Nick Snow
Washington Correspondent
WASHINGTON, DC, Sept. 14 -- Omission of price thresholds from federal deepwater Gulf of Mexico leases issued in 1998 and 1999 and subsequent inaction likely resulted from "bureaucratic bungling," the US Department of the Interior's inspector general (IG) told a congressional subcommittee on Sept. 13.
In written testimony submitted to the House Government Reform Committee's Energy and Natural Resources Subcommittee, IG Earl E. Devaney also described a culture at DOI "that sustains managerial irresponsibility and a lack of accountability."
He added that Dirk E. Kempthorne, who succeeded Gale A. Norton as interior secretary earlier this year, has declared his intention to replace this culture with one of ethics and accountability.
In a written statement following the hearing, Kempthorne said he takes Devaney's allegations "very seriously" and has been meeting with him for months.
"Prior to my becoming secretary, there appeared to be disagreements over recommendations that the inspector general had made and subsequent decisions made by the department," Kempthorne said.
In his opening statement at the hearing, House Government Reform Committee Chairman Tom Davis (R-Calif.) urged Kempthorne to move quickly in instituting reforms.
Subcommittee Chairman Darrell E. Issa (R-Calif.) said DOI breached its fiduciary responsibility by not moving to restore the price thresholds in 1999 when one lessee, Chevron Corp., brought the omission to the US Minerals Management Service's attention.
Primary questions
Devaney said IG investigators interviewed 29 witnesses and sifted through 11,000 DOI e-mail messages as they sought to learn how and why the price-threshold omission occurred in 1998 and 1999 and what happened once it was discovered.
He said MMS employees intended to include price thresholds in leases issued under the Deepwater Royalty Relief Act and did so in 1996 and 1997.
As the agency was developing new deepwater royalty relief components, "confusion arose among MMS components as to whether or not the regulations would address price thresholds," Devaney said. "In the end, they did not."
He said the employee responsible for directing the preparation of the leases said he was told by other employees in MMS's economics and leasing divisions to remove the threshold. Three employees in those divisions denied doing so.
"The attorney involved in both processes conceded to an MMS official that he should have spotted the omission but did not. The official who signed the leases on behalf of MMS told us he relied on counsel and his staff," Devaney said.
When other MMS employees discovered the omission in 2000, the information was not relayed to the agency's director, he continued. "We found a brief flurry of e-mail discussion in 2000 about the omission of price thresholds, and the e-mails document the decision not to advise the director. Unfortunately, the official who made this decision is deceased. We did not find any e-mail prior to 2000 that touched on the issue."
Devaney said, "This appears to be an example of bureaucratic bungling, of the stove-piping of various responsibilities involved in a complex undertaking, reliance on a surname process which dilutes responsibility and accountability by including virtually every official involved, having no one person ultimately responsible for the quality assurance of the final product."
'Anything goes'
Devaney complained about "one instance after another" during 7 years in his position of Interior's disregarding IG findings.
"Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior," he said. "Ethics failures on the part of senior department officials—taking the form of appearances of impropriety, favoritism, and bias—have been routinely dismissed with a promise 'not to do it again.'"
He said that when the Office of Inspector General submitted reports of complex efforts to hide the true nature of relationships with contractors, regulatory and policy requirements designed to reach a predetermined end, palpable procurement irregularities, massive project collapses, and bonuses awarded to employees and contractors whose programs fail, DOI officials responded by vehemently challenging negligible details.
Interior Dep. Sec. P. Lynn Scarlett and MMS Director Johnnie Burton were to answer Devaney's allegations before the full Government Operations Committee on Sept. 14.
Contact Nick Snow at [email protected].
