House hearing, Senate bill focus on MMS ethics reforms

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, May 27 -- Ethics reforms are needed at the US Minerals Management Service, but making them effective and realistic will be a challenge, the US Department of the Interior’s acting inspector general told a US House committee on May 26. Two US senators introduced their own MMS ethics reform bill as Mary L. Kendall waited to testify in the day-long hearing.

One day after releasing a report that found ethics violations during 2000-08 at MMS’s district office in Lake Charles, La., Kendall told the House Natural Resources Committee that she neither condones nor excuses the acceptance of gifts, fraternizing with industry, pornography and other inappropriate material on government materials, and lax handling of inspection forms that IG investigators found.

“I am more concerned about the environment in which these inspectors operate, and the ease with which they move between industry and government,” she said. “I am also concerned about the conduct of industry representatives, something that stems from our 2008 report. That they should think it permissible to fraternize and provide federal government employees with gifts after all the media coverage of this practice is somewhat hard to fathom, but may be informed by the environment as well.”

Kendall said while it was not included in the report, IG investigators discovered that the individuals involved in the fraternizing and exchange of gifts at the Lake Charles MMS district office, both government and industry, often had known each other since childhood. “Their relationships were formed well before they began their professional careers,” she said.

“MMS relies on the ability to hire employees with industry experience,” Kendall noted. “In my very brief, but intense, experience in this arena the past three-plus weeks, the MMS employees I have met are highly professional, extremely knowledgeable, and passionate about the job they do.”

‘Bad apples’
Testifying earlier at the hearing, which was the first of seven that the Natural Resources Committee and its subcommittees have scheduled to examine the Gulf of Mexico rig accident and crude oil spill, US Interior Secretary Ken Salazar said, “Of the 1,700 employees at MMS, they continue to work to collect and distribute about $13 billion/year and to stop this oil that is leaking. There are bad apples, but they will be rooted out with every power we have.”

He noted that soon after taking office in early 2009, he instituted reforms at DOI which included a new department-wide ethics code after reading then-Inspector General Earl E. Devaney’s 2008 report about activities in MMS’s royalties office in Lakewood, Colo. Devaney’s investigators found serious ethics violations including drug abuse, sexual misconduct, acceptance of gifts and meals from oil and gas producers, and, in one employee’s case, simultaneously working for the industry while employed at MMS.

Salazar said the 2008 report contributed to his decision to divide MMS in two and move its royalty collection responsibility to a separate agency. He also instituted a crackdown. “If we know an employee has done something which requires termination, they have been terminated and turned over for prosecution if the facts surrounding the incident are severe enough,” he said. “We are talking about the here-and-now. This is not like the previous administration, where MMS was an oil and gas kingdom.”

Kendall said most of her office’s recommendations in the latest report involved stronger ethics requirements and ensuring that the reforms which Salazar ordered actually happened. “The secretary also can take some short-term steps, such as instituting a 2-year waiting period,” she said. “An inspector who comes from Shell, for example, should not be allowed to inspect a Shell platform or well for 2 years.” MMS suggested a two-year waiting period in its response to the IG office’s latest report, she added.

US Sens. Robert Menendez (D-NJ) and Bill Nelson (D-Fla.) called for additional steps in their bill. In addition to barring DOI employees from taking oil and gas industry jobs for two years after leaving government service, the measure they introduced on May 26 would make it a felony for regulators to knowingly accept gifts from someone in the industry, and increase the penalty for making fraudulent statements and false representations to 15 years in prison from 5 years.

Other provisions
The bill also would prohibit regulators from simultaneously doing work for the oil and gas industry, require financial disclosure for senior oil and gas regulators (GS-13 or higher), and prohibit regulators from owning stock or other interests in the oil and gas industry. The bill is a tougher version of legislation Menendez and Nelson introduced 2 years ago, the senators said.

“The more we learn about the safety oversight of oil drilling, the more it becomes clear that for many years the federal regulators have been a wholly owned subsidiary of Big Oil,” said Menendez. “When a regulator is lured by immediate or future financial gain, the industry is able to ignore safety rules.”

“We don’t need our public servants serving Big Oil,” Nelson added. “The conduct in this agency is at least indirectly responsible for what is becoming one of the country’s worst disasters.”

But discussion at the House committee’s hearing suggested that part of MMS’s problem may be that its employees and their counterparts in the business they regulate come from the same relatively small professional pool. “As much as we’d like to see it in a perfect world, we’re never going to see 100% honesty and integrity,” said Chairman Nick J. Rahall (D-W.Va.) “It’s impossible to legislate or otherwise make happen.”

He noted that members of Congress have a personal relationship exception for their gift-giving rules, and that there are bans on former members becoming lobbyists very soon after leaving office. Kendall said that DOI has similar bans for its employees, and their lengths are determined by the extent to which someone was involved in a company’s regulation.

‘Not acceptable’
“The fraternizing certainly is not acceptable. One weakness is in the ethics regulations which allows gifts if they are based on a personal relationship,” she continued. “I think the Office of Government Ethics, when it put these rules together in the late 1980s, did not envision this kind of problem.”

Kendall said that IG investigators did not find a quid pro quo involved in their examinations of the Lake Charles district office or the royalty-in-kind group in Colorado. “We determined that the Deepwater Horizon was not inspected by anyone mentioned in this report,” she said.

There were clear violations of ethics in the acceptance of gifts, however. “The rule is not against socializing but against acceptance of gifts, such as a meal or going to a football game,” Kendall said. “The preliminary response we’ve received from MMS said it will implement ethics training specific to their inspectors which incorporate their unique problems.”

Other findings in the Lake Charles district office investigation have been exaggerated or distorted, she continued. “The allegation that inspectors let employees of the companies whose rigs were being inspected fill out inspection forms did not pan out,” she said. “We found the inspectors filled them out in pencil, came back, and refilled them out in pen. They did not get them from someone else and simply sign them. A careful reading of our report found that the allegation could not be substantiated.”

Committee member Dan Boren (D-Okla.) suggested that it can be hard for people in public and private employment to draw the ethics line when their relationships started before their careers did. Kendall said that this may be why MMS believes specific ethics rules are needed for its workforce. “We can govern human behavior,” she maintained. “If you can be specific about expectations, you have a better chance.”

Contact Nick Snow at

Related Articles

WAFWA: Aerial survey finds lesser prairie chicken population grew

07/06/2015 A recent range-wide aerial survey found the lesser prairie chicken population rose 25% from 2014 to 2015, the Western Association of Fish & Wil...

Buru awarded onshore Canning licenses

07/06/2015 Buru Energy Ltd., Perth, and Mitsubish Corp. have been granted two production licenses for Ungani oil field in the onshore Canning basin of Western...

Cenovus sells royalty business for $3.3 billion

07/06/2015 Cenovus Energy Inc., Calgary, inked an agreement to sell its wholly owned subsidiary Heritage Royalty LP to Ontario Teachers’ Pension Plan for gros...

CERI: Energy, operational efficiencies possible in Canadian oil, gas

07/06/2015 Measures can be taken by operators in the expanding resource-intensive Canadian oil and gas sector to improve both energy efficiency and operationa...

AGL Energy to scale back upstream gas operations


Gas retailer AGL Energy Ltd., Sydney, says it will exit the oil business and massively scaling back its upstream gas operations.

Macondo settlement seen ‘positive’ for BP

07/06/2015 BP Exploration & Production Inc.’s recent agreement to settle federal and state claims related to the 2010 Macondo blowout and spill improves t...

Court to EPA: Costs matter

07/06/2015 Oil and gas groups did not respond immediately when the US Supreme Court ruled on June 29 that the US Environmental Protection Agency acted unreaso...

Innovation addresses US environmental regulations; more needed

07/06/2015 Technology spawned the recent boom in US oil and gas production which in turn led to new regulations that keep the environment and people safe.

Poor BIA management has hindered tribal energy development, GAO says

07/06/2015 The US Bureau of Indian Affairs does not have data it needs to verify ownership of some Indian oil and gas resources, easily identify resources ava...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts

Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected