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.
"Clearly, the department's energy leasing and royalty programs have not been working as they should," Salazar said.
Until now, some oil and gas extracted from public lands was paid for in cash or in the form of oil and gas products delivered to the government. Salazar announced Wednesday that when they expire, existing in-kind contracts would not be renewed.