[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
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
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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
JON C. PORTER, Nevada                C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas                BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia        ELEANOR HOLMES NORTON, District of 
PATRICK T. McHENRY, North Carolina       Columbia
CHARLES W. DENT, Pennsylvania                    ------
VIRGINIA FOXX, North Carolina        BERNARD SANDERS, Vermont 
JEAN SCHMIDT, Ohio                       (Independent)
BRIAN P. BILBRAY, California

                      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        DIANE E. WATSON, California
JOHN M. McHUGH, New York             BRIAN HIGGINS, New York
PATRICK T. McHENRY, North Carolina   TOM LANTOS, California
KENNY MARCHANT, Texas                DENNIS J. KUCINICH, Ohio
BRIAN P. BILBRAY, California

                               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


                            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

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 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:]
    [GRAPHIC] [TIFF OMITTED] 38580.001
    
    [GRAPHIC] [TIFF OMITTED] 38580.002
    
    [GRAPHIC] [TIFF OMITTED] 38580.003
    
    [GRAPHIC] [TIFF OMITTED] 38580.004
    
    [GRAPHIC] [TIFF OMITTED] 38580.005
    
    [GRAPHIC] [TIFF OMITTED] 38580.006
    
    Mr. Issa. And I now yield to the full committee chairman 
for his opening statement.
    [The prepared statement of Hon. Darrell E. Issa follows:]
    [GRAPHIC] [TIFF OMITTED] 38580.007
    
    [GRAPHIC] [TIFF OMITTED] 38580.008
    
    [GRAPHIC] [TIFF OMITTED] 38580.009
    
    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, 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:]
    [GRAPHIC] [TIFF OMITTED] 38580.010
    
    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:]
    [GRAPHIC] [TIFF OMITTED] 38580.011
    
    [GRAPHIC] [TIFF OMITTED] 38580.012
    
    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 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 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 Secretary 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:]
    [GRAPHIC] [TIFF OMITTED] 38580.013
    
    [GRAPHIC] [TIFF OMITTED] 38580.014
    
    [GRAPHIC] [TIFF OMITTED] 38580.015
    
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    [GRAPHIC] [TIFF OMITTED] 38580.018
    
    [GRAPHIC] [TIFF OMITTED] 38580.019
    
    [GRAPHIC] [TIFF OMITTED] 38580.020
    
    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?
    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 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 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 cover-up, 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 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?
    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.
    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, therefore, 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 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.
    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 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.
    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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