some of those findings, saying a two-year study of leases in the central and western parts of the Gulf of Mexico is already underway and that an independent panel would be a waste of resources.
One of the lawmakers who requested the Gulf of Mexico report -- Rep. Nick J. Rahall (D-W.Va.), the chairman of the House Committee on Natural Resources -- said the report "calls into question whether taxpayers are getting a fair return for the resources they own."
"The GAO also reports that the Interior Department has been dragging its feet when it comes to analyzing and modernizing its own royalty collection practices, perhaps costing the American people billions of dollars," Rahall said. "The Congress must take a very close look at GAO's recommendations for an independent panel to review the oil and gas fiscal system."
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