Project on Government Oversight Receives Sunshine Award for Investigation of U.S. Minerals Management Service

This July, the Project on Government Oversight (POGO) was awarded the Society of Professional Journalists' national Sunshine Award for its contributions in the area of open government. The award was based on three 2008 POGO investigations, including their 13-year investigation into the Department of Interior's Minerals Management Service (MMS), which exposed a culture of widespread managerial irresponsibility.

POGO is a nonprofit watchdog group that works with government insiders and journalists to investigate government corruption, wrongdoing and abuse of power. In their investigation into the MMS, they uncovered a significant lack of accountability and gross mismanagement.

Earlier in 2008, the Inspector General of the Department of Interior (DOI) unleashed a scandal over inappropriate relationships between DOI staff and the oil industry that included sex, drug use and graft on the part of employees in charge of the lucrative Royalty-In-Kind (RIK) Program. The program, which is the second-largest source of U.S. government revenue after taxes, determines whether and when companies are permitted to pay a percentage of the oil and gas produced on their leases to states and the federal government, instead of making in-value cash payments. The industry strongly promotes the former.

The Inspector General's 2008 report indicated that nearly 1/3 of the RIK staff was socially intimate with industry representatives—in some cases accepting large gifts and in others having sexual relationships—creating the impression of a program that "appeared to inappropriately benefit oil companies" over the public interest.

But beyond any salacious details, POGO found that there were systemic resource management failures, including significant problems in the royalty collection undertaken by the department's auditing and compliance division. Under the division's watch, royalty payments for U.S. mining leases have dropped by half since 2002, sinking from the average of $115 million collected annually during the division's first 20 years, to an annual average of $48 million between 2002 and 2005. "One of the problems that we've been worried about for years is MMS's failure to adequately audit industry royalty payments—which the [Inspector General] reports reveal are the main reasoning for industry backing the RIK program," Investigator Mandy Smithberger explained. POGO also addressed this decline in a written testimony to the House Government Reform Committee, "Interior Department: A Culture of Managerial Irresponsibility and Lack of Accountability?"
 
In response to these revelations, reform legislation was introduced in the Senate, with support from POGO. The bill, "The Integrity in Offshore Energy Resources Act of 2008," prohibited MMS employees from knowingly accepting gifts from representatives of the mining industry, and suspended the Royalty-In-Kind program until the Secretary of the Interior  "certifies that a comprehensive review of such programs has been conducted, implements an ethics training program for employees of the Minerals Management Service, and creates an ombudsman position to monitor the progress of the Service in carrying out reforms." The bill has been referred to the Committee on Energy and Natural Resources.

The impact of the scandal has continued into the new administration. In February, DOI Secretary Ken Salazar announced new reform initiatives at the MMS, including the restructuring of DOI oil and gas royalty management, a new departmental Code of Conduct, and a review of agency ethics procedures and policies. In addition to the 2008 Senate bill, a new bill is currently being drafted by the House Natural Resources Committee, in consultation with POGO, that would seek to phase out RIK payments.

POGO will be honored by the SPJ during its 2009 Convention and National Journalism Conference in August.

LEARN MORE

• Report: Drilling the Taxpayer: Department of Interior's Royalty-In-Kind Program (POGO)
• POGO's Testimony to the House: "Interior Department: A Culture of Managerial Irresponsibility and Lack of Accountability?" (POGO)
• US Legislation: The "Practice What You Preach" Bill
• Interior Staff Had Inappropriate Relationships with Oil Industry (POGO)
• Ass for Gas Isn't the Only Problem at MMS (POGO)
• POGO Supports Reform of MMS and the RIK Program (S. 3543 ) - Hopes to Restore Ethical Conduct and Accountability to the Resource Management (POGO)