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Regulators Accepted Gifts From Oil Industry, Report Says

THE WALL STREET JOURNAL

By STEPHEN POWER

WASHINGTON—Employees of a federal agency that regulates offshore drilling—including some whose duties included inspecting offshore oil rigs—accepted sporting-event tickets, lunches and other gifts from oil- and natural-gas companies and used government computers to view pornography, according to a new report by the Interior Department’s inspector general.

The report—which hasn’t been made public by the inspector general but was described Tuesday in an email from Interior Secretary Ken Salazar—notes “a number of violations” of federal regulations and agency ethics rules by staffers assigned to the Lake Charles, La., office of the Minerals Management Service, a unit of Interior that manages the nation’s offshore oil and gas resources, Mr. Salazar said in his statement.

Mr. Salazar disclosed some of the inspector general’s findings ahead of congressional hearings later this week that are to focus on his plan to restructure the agency following the April 20 explosion of the Deepwater Horizon oil rig. The accident led to the deaths of 11 workers and to the spillage of thousands of barrels of oil into the Gulf of Mexico each day.

The New York Times also reported on findings of the inspector general’s report Tuesday morning.

It wasn’t immediately clear how many MMS staffers were implicated in the inspector general’s report, which covers actions that occurred between 2000 and 2008. Mr. Salazar said in his statement Tuesday that some have resigned, been terminated, or referred for prosecution. He added that any remaining staffers accused in the IG report of questionable behavior will be placed on administrative leave pending the outcome of a personnel review.

The inspector general’s report is the latest in a series of reports by the IG that have raised questions about the MMS. In 2008, a report by the inspector general concluded that MMS employees assigned to a royalty-collection office in Colorado broke government rules and created a “culture of ethical failure” by accepting gifts from, and in some cases having sex with, industry representatives. Following the inspector general’s report, the Interior Department took disciplinary action against more than a half dozen MMS workers, with punishments that ranged from a warning letter to termination.

In 2009, Donald C. Howard, the former regional supervisor of the Gulf of Mexico region for MMS, pled guilty and was sentenced to a year’s probation in federal court in New Orleans for lying about receiving gifts from an offshore drilling contractor.

“This deeply disturbing report is further evidence of the cozy relationship between some elements of MMS and the oil and gas industry,” Mr. Salazar said Tuesday. “I appreciate and fully support the inspector general’s strong work to root out the bad apples in MMS and we will follow through on her recommendations, including taking any and all appropriate personnel actions including termination, discipline, and referrals of any wrongdoing for criminal prosecution.”

Mr. Salazar said he has asked the inspector general to expand her investigation to determine whether any of “this reprehensible behavior” persisted after the Department implemented new ethics rules in 2009.

Mr. Salazar said he has also asked the inspector general to investigate whether there was a failure of MMS personnel to adequately enforce standards or inspect the Deepwater Horizon rig and to examine whether there are deficiencies in MMS policies or practices that need to be addressed to ensure that operations on the Outer Continental Shelf are conducted in a safe and environmentally sensitive manner.

Earlier this month, Mr. Salazar formally ordered the breakup of the MMS, which in addition to regulating offshore oil and gas operations also decides where drilling is permitted and collects royalties from companies that produce petroleum in federal waters. Those three functions will be split up and assigned to different Interior Department branches.

Mr. Salazar said the reorganization was aimed at ending the “conflicting missions” of the MMS. His announcement followed a Wall Street Journal article that explored how the MMS has over the years gradually shifted much of the responsibility for crafting safety regulations to the oil and gas industry.

Write to Stephen Power at [email protected]
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