Interior Secretary Ken Salazar said Thursday he has asked officials to review the potential criminal conduct of a group of Minerals Management Service (MMS) employees who were involved in a sweeping scandal last year and to take a close look at restructuring the agency’s oil and natural gas royalty program, as well as examine Interior’s ethics regulations and policies.

“I have asked the Department of Justice and, if appropriate, the Colorado United States Attorney’s Office to review whether the criminal determinations made earlier were correct,” Salazar said after meeting with MMS staff in Denver, which was embroiled in a scandal last year that involved illicit drugs, sex and contract misdealing. The details emerged last September following a two-year investigation by Interior Inspector General Earl E. Devaney (see Daily GPI, Sept. 11, 2008).

“Given the seriousness of the findings of the OIG [Office of Inspector General], I want to make sure that those who blatantly flaunted the law receive the appropriate sanction,” he said. The OIG at the time explored allegations involving more than a dozen current and former MMS employees. Following investigations by the Department of Justice, only two former MMS officials were sentenced to prison for their part in the corruption (see Daily GPI, Nov. 17, 2008; Sept. 17, 2008).

Salazar said the department also plans to review the personnel actions taken against those involved in the scandal to determine whether they were appropriate, or warrant additional sanctions. In November, former MMS Director Randall Luthi said the actions taken against participants ranged from a letter of warning and reprimand up to and including permanent reassignment from MMS’ royalty-in-kind (RIK) program, suspension without pay, demotion to a lower pay grade, and termination from federal service (see Daily GPI, Nov. 24, 2008).

“Our agenda for reform will reach every part of this department. But it will also send a loud and clear signal to the special interests outside of this department who have become accustomed to the ‘anything goes attitude in Washington over the last eight years. The ‘anything goes’ era is over. And this department and the Minerals Management Service will lead the way in ending it,” Salazar said. The MMS collects billions of dollars each year in royalties from production on oil and gas leases in the federal Outer Continental Shelf.

Heading up this “ethics reform initiative” will be Tom Strickland, Salazar’s chief of staff, who served as U.S. attorney general for Colorado when Salazar was the state’s attorney general.

The well-publicized offenses, which brought disgrace to Interior and evoked cries from Capitol Hill for major change, were “the product of a few individuals and a set of special interests who capitalized on an outdated and flawed royalty-collection system,” Salazar said.

He noted that Strickland and others also will review the recommendations made by Devaney and the Government Accountability Office to “assess the progress and effectiveness” of the implementation of the recommendations. “We want to ensure that the actions taken to date are comprehensive. If they are not, we will take additional steps.”

Salazar also ordered the publication Thursday of a “new, clear, strict code of conduct” that applies to all employees in MMS. “This was designed specifically to address some of the problems identified by the Inspector General.”

In addition, he called for a thorough review of the department’s ethics regulations, policies and guidance, as well as recommendations for areas that need to be strengthened.

At a White House press briefing earlier this week, Salazar said that that was “only the first step of our long-term effort to enact comprehensive, top-to-bottom reform of the Department of Interior.”

He said some employees of the MMS’ Colorado office, which collected $23 billion in revenues last year, were some of the worst violators, “accepting gifts and employment contracts from the oil and gas companies [that] they are supposed to be holding accountable.” This is “one of the worst examples of corruption, abuse and of government putting special interests before the public interest,” he noted.

Asked whether the Obama administration would be overturning some executive and/or presidential orders on oil and natural gas exploration on federal lands, Salazar said “we have all of those on the table and we’re taking a look at them. There are some which are bad and which need a new direction. There are probably some which will be kept in place.”

Oil and gas development “has to be done in the context of a comprehensive energy plan, and it also has to be done with the right kind of balance,” Salazar said. “There are places where it is appropriate to explore and to develop oil and gas resources, and there are places that are not appropriate. And so that’s part of what we’ll move forward with in the agenda at the Department of Interior.”

Salazar skirted the issue of whether Obama will support the recently released five-year leasing plan, which calls for lease sales in areas off the Atlantic and Pacific coasts that have been long closed to producers. The plan “is going to have to fit in with a comprehensive energy plan that President Obama wants for the nation,” he said.

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