IG Pins 'Royalty Relief' Fiasco to Culture of Corruption

E&E Daily

The Interior Department's inspector general yesterday lit into the agency's upper-level management for its response to the oil and natural gas "royalty relief" controversy.

Before a House panel investigating the issue, Earl Devaney leveled a candid critique at department heads for their unwillingness to reform the agency and predicted little would change as a result of his investigation into the deep water oil and gas lease errors.

"Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior," Devaney told the the House Government Reform Energy and Resources Subcommittee. "Ethics failures on the part of senior department officials –- taking the form of appearances of impropriety, favoritism and bias -– have been routinely dismissed with a promise 'not to do it again.'"

Interior Deputy Secretary Lynn Scarlett and MMS Director Johnnie Burton will testify before the full committee this morning to respond to Devaney's findings, and they are certain to face a chorus line of critics.

Subcommittee Chairman Darrell Issa (R-Calif.) yesterday described a "new bureaucratic principle" at Interior. "It is to define a job so narrowly and limited in scope over time -- no matter how senior the position -- that the person claims neither responsibility nor accountability for fulfilling their basic duties. The only thing claimed is a paycheck," Issa said.

Issa and House Government Reform Chairman Tom Davis (R-Va.) have held four hearings on the price thresholds that were not included in Minerals Management Service oil and gas lease contracts in 1998 and 1999. The omission could cost the federal government as much as $10 billion.

Davis noted that so far, no disciplinary action has been taken against an Interior or MMS employee for the errors, adding that mistakes first discovered in 2000 did not come to light until this year. "A five-year cover-up on something of this nature is something no organization should tolerate," Davis said.

In a statement last night, Interior Secretary Dirk Kempthorne addressed the comments directly when he said he is working to change the department's ethical problems. "I take these allegations concerning issues dating back to 1998 very seriously," Kempthorne said.

No smoking gun

While Devaney's appearance yesterday was much anticipated, the IG admitted he lacks a "smoking gun" to explain why MMS did not include the price thresholds. "In the end, unless we come across something entirely unexpected, this appears to be an example of bureaucratic bungling," he said.

MMS and Interior's solicitor's office both dropped the ball, because of their "dysfunctional relationship," Devaney said. "They don't understand what their roles are," he added. "It was like that then and is like that now."

Although the IG office is still working on the final report, Devaney said he does not believe criminal charges will come as a result. "There isn't anything that would allow us to take this to a U.S. attorney," Devaney said.

Devaney's testimony demonstrated the difficulties the IG encountered in attempting to find the source of the problem. For instance, the employee responsible for preparing the leases said officials in MMS's Economics and Leasing Divisions told him to remove the price threshold language. The employee passed an IG-administered polygraph test.

But one official in the Economics and Leasing Divisions, who also passed a polygraph, denied that account.

Speaking with reporters after the hearing, Devaney said he does not believe MMS would make the same mistake in the future of not including the price thresholds, adding that employees still lack proper guidance from the bureau on the issue.

"I think there's a little bit of angst on the part of the workforce that some clarity needs to be brought to the situation," Devaney said. "I'm not concerned the new leases won't have the appropriate language in it, but there are not as we speak clear guidelines about this in the MMS."

Based on his recent experience with the department, Devaney told the panel he does not expect any major shake-ups as a result of his upcoming final report.

"I have watched a number of high-level Interior officials leave the department under the cloud of OIG investigations into bad judgment and misconduct," Devaney told the subcommittee. "Absent criminal charges, however, they are sent off in usual fashion, with a party paying tribute to their good service.

"Nobody ever leaves with an IG report tagged on their back," Devaney later told reporters, noting that he has never been to one of the goodbye parties. "I'm always invited. ... I also don't think I'd be well received."

The IG said he is working on a "white paper" to present to Interior Secretary Dirk Kempthorne for ethics reforms. He was clearly upset with the actions of Kempthorne's predecessor, Gale Norton, and senior Interior officials who have come and gone. Devaney specifically cited the "particularly contentious investigation" of then-Deputy Secretary J. Steven Griles. After spending 18 months and over $1 million investigating the former oil and coal lobbyist, the department and Office of Government Ethics were both critical, he said.

The IG report unearthed instances in which Griles contacted former business partners or companies with financial stakes in department decisions. The IG ruled Griles did not violate ethics laws or rules, and the department took no action against Griles (Greenwire, March 17, 2004).

"I'm sure you're not the most popular guy when you walk down the corridors at the Interior Department," Davis told the IG.

"I am not," Devaney responded.

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Company: Minerals Management Service (MMS) more info
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