MMS announces actions against RIK workers named in probe

US MMS Director Randall B. Luthi announced actions on Nov. 21 against employees included in the recent RIK program investigation by the US DOI's inspector general.

Nov 21st, 2008

Nick Snow
Washington Editor

WASHINGTON, DC, Nov. 21 -- US Minerals Management Service Director Randall B. Luthi announced actions on Nov. 21 against employees included in the recent royalty-in-kind program investigation by the US Department of the Interior's inspector general.

Actions ranged from letters of reprimand and warning to permanent reassignment from the program, suspension without pay, demotion to a lower pay grade, and termination from federal service, he said.

Luthi said DOI Insp. Gen. Earl E. Devaney began to investigate the RIK program in March 2006 at the request of then-MMS Director Johnnie Burton. "In summary, our investigation revealed a relatively small group of individuals wholly lacking in acceptance or adherence to government ethical standards; management that through passive neglect, at best, or purposeful ignorance, at worse, was blind to easily discernible misconduct; and a program that had aggressive goals and admirable ideals, but was launched without the necessary internal controls to ensure conformity with one of its most important principles: 'Maintain the highest ethical and professional standards,'" Devaney said in a Sept. 9 letter to DOI Secretary Dirk A. Kempthorne as the IG reported his findings.

"These actions complete a long and thorough investigation into the royalty-in-kind program. While the behavior of some MMS employees prior to 2007 was clearly inappropriate and warranted strong administrative action, the vast majority of our employees take great pride in the service they perform for our nation, and perform that service with a high degree of professionalism, every hour of every day, as noted by the IG," Luthi said on Nov. 21.

All personnel actions followed federal government employment regulations and guidelines, he emphasized. MMS also strengthened internal controls, enhanced documentation requirements, improved record-keeping, and strengthened employees' ethics training within the RKI program, according to the current MMS director.

Other actions
He said MMS also named Jim Steward, who joined the DOI agency in 2004 as a project management office supervisor, to succeed Gregory Smith as the RIK program's director on Jan. 14, and modified the program's organizational structure in mid-September so that its director now reports to the MMS Minerals Revenue Management division's deputy associate director in Denver.

Luthi's announcement came as US House Natural Resources Committee Chairman Nick J. Rahall (D-W.Va.) said that the committee will continue to try to improve DOI's royalty management program during the 111th Congress. Revenue from oil and gas production on federal land and in federal waters reached $12 billion in fiscal 2007 and should be accurately and transparently collected, he maintained.

"The federal agency tasked with tracking and collecting these revenues has failed repeatedly over the past several decades, and recent scandals illustrate the need for prompt congressional action. The committee will continue its work to rectify the gross malfeasance and inadequacies unearthed in the federal oil and gas royalty program and will consider legislation to improve the collection of rents, bonus bids and production royalties from oil and gas development both onshore and offshore," Rahall said.

"Issues relating to oil and gas development off the nation's coastlines will be front and center in the committee's agenda for the 111th Congress as federal lands and waters are critical to our energy supply and our economy, producing approximately 25% of the nation's domestically supplied oil and gas. In the coming months, the committee will work with the new administration to ensure that any new oil and gas activity off the Atlantic and Pacific coastlines is done in an environmentally and fiscally responsible manner," he added.

Contact Nick Snow at nicks@pennwell.com.

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