From Incompetent to Criminal
Once again the Interior Department is under investigation, this time by the Justice Department. It's been a bad year for the department, especially the last several months. From today's NY Times:
The Justice Department has begun two criminal investigations into the Interior Department’s Minerals Management Service, which is already the focus of several inquiries into its collection of royalties for oil and gas produced on federal property.
...The investigations are an unexpected development in what has already become a broad examination of the Interior Department’s oversight of companies that pump more than $60 billion worth of oil and gas each year from publicly owned land and coastal waters.
...Mr. Devaney, the department’s inspector general, is already conducting two other investigations into suspected mismanagement of the minerals agency. And just last week, he issued a scathing criticism of the agency’s system for auditing oil and gas royalty payments. [Emphasis added]
While the article did not provide much detail, probably because the investigations are not complete, the subject matter appears to be the "royalities in kind" system that the oil companies pushed for and received. Under this program, instead of paying the royalties charged for extracting the oil and natural gas in dollars, the oil companies pay in oil and natural gas. The oil is usually placed in the US strategic oil reserve, but the natural gas is sold on the open market. The oil companies claimed that this system would simplify accounting. Apparently is also would make it easier for the oil companies to cheat.
To be fair, part of the Interior Department's problems were caused by sloppy contract drafting during the Clinton administration, but the Bush admistration was aware of the problem and cheerfully did nothing about it. Why should it? After all, the oil companies are like family to both Bush and Cheney.
Still, it's nice to see that at least some in the Justice Department haven't gotten the message to lay off big oil. Now, with a new Congress, perhaps the Justice Department will get the support it needs to clean up the mess in Interior.
The Justice Department has begun two criminal investigations into the Interior Department’s Minerals Management Service, which is already the focus of several inquiries into its collection of royalties for oil and gas produced on federal property.
...The investigations are an unexpected development in what has already become a broad examination of the Interior Department’s oversight of companies that pump more than $60 billion worth of oil and gas each year from publicly owned land and coastal waters.
...Mr. Devaney, the department’s inspector general, is already conducting two other investigations into suspected mismanagement of the minerals agency. And just last week, he issued a scathing criticism of the agency’s system for auditing oil and gas royalty payments. [Emphasis added]
While the article did not provide much detail, probably because the investigations are not complete, the subject matter appears to be the "royalities in kind" system that the oil companies pushed for and received. Under this program, instead of paying the royalties charged for extracting the oil and natural gas in dollars, the oil companies pay in oil and natural gas. The oil is usually placed in the US strategic oil reserve, but the natural gas is sold on the open market. The oil companies claimed that this system would simplify accounting. Apparently is also would make it easier for the oil companies to cheat.
To be fair, part of the Interior Department's problems were caused by sloppy contract drafting during the Clinton administration, but the Bush admistration was aware of the problem and cheerfully did nothing about it. Why should it? After all, the oil companies are like family to both Bush and Cheney.
Still, it's nice to see that at least some in the Justice Department haven't gotten the message to lay off big oil. Now, with a new Congress, perhaps the Justice Department will get the support it needs to clean up the mess in Interior.
Labels: Interior Department
posted by Diane at 2:49 AM
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