TOPIC: Minerals Management Service

How the revolving door leads to weak regulation

You’ve heard about the FCC commissioner, Meredith Baker, who has taken a job with NBC Universal (as senior VP for government affairs, of course) just four months after voting to approve the merger between Comcast and NBC Universal.  Then there’s the the too-cozy relationship between regulators at the Nuclear Regulatory Commission and the power companies they are supposed to regulate, because many employees at the NRC are aiming to land top jobs in industry when they leave government service.  And let’s not forget that beyond-cozy relationships in the oil and gas regulation business helped create a culture of permissiveness that made catastrophes like the Deepwater Horizon explosion more likely. (more…)

Minerals Management Service: the Novel

Set aside some time to read Juliet Eilperin and Scott Higham’s insightful (and long) look in the Washington Post at the culture of permissiveness that developed over many years at the Minerals Management Service, the federal agency (now disbanded) that was responsible for overseeing mining and drilling of natural resources on federally owned lands.  MMS’s “consensus-based” approach to oil regulation, beginning in the 1990s, led to a decision to end royalty payments for certain deepwater drilling leases that required larger investments by oil companies. The Deepwater Horizon was built on one of those leases.

Another ‘BP Squad’ should investigate dispersants

The Obama administration has deployed the ‘BP Squad’ of federal investigators to the Gulf to probe whether there was any wrongdoing on the part of government regulators or private companies related to the explosion of the Deepwater Horizon rig.

As Peter Henning points out in The New York Times, the criminal probe focuses mostly on (more…)

Being willing to ask the safety question

Ben Casselman and Guy Chazan of the Wall Street Journal dig deep into the reasons behind the disasters that can happen with deep water oil rigs.  As oil companies use untested technologies in ocean waters “at depths no human could survive,” the need for government regulators to step in and get in the way of progress becomes even more imperative.  These rigs are doing something so new that in some cases “hundreds of pieces of equipment [have] to be created from scratch.”  As for government regulators, it boils down to asking the right question:  can something go wrong?  And then not letting go until they get an answer.  (more…)

When the money flows, so do the oil spills

No matter what decisions we make today about changing America’s energy landscape, and we need to make those decisions this year, the oil business and the coal business are going to be very good business for a very long time.  Without pressure from society and government, companies won’t be swayed even by disasters as enormous as the one happening in the Gulf of Mexico right now (when a newspaper article refers to “last month’s” oil spill and it’s still spilling, you know we’re in trouble).  And so it is incumbent on government regulators to use their power to close down unsafe operations in drilling and mining and listen to other government agencies when they issue warnings.  It’s time to stop letting corporations get away with murder.  (more…)


Stephanie Simon of the Wall Street Journal highlights a new challenge to the American West’s limited water resources: oil companies looking to pull oil from deep shale deposits.  Some experts say there’s three times as much oil in the Rocky Mountain region as Saudi Arabia’s total oil reserves.  Extracting fossil fuels from shale deposits is raising questions all over the country, as previous GIMBY reports have shown.  Huge volumes of water are needed to push oil or natural gas from tightly packed layers of shale, and this water, while not disappearing, can be sequestered in reservoirs and polluted by chemicals used to liberate the raw natural resources. 

In Colorado, where the most oil shale development is planned, oil companies say they’re looking for alternatives to all this water use and don’t plan to get started for many years.  But with Colorado’s fractious water rights environment, it’s not too early for folks to get involved in monitoring how this water will be used and being sure that government agencies are looking out for you — not just the nice people at ExxonMobil and Royal Dutch Shell. -NH


The Wall Street Journal’s Stephen Power reports that if House Speaker Nancy Pelosi has her way proposed energy legislation will include "a very strong integrity piece" dealing with the Dept. of Interior’s Mineral Management Service. Three DOI inspector general reports released yesterday detailed amazing tales of corrupt contracting, and partying/sexual liasons with oil and gas executives by more than a 1/3 of MMS employees. MMS is in charge of collecting royalties for the federal government when oil and natural gas companies drill on public lands.

What’s interesting here is that Pelosi, an opponent of offshore drilling, is not using the Interior mega-scandal to say the U.S. can’t properly manage drilling. Instead of seeing a systemic breakdown between the government and big oil companies, pro-offshore drilling legislation would have the premise that federal investigators just need to get rid of a few bad seeds at Interior.

We’ll keep you posted as the Interior/drilling conundrum likely hits the Senate floor next week.-MB


Wuh-boy. The Washington Post’s Derek Kravitz and Mary Kay Flaherty and the New York Times’ Charlie Savage each have helpful rundowns of the rampant (forgive me if I’ve used "rampant" before so that it loses its meaning here but this is RAMPANT) corruption at the Dept. of Interior’s Mineral Management Services. There’s a lot that’s already been said about the scandal, so allow me to focus on a few main points of interest to UG readers.

The articles today concern three reports by DOI’s excellent inspector general, Earl Delvaney, on the Mineral Management Service’s royalty-in-kind program. This program generated $4.3 billion in revenue last year, as MMS gets a sixth of all oil and natural gas taken by oil and gas companies from federal lands. About 1/3 of MMS staff, though, took gifts from oil and gas executives with what the IG called "prodigious frequency." The report describes parties MMS staff had with executives from oil and gas companies that included cocaine and marijuana. MMS staff also had sexual relationships with and oil and gas executives.

Where the reports really get interesting, though, is their focus on two former MMS executives: Lucy Denett, the former associate director of Mineral Management Services, and Gregory W. Smith, the former director of the royalty-in-kind program. Denett used her position to steer consulting contracts to two former MMS employees. One of these, Jimmy W. Mayberry, has already pleaded guilty to a felony conflict-of-interest charge related to using his former MMS position to win an MMS contract.

Smith, meanwhile, has an entire IG report devoted to his exploits. He had an outside consulting job while still royalty-in-kind director, he accepted gifts from oil and gas officials, had sex with two subordinates, and purchased cocaine several times from his secretary and her boyfriend. The report alleges Smith made his drug deals during office work hours.

And now the kicker: the Justice Dept. has already said it won’t prosecute Denett and Smith. Why is this? Will Justice prosecute any other Interior officials?

Between expected Congressional oversight and its ties into the issue of offshore drilling, this story should stick around for at least a little while. Hopefully in that time we’ll know why former MMS officials aren’t being held accountable for their many, many misdeeds.-MB


Ever heard of the Minerals Management Service?  Fees paid by processors of oil, gas, and mineral reserves make Interior Dept. agency the third-largest earner for the U.S. government after the IRS and the Social Security Administration.  And that’s money coming from somewhere other than your pocket.  An independent panel, appointed by Secretary of the Interior Dirk Kempthorne in March 2007, says the government is losing out on royalty revenues from minerals and fuels extracted from federal land.  See John Fialka’s report in the Wall Street Journal.