MMS Director Promises Change: Are the Important Changes Really Happening?

There have been several indications that things are changing for the better at the Department of the Interior. Interior Secretary Ken Salazar practically kicked off his leadership at the agency by issuing a memorandum to employees on their ethical responsibilities, and has recently followed up this effort with additional measures to improve ethics at the department. He also expressed an interest in reopening investigations of the misconduct in the Royalty-In-Kind (RIK) program, including investigations of Greg Smith and Lucy Denett. And most importantly, he signaled that he seeks to prevent industry from not paying taxpayers their fair share for their natural resources by ending the RIK program.

But there are still several important steps that need to be taken at the Department and specifically at the Minerals Management Service (MMS). Like the Defense Contract Audit Agency (DCAA), MMS needs more auditors and those auditors would be more successful if they had more independence. But also like DCAA, at this point it's not clear that their department recognizes these deficiencies.

In his testimony last week, Secretary Salazar agreed that the Consolidated Land, Energy, and Aquatic Resources (CLEAR) Act, which aims to reform royalty management and was recently proposed in the House, identified the major challenges facing the agency — but he did not comment on the provision that would remove auditing functions from MMS and give them to the Office of the Inspector General (OIG). In testimony before the committee, POGO Executive Director Danielle Brian said that while the OIG might not ultimately be the right home for this function, removing the conflict of mission from MMS was essential.

Yesterday POGO had the opportunity to follow up on the issue in a teleconference with the new Director of MMS, Liz Birnbaum. She said that there was no official administration policy, but that she is concerned that removing this function will mean that MMS has no capacity to verify that the royalty amounts they collect are accurate. But then, POGO can't help but note, this isn't a capacity that MMS has executed well in the status quo, either — and at least removing this function from MMS removes the current conflict of mission at the agency.

Another area still need in of reform at MMS is increasing transparency to taxpayers. Dennis Roller, the Audit Manager for the North Dakota State Auditor's Office, asked if MMS had any plans to change how the agency treats releasing proprietary information to the public. Currently, taxpayers are not permitted to see the amount companies pay the government in royalties, even though, he noted, Freedom of Information Act (FOIA) officers have said that this kind of information should be available to taxpayers. Birnbaum said there weren't any plans to change the policy, since it would require legislative changes since her attorneys have told her that sharing this information would violate trade secret laws.

Roller disagreed. "It's just commercial proprietary information, not trade secrets," he said. Birnbaum said that she was tempted to argue with him over this, but wouldn't. POGO believes that Roller is right and that taxpayers deserve to know about this information, but we'd love for any commenters to weigh in. Would revealing the royalties that industry pays to the Department of the Interior be tantamount to revealing their trade secrets? The fact that taxpayers are being ripped off is certainly well-documented.

-- Mandy Smithberger

Comments

[Posted on: Sep 25, 2009 at 04:11 PM]

I'll take the bait and weigh in on the "trade secret" issue raised in your blog. The gentleman from North Dakota was right and the Minerals Management Director was wrong. Company information, such as volumes of production, is not a "trade secret" as that term has been defined by the courts. It can be characterized as "commercial information"; however, hanging that label on it does not mean it cannot be disclosed to the public. Whether commercial information is protected from disclosure involves a multi-prong evaluation of each piece of data, including things like: the circumstances surrounding its submission to the government, whether disclosure would currently cause a competitive disadvantage, etc.

The end result is that some commercial information is subject to public disclosure and some may not be. Government agencies, of course, are typically loathe to undertake the type of thoughtful analysis that might lead to disclosure. Its easier and cheaper to just conclude against disclosure -- although it is the agency's responsibility to not only determine whether each type of document can be disclosed, but also the extent to which particular data elements within a document can be disclosed. Moreover, it is clearly within the authority of the agency to collect or aggregate data for public disclosure on a more meaningful and accurate basis than is currently being done at the Minerals agency. What it publishes now does not lend itself to public evaluation of the agency's performance -- something the NYT discovered a few years ago.

So, while wrong on the legal classification, the Minerals Director was partially correct -- An act of Congress would certainly streamline public access and make the process less resource intensive for her agency. The follow up questions would be: Would she support a legislative change? If not, why not?