Sex, Drugs And Corruption Too Much For Gov't Oil Royalty Program

Office Sex Version 3

Last September, federal employees of an oil and gas royalty program were caught engaging in corruption, drug use and sexual misconduct with industry officials.

Well, it took a year, but troubles — and general inefficiency — finally killed the program.

NYT: The Interior secretary, Ken Salazar, told a House committee on Wednesday morning that he was phasing out the royalty-in-kind program administered by the agency’s Minerals Management Service. The program allows oil companies to pay the government in oil and gas rather than in cash for the right to drill on federal lands. Recent audits have shown that the government failed to collect tens of millions of dollars in royalties owed under the program.

“Clearly, the department’s energy leasing and royalty programs have not been working as they should, and the American people have not been receiving the full benefits from these valuable assets,” Mr. Salazar said in testimony before the House Natural Resources Committee.

You bet. But it sure was fun. As the NYT noted last year

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.

The program had plenty of problems itself. A new GAO report says the royalty-in-kind set-up failed to collect at least $21 million in fees last year. And, as the Times notes, another report found that oil companies may have misreported drilling revenue and underpaid $160 million in royalties in 2006 and 2007.

The oil lobby disagrees with the decision. API said in a statement that “terminating this straight-forward method of handling royalty payments runs the risk of raising administrative costs and adding additional layers of paperwork.”

Perhaps. But maybe API just misses all the fun?

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