DOI: Report finds ethics lapses at MMS office in Louisiana

This story was updated May 25.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, May 25 -- A report by the US Department of the Interior’s inspector general found several ethics violations by employees at a US Minerals Management Service office in Lake Charles, La., during 2000-08, US Interior Secretary Ken Salazar said on May 25.

The report followed one on an investigation the IG’s office conducted in 2007 that revealed major ethics lapses within MMS’s royalties collection operations in Lakewood, Colo. Salazar commented that this one found that employees in the Lake Charles district office accepted sporting event tickets, lunches, and other gifts from oil and gas producers, and used government computers to view pornography, among other things.

Some of the employees were responsible for inspecting offshore drilling platforms in the Gulf of Mexico, he added. He said several individuals mentioned in the new report have resigned, were fired, or were referred for prosecution. Others who were cited for questionable behavior who still work for MMS will be placed on administrative leave pending the outcome of a personnel review, he said.

“This deeply disturbing report is further evidence of the cozy relationship between some elements of MMS and the oil and gas industry,” Salazar said. “That is why, during the first 10 days of becoming Interior secretary, I directed a strong ethics reform agenda to clean house of these ethical lapses at MMS.” He said he plans to follow through on the report’s recommendations, including firing or otherwise disciplining employees and referring any wrong-doing for criminal prosecution.

Salazar said he has asked Mary L. Kendall, DOI’s acting inspector general, to expand her inquiry and determine whether “any of this reprehensible behavior persisted after the new ethics rules I implemented in 2009.” The 2007 inquiry found that some employees at MMS’s Lakewood office were involved in sexual misconduct and drug abuse as well as other serious violations of federal employment rules. Earl E. Devaney, who was the department’s IG at the time, emphasized in his report that the vast majority of MMS employees were not involved. 

Other questions
Salazar, who is scheduled to testify on May 26 at the US House Natural Resources Committee’s first hearing on the Apr. 20 Deepwater Horizon gulf oil spill, said he also has asked the IG’s office to investigate whether MMS employees failed to adequately enforce standards or inspect the rig. Kendall was added to the Natural Resources Committee’s May 26 witness list on May 25.

Salazar also said he wants the office to investigate whether there are deficiencies in MMS policies or practices which need to be addressed to ensure that oil and gas operations on the US Outer Continental Shelf are conducted in a safe and environmentally responsible manner.

In an Apr. 12 memorandum to MMS Director S. Elizabeth Birnbaum that included a draft of the latest report, John E. Depuy, assistant inspector general for operations in the IG’s office at DOI, noted that investigators found that a number of employees at the Lake Charles district office said they attended sporting events prior to 2007 in which oil and gas producers sponsored teams, as well as receiving lunches and accepting gifts.

“Through numerous interviews, we found a culture where the acceptance of gifts from oil and gas companies was widespread throughout the office, but appeared to have declined after the investigation [of the Lakewood, Colo., office in 2007] and termination of [Donald C.] Howard [as a supervisor in MMS’s New Orleans office] in January 2007 for his acceptance of a gift from one of these companies,” Depuy said in his memorandum.

Earlier investigation
A Feb. 16, 2009, report from the IG’s office that was included with the latest report said Howard was investigated in response to allegations in 2006 by Chris Oynes, then-MMS Gulf of Mexico regional director, that Howard had gone on one or more hunting trips with officials from offshore operating companies. Oynes, who was named associate director of MMS’s offshore energy and mineral development program in 2007, said on May 17 that he will retire from the agency on May 31.

Depuy said in his memorandum to Birnbaum that two MMS employees in the Lake Charles office admitted using illegal drugs while working there, that many inspectors had e-mail messages with inappropriate humor and pornography on their government computers, and that one inspector conducted four inspections of Island Operating Co. Inc. (IOC) platforms while in the process of negotiating, and later accepting, employment with the company.

When OGJ contacted the company, it learned that officials there were aware that IOC was mentioned in the IG office’s report but had no immediate comment. The Lafayette, La., company has provided lease management services since it was founded in 1986 and operates several platforms and loop systems in the gulf and adjacent waters, according to information at its web site. It said that it received MMS’s National Safety Award for Excellence for 1999 and 2002 and was named a SAFE award finalist in 2000, 2006 and 2007.

The report said that an IOC employee contacted the MMS inspector, who was not identified, but who had worked for the company previously, by e-mail on June 12, 2008, to say that IOC would like to hire him back to work in its compliance department. After responding in a June 16 e-mail that he might be interested and suggesting a salary which he would find acceptable, the inspector resigned from MMS on Aug. 8 and returned to IOC.

Inspected IOC platforms
After discovering this, the IG office’s report said investigators reviewed MMS New Orleans district inspections from 2005 to 2009 and found that the inspector, who came to work at the agency on July 7, 2007, inspected 51 IOC platforms, 47 of them from Oct. 1, 2007, to May 19, 2008, resulting in 16 incidents of noncompliance.

“After his employment negotiations began on June 12, 2008, the inspector conducted four inspections of IOC platforms, none of which resulted in an incident of noncompliance,” it continued. It said that the US attorney’s office for Louisiana’s western district declined the case for prosecution on Oct. 15, 2009, and that it was being referred to MMS Director Birnbaum for any action deemed appropriate.

The report also said investigators looked into allegations that some MMS inspectors allowed oil and gas company employees on platforms to fill out inspection forms which the inspector would then sign and turn in for review. “According to the source, operating personnel completed the inspection forms using pencils, and MMS inspectors would write on top of the pencil in ink and turn in the completed form,” it said.

It said investigators reviewed 556 files to look for any alteration of pencil and ink markings, notations, or signatures; found a small number with pencil and ink variations; but could not discern if any fraudulent variations were present on the forms. The report noted that a lead MMS inspector said that inspectors often completed inspection forms in pencil, that anyone from MMS involved in the platform inspections could complete the forms, and that inspectors routinely signed each other’s names on the forms.

Contact Nick Snow at nicks@pennwell.com.

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