The Project On Government Oversight (POGO) Blog

Why Accountability Is Important

By NICK SCHWELLENBACH and DANIELLE BRIAN

Interior Department employees taking money and gifts, rigging bids, and literally being in bed with the oil industry go unpunished. A Food and Drug Administration (FDA) official screening for conflicts of interest allows an academic, who has been paid by the manufacturer of a drug known to cause unnecessary deaths, to sit on a federal advisory panel and advise that the drug stay on the market. The Army fails to pursue refunds from a major defense contractor whom the Pentagon Inspector General says overcharged the Army by millions. The Securities and Exchange Commission (SEC) fails to discipline its own employees for inappropriately shutting down enforcement cases after being contacted by former colleagues who work for the companies being investigated.

In these examples, the private sector is benefitting, perhaps inappropriately. But can you blame them? While it’s no excuse for wrongdoing, let’s be honest: The business of business is to make money, but it’s the government’s business to protect the public’s interests.

In the four cases mentioned, the government’s failure to act contributes to a culture of impunity.

At the Interior Department, the Office of Inspector General (OIG) found numerous ethical lapses among as much as one third of the employees in the now defunct Minerals Management Service (MMS)’s Royalty-in-Kind (RIK) program. Several MMS employees “socialized with, and received a wide array of gifts and gratuities from, oil and gas companies with whom [the program] was conducting official business,” according to a memo sent from the Interior IG to the head of the Department. For instance, Gregory W. Smith, the former director of the MMS office in Lakewood, CO, was paid “over $30,000 for his work in marketing Geomatrix [Consultants, Inc.] to various oil and gas companies, most of whom, because of their business relationships with RIK, were considered prohibited sources,” according to an OIG investigative report. Another Senior Executive, Lucy Dennett had “manipulated the contracting process from the start” by setting up sweetheart government contracts for friends leaving the government—such an egregious abuse the IG called it “a culture of ethical failure.” The OIG referred evidence against Smith and Dennett to the Justice Department, which declined to prosecute.

Then there’s the FDA, which allowed a Stanford professor to sit on an FDA advisory committee in December 2010 on the safety of drugs like Bayer’s Yaz and Yasmin oral contraceptives, despite that professor’s very recent history (as of November 2010) of paid advisory work for Bayer to advise the company on Yaz and Yasmin. Paula Hillard, the Stanford professor, said she disclosed all relevant information to the FDA, but that the FDA did not determine she had a conflict of interest. Hillard voted in favor of Bayer’s drug when it came down to a vote by the FDA committee. The vote was close—15 to 11—with Hillard and three other committee members with industry ties voting in favor of the drugs.

FOIA Friday: The Fracking New York Times - How Industry and the Government Reacted to an Expose

FOIA FRIDAY

This week's document: Internal emails from the Department of Energy's Energy Information Administration responding to a New York Times article on fraking.  Document dates: June and July, 2011 Every Friday, POGO will strive to make one document available that we or others have obtained through the Freedom of Information Act (FOIA), especially documents that have not previously been posted online. Some of these documents will be more important than others, some may only be of historical interest— although relevance is in the eye of the beholder. POGO is doing this to highlight the importance of open government and FOIA throughout the year.

By MIA STEINLE

In the aftermath of last summer’s damaging New York Times investigation into fracking—a method of shale gas drilling lauded by investors—industry and the Department of Energy (DOE) went into damage control mode.  

Internal department emails obtained by POGO through the Freedom of Information Act give insight into how DOE’s Energy Information Administration (EIA) responded to the first story from Ian Urbina’s “Drilling Down” series for The Times. The story itself helped bring the fracking debate into the public consciousness, by making public internal industry emails and DOE documents, which showed skepticism about fracking’s promises as early as 2009.

The EIA emails obtained by POGO show that agency employees were displeased with The Times investigation, which revealed, among other things, industry emails from 2009 comparing shale gas investments to Ponzi schemes. The Times noted that, just one year prior, residents of Fort Worth, Texas, were promised almost $28,000 per acre for drilling leases—but many never received such high royalty checks.

The emails also show that employees from the fracking industry—from investment banks, consulting firms and energy companies—and EIA employees emailed each other Urbina’s article and press releases, written by both EIA and industry employees, that were critical of the article.

One EIA economist sent fellow agency employees a press release from natural gas producer Chesapeake Energy Corp. (CHK), which called The Times investigation “inaccurate” and “misleading.” The EIA economist wrote, “This is only my opinion, but I concur with CHK’s findings.” Another EIA employee forwarded the CHK press release to fellow employees, noting, “Here is a rebuttal from a company my nephew works at. Just for amusement.”

It’s no wonder industry hit back hard against Urbina’s story, considering how much they’re betting on fracking and the natural gas market. Another Urbina story also brought to light the dependence EIA has on industry data. As that story notes, EIA “relies on research from outside consultants with ties to the industry. And some of those consultants pull the data they supply to the government from energy company news releases.” So perhaps it shouldn’t come as any surprise some EIA employees, who’ve depended on industry for their view of fracking’s potential, might be taking industry’s side. And if industry indeed has made some rosy assumptions, this is troubling. 

FOIA Friday: Emails between Ethics Office and Former Regulator Cast Light on Revolving Door Spin

Then-MMS director Randall Luthi (right) hands a corporate leadership award to an ExxonMobil official in 2008.

FOIA FRIDAY

This week's document: email from Department of the Interior Ethics Office to former Minerals Management Service (MMS) Director Randall Luthi.  Document dates: October 29, 2009 Every Friday, POGO will strive to make one document available that we or others have obtained through the Freedom of Information Act (FOIA), especially documents that have not previously been posted online. Some of these documents will be more important than others, some may only be of historical interest— although relevance is in the eye of the beholder. POGO is doing this to highlight the importance of open government and FOIA throughout the year.

By MIA STEINLE

In Washington, the revolving door is practically a fact of life. Federal employees routinely leave their posts for better-paying positions in the private sector--often in the very same industry they used to regulate. (It was a recurring joke in the 2011 political thriller, The Ides of March, and--oh!--did a downtown DC theater crowd chuckle when the characters riffed about leaving political life for cushy consulting positions on K Street.) But Michael Bromwich, the head of the Department of the Interior’s (DOI) interim gas, oil, and minerals drilling agency, told reporters this week that he won't take this route.

Bromwich said he’s going to stay out of “direct dealings” with the DOI’s newly created Bureau of Ocean Energy Management (BOEM) and Bureau of Safety and Environmental Enforcement (BSEE), when he steps down as director later this month. The Hill reported earlier this week:

“There has been too much of the revolving door in the past, too much effort to influence the agency's policy and regulatory judgments by former top executives and senior people in this agency and it has got to stop, and it is going to stop with me,” Bromwich added.

As The Hill notes, DOI has been rocked in recent years by ethics scandals involving drilling regulators, and the Department has seen its fair share of regulators leaving for positions in private gas, oil and minerals industry groups.

One of these regulators is Randall Luthi, the former director of DOI’s Minerals Management Service (MMS), the predecessor agency to BOEM and BSSE. About a year after he left DOI, Luthi went on to become president of the National Oceans Industry Association, a group that represents the offshore drilling industry. According to emails between Luthi and DOI’s Departmental Ethics Office, which POGO recently obtained through a Freedom of Information Act (FOIA) request, Luthi also sat on a law firm review panel “to provide consultation advice” for oil company Taylor Energy in its dealings with MMS. The emails indicate that Luthi asked DOI if there would be a conflict of interest between his new and old positions.

Senate Offshore Safety Bill Would Put Interior Department in Charge of Investigating Itself

By ANGELA CANTERBURY

The BP oil spill disaster in the Gulf left little doubt about the costs of allowing the Interior Department to regulate offshore drilling safety without adequate independent oversight. Inspector General (IG) reports exposed numerous corrupt relationships between the Department's Minerals Management Service (MMS) and the offshore oil industry it was supposed to oversee to the point that last year, President Obama formally abolished the MMS and announced a new Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) in its place and a formal federal prosecutor, Michael Bromwich, as its new director.

This morning, the Senate Energy and Natural Resources Committee is poised to approve legislation (S. 917) offered by its chair, Senator Jeff Bingaman (D-NM), which would codify the reorganization and many of the important reforms initiated at Interior since the oil disaster. However, a surprising and little-noticed provision of the bill would put the Interior Department squarely in charge of conducting “independent” investigations of future offshore accidents—even though the adequacy of Interior Department regulations and programs would be a prime focus of any thorough, independent investigation.

Departing from the well-established model where independent, presidentially appointed safety boards like the Chemical Safety Board or the National Transportation Safety Board (NTSB) initiate and conduct accident investigations on their own statutory authority, the Bingaman bill would allow the Interior Department itself to request and structure future investigations of major accidents—including the choice of the investigator. The bill would nominally authorize the NTSB to investigate offshore accidents (a role the NTSB has never publicly sought) at the request of the Interior Secretary.

Gusher: Taxpayer Costs for Oil Spill May Not be Over

By MANDY SMITHBERGER

The Interior Department's reorganization of its oil and gas agencies may jeopardize the agency's ability to effectively manage revenue collection and meet its oil and gas oversight and government responsibility, according to Congress's watchdog.

The Government Accountability Office (GAO) testified for the House Oversight and Government Reform Committee's hearing on the Deepwater Horizon oil spill cleanup this morning that even before the spill, Interior collected lower levels of oil and gas revenue in the U.S. Gulf of Mexico than "all but 11 of 104 oil and gas resource owners" (during higher gas prices, no less). And although it's a worthwhile effort, the post-spill reorganization--which appropriately separates the auditing and leasing functions out of the agency formerly known as the Minerals Management Service (MMS)--only increases the risk of taxpayers losing out on their fair share because of the administrative burden it represents. The GAO also raised concerns that problems with recruitment and turnover for oversight positions made it more difficult to ensure royalty payment accuracy.

Program risk in this area can be costly. Not only do oil and gas royalty revenues--$9 billion in total for fiscal year 2009--make up one of the largest sources of revenue for the federal government after taxes, but many states count on these royalties to be able to provide state-level services.

As of December 2010 the Interior department failed to implement many GAO recommendations to improve oil and gas management. The agency's failure to improve in this area landed it on the GAO's "high risk list" this year.

Mandy Smithberger is POGO Investigator.

Image: Vince O'Sullivan

BOEMRE Chief Discusses Bane of His Existence and How MMS Erred

By Mandy Smithberger

Institutional conflicts of interest, a lack of conflict of interest or recusal policies for offshore inspectors, and a strong orientation towards production and revenue were all real obstacles to meeting safety goals at the now-defunct Minerals Management Service (MMS), said Michael Bromwich, Director of the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE), at an event held by Public Citizen yesterday.

The royalty and revenue collections function has been successfully separated from the other BOEMRE missions, he said, but fixing other institutional conflicts of interest between resource development and regulation hasn't been an easy task. Untangling the functions means untangling a joint computer system, and making what some may perceive to be arbitrary decisions about duties like planning reviews (which BOEMRE gave to the development side) and permitting (a job for the regulators).

Deepwater Horizon: One Year Later

By Mandy Smithberger and Bryan Rahija

We decided to reflect on the anniversary of the Deepwater Horizon disaster by poring though our coverage of the spill in its immediate aftermath. One thing that struck us: it's kind of remarkable how many questions are still not definitively answered when it comes to accountability.

Have government regulators made the right adjustments? Do they have enough funding to do their jobs? Do they have enough training? Can taxpayers trust the Bureau of Ocean Energy Management, Regulation and Enforcement to work in the public's best interest when it comes to collecting taxpayer royalties for oil harvested on federal lands? What happened to the legislative reforms proposed in the wake of the spill?

We've listed our coverage of the spill in April and May below. You can find additional material here.

More Evidence Transocean Is Avoiding Accountability?

By Mandy Smithberger

One of the major findings of the National Commission on the BP Deepwater Horizon Oil Spill was the need to cultivate "safety culture" in the oil and gas industry. The concern was also echoed by the Interior Department Inspector General and the Director of the Bureau of Ocean Energy Management, Regulation and Enforcement—and the American Petroleum Institute also acknowledged there was room for improvement. Arguably, the much-maligned safety bonuses issued to the Deepwater Horizon rig operator's CEOs in the face of the "performance" of the largest oil spill in U.S. history indicates that there's still work to do in developing that culture.

Theo Francis from footnoted discovers that bonuses are only one part of a larger picture indicating Transocean's deeper cultural problems resistant to accountability and improving safety practices. For one, he says, while Transocean did create a Health Safety and Environment Committee in August, the group only met once in 2010 (what's happened in 2011 seems to not be available yet). But then there's avoiding accountability:

Agenda Item 2 in the proxy is even more eye-opening. To hear the company tell it, the provision is an attempt to “discharge the members of the Board of Directors and our executive management from liability for their activities during fiscal year 2010,” explicitly including the rig explosion and oil spill. It would, Transocean says, not only prevent many shareholders from suing directors and officers entirely—whether by taking part in existing lawsuits or future ones—it would give other shareholders a narrow window of just six months to sue.

The government can't control what these companies do, nor should it, but it seems that the Interior Department's past practice of issuing safety awards (for many years) has not created awe-inspiring industry leadership when it comes to safety and the public interest.

Read more over at footnoted.

Mandy Smithberger is a POGO Investigator.

 

The Big Uneasy: Natural Disaster? You Don't Know the Half of It

(Update: Be sure to check out Dan Zak's piece on Harry Shearer in the Washington Post)

We all know what happened in New Orleans on Aug. 29, 2005, right?

Humorist and New Orleans resident Harry Shearer's documentary, The Big Uneasy, gets the inside story from the people who were there and what he finds might make you a little angry. As the film's trailer proclaims: "People didn't have to die." Shearer speaks to the investigators who poked through the muck as the water receded and a whistleblower from the Army Corps of Engineers who reveals that some of the same flawed methods responsible for the levee failure after Katrina are being used to rebuild the system expected to protect the new New Orleans.

There's still time to get tickets to see Tuesday's special screening sponsored by the Project on Government Oversight and DC Labor FilmFest at AFI Silver Theater in Silver Spring, Maryland. You can also attend a reception before the movie hosted by The Ridenhour Prizes and The Fertel Foundation of New Orleans at nearby McGinty's. The reception is free, but space is limited and an RSVP is required.

WHAT: Special Whistleblower Film Series Screening of The Big Uneasy and a special post-screening discussion with director Harry Shearer and featured whistleblower Maria Garzino.

WHEN: Tuesday, March 15 · 7:00pm - 10:00pm

WHERE: AFI Silver Theatre and Cultural Center, 8633 Colesville Road

WHO: Filmmaker/Actor Harry Shearer starred as Derek Smalls in This is Spinal Tap and provides the voice for Mr. Burns, Principal Skinner, Ned Flanders and others in The Simpsons; Maria Garzino was the engineer for the Army Corps of Engineers who raised warnings about the defective pumps installed after Hurricane Katrina.

Checking in on BOEMRE: How's the Reorganization Effort Going for the Offshore Oil Regulators?

By Bryan Rahija

Efforts to reorganize the Bureau of Ocean Energy, Management, Regulation, and Enforcement (BOEMRE) may not be striking the right balance between getting the agency's house in order and delivering essential services, according to the Government Accountability Office (GAO). From GAO's written testimony submitted last week to the House Subcommittee on Interior, Environment, and Related Agencies:

We are concerned about Interior's capacity to find the proper balance—particularly in today's fiscally constrained environment—given its history of management problems and challenges in the human capital area. Specifically, we are concerned about Interior's ability to undertake this reorganization while providing reasonable assurance that billions of dollars of revenues owed to the public are being properly assessed and collected and that oversight of oil and gas exploration and production on federal lands and waters maintains an appropriate balance between efficiency and timeliness on one hand, and protection of the environment and operational safety on the other.

POGO Mourns the Loss of Good Government Champion Steve Horn

The good government community lost a close friend and ally last week with the passing of former Rep. Steve Horn (R-CA).

Rep. Horn was the first recipient of POGO's Good Government Award, and served as a member of our advisory board. During his time in Congress, Rep. Horn was relentless in his efforts to challenge executive branch secrecy and improve the public's access to information. In 1996, he co-sponsored legislation to expand the Freedom of Information Act (FOIA) to include electronic records, and he continued to fight secrecy abuses throughout his time as Chairman of the House Government Reform and Oversight Committee. He also held the first hearings into the failures of the Department of Interior to collect royalties from oil and gas leases in 1996.

Steven Aftergood tracked down this 2002 interview with Rep. Horn, in which he spoke about his commitment to government transparency:

What struck me then and now is the critical role that public access to Government information plays in our democracy....It is key to having an informed citizenry and to supplying our citizens with the knowledge they need to hold their Government accountable. Therefore, I have always been a strong advocate of [FOIA].

Rep. Horn was also a champion of congressional oversight. Whether he was forcing the CIA to hand over documents or exposing the Army employee who used a government purchase card to pay for escort services, his hearings served as a model for holding federal agencies accountable. Rep. Horn was also a supporter of meaningful campaign finance reform, and he refused to accept any contributions from PACs.

You can watch many of Rep. Horn's hearings and floor speeches in C-SPAN's video archives.

Our warmest thoughts and prayers go out to Rep. Horn's family and friends. He will be deeply missed.

Did the White House Put Public Relations Before Science in the Oil Spill Report?

By Bryan Rahija

POGO was hoping President Obama would touch on several key reform topics in last night's State of the Union address, but one that we were keeping a particularly watchful eye for was the issue of scientific integrity.

That's partly because POGO recently unearthed internal emails suggesting that the White House placed public relations over science in last year's controversial report on the oil spill, which in fact was referred to as a "communication product" internally, according to the emails.