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MARIN COUNTY'S NEWS MONTHLY - FREE PRESS
(415)868-1600 - (415)868-0502(fax) - P.O. Box 31, Bolinas, CA, 94924

October, 2008


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ETHICS
The 'Drill Baby Drill' Scandal

Sept. 12, 2008: This week, the Interior Department Inspector General released the results of a two-year, $5.3 million investigation finding that workers at the Minerals Management Service (MMS) royalty collection office were "partying, having sex, using drugs and accepting gifts and ski trips and golf outings from energy company representatives with whom they did government business." MMS, which takes in royalties on oil leases on public lands, "came under fire two years ago for a costly bureaucratic snafu -- leaving out important language in some oil leases, written in 1998 and 1999, that may have cost the government as much as $7 billion in revenue." As Daniel J. Weiss of the Center for American Progress observed, "The federal watchdogs are in bed with the oil companies that they are supposed to oversee." The revelations come as conservatives have initiated a battle cry of "drill baby, drill" and "drill here, drill now" to push for expanded drilling. House Oversight Committee Chairman Henry Waxman (D-CA) said his staff is investigating the scandal. Already, Sen. Bill Nelson (D-FL) has called for MMS Director Randall Luthi, to resign. "This all shows the oil industry holds shocking sway over the administration and even key federal employees," Nelson said.

SALACIOUS CONFLICT OF INTERESTS: The IG report is full of accounts detailing the unethical relationships between government officials and the oil industry, calling it "a culture of ethical failure" and "a culture of substance abuse and promiscuity." The report notes that "employees frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and natural gas company representatives," despite being subject to restrictions on taking gifts. Royalty in Kind (RIK) officials, however, attempted to rewrite the ethics rules to cover up their misdoings. Two employees engaged in "brief sexual relationships" with oil and gas representatives, yet they did not recuse themselves from work with those companies and officials. Oil giant Chevron gave roughly $2,500 over the course of five years, "most of it spent on meals and drinks." Three others, Shell, Gary-Williams Energy Corp. and Hess Corp., also were named as gift-givers. Other agencies, such as the Minerals Revenue Management (MRM), were implicated as well. MRM Associate Director Lucy Denett created a "lucrative contract" for her special assistant Jim Mayberry, upon Mayberry's retirement and later sought to increase funding for the contract. Gregory Smith, who managed RIK at MMS, was said to have demanded sexual favors from an employee; Attorney General Michael Mukasey in May 2008 "declined to prosecute Smith on various charges," the report notes.


THE DRILLING DEBATE: The MMS, the agency that would oversee the expansion of offshore oil drilling, is now front and center in the oil drilling debate in Congress because of the IG report. This week, House Democrats announced that they would bring an energy bill allowing for expanded oil exploration off the coasts. "On the eve of Congress starting this big debate you've got a horror story of mismanagement and misconduct in programs that are going to be a key part of the discussion," Sen. Ron Wyden, (D-OR) observed. Conservatives are attempting to block the legislation because it would eliminate an estimated $17 billion in tax breaks for oil companies over 10 years. "So we're saying: OK, you want to drill, this is how it will be. No more subsidies," House Speaker Nancy Pelosi (D-CA) told reporters Thursday. Pelosi said the energy measure in Congress will now include a "strong integrity piece" to shield the government from oil industry influence.


SCANDAL-CLAD DEPARTMENT: The revelations from the IG are the latest in scandal-clad Interior Department. The IG previously found that the Department under-collected billions of dollars of revenue owed the U.S. taxpayer from oil companies that produce and sell oil and gas from public lands and waters. Government workers "routinely failed to seek out legal advice on complicated deals and that the agency used outdated computers and a $150 million software program that resulted in royalty money going uncollected." J. Steven Griles, former mining lobbyist and Interior Department Deputy Secretary, pleaded guilty in 2007 to obstruction of justice in the Jack Abramoff scandal. "Vice President Dick Cheney packed the top posts at the Department of the Interior with lobbyists who had spent their careers representing the very industries they were now being asked to regulate," the New York Times noted yesterday.

From The Progress Report

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