Staff members at an agency that oversees offshore drilling accepted tickets to sports events, lunches and other gifts from oil and gas companies and used government computers to view pornography, according to an Interior Department report alleging a culture of cronyism between regulators and the industry.
In at least one case, an inspector for the Minerals Management Service admitted using crystal methamphetamine and said he might have been under the influence of the drug the next day at work, according to the report by the acting inspector general of the Interior Department.
The report cites a variety of violations of federal regulations and ethics rules at the agency's Louisiana office. Previous inspector general investigations have focused on inappropriate behavior by the royalty-collection staff in the agency's Denver office.
The report adds to the climate of frustration and criticism facing the Obama administration in the monthlong oil spill disaster in the Gulf of Mexico, although it covers actions before the spill. Millions of gallons of oil are gushing into the Gulf, endangering wildlife and the livelihoods of fishermen, as scrutiny intensifies on a lax regulatory climate.
The report began as a routine investigation, the acting inspector general, Mary Kendall, said in a cover letter to Interior Secretary Ken Salazar, whose department includes the agency.
"Unfortunately, given the events of April 20 of this year, this report had become anything but routine, and I feel compelled to release it now," she wrote.
Her biggest concern is the ease with which minerals agency employees move between industry and government, Kendall said. While no specifics were included in the report, "we discovered that the individuals involved in the fraternizing and gift exchange — both government and industry — have often known one another since childhood," Kendall said.
Their relationships took precedence over their jobs, Kendall said.
The report follows a 2008 report by then-Inspector General Earl Devaney that decried a "culture of ethical failure" and conflicts of interest at the minerals agency.
Salazar called the latest report "deeply disturbing" and said it highlights the need for changes he has proposed, including a plan to abolish the minerals agency and replace it with three new entities.
The report "is further evidence of the cozy relationship between some elements of MMS and the oil and gas industry," Salazar said Tuesday. "I appreciate and fully support the inspector general's strong work to root out the bad apples in MMS."
Salazar said several employees cited in the report have resigned, were fired or were referred for prosecution. Actions may be taken against others as warranted, he said.
The report covers activities between 2000 and 2008. Salazar said he has asked Kendall to expand her investigation to look into agency actions since he took office in January 2009.
Salazar last week proposed eliminating the Minerals Management Service and replacing it with two bureaus and a revenue collection office. The name Minerals Management Service would no longer exist.
Members of Congress and President Barack Obama have criticized what they call the cozy relationship between regulators and oil companies and have vowed to reform MMS, which both regulates the industry and collects billions in royalties from it.
The report said that employees from the Lake Charles, La., MMS office had repeatedly accepted gifts, including hunting and fishing trips from the Island Operating Company, an oil and gas company working on oil platforms regulated by the Interior Department.
Taking such gifts "appears to have been a generally accepted practice," the report said.
Two employees at the Lake Charles office admitted using illegal drugs, and many inspectors had e-mails that contained inappropriate humor and pornography on their government computers, the report said.
Kendall recommended a series of steps to improve ethical standards, including a two-year waiting period for agency employees to join the oil or gas industry.
One MMS inspector conducted four inspections of Island Operating platforms while negotiating and later accepting employment with the company, the report said.
A spokeswoman for Island Operating Company could not be reached for comment. The Louisiana-based company says on it website that it has "an impeccable safety record" and cites Safety Awards for Excellence from the MMS in 1999 and 2002. The company was a finalist in other years.
"Island knows how to get the job done safely and compliantly," the website says.
Sen. Dianne Feinstein, D-Calif., called the report "yet another black eye for the Minerals Management Service. Once again, MMS employees have been found culpable of performing shoddy oversight of offshore drilling. The report reveals an overly cozy culture between MMS regulators and the oil industry."
Feinstein, who chairs a Senate Appropriations subcommittee that oversees the Interior Department, said she will hold a hearing next month on Salazar's plan to restructure the agency.
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