The POGO controversy continues to broaden, miring the U.S. Minerals Management Service`s effort to promulgate a controversial oil royalty reform regulation.
It was disclosed in May that two federal employees might have had a vested interest in advocating a tough royalty rule. The men are Bob Berman, of the Department of Interior`s Office of Policy Analysis, and Robert Speir, now retired from the Department of Energy.
The men received $350,000 each after the Project on Government Oversight (POGO), a public advocacy group, received a $1.2 million settlement last fall in a royalty lawsuit.
That has spawned a Department of Justice criminal investigation and prompted oil-state senators to ask Interior to postpone the royalty rule (OGJ, May 31, 1999, p. 33).
The latest
Sylvia Baca, acting assistant secretary for land and minerals management, replied June 10 to the request by Sens. Frank Murkowski (R-Alas.), Don Nickles (R-Okla.), and Pete Domenici (R-N.M.).
Baca wrote, "The two employees in question were not involved in drafting the first proposed oil valuation rule, which was published in January 1997, nor did they participate in developing subsequent versions of the proposed rule."
The senators then released documents that they said showed Speir recommended Sept. 18, 1996, that MMS rewrite the rule to eliminate recognition of oil sales between affiliated companies.
They released a second document that they said showed Berman urged in December 1996 that the rule set royalty values reflecting New York Mercantile Exchange prices, which it later did.
The senators wrote Baca, "Far from being `inconsequential,` as you stated, the role of these two employees appears to have been very influential. You plainly owe us a far more thorough explanation of their involvement than your June 10 letter provides.
"We have trouble believing that this is just one remarkable string of coincidences. We do not believe the Department of the Interior fully appreciates how severely POGO`s payments to Mr. Berman and Mr. Speir cast doubt on the integrity of the proposed rule."
More twists
The House resources committee has begun investigating the payments, using its subpoena power to obtain documents.
Meanwhile, it was disclosed that POGO`s decision to pay Berman and Speir wasn`t exactly-as POGO had claimed-a benevolent gesture on its part to reward two government whistleblowers.
The Washington Times newspaper reported it obtained documents showing the two men signed agreements with POGO on Jan. 5, 1998, that they each would get a third of any court settlement in the royalty case. Of course, that was after their alleged involvement in the royalty rulemaking.
The Department of Justice has told the resources committee that it advised POGO not to make the payments. POGO disputes that.
Congress earlier had blocked MMS from issuing the royalty rule until Oct. 1. Recently, as a result of the POGO mess, the Senate Interior appropriations committee voted to extend that ban until June 30, 2001-after the Clinton administration leaves office.
