You can’t make this stuff up.  Just as Congress looks poised to lift the offshore drilling ban for the first time in a generation, and with the echoes of Republican chants of “Drill, baby drill” still ringing in our ears, the Interior Department’s own Inspector General has released a report damning the Minerals Management Service (MMS) for frequent “sexual relationships with oil and gas industry representatives”, as well as marijuana and cocaine use.

MMS, in theory, is charged with regulating the oil and gas industry on public land and offshore in the United States.  In order to effectively regulate, its important to stay objective regarding those you are regulating.  But as the report notes, “sexual relationships with prohibited sources cannot, by definition, be arms’ length.”

The report says that eight officials in the royalty program accepted gifts from energy companies whose value exceeded limits set by ethics rules — including golf, ski and paintball outings; meals and drinks; and tickets to a Toby Keith concert, a Houston Texans football game and a Colorado Rockies baseball game.

The investigation also concluded that several of the officials “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives.”

The investigation separately found that the program’s manager mixed official and personal business. In sometimes lurid detail, the report also accuses him of having intimate relations with two subordinates, one of whom regularly sold him cocaine.

Created in 1982, the Minerals Management Service has been widely known for twenty-five years as a revolving door with the oil industry.  J Robinson West, the Reagan era architect of MMS’ Five Year Plan programs, now is the CEO of Washington’s largest oil industry consultancy, PFC Energy.  Since the early ‘80’s, every year MMS proposes new drilling in our nation’s coastal waters – most recently offshore Virginia and in Alaska’s Bristol Bay.  And since the late “80’s, every year Congress passes a bipartisan moratorium stopping them from doing it - except in the central and western Gulf of Mexico.  Except, that may be in danger now.

But why is Congress caving in to pressure now of all times?

For years, scandals have been mounting, as its coming out that MMS is nothing more than a corrupt home for the oil industry within the government.

Bobby Maxwell, an auditor who had worked for many years for the Minerals Management Service (MMS), had the job of ensuring that oil companies were paying the federal government the royalties they owed. He discovered that Kerr-McGee Chemical Worldwide, LLC, an oil company, was underpaying its royalties by millions. According to Maxwell, his superiors at MMS discouraged him from pursuing the money from Kerr-McGee.

In 2005, Maxwell filed a lawsuit against Kerr-McGee in a Denver, Colo. federal court. The suit accused the company of cheating the government out of over $7 million in royalty payments. It also contended that the Interior Department ignored audits which clearly showed Kerr-McGee’s wrongdoing. Soon after, the Interior Department eliminated Maxwell’s job in what it termed “reorganization.”

ExxonMobil, Chevron, Shell and ConocoPhillips all tried to block Maxwell’s suit, arguing before that the case would “open the floodgates” to suits by other federal auditors. The court, however, rejected their pleas and on January 23 2007, a federal jury found that Kerr-McGee Corp. knowingly underpaid the federal government by $7.56 million in royalties.

But U.S. District Judge Phillip Figa later dismissed the suit, saying the court did not have jurisdiction in the matter. Figa died in January.

On Wednesday (September 10, 2008), the U.S. Appeals Court for the 10th Circuit in Denver reversed Figa’s dismissal and sent the case back to federal court.

Maxwell, now a college professor in Hawaii, said Wednesday he was thankful.

“We had a company that was stealing money from the government, from the American people, and walking away with it,” he said. “When my managers wouldn’t allow me to pursue it, it was just wrong. . . . We were being told to look the other way.”

Maxwell and the government are entitled to split treble damages and other fines, said Michael Porter, Maxwell’s attorney. The ultimate amount owed by Kerr-McGee, now part of Anadarko Petroleum Corp., could exceed $30 million, he said.

In March 2007, Maxwell testified before the House Natural Resources Committee. According to his statement “I served the American taxpayer with over thirty years of service, including three years in the U.S. Army… My only regret is that my career was cut short due to exposing the federal government’s current cozy relationship with the oil and gas industry.”

Hah!  Cozy relationship!  Way to go Bobby Maxwell!

Read the full Interior Department report.

Tags: drill baby drill, MMS, oil, sex

This entry was posted on Thursday, September 11th, 2008 at 9:48 am and is filed under Offshore Drilling. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.