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INTERIOR DEPARTMENT: A CULTURE OF

MANAGERIAL IRRESPONSIBILITY AND LACK OF

ACCOUNTABILITY?

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND RESOURCES

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

SEPTEMBER 13, 2006

Serial No. 109–248

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

JEAN SCHMIDT, Ohio

BRIAN P. BILBRAY, California

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

DAVID MARIN, Staff Director

LAWRENCE HALLORAN, Deputy Staff Director

BENJAMIN CHANCE, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON ENERGY AND RESOURCES

DARRELL E. ISSA, California, Chairman

LYNN A. WESTMORELAND, Georgia

JOHN M. MCHUGH, New York

PATRICK T. MCHENRY, NORTH CAROLINA

KENNY MARCHANT, Texas

BRIAN P. BILBRAY, California

DIANE E. WATSON, California

BRIAN HIGGINS, New York

TOM LANTOS, California

DENNIS J. KUCINICH, Ohio

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

LAWRENCE J. BRADY, Staff Director

DAVE SOLAN, PH.D., Professional Staff Member

LORI GAVAGHAN, Clerk

HAUN GARRISON, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on September 13, 2006 ..................................................................... 1

Statement of:

DeVaney, Earl E., Inspector General, Department of the Interior .............. 19

Letters, statements, etc., submitted for the record by:

Davis, Chairman Tom, a Representative in Congress from the State of

Virginia, prepared statement of ................................................................... 15

Dent, Hon. Charles W., a Representative in Congress from the State

of Pennsylvania, prepared statement of ...................................................... 17

DeVaney, Earl E., Inspector General, Department of the Interior, prepared statement of ........................................................................................ 23

Issa, Hon. Darrell E., a Representative in Congress from the State of

California:

Briefing memo ........................................................................................... 3

Prepared statement of ............................................................................... 10

(1)

INTERIOR DEPARTMENT: A CULTURE OF

MANAGERIAL IRRESPONSIBILITY AND LACK

OF ACCOUNTABILITY?

WEDNESDAY, SEPTEMBER 13, 2006

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON ENERGY AND RESOURCES,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 2:30 p.m., in room

2154, Rayburn House Office Building, Hon. Darrell E. Issa (chairman of the subcommittee) presiding.

Present: Representatives Issa, Dent and Bilbray.

Staff present: Larry Brady, staff director; Lori Gavaghan, legislative clerk; Tom Alexander, lead counsel; Dave Solan, Ph.D. and Ray

Robbins, professional staff members; Joe Thompson, GAO detailee;

Alexandra Teitz, minority counsel; Shaun Garrison, minority professional staff member; and Cecelia Morton, minority office manager.

Mr. ISSA. Good afternoon. A quorum being present, this hearing

of the Government Reform Subcommittee on Energy and Resources

will come to order. This is the fourth investigative hearing by the

subcommittee regarding the absence of price thresholds in deep

water leases between the Interior Department’s Mineral Management Service and various oil and natural gas producing companies

during the 1998, 1999 calendar years. The GAO estimates that the

lack of price thresholds will or could, if not corrected, cost the U.S.

Government nearly $10 billion in lost royalty revenue; $2 billion

has already been lost.

This estimate does not include the major new discovery announced in the past week. Part of this discovery is located in fields

leased in 1998 and 1999, and these leases do not have price thresholds, meaning they are free of all revenue to the government. This

means even more revenue will be lost.

The subcommittee has concluded its investigation. It has found

that the Interior Department has breached its fiduciary duty to the

American people. The Interior Department holds our natural resources in trust for the American people. It has squandered billions

of dollars.

In sworn testimony and formal interviews with subcommittee investigators, Interior Department and MMS personnel have claimed

the inclusion of price thresholds was always Department policy, but

their omission in 1998 and 1999 was a case of the right hand did

not know what the left hand was doing. That’s an excuse. This is

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very much incorrect. There were certainly officials who participated

in the review of the actions of the different offices and divisions

and departments, but they failed to ensure that the price thresholds were implemented. When allegedly presented in 1999—and I

say allegedly even though this has come to us, and I personally believe it—with prima facie evidence, Interior’s own regulations, Interior’s own regulations that the price thresholds were in fact missing from the leases and the regulations, MMS officials did nothing

to correct it.

This particularly troubles me because Chevron, who testified

under oath in detail about notifying MMS, stood to lose possibly

hundreds of millions of dollars by telling the truth. I congratulate

them on their integrity in coming forward with this information.

MMS officials on the other hand do not dispute Chevron’s testimony but instead claim to have no recollection of the multiple inquiries into this matter.

Who are we to believe, those who testify under oath to their own

detriment or those who have no memory? Unfortunately, I am left

to conclude that there is a new bureaucratic principle that has

been identified through this investigation and distinctly applies to

Interior Department and its managers; it is to define a job so narrowly and limited in scope over time—no matter how senior the position—that the person claims neither responsibility nor accountability for fulfilling their basic duties. The only good thing claimed

is a paycheck.

I want to make it clear that individuals do make up institutions,

and these individuals must be responsible for their actions. However, the Interior Department and the MMS are not just comprised

of limestone buildings with thousands of individuals going about

their business. There is also an institutional culture, an organizational intransigence that exists. This is surely the issue that will

be taken up in a hearing tomorrow by the full Committee on Government Reform.

Testifying though here today before the subcommittee regarding

its office investigation is the Interior Department’s Inspector General, Earl E. Devaney. He will describe in much greater detail

when and why price thresholds disappeared from leases and what

personnel did once it was discovered. While the subcommittee has

brought in many individuals to testify in public hearings, which the

IG cannot do, the Office of the Inspector General has more access

to the Department and was able to review emails and materials

that are not provided to the committee despite repeated requests.

Mr. Devaney, I welcome you. This is one of the most important

jobs that any Inspector General can do. You are a very respected

Inspector General. I commend you for the work. I commend you for

coming before this committee. I recognize that, in fact, your investigation is not complete. And I want to make it clear for the record

that this is an unusual accommodation for you to come forward

with a hearing that, although partially completed, clearly is not

prepared for its final ruling. Additionally, I would like to ask unanimous consent the briefing memo prepared by the subcommittee

staff be inserted into the record as well as all relevant materials.

Without objection, so ordered.

[The information referred to follows:]

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Mr. ISSA. And I now yield to the full committee chairman for his

opening statement.

[The prepared statement of Hon. Darrell E. Issa follows:]

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Chairman TOM DAVIS. Thank you very much, Mr. Issa.

Good afternoon. I would like to take this opportunity to commend

Chairman Issa and his staff for their thorough look at the issue of

natural gas royalties from Federal offshore leases. This is the

fourth subcommittee hearing on this issue. Tomorrow we are holding a full subcommittee hearing as a followup to today. You know,

they talk about not doing oversight; this is the kind of oversight

that is very, very important to American taxpayers and to American energy users. And I’ve just got to say, I’m a little surprised

that they’re not even here to help us oversee it.

I am disheartened by the facts uncovered by the subcommittee

during its 6-month investigation and by the Department of the Interior’s Inspector General’s Office. Uncovering waste, fraud and

abuse is what this committee does best. When failings within the

government are identified we need to remedy them as quickly as

possible. Unfortunately, as it pertains to the deep water drilling

leases signed under the Deep Water Royalty Relief Act. This was

not the case in the Interior Department.

Today we’ll hear the findings of the Inspector General’s investigation. We’ll hear of conflicting accounts from within the Department of Interior why price thresholds were omitted from deep

water leases in 1998 and 1999. We’ll hear of conflicting accounts

as to when the omissions were discovered. We’ll also hear of an internal Department decision made in 2000 against disclosing the

omissions to the director of the Minerals Management Service. It’s

unacceptable that the omissions of price thresholds which would

cost the country billions of dollars can be concealed for 5 years, hidden for 5 years.

Unfortunately, as the Inspector General has found, the deep

water lease issue is not an exception in the Department. The Inspector General’s Office has issued countless reports citing cases of

ethics failures and a history of ineffective management and policy

throughout the Department. These failings permeate employee morale, as the Inspector General’s Office found in 2004 that 46 percent of employees within the Department believed discipline was

administered fairly only sometimes, if ever.

Tomorrow in a full committee hearing, we’ll receive testimony

from Lynn Scarlett, the Deputy Secretary of Interior, and Johnny

Burton, director of the Minerals Management Service. The hearing

will give these witnesses a chance to respond to the Inspector General’s report and provide members with an opportunity to delve further into issues that appear to plague the Department of the Interior. Now is the time for Secretary Kempthorne, really the new

man on the block, to rectify the longstanding culture of disregarding and dismissing examples of waste, fraud and abuse within the

Department.

While we can’t change the decisions in 2000 that kept the omissions and the contract hidden for 5 additional years, we can learn

from the past and commit ourselves to working to reform the Department of the Interior in remedying these longstanding inadequacies. American taxpayers demand and deserve nothing less.

Let me just add, the Department of Interior is the reason why

I am in Congress, if you want know, from Virginia. My grandfather

came here from Nebraska as Solicitor of the Department in 1953,

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rose to Undersecretary under Doug McKay and was acting Secretary in the mid 1950’s before Fred Seaton came in. And when he

moved, the rest of the family moved to Virginia, and I stayed here

and now represent the area in Congress.

So it’s disappointing to me that these problems persist, but I

want to commend the Inspector General. He’s known as not only

fair and thorough but one of the best IGs in government, and we

appreciate you being here today.

[The prepared statement of Chairman Tom Davis follows:]

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Mr. ISSA. Thank you.

And the gentleman from Pennsylvania, Mr. Dent.

Mr. DENT. Thank you, Mr. Chairman. And I appreciate your

leadership on this very important issue and also for allowing me

to participate on this crucial hearing on the absence of price

thresholds in deep water leases between the Department of the Interior and various oil and natural gas companies between 1998 and

1999. As the fourth oversight hearing in this 7-month long investigation gets underway this afternoon, i believe it is critical that we

address the means by which the Department will efficiently and expeditiously remedy the sources of internal inadequacy that contributed to this costly error.

Because of the gross mistake in deep water leases during these

years, the U.S. Government Accountability Office estimates a loss

of upwards of $10 billion revenue over the life of the leases. In a

letter I recently sent to Secretary Kempthorne, I expressed my concern that this costly error ultimately falls to the American people.

As Americans continue to realize high prices at the pump, oil and

natural gas companies have experienced the luxury to preclude

themselves from royalty payments from 1,100 deep water leases.

With Chevron’s most recent oil discovery in the gulf, it has been

reported that at least two of their leases used in this oil field may

relieve the company of royalty payments in millions of barrels of

oil. I do believe it is imperative that this committee is informed by

the proactive measures of the Department that it’s pursuing to

remedy any internal inefficiencies that have contributed to this

blunder. I look forward to the testimony of the very distinguished

Inspector General, Mr. Devaney.

Thank you again, Chairman Issa, for holding this hearing, and

I look forward to your testimony.

[The prepared statement of Hon. Charles W. Dent follows:]

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Mr. ISSA. Thank you. And I would also ask the committee for

unanimous consent for the gentleman from Pennsylvania, who is

not actually on the committee, to be able to remain—not on the

subcommittee—to remain and ask questions. Without objection, so

ordered.

I apologize. I see you so often, I forgot you were not on the committee.

And with that, Mr. Devaney, I would ask that you rise, as is the

requirement of the committee, to take the oath.

[Witness sworn.]

Mr. ISSA. Let the record show the answer was in the affirmative.

Once again, we appreciate your being here. We understand that

your testimony and our questions will be limited to that which is

available, recognizing that your Department has not completed

your investigation. However, I’ve looked over your testimony, and

it is more than sufficient to give us the appropriate backup of what

this committee had already found, and with that, I look forward to

your testimony and take what time you need.

STATEMENT OF EARL E. DEVANEY, INSPECTOR GENERAL,

DEPARTMENT OF THE INTERIOR

Mr. DEVANEY. Thank you very much, Mr. Chairman. I appreciate

your remarks and other remarks from other members of the committee this morning.

I want to thank you for the opportunity to address the subcommittee this afternoon concerning the status of our investigation

into the circumstances surrounding the failure of the Minerals

Management Service to include price thresholds in deep water

leases entered into during 1998 and 1999. You’ve also requested

that I address, ‘‘the institutional culture of managerial irresponsibility and lack of accountability that lies beneath some of the

most significant failures at the Interior.’’

Mr. Chairman, with your permission, I would like to submit my

full testimony for the record and make some oral remarks and then

answer any questions the committee might have.

Mr. ISSA. Without objection, so ordered.

Mr. DEVANEY. Mr. Chairman, I know you and other members of

the subcommittee have a general understanding of how we conduct

our investigations. Suffice it to say, we are always as thorough and

as accurate as we possibly can be regardless of the fervent emotions, strong opinions and competing interests that usually swirl

around high-profile investigations like this one.

As the content of our previous reports demonstrates, we will condemn the Department for wrongdoing, and we will exonerate the

Department when allegations prove unfounded. Whether an investigation results in a prosecution and a conviction of a criminal defendant or only disciplinary action against an employee engaged in

misconduct, I am most pleased when the results of an investigation

also give the Department the insight and incentive to improve the

way it conducts itself and help prevent the problem from recurring

again.

I’d like to give this subcommittee my assurance that our investigators are working diligently to finalize our report of the investigation concerning the terms of the deep water leases issued in

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1998 and 1999. In summary, we have conducted our investigation

with two primary questions in mind: How and why were price

thresholds omitted from the deep water leases of 1998 and 1999;

and what happened once that omission was discovered?

What we know is that MMS told us that they intended to include

price thresholds in leases issued pursuant to the Deep Water Royalty Relief Act, like the first leases issued in 1996 and 1997. As

MMS was developing new regulations relating to the Deep Water

Royalty Relief Act, confusion apparently arose among MMS components as to whether or not the regulations would address price

thresholds. In the end, those regulations did not. The person responsible for directing the preparation of the leases said he was

told by those in the MMS Economics and Leasing Divisions to take

the price threshold language out of the leases. This individual submitted to a polygraph examination and passed.

Those in the Economics and Leasing Divisions deny telling him

to take the threshold language out. One of those individuals provided a sworn statement, submitted to a polygraph and passed. Another individual refused to provide a sworn statement. So he was

not even asked to take a polygraph. The third individual provided

a sworn statement but refused to take a polygraph.

We have learned that the attorney from the Solicitor’s office who

was involved in both processes had earlier conceded to an MMS official that he should have spotted the omission but did not. The official who signed the leases on behalf of MMS told us that he had

relied on that attorney and his own staff for input before signing.

He also passed a polygraph.

We also have learned that when the omission was discovered by

MMS staff in 2000, it was not conveyed up the chain of command

to the MMS Director’s Office. In fact, we interviewed three former

MMS directors who each told us that they only became aware of

the omission when The New York Times article came out earlier

this year.

So far, we’ve interviewed 29 witnesses, including present and

former DOI employees. We have also obtained approximately

11,000 MMS emails, and using software developed by our forensic

specialists, we searched these emails to extract those emails potentially relevant to this issue. Ultimately, we determined that less

than 20 emails were relevant to our investigation. Specifically, we

found a brief flurry of email discussion in 2000 about the discovery

of the omission of price thresholds, and those emails also document

the decision not to advise the Director of MMS. Unfortunately, the

MMS official who made this particular decision is deceased. We did

not find any email prior to 2000 that touched on this issue.

Mr. Chairman, in the end, unless we come across something entirely unexpected, this appears to be a classic example of bureaucratic bungling, of the stovepiping of various responsibilities involved in a complex undertaking, of reliance on a surname process

which only served to dilute responsibility and accountability and of

having no one person responsible for the final product.

Although we have found massive finger-pointing and blame

enough to go around, we do not have the proverbial smoking gun.

However, we do have a very costly mistake which might never have

been aired publicly absent The New York Times, the interest of

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this committee, the Senate Committee on Energy and Natural Resources and that of several other individual Members of Congress.

This brings me to the second matter of concern to the committee,

the culture at the Department of the Interior that sustains managerial irresponsibility and lack of accountability. I’d like to speak

about this culture in very general terms, if I may. In fairness, I

cannot speak about it in terms of the deep water royalty relief

issue yet since the Secretary has not had the benefit of our report

on the matter. And in fact, while Secretary Kempthorne has essentially inherited the culture at the Interior, he has already signaled,

both in terms of his early messages to Interior employees and is

in his personal discussions with me, his intentions to create and

sustain a culture of ethics and accountability during his tenure as

the Secretary of Interior. Therefore, I am hopeful at this juncture

that the culture that I describe in my testimony today will soon become a thing of the past.

Mr. Chairman, I recently marked my seventh anniversary as Inspector General for the Department of the Interior. Over the course

of this 7-year tenure, I have observed one instance after another

when the good work of my office has been disregarded by the Department. Simply stated, short of a crime, anything goes at the

highest levels of the Department of the Interior. Ethics failures on

the part of senior Department officials taking the form of appearances of impropriety, favoritism and bias have been routinely dismissed with a promise of not to do it again. Numerous IG reports

which have chronicled such things as efforts to hide the true nature of agreements, deviations from statutory, regulatory and policy requirements procurement irregularities, massive program failures with bonuses awarded to the very people whose programs fail

and indefensible failures to correct deplorable conditions in Indian

country have been met with vehement challenges to the quality of

our audits, investigations and evaluations.

I’ve taken to calling this behavior the dance of the three Ds: That

is, first deny it happened; then defend the indefensible; and then,

when all else fails, attempt to delay public exposure of the problem.

In one particularly contentious investigation of a high level official

that we conducted over the course of several years which cost my

office well over $1 million, I commented in my transmittal letter

to the Secretary that, ‘‘The American public is not equipped to conduct the kind of tortured analysis necessary to come to a sound

legal conclusion in matters like this. Whether a violation occurred

or not may ultimately be irrelevant. Mere appearances, however,

will erode the public trust. Once eroded, that trust is difficult if not

impossible to win back.’’

After she received my report, former Secretary Norton met with

me at length and indicated that she had accepted this official’s admission that he had exercised bad judgment, but given his promise

not to do it again, she was unwilling to take any action against

him.

I have unfortunately watched a number of high level political

and career Interior officials leave the Department under the cloud

of one of our investigations into bad judgment and misconduct. Absent criminal charges however, they are sent off in the usual fashion with a party paying tribute to their good service and the SecVerDate 11-MAY-2000 14:35 Feb 04, 2008 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 C:\DOCS\38580.TXT HGOVREF1 PsN: HGOVREF1
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retary wishing them well to spend more time with their family or

to seek new opportunities in the private sector. This charade does

not go unnoticed by career public servants. What are these civil

servants to think if those at the top are not held accountable? Why

should those at lower levels not feel empowered to challenge the

call for accountability?

In June 2004, my office issued an evaluation report on the conduct and discipline at the Department which chronicled widespread

skepticism regarding the fairness of the department’s discipline

policies. For instance, over one-third of the respondents believe

that discipline for misconduct depended on who committed the offense rather than the offensive itself. A startling 46 percent of respondents stated that discipline was administered fairly only sometimes if ever.

This failure to hold the leadership of the Department accountable

sets the stage for the remainder of the work force. If one subscribes

to the concept of leading by example, it’s no wonder that a culture

of managerial irresponsibility and lack of accountability thrives at

the Interior.

Mr. Chairman, I don’t have a simple solution. I am only hopeful

that somehow the Congress, Secretary Kempthorne and I can work

together constructively to disassemble this troubling culture at the

Interior and replace it with a strong sustainable culture of ethics,

responsibility, and accountability. This concludes my formal testimony. Thank you for the opportunity to appear here today. I’ll be

happy to answer any questions you might have.

[The prepared statement of Mr. Devaney follows:]

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Mr. ISSA. Thank you. And I am going to recognize the full committee chairman first for his questions. I would only put in place

into the record a request that the minority staff attempt to—in

light of your very startling testimony, attempt to get as many

members of the minority here so they can ask questions. I recognize that this is a unique opportunity, and with a full committee

mark-up or hearing tomorrow, I believe this is the opportunity for

people to get the facts straight. And with that, I’d recognize Chairman Davis for his questions.

Chairman TOM DAVIS. Thank you.

Thank you very much for your testimony and your ongoing oversight and investigations at the Department. I know, on page three

of your testimony, you talk about the person responsible for directing the preparation of the leases said he was told by those in

MMS’s Economics and Leasing Divisions to take the price threshold language out of the leases; that they then took a polygraph and

passed. You then went on to interview three people, two of whom

would not take polygraphs.

Mr. DEVANEY. Right.

Chairman TOM DAVIS. Testified under oath. I mean, that’s—you

can’t force them I guess. Any reason why they would refuse to take

a polygraph?

Mr. DEVANEY. Well, I think, you know, there are some—there are

several philosophical differences of opinion about the validity of

polygraphs, and it is not unusual for us to run into somebody who

has a philosophical problem with taking one.

Chairman TOM DAVIS. And one refused to even make a statement. Did he just take the fifth—plead the fifth equivalent?

Mr. DEVANEY. I don’t know that he actually said those words, but

he didn’t provide a statement and didn’t take a polygraph.

Chairman TOM DAVIS. And he was named by this other person

as someone.

Mr. DEVANEY. Yes, the first person, the one who was told to take

it out over the period of time that’s involved was pretty unsure, but

he knew it was one of these three people. But he was unsure of

which one it was, so naturally we went to all three.

Chairman TOM DAVIS. And one came out clean, and the other

two, you would have to say there’s still a cloud.

Mr. DEVANEY. I think there is arguably less of a cloud on the

person who was willing to give us a signed sworn statement.

Chairman TOM DAVIS. Absolutely. Absolutely.

Mr. DEVANEY. As you point out, Mr. Chairman, one of those folks

didn’t say much at all.

Chairman TOM DAVIS. I think the committee will take a further

look at those individuals as we move through. I guess the outstanding thing is mistakes get made. They get made up here every day.

I make them. The chairman makes them, but a 5-year cover-up of

something of this nature is something that no organization should

tolerate. And at a minimum, we know who covered this up, don’t

we?

Mr. DEVANEY. Well, there’s——

Chairman TOM DAVIS. Besides from who made the mistake or

who directed this or that, wouldn’t we know who covered it up and

who didn’t bring it forth to their superiors?

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Mr. DEVANEY. I think I’d say there’s a lot of blame to go around

here both in the Solicitor’s Office and in MMS.

Chairman TOM DAVIS. Where do you put the blame for not reporting this further up to the Secretary so things could be at

least—if the director knew, at least they would have an opportunity to perhaps change it, make some, you know, whatever. If

they don’t know about it, it’s going to continue.

Mr. DEVANEY. As I mentioned in my testimony, there was an associate Director of MMS that had actually made the decision not

to report it to the director, wanting to keep it sort of in house in

her——

Chairman TOM DAVIS. Are they still with the Department?

Mr. DEVANEY. Actually, she’s deceased, so that’s part of the problem. We didn’t have the opportunity to talk to her.

Chairman TOM DAVIS. OK. Was anybody fired over this?

Mr. DEVANEY. No.

Chairman TOM DAVIS. Was anybody suspended over this?

Mr. DEVANEY. No.

Chairman TOM DAVIS. Was anybody reprimanded over this?

Mr. DEVANEY. Not yet.

Chairman TOM DAVIS. I also note your frustration in terms of

how this is collected. And I guess when you’re through your report,

maybe you’ll have some recommendations on how you changed the

culture, and I think at that point, you noted, at the end, I don’t

have a simple solution, and you’re hopeful that the Congress and

Secretary Kempthorne and yourself can work together to constructively disassemble the troubling culture at the Interior and replace

it with a strong sustainable culture of ethics sustainability and accountability. You think you may get more specific from that as you

approach this report with some finality?

Mr. DEVANEY. Yes. As I’ve mentioned, I’ve had several conversations with Secretary Kempthorne. As a matter of fact, I had one

about this very subject the 1st day he was in office. So I have told

him that I intend to write a white paper that we can work from

and try to work together to address this systemic problem across

the Department in a way that has never been tried before. So I’m

working on that. He’s waiting for me to finish with that. And I

would hope it would provide a roadmap of how we get out of this

mess.

Chairman TOM DAVIS. Yes, I just make it this committee’s intention when that’s done to have the Secretary up here to look for his

roapmap. Remember, as the government oversight committee, we

don’t have close working relationships with any agency, which allows our ability to come in at any point without having to worry

about making friends over long-term relations getting cozy, and so

it would be our intention at that point to have the Secretary up.

I’ve known Secretary Kempthorne when he was a Senator. So I’m—

on occasion when he was Governor. And now that he’s here, he is

a very honorable man. I work with him on unfunded mandates, the

legislation in 1995, and you know, this is an opportunity for him

to turn that around. I hope he will not let this become his problem.

Mr. DEVANEY. I’m very hopeful, Mr. Chairman. He is—as one of

the first things he did, he sent a message to all—he sent actually

two messages. One was about ethics. I think it was within the first

33

week of his tenure. And the second message he sent was specifically to all employees that they have to cooperate with the Inspector General’s Office. So I appreciated both of those very visible

moves on his part early on. I really do think I have a chance of

working with somebody who takes this seriously.

Chairman TOM DAVIS. Yes, let me just note, I’m sure you’re not

the most popular guy as you walk down the corridors of the Interior Department.

Mr. DEVANEY. I am not.

Chairman TOM DAVIS. But I would just say that this committee,

the Congress, American taxpayers rely on you to do your job. I

think you’re doing it well, and it’s a serious and tough responsibility. We appreciate it. I’ve got one last question: Do you resolve or

have you resolved so far in your report whether Chevron officials

indeed notified MMS officials of the missing price thresholds in

1998 and 1999 in quarterly meetings?

Mr. DEVANEY. I think that question still remains a little unclear.

There was a regional MMS official that came before the subcommittee I believe in July and testified that—I believe he testified, I wasn’t personally here—but I was told that he remembers

the meetings, but he doesn’t remember the conversation where

Chevron informed him. We actually took him from this hearing

room directly back to our office and questioned him and asked him

to take a polygraph about what he had said up here about his

memory, and he passed that polygraph. So it may be a case that

he truly does not remember something that may have been said.

Chairman TOM DAVIS. Thank you very much. Those are my basic

questions. I know that Chairman Issa and Representative Dent are

going to have other questions in here. As you know, we have a full

committee meeting tomorrow. So this is, I think lays a very strong

predicate for that. And, again, we appreciate your work to date. We

look forward to your completion of this report and continuing to

work with you. Thank you.

Mr. ISSA. Thank you, Mr. Chairman.

Mr. Devaney, maybe I’ll followup just quickly on the chairman.

In the earlier statement that I made, basically what we said was

we thank Chevron for coming forward for making us aware of the

meeting. And your investigation and our investigation seemed to

have one thing in common, which is, even if someone really doesn’t

remember, what we have are people saying something didn’t happen when in fact a for-profit company comes forward, is negotiating

to pay royalties that technically they don’t owe under the letter of

the contract and says, but we brought this up repeatedly. Other oil

companies were aware of it, didn’t maybe take as much action, but

it appears just normal judgment. It appears as though there’s no

logical reason to disbelieve the oil companies even if we agree that

some of the employees no longer remember it.

Mr. DEVANEY. I think that’s very fair. I think it’s—we certainly

hold no opinion on—I think it is fair to say that we will just accept

Chevron’s testimony at face value, and we’ve polygraphed the employee, and it’s probably equally fair to say he just doesn’t remember.

Mr. ISSA. And I appreciate your ability to do that and your use

of polygraph and other techniques that are not available to this

34

committee. I also want to enter into the record just a calculation

and a form of a thank you for the work that you’ve done because

ultimately you’ve uncovered a great deal that we otherwise would

not have.

Recently, there’s been the discovery of the so-called jack discovery that has two—just two leases that fall under this are included

in this fairly vast new discovery, perhaps one of the largest discoveries in North America. This is two out of 1,100 leases that don’t

have—that fail to have the thresholds in them. We did the calculation of the estimate, the 15 billion barrel estimate divided it of

course for the actual two out of eight that were recovered, looked

at the absence of thresholds multiplied it by the 175 million barrel

otherwise volume threshold; today’s dollars, roughly 66. We took a

lower dollar than we’ve been experiencing, comes out to $11.5 billion of gross revenues. The cost as I see it, and I think—you know,

this is classic back of the envelope, but the cost to the U.S. Government in lost royalties, $144 million from just two out of 1,100

leases. So if you ever go up after spending $1 million investigating

something at the Department of the Interior again and you ever

feel bashful or shy or apologetic for spending the money, come to

this committee and we’ll find you a way to get a lot more money.

Your investigation in just two out of 1,100 is paying for the rest

of your long career to come. And I don’t get to say thank you very

much like that, but I really appreciate your work.

Going into just a few quick questions, and then I want to let Mr.

Dent have his, and then we can do additional if he’d like. You testified that once the missing price thresholds were discovered, that

there was an active decision not to notify the management, understandably despite somebody who is now deceased. This, this coverup, from your experience from other investigations, because this

committee is really looking at the reform part, what do we do going

forward? Was this surprising to you? Or would you say this is part

of a culture that this was something that nobody thought was a

bad idea to cover up and that it could happen today again if we

don’t change the culture?

Mr. DEVANEY. Well, I’ve been in this town a long time, and it

never ceases to amaze me about how people somehow get involved

in a cover-up, and it ends up being worse than the actual offense

in the beginning, and there are countless examples of that.

No, it didn’t surprise me. I think this is a Department that has

eight separate bureaus. It’s very bureau-centric. They’re very protective of themselves, not particularly interested in the other bureaus. And it presents an enormous challenge to any Secretary to

sort of get a handle on all of that. And it’s almost impossible to

know what’s going on in one of those bureaus on a day-to-day

basis. So the idea that somebody at an associate director level at

MMS would say, ‘‘you know what, we’re not going—we’re not going

to report this to the director; we’re just going to contain this and

see if we can get through this without’’—because at the time I

think arguably the price of oil was much lower and maybe they

didn’t have as high an expectation that there would be this kind

of—5 years later, there would be this kind of a problem.

Mr. ISSA. Yes. And I am only going to ask one more question and

then yield to the other two members, but I want to stay on this

35

point. If on that date, and this is more not just for the IG but for

anybody looking at this, if, on that date when they were covering

up or not reporting, they had gone to the industry and said, ‘‘we

haven’t hit these price thresholds, but this is a technical error, we

are way below, there’s no impact to your companies, but we’d like

to make this correction.’’ We would today have a record that they

at least tried to tell companies, ‘‘it doesn’t cost you anything but

here’s the law, would you please sign this amendment or correction

to make it the case,’’ and we might very well not have this to deal

with at all because it would have been a mistake that was then renegotiated at no cast to either party. That I’m guessing is not part

of the culture today at the Department of the Interior where they’d

ever consider going back and doing the right thing because it isn’t

just the cover-up; it’s the fact they didn’t do the right thing. They

didn’t try to do the right thing when they could have gone back to

Chevron and said, ‘‘you know, you’re right in that meeting and

here’s the addendum we need you to sign covering these leases.’’

Mr. DEVANEY. I think you’re right. I think the opportunity to renegotiate in that environment as opposed to the environment we

have today is, there’s a huge gulf there. And they should have done

it. But it doesn’t surprise me they didn’t.

Mr. ISSA. Thank you. And I’m now going to yield to Mr. Dent and

then Mr. Bilbray in that order for 5 minutes, and then there will

be a second round.

Mr. Dent.

Mr. DENT. Thank you, Mr. Devaney, for being here today. Would

you describe the extent of the accountability Interior employees involved in the leasing process must adhere to as contracts are finalized through the duration of a year between the Department and

oil and gas companies. And how do today’s measures of accountability compare to those in 1998 and 1999?

Mr. DEVANEY. I think we still have a process that’s dysfunctional. We still have in place a surname process where so many

people are signing off on it; no one person takes ownership. Most

of the people in the surname process are relying on staff to tell

them whether or not to sign a document. Each of them, each of the

components of MMS are looking at their own individual pieces and

not necessarily at the pieces of the other half or the other third of

the equation. And then we have the role of the Solicitor’s Office,

which, quite frankly, this is another area where I wasn’t particularly surprised, where the Solicitor, he or she feels that they’re only

looking at these documents for legal sufficiency, and the client,

MMS or National Park Service actually thinks they’re doing a lot

more than that. So we have this sort of dysfunctional relationship

between the client and the Solicitor as they don’t understand what

their roles are. And so you have no one person responsible, and the

client and the Solicitor not understanding what each other’s roles

are. It was like that then. It’s like that today.

Mr. DENT. Thank you. Thanks for that explanation. What the Interior Department official, as has been discussed here, expressed,

the reason for the mistake in these leases is that the right hand

simply didn’t know what the left hand was doing. Can you describe

their visions that have been made in the internal communication

and managerial systems to prevent a similar mistake or incident?

36

Mr. DEVANEY. My honest belief is none.

Mr. DENT. Wow. None.

Mr. DEVANEY. I’m sorry to be—I’m sorry to be facetious.

Mr. DENT. I understand. That’s disconcerting to say the least.

With respect to Chevron’s recent discovery in the gulf, is there a

possibility that they’re going to be dismissed from any royalty payments? And if so, how much revenue will the government lose in

such payments?

Mr. DEVANEY. Congressman, I really—we really did not look at—

it’s so recent the discovery and such a revelation, we really didn’t

look at it with respect to this investigation. So the only thing I

know is what I’ve heard thirdhand. I think the people that are appearing before the committee, the full committee, tomorrow would

have a better handle on what that might mean.

I will tell you that I think certainly there are pieces of this new

find that appear to be without the price thresholds on them, and

whatever the production ends up being probably will determine

how much money is actually lost, and we’re not at the point where

that can be assessed at the moment, but there’s going to be an impact.

Mr. DENT. Thank you and I’ll yield back to the chairman.

Mr. ISSA. Thank you, and the record will show my $144 million

estimate, but you’re welcome to put your own into the lottery on

this.

With that, I recognize our newest member but not a new member

to the energy business, Mr. Bilbray.

Mr. BILBRAY. Yes. Thank you, Mr. Chairman. Mr. Devaney, my

question really is sort of reflective of where the public’s perception

is right now, is really skeptical on all of us here, and this one is

just an open sore that’s just asking—can I sincerely tell my constituency that this was not a—there was not criminal intent or any

criminal involvement or activities as you know it besides people

being felony dumb?

Mr. DEVANEY. I have I think a well deserved reputation of trying

to answer that question first, and I am always—because my background is criminal enforcement for 30-odd years. I am satisfied

right now that there isn’t anything that would allow us to take this

case to a U.S. attorney.

Mr. BILBRAY. So you’re telling me that you just cannot or have

not found anything that indicates personal benefit or any ties with

the beneficiaries between the decisionmakers and the administration and those who were able to have a huge windfall based on

this.

Mr. DEVANEY. While our investigation is not done, absent a very

unexpected event, I think I can make that assurance to you.

Mr. BILBRAY. I also have 20 years in local government on the administration side of this thing, and all I can imagine, if I was—

while I was mayor or chairman of the county, if this had come up,

they would have just hung and dried me out long before the election would have ever come around. I think this is one where, Mr.

Chairman, I would hope that we not only find who’s to blame and

how the system broke down but what possible way we could have

a restructuring to avoid those problems in the future.

I yield back at this time. We’re going to do another round.

37

Mr. ISSA. Thank you. Boy, you know, it is so—it is such a pleasure to have somebody who has been working sort of different sides

of the same coin, but seeing that there’s a lot of tarnish on it, let

me—let me try to get a bright side to this if I can. Are there any

heroes in this process? Is there anybody that stood out, that stood

up and said, boy, this sucked, and I need to tell you about it? Were

there people who came forward that were not part of that culture

of the Ds, the denials, and the delay and so on?

Mr. DEVANEY. Yes. As a matter of fact, there is a hero here, at

least I view him so far as a hero. And there was an economist by

the name of Sam Fraser that was working on these leases in February 2000. Actually, on February 17, he discovered this problem,

and to his credit, he immediately spread the news throughout the

MMS at his level, and there was—there were some new leases that

had sales that were going to take place in the near term, and

addendums were sent out immediately based on his discovery. I’m

not sure that decision was made at any higher level than in that

particular region, but I would consider that—the action of those

sort of lower-level folks at MMS when they—when they discovered

it, they took immediate action.

Mr. ISSA. Thank you. I’d like to go to one area that I am particularly concerned about. To what extent was the Solicitor’s Office involved in the absence of price thresholds in the governing regulations?

Mr. DEVANEY. Well, the same Solicitor attorney was involved in

both the drafting of the regulations and the review, the final notice

of sale, in 1996, 1997.

Mr. ISSA. And that’s Mr. Milo Mason?

Mr. DEVANEY. It is.

Mr. ISSA. We’ve had him before the committee.

Mr. DEVANEY. Yes, he also acknowledged to us that he knew of

MMS’s policy decision to include price thresholds. An MMS official

told us independently that he had earlier admitted to him that he

should have caught the omission in the final notice of sale because

Mr. Mason told us that his surname on the final notice of sale was

to ensure its legal sufficiency and ability to withstand a lawsuit,

not to ensure that MMS policy decisions were adequately covered,

and this goes to my earlier statement about a failure of the client

and the attorney to understand what each—each role is.

Mr. ISSA. Well, I am not that old, but I am getting older all the

time. And one of the life experiences I had in my dealings in Asia

was that people sometimes said, well, you know, you can’t count on

the Asians; they tell you things are going to happen, and they don’t

happen. This was true in Taiwan, in China and even in Korea. I

said, ‘‘Why?’’ They said they always said, ‘‘Yes,’’ and it doesn’t happen. I learned fairly quickly that, yes, they say ‘‘Yes’’ because they

are saying, ‘‘Yes, I hear you, and I understand you.’’ And if you

make a fair followup question, they are incredibly truthful, honest.

Don’t ask me, ‘‘Will you deliver on this date?’’ Ask them one more,

‘‘Will you deliver on that date, and is that date good?’’ And next

thing you know they’re telling you about the problems and the likelihood of not meeting a deadline. Is this really the way that the Solicitor’s Office works, that, from what you can see, Mr. Mason, basically says, my job is to say, ‘‘This contract is in front of me, thereVerDate 11-MAY-2000 14:35 Feb 04, 2008 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 C:\DOCS\38580.TXT HGOVREF1 PsN: HGOVREF1
38

fore, I put my signature on it;’’ not that ‘‘This contract is effective

and proper and all those who sign it, all those signatures that follow should rest confident that it’s correct?’’ Is it really that kind of

a culture?

Mr. DEVANEY. Yes. And we have heard this time and time again.

Every time we get into something that has gone wrong at Interior

where the Solicitor’s Office has been involved, when we inevitably

end up talking to the Solicitor involved, that is always what they

say. So it, once again, it wasn’t a surprise. Oftentimes, Solicitor to

legal opinions at Interior turns out to be a checkbox along with a

signature or set of initials. The focus is always on legal sufficiency,

withstand a lawsuit, not necessarily what’s best for the American

public.

I must say that I’ve had some fairly encouraging discussions with

the new acting Solicitor about who the client is. I take the view

that among the clients is the American people, and quite frankly,

I think there has been a culture at the Interior that has suggested

to the folks working at the Solicitor’s Office that the client is the

particular bureau that they’re working with and whatever the client wants done, their job is to find a way to do it, regardless of

whether or not that is in the keeping with the spirit of the law or

regulations or policies that the Department has. And I also take

the view that the more transparency of the process, the better. And

we’ve had occasions where the Solicitor’s Office has crafted documents which would literally take Houdini to figure out what was

going on. So, yes, we’ve heard this before. Mr. Mason’s comments

are not an aberration. He’s part of a culture. Once again, I am encouraged by the conversations I’ve had with the new acting Solicitor and hopefully that will turn out to be a productive exchange.

Mr. ISSA. This is probably a tough question that takes both your

experience and your interviews with the Solicitor; do you believe

the absence of price thresholds could have been or were the direct

result of legal advice rendered by attorneys in the Solicitor’s Office?

And I ask this question because we were told by the Solicitor that

everything was done orally. You today have pretty well told us that

there’s not much of an email trail, that in fact they wandered back

and forth down the hallways to make decisions and never codified

them with any kind of a memo.

Mr. DEVANEY. That is a—once again, not an unexpected find on

our part. When we hear about a legal opinion, the first question

we’ve learned to ask now is, ‘‘Show it to us’’ because we’ve learned

in the past through past investigations that legal opinion is often

an oral opinion. In this particular case, I don’t think there is any

written record of having rendered any sort of an opinion in this

matter. And that’s a problem. That’s a real problem.

Mr. ISSA. I’ll ask two more questions, and I’ll yield back to the

gentleman from California.

Did you find an attorney within the Solicitor’s Office that would

take some level of ownership of these oral opinions, or was it pretty

much it all went back to Milo Mason?

Mr. DEVANEY. Well, Milo Mason had supervisors. My understanding is, their testimony and their conversations with our investigators is, while we only—we assumed that he had done his review, and we just signed off on them. So it’s just one of those deals

39

where it kind of flows down the hill, and Milo is sitting at the end

of that chain, but he didn’t—I really—I really am troubled by his

role in this matter.

Mr. ISSA. Followup on the same thing, and I’m going to finish on

Mr. Mason and then yield. When he was before this committee, he

said something which I found somewhere between interesting and

disturbing. And in light of what you said about the culture and the

question of, who do I work for, am I in fact a fiduciary to the American people or to some particular boss, he made a statement in

that—in how these things, the thresholds, got omitted that this

was policy, and at the time, he was sort of saying, ‘‘Well, it’s policy

that it was going to be here, not here, and it was policy here, not

here, because it wasn’t really for sure because if it was for sure,

it absolutely would have been here and nobody would have cared

if it was in both places.’’ Do you think that policy would trace back

to this idea that maybe some people just weren’t that keen on the

thresholds or there was a less important—and his client, as he

viewed it, may not have been that interested in it being in there?

Mr. DEVANEY. I think actually the client assumes that more is

happening when the Solicitor looks at it than actually is. It has

been an argument within the Solicitor’s Office and I’ve had that argument with previous Solicitors about—and previous Solicitors

have told me our position is, we don’t make policy. And I concede

to them that they shouldn’t be making policy. However, I think

there is a certain amount, as you suggested earlier, of due diligence

that any attorney needs to have to ask that next question and not

simply to accept at face value that, here it is, just please sign off

on it. As sort of a road exercise, I would like to see a process where

certainly Solicitors are not setting or making policy for the Department of Interior but that they understand that the policy of the Department of Interior or MMS was to have price thresholds in there,

and if they’re not in there, call it to somebody’s attention.

Mr. ISSA. Now I come from 20-plus years in the private sector,

so I’ve employed a lot of attorneys. I’ve never had occasion to sue

my own attorney, but I have known people who have had occasion

to sue their attorney for malpractice. If, in fact, I ever relied on an

attorney to prepare a legally binding document, such as a lease,

and it was simply insufficient, it would not be anything other than

a normal malpractice case where you’d go to your attorney and say:

‘‘My losses are the result of your malpractice; therefore, they are

your losses.’’ Realizing these government attorneys are not covered

by malpractice insurance, but would you characterize this failure

in a government equivalent as malpractice?

Mr. DEVANEY. Well, I don’t do that ever, but what I do do is, oftentimes, in the wake of one of our investigations, the bar, the association which holds that in which the person we’re talking about

has a license, comes to us and we often cooperate fully with their

inquiries, and in this particular case, it’s the D.C. bar, and we’ve

worked with them a lot in the past, but I don’t—I don’t actually

ever say that malpractice has occurred. I use other words.

Mr. ISSA. So this is a decision for the D.C. bar, but this is not

inconsistent with past investigations that might have led to a reprimand or other actions against an attorney.

Mr. DEVANEY. Exactly.

40

Mr. ISSA. Thank you, and I’d again recognize the gentleman from

California, Mr. Bilbray, for his second round.

Mr. BILBRAY. Thank you, Mr. Chairman.

Just very quickly, I think we all agree that of all the government

agencies that are frontloaded to maintain the public trust and rely

on the trust, holding the public’s resources in trust, the Interior

should be the experts in it. Wouldn’t you agree? I don’t think any

other department there has been historically so much oversight.

And even if it’s—I mean everything from our public lands to Native

American resources and everything else, the concept of being the

trust holders is not new to this Department.

Mr. DEVANEY. No. You’re exactly right, Congressman. Literally,

with the exception of money, everything, anything anybody else

would ever want is at Interior. Oil, gas and coal, water in the west,

grazing rights, Indian gaming, huge contract in grant programs

and very lucrative inceptions at our national parks and fish and

wildlife refuge. So, literally, this Department has had for 150-odd

years the fiduciary responsibility that’s attendant to all those

things, and they should be able to do this right.

Mr. BILBRAY. And so you know the fact is because the people in

the United States have put so much trust in this Department, that

it would administer the trust in an appropriate way. This kind of

report is very, very disconcerting. I just ask, when we get into it,

would you recommend, with this kind of policy of this type of attitude, would you recommend that your grandchildren’s trust be

managed by these people?

Mr. DEVANEY. Personally, no. Absolutely not.

Mr. BILBRAY. You don’t make—you don’t decide; you don’t cite

malpractice, but let me just say, with this policy and the way it

was managed, you not only would not want your grandchildren to

have their trust managed by these guys, I would ask, you don’t disbar and you don’t do malpractice, but do you see enough justification here that this is something that you would think in fairness

should be referred to the D.C. bar for review?

Mr. DEVANEY. You know, they are not bashful at coming to us.

They pay an awful lot of attention to my reports, and it is their

practice, I believe, to check my Web site on a regular basis, and

they’re in—they’re in regular contact with us. It would not surprise

me if we issue a report which has—which criticizes the role of any

Solicitor in this matter, that they come to us, and we will cooperate

with them.

Mr. BILBRAY. Mr. Chairman, in closing, I would just like to say

I appreciate the testimony. I just think we have to understand

what’s at stake here. It is not the money. It is the total destruction

of the trust by of the American people. If this is happening here,

how do we know it’s not happening everywhere else in every

other—because this is the department that the American people

have put their heritage in so many ways on the line and trusted

these people to administer it. And with this, this breach that we

saw in 1998, 1999, it just really plays into those people—the hands

of the people who always say that there is no credibility in the ability of the Federal Government to manage the public assets. And I’ll

tell you, as a mayor, there would have been—there would be people

hanging from trees in cities and counties if you had this happen

41

in the local government. And I will use that term and some people

may be appalled by it, but frankly, some of us may think that attorneys would look good hanging from the trees when they’ve committed this kind of violation of a trust. So with that more-than-subtle approach, I will yield back my time.

Mr. ISSA. Thank you. You’ve been very generous with your time.

I’m just going to ask, very quick, one more question and comment

and then close. Thank you.

First of all, with one exception; will you agree to come back after

your report is finalized.

Mr. DEVANEY. Sure.

Mr. ISSA. I look forward to that.

I’ve got to ask, your office has reviewed the testimony and you,

I believe, personally reviewed the testimony of the Department employees that have previously spoken before under oath before this

committee; is that true?

Mr. DEVANEY. Yes.

Mr. ISSA. Do you find—and you don’t have to name names in the

first round—but do you find any of the testimony to be in doubt

or untruthful that was given before this subcommittee?

Mr. DEVANEY. No. But basically, I mean, I wasn’t there personally, but we’ve had people literally in all of your hearings—we will

have somebody at tomorrow’s hearing—and we look for that and

we haven’t found that yet.

Mr. ISSA. And if you find it in the future, I trust that we would

know about it sooner.

Mr. DEVANEY. You will.

Mr. ISSA. I appreciate that. Now, again, this is sounding a little

folksy, but I was a young Army lieutenant one time, and another

young Army lieutenant in the mid-1970’s went out on a unit maneuver, and one of those soldiers lost a weapon, left it in the wrong

place, and it didn’t get reported for several hours. And when it was

reported, they went back to the field and searched and searched

and didn’t find it. It was found a couple of days later. That lieutenant was relieved for that. The lieutenant didn’t lose his weapon,

the sergeant didn’t lose his weapon, a young enlisted man lost his

weapon and then it was found. That’s the level of accountability

that I was brought up with as a lowly second lieutenant in the U.S.

Army.

What disciplinary action would you recommend for a mistake

like this one, including the delay and the cover-up that costs the

American people billions of dollars?

Mr. DEVANEY. Well, I would be unlikely not to recommend disciplinary action when the loss to the American taxpayer is so high.

But that decision is usually made after the report is complete, and

I would normally include that in my transmittal letter to the Secretary. But this is an egregious loss of revenue to the American

taxpayer, and in situations like this in the past I have made strong

recommendations for disciplinary action, where appropriate.

Mr. ISSA. Thank you. And I want to, once again, thank you for

being here and for your testimony. Clearly the Department’s culture must be changed, and the organizational structure is something that the full committee should address in the hearing tomorrow.

42

The failure to carry out our departmental policy and include

price thresholds in all leases need never have happened. Leadership in the Department must step up and fix this problem. The

American people now know that there are more than 10 billion

good reasons why we must have these changes.

Mr. Devaney, we’ll hold the record open for any additional items

you choose to put in the record for 2 weeks, which will give you

the benefit of seeing what happens tomorrow and still putting it in

today’s record. It’s one of the miracles of Congress.

I once again thank you for your good work, and I look forward

to working with you later and in the next Congress to reform the

Department of Interior. And with that, the hearing is adjourned.

[Whereupon, at 3:33 p.m., the subcommittee was adjourned.]

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