Pelosi: Oil bill will have ethics clause

House Speaker Nancy Pelosi on Thursday knocked down speculation that an Interior Department sex and drug scandal would undermine a Democratic plan for new offshore oil drilling, saying the measure will include a “strong integrity piece” to shield the government from oil industry influence.

“It’s really important for us to put the bright light on this whole (oil) leasing process,” Mrs. Pelosi said. She added that Democrats will work to end “the cozy relationship between the administrators at the Department of Interior who dealt with leases and the oil companies.”

Mrs. Pelosi’s comments came in response to an inspector general’s report released Wednesday that described a “culture of substance abuse and promiscuity” at the department’s Minerals Management Service’s royalty collection office in Denver, where workers are accused of partying, having sex and using drugs with oil company representatives

The investigation showed that between 2002 and 2006, 19 oil marketers - almost a third of the Denver office - received gifts and gratuities from oil and gas companies including Chevron Corp., Shell, Hess Corp. and Denver-based Gary-Williams Energy Corp.

“I am outraged by the immoral behavior, illegal activities and appalling misconduct of several former and current long-serving career employees” at the Denver office, Interior Secretary Dirk Kempthorne said Thursday. “These individuals have eroded the trust the American citizens deserve to have in their public servants.”

Mrs. Pelosi’s office also Wednesday released preliminary details of a massive energy bill that includes a limited expansion of offshore drilling - timing the speaker said was simply a coincidence. The measure is expected to be introduced early next week.

“That had nothing to do with when we released our bill,” she said. “That’s just because we’re back [in session] now” after Congress’ five-week summer break.

The scandal is a setback for the Bush administration and Capitol Hill Republicans, who for months have been pushing to increase domestic oil drilling in response to skyrocketing gasoline prices at the pump.

“This all shows the oil industry holds shocking sway over the administration and even key federal employees,” said Sen. Bill Nelson, Florida Democrat and a staunch opponent of expanded offshore leasing. “This is why we must not allow big oil’s agenda to be jammed through Congress.”

In Colorado, Democrats are using the scandal to push an attempt to cut subsidies and raise severance taxes on oil and gas companies through the November ballot. Gov. Bill Ritter Jr., a Democrat, is the prime backer behind Amendment 58, which would eliminate an estimated $321 million in subsidies and redirect the funding to state scholarships.

“The investigation also must closely examine how much this type of corruption has cost American - and Colorado - taxpayers,” Mr. Ritter said. “The oil and gas industry already benefits from taxpayer-funded subsidies, so the question is: how much has the scandal cost us in lost revenue?”

Sen. Ken Salazar, Colorado Democrat, called the revelations “a disgraceful breach of public trust.”

Republicans denied the scandal would deflate their party’s push to increase drilling, saying that the alleged abuses, though serious, are isolated cases and shouldn’t derail the nation’s quest for more domestically produced oil.

“We’re going to grind our national energy policy to a halt until illegal activity in that agency has fully gone to trial and been resolved?” asked House Republican Conference Chairman Adam H. Putnam of Florida.

c Valerie Richardson contributed to this article and reported from Denver.