Federal report slams drilling inspectors

Inspectors for offshore oil and gas drilling took unreported gifts from the companies they were supposed to regulate, and they may have falsified inspection reports, the Interior Department’s inspector general said in a scathing report released Tuesday.

One inspector completed four safety reviews of an offshore platform operator, even as he was negotiating with that operator for a job, the report said. Others admitted frequently accepting skeet-shooting outings, meals, trips and college football tickets from the companies they were responsible for overseeing.

Two federal employees admitted using cocaine and crystal methamphetamine, and investigators found several others had used their government e-mail accounts to spread pornography and racist comments.

Acting Inspector General Mary Kendall wrote in the report that she was particularly concerned with “the ease” with which federal inspectors “move between industry and government.”

As one manager is quoted in the report: “Obviously, we’re all oil industry. We’re all from the same part of the country. Almost all of our inspectors have worked for oil companies out on these same platforms. They grew up in the same towns. Some of these people they’ve been friends with all their life. They’ve been with these people since they were kids. They’ve hunted together. They fish together. They skeet shoot together. ... They do this all the time.”

The report investigated alleged impropriety at the Minerals Management Service’s Lake Charles, La., district office from 2000 to 2008, under the Clinton and Bush administrations.

It followed up on an earlier report that detailed sex, drug use and other improprieties among MMS employees in Colorado and representatives of industries they regulated, and on the criminal conviction of a former MMS official for accepting unreported gifts.

The report says the culture of gift acceptance appears to have declined at MMS since that official, Don Howard, was investigated and fired in January 2007.

The findings come amid mounting criticism of MMS regulation of oil and gas drilling in the Gulf of Mexico, in the wake of the explosion and sinking of the Deepwater Horizon platform and the massive, continuing oil spill.

Interior Secretary Ken Salazar installed new, strict ethics guidelines at MMS when he took office in 2009. This month, he moved to split the service into three parts, separating its safety, leasing and royalty-collection functions.

On Tuesday, Salazar called the report “deeply disturbing” and said he had asked Kendall to broaden her investigation to include the time since he took office. “I appreciate and fully support the Inspector General’s strong work to root out the bad apples in MMS,” he said, “and we will follow through on her recommendations, including taking any and all appropriate personnel actions including termination, discipline, and referrals of any wrongdoing for criminal prosecution.”

The report’s allegations include:

-- MMS inspectors accepted meals, entrance fees to skeet-shooting competitions and, most notably, a trip to see LSU beat Miami in the 2005 Peach Bowl, from industry representatives. One inspector told investigators he knew he should not accept the trip, but, investigators wrote, “He explained that he was a ‘big LSU fan,’ and he could not refuse the tickets.”

* Sources within MMS alleged that inspectors would allow industry officials to fill out their own inspection forms in pencil, then write over them later in pen. Investigators examined more than 500 forms but said they could not determine if fraud was committed.

-- A conversation between a Conoco Phillips employee and an inspector that hints at industry attempts to bribe investigators. The inspector wrote an email detailing fines assessed to companies “for breaking the rules,” investigators wrote. “The Conoco Phillips employee responded, ‘[E]ver get bribed for some of that?’ He replied, ‘They try all the time.’ The Conoco Phillips employee responded back, ‘[E]ver take em?’ the inspector said, ‘I accept “gifts” from certain people. But we have VERY strict ethic standards as you could imagine.’ The Conoco Phillips employee replied, ‘[C]ertain people, meaning women?’ the inspector said, ‘No. meaning good friends that I wouldn’t write up anyway.’

* Evidence that a platform operator, Island Operating Company, negotiated to hire - and eventually hired - an MMS inspector who was inspecting the company’s operations at the time of the negotiation.

Reaction from Capitol Hill to the findings was swift and harsh.

“As if catching MMS employees literally in bed with industry officials wasn’t enough, MMS safety inspectors were flying high in private jets taking bribes while allowing oil and gas companies to fill out their own safety inspection forms,” said Rep. Nick Rahall II (D-W.Va.), the chairman of the House Natural Resources Committee. “It’s past time for MMS to stop acting as a farm team for the industry -- the Deepwater Horizon oil rig explosion is proof that this isn’t just a game.”

The top Republican on the House Committee on Oversight and Reform, Rep. Darrell Issa of California, said the report “echoes the same problems that have been exhaustively reported on for years. In the course of a decade, we’ve had 10 IG reports, 9 GAO reports and a report released just last year by Oversight Committee Republicans highlighting the failures within MMS and yet it still took a massive catastrophe to get anyone to read these reports and agree on the need for a massive bureaucratic overhaul.”