In the wake of a blistering report by the Interior Department Inspector General last week of ethics violations and amid fresh allegations that top agency officials blocked four auditors from recovering millions of dollars in oil and natural gas royalties from producers, Sen. Ron Wyden (D-OR) Thursday called on the Senate Energy and Natural Resources Committee to schedule a hearing to question Interior Secretary Dirk Kempthorne about the charges and what he is doing to address the ethics problems at the department.

“I…request that this hearing be held before the end of the session,” Wyden said in a letter to Committee Chairman Pete Domenici (R-NM) and Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the panel. The Senate is planning to adjourn at the end of next week to allow members to campaign for the mid-term elections in November.

Interior, which has been under fire for nearly the entire year, took another shot to the mid-section Thursday when The New York Times reported that government auditors, in four lawsuits that were unsealed last week by federal judges in Oklahoma, accused their Interior superiors of preventing them from pursuing more than $30 million in royalty underpayments for oil and gas produced in federal waters in the Gulf of Mexico. Several of the auditors have filed False Claims Act lawsuits as private citizens against producers for allegedly defrauding the U.S. government.

Wyden said he called Interior officials to his office earlier this week, but they were not able to answer his questions about the whistleblowers’ allegations. Specifically, he asked Interior officials to identify the number of times auditors were overruled in their recommendations to pursue underpayment of royalties and how many auditors’ letters raising underpayment issues were blocked by superiors.

Interior Inspector General Earl Devaney delivered a scathing attack on the department during a House Government Reform subcommittee hearing last Wednesday, saying that “short of a crime, anything goes at the highest levels of the Department of Interior.” He characterized the omission of price ceilings in the 1998 and 1999 deepwater Gulf of Mexico oil and gas leases as “an example of bureaucratic bungling” at its worst, and said the failure of Minerals Management Service (MMS) employees to report the oversight to superiors when they first detected it in 2000 stemmed from a “culture of irresponsibility” that pervades the department (see Daily GPI, Sept. 14).

Devaney reported that officials responsible for Interior’s royalty audits attempted to cover up the oversight in the 1998 and 1999 leases, which so far has cost the federal government $2 billion in lost revenues, according to the Government Accountability Office (GAO). The GAO estimates that the “sweetheart” royalty-free leases negotiated by Interior’s MMS during the two-year period could cost the federal government upwards of $10 billion over the life of the leases.

Wyden said he supports renegotiating the 1998 and 1999 leases and, if the producers refuse, he proposes that the federal government bar them from bidding on new leases in the future.

©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.