(Adds comments from U.S. lawmakers, environmental group)
By Tom Doggett
WASHINGTON, Sept 10 U.S. Interior Department
employees who oversaw oil drilling on federal lands had sex and
used illegal drugs with workers at energy companies where they
were conducting official business, an internal government
report said on Wednesday.
Employees at the department's Minerals Management Service
"socialized with, and received a wide array of gifts and
gratuities from, oil and gas companies," according to the
department's inspector general, Earl Devaney.
"When confronted by our investigators, none of the
employees involved displayed remorse," Devaney said.
The alleged activities occurred between 2002 and 2006 and
involved 19 former and current workers at the Minerals
Management Service's offices in Denver and Washington. Devaney
recommended that those still on the job be fired.
The workers were involved in the "royalty-in-kind" program
that collects and sells oil and gas turned over by energy
companies as royalties for drilling on federal lands. About $4
billion a year in royalty-in-kind oil and gas is collected and
sold by the department.
The oil companies named in the report were Chevron (CVX.N),
Shell Oil (RDSa.L), Hess Corp (HES.N) and Gary Williams Energy
The findings came as Congress considers legislation to
expand offshore oil drilling, a priority of the Bush
administration, which has been criticized for having close ties
to the oil industry. Drilling opponents are likely to use the
report as fodder to try to stop such legislation.
"It just underlies the fact that we shouldn't be putting
the future of our coasts and beaches in the hands of people who
obviously care nothing about the public," said Anna Aurilio,
Washington office director for Environment America.
"American taxpayers deserve to have confidence that their
interests are being protected when it comes to collecting
royalties from the production of public oil and gas resources,
especially given the potential for expanded domestic drilling,"
Democratic Sen. Jeff Bingaman, chairman of the Senate Energy
Committee, said of the inspector general's report.
'CULTURE OF PROMISCUITY'
Devaney said he discovered "a culture of substance abuse
and promiscuity" among workers in the royalty-in-kind
He said one supervisor engaged in illegal drug use and had
sex with subordinates. Several staff admitted to illegal drug
use and "illicit sexual encounters," he added.
There was also alcohol abuse among government workers when
they socialized with employees at regulated oil companies, he
For example, Minerals Management Service staff accepted
lodging from energy companies "after industry events because
they were too intoxicated to drive home or to their hotel."
Devaney said the same government workers "engaged in brief
sexual relationships with industry contacts."
He said many of the employees did not believe federal
government ethics standards and department policies applied to
them because of their "unique" role.
"Employees said they felt that in order to effectively
perform their official duties, they needed to interact in
social settings with industry representatives to obtain 'market
intelligence,'" he said.
One agency worker went so far as to say that a goal of the
royalty-in-kind program was to be "part of the industry,"
Rep. Nick Rahall, chairman of the House Natural Resources
Committee, said the activities of the Minerals Management
Service staff "are so outlandish that this whole IG report
reads like a script from a television miniseries -- and one
that cannot air during family viewing time."
Rahall, a West Virginia Democrat, said it was no wonder the
Minerals Management Service was doing a poor job of overseeing
the government's oil royalty program.
"Clearly the employees had 'other' priorities in that
office," he said.
(Editing by Peter Cooney)