Interior Official Assails Agency for Ethics Slide

The Interior Department’s chief official responsible for investigating abuses and overseeing operations accused the top officials at the agency on Wednesday of tolerating widespread ethical failures, from cronyism to cover-ups of incompetence. “Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior,” charged Earl E. Devaney, the Interior Department’s inspector general, at a hearing of the House Government Reform subcommittee on energy. “I have observed one instance after another when the good work of my office has been disregarded by the department,” he continued. “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 ‘not to do it again.’ ” The blistering attack was part of Mr. Devaney’s report on what he called the Interior Department’s “bureaucratic bungling” of oil and gas leases signed in the late 1990’s, mistakes that are now expected to cost the government billions of dollars but were covered up for six years. While these leases were the specific focus of the hearing, Mr. Devaney directed most of his criticism at what he called a broader organizational culture at the Interior Department of denial and “defending the indefensible.”...Mr. Devaney’s broadside against the Interior Department’s culture dovetailed with his tentative conclusions in his most recent investigation, into how the department had managed to sign 1,100 leases for offshore drilling that inadvertently let energy companies escape billions of dollars in royalties on gas and oil produced in the Gulf of Mexico. The leases, signed in 1998 and 1999 during the Clinton administration, allow companies to escape normal federal royalties — usually 12.5 percent of sales — on the tens of millions of barrels of oil on each lease. The royalty break was intended as an incentive for deepwater drilling, but it was also supposed to end if oil prices climbed above a “threshold” level of about $34 a barrel. The leases at issue omitted that restriction, and department officials kept quiet about their mistake for six years after they discovered it. The problem was first disclosed by The New York Times in March. Government officials now estimate that the mistake could cost the Treasury as much as $10 billion over the next decade....