Minerals Management Service ‘royalty in kind’ program to end

Interior Secretary Ken Salazar says the program, which let energy companies pay in oil or gas for drilling on federal land, had clearly not been working. Allegations of sex and drug use didn’t help.

By Jim Tankersley and Alexander C. Hart
September 17, 2009
Reporting from Washington

The Interior Department is ending a controversial program that was at the center of a sex and drug scandal in the federal Minerals Management Service, Interior Secretary Ken Salazar said Wednesday.

Testifying before the House Natural Resources Committee, Salazar said that he would phase out the program, which allows energy companies drilling on federal lands to pay royalties in the form of oil or gas instead of cash.

The program, known as “royalty in kind,” has been rocked by scandal, and auditors have questioned its effectiveness. The Interior Department inspector general issued a report last year describing a “a culture of substance abuse and promiscuity” over a five-year period at the Denver-based office of the Minerals Management Service, which deals with royalty-in-kind payments.

Allegations included cocaine use and sex with industry contacts.

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