Announced Wednesday by Michael Bromwich of the Bureau of Ocean Energy Management, Regulation and Enforcement, the penalty was for false reporting of energy production on Southern Ute tribal land in Southwest Colorado.

“What’s been discovered, we’ve been working on this and it’s really an accounting, coding error, and it’s less than .02 percent of our royalties paid. Everything’s been corrected and rectified,” said Lisa Hough, head of public affairs for BP America’s Rocky Mountain Region.

“We’ve worked with the tribe and the federal government on that. It’s a line coding errors where we characterize gas produced as natural gas instead of coal-bed methane gas,” Hough told the Colorado Independent. “That’s an example of one of the errors they’re deciding to fine us for today.”

Bromwich is the new director of the agency that replaced the scandalized Minerals Management Service, which was charged with collecting royalties from energy production and federal lands.

“We are committed to collecting every dollar due from energy production that occurs on federal and American Indian lands, and accurate reporting is crucial to that effort,” Bromwich said in a release.

The Interior Department is under increasing pressure to clean up the agency that both collects revenues and regulates the oil and gas industry. Secretary Ken Salazar, prior to the Deepwater Horizon spill in the Gulf of Mexico, had promised to clean up the MMS, which critics charged was far too cozy with the industry.

BP America, which is looking to step up natural gas production in Colorado in the fall, is the second largest producer in the state – behind only Williams Companies.

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More than 100 scientists and environmental groups recently signed a WildEarth Guardians letter calling for President Barack Obama to oust Salazar for his failure to clean house at the Minerals Management Service and possibly prevent the growing Deepwater Horizon-British Petroleum oil spill in the Gulf of Mexico.

Ken Salazar

Other environmental groups, according to the Grand Junction Daily Sentinel, are still backing Salazar for doing more to balance environmental concerns and energy development demands than any interior secretary in the last 25 years.

Still, Salazar’s “new sheriff in town” proclamation in Lakewood last year, when he vowed to clean up the MMS in the wake of a drugs, sex and influence-peddling scandal, are coming back to haunt him. Even Republicans such as Colorado Rep. Mike Coffman are using that one against him.

But Salazar maintains he inherited eight years of entrenched “drill, baby, drill” bureaucracy from the Bush administration – a mess it will take some time to clean up. Since his appointment late in 2008, though, conservation groups have been somewhat divided on Salazar’s past record and his potential to reform deeply entrenched pro-industry policies.

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Coffman, who represents Colorado’s uber-conservative 6th Congressional District after serving as an outspoken and controversial Secretary of State, has a track record of blasting Salazar and Gov. Bill Ritter for over-regulating the fossil fuel extraction industries in Colorado. But here’s what he had to say Wednesday:

Mike Coffman

“Secretary Salazar, on Jan. 20, 2009, you were confirmed as the Secretary of the Interior. Just nine days later you were in Colorado where you publicly ordered a re-examination of the scandalized Interior Department’s Minerals Management Service.

“At that event you said, ‘There’s a new sheriff in town,’ and the American people took you at your word that you were going to make it a top priority to clean up MMS, but you didn’t. At least not until the lax industry oversight of MMS contributed to what may turn out to be the single most significant environmental catastrophe in U.S. history.

“Can you with certainty tell me what assurances you can give to the American people going forward? Can you really change what is an incredibly dysfunctional agency? Where is the increase in oversight? Where is the new sheriff? The American people are seeking some assurances Mr. Secretary.”

Coffman was referring to a 2009 visit by Salazar to the Lakewood offices of the MMS, which simultaneously regulates and collects royalties from energy companies drilling on public lands. That office was wracked with a sex, drug and influence-peddling scandal at the time.

But since his days as a Democratic Colorado senator, Republican lawmakers have been blasting Salazar for impeding everything from natural gas drilling on the Roan Plateau to oil shale production across northwestern Colorado and eastern Utah. Salazar often was simply pushing for better environmental practices to protect the state’s natural heritage.

Here’s Coffman from a September, 2009, committee hearing on the CLEAR (Carbon Limits and Energy for America’s Renewal) Act, at which he blasted Salazar for a series of steps to increase environmental protections before moving ahead with various domestic energy projects:

“So we can’t drill onshore, we can’t drill offshore, we can’t develop oil shale, we can’t develop nuclear and we can’t develop solar. Mr. Secretary, why won’t you let Americans develop American energy?”

Coffman went on to repeat the GOP mantra that Democrats are job-killing bureaucrats in bed with radical environmentalists:

“This bill is just another example of the Democrats’ ‘more-bureaucracy-more-taxes’ agenda that is simply out of touch with the needs of American people. At a time when Congress should be doing everything possible to encourage job creation and domestic energy production, Democrats put forth another bill that will make it harder to produce American energy …”

Today the Obama administration is announced an extended moratorium on offshore drilling, and the head of the MMS has reportedly been fired or stepped down. Had those actions been taken prior to the Deepwater Horizon disaster, Republicans would have no doubt had a field day.

In 2007, then Secretary of State Coffman very nearly accepted a gig as chairman of the radical pro-drilling Astroturf group Americans for American Energy but backed out at the last minute, according to the Rocky Mountain News.

Then Sen. Salazar had to block the appointment of the Bush administration’s pick to head the U.S. Bureau of Land Management just to get the Bush Interior Department to give the state more time to comment on the massive Roan Plateau natural gas lease sale, which some local officials say has the potential to be an onshore Deepwater Horizon disaster in one of the state’s most pristine backcountry areas. Here’s what Coffman had to say at the time:

“Sen. (Ken) Salazar, Gov. (Bill) Ritter and others feel a need to throw a bone to radical environmentalists, and Roan Plateau is that bone.”

Earlier this year, when Salazar announced onshore drilling and leasing reforms meant to turn back the previous eight years of “drill, baby, drill” policy established by the Bush administration, Republicans were quick to say he was taking his Colorado agenda national.

State Senate Minority Leader Josh Penry, R-Grand Junction, a constant critic of the more environmentally stringent drilling regulations pushed by Ritter and passed by the legislature in the spring of 2009, issued this statement regarding Salazar’s onshore reforms:

“Punitive restrictions on this important industry have already caused devastating job losses in my hometown. Why on earth would Secretary Salazar want to take Colorado’s job-killing rules national?”

The Colorado rules have been held up as a model of environmentally responsible drilling regulations that other states are beginning to emulate, and yet Republicans continue to threaten to gut the Colorado rules if returned to the governor’s mansion and a majority in the State Legislature in November.

While the GOP keeps harping on lost jobs, natural gas drilling dropped off dramatically around the country late in 2008 at the onset of the global recession. The new Colorado drilling rules were put in place to protect air and water quality, public safety and wildlife habitat – seen as critical to Colorado’s outdoor recreation, hunting, fishing and tourism industries. Those are the exact jobs that have been lost in droves on the Gulf Coast as a result of the Deepwater Horizon disaster.

Here are some other samples of industry and Republican criticism of increased environmental regulation of oil and gas drilling in Colorado:

State Sen. Josh Penry, R-Grand Junction (Wall Street Journal, Dec. 23, 2008):

“These rules have made a grim situation almost intolerable for these companies. This is killing jobs.”

Curtis Thomas, BP America director of government and public affairs in the Rockies, on the impacts of the new regulations and the company’s decision to shut down drilling operations in La Plata County (Durango Herald, Jan. 15. 2010):

“You start to feel the weight of all of that.”

Penry (Durango Herald, March 7, 2010):

“The results are in. If you compare the loss in drill-rig count in Colorado, and in particular the Piceance Basin, to surrounding states – New Mexico, Utah, Wyoming, for example, not to mention states like Pennsylvania that have seen an increase in energy production – it’s clear that these rules have taken a bad situation in the commodity environment and made it dramatically, dramatically worse.”

Actually, statistical analysis reveals Colorado is ahead of its neighboring Rocky Mountain states in current drilling activity.

Current GOP gubernatorial candidate and former congressman Scott McInnis (Durango Herald, March 7, 2010):

“This is punitive – the toughest rules in the United States. What happens? What happens is what you would expect to happen. They’ve left. We have lost thousands of jobs. The actions of the governor and the inactions of the [Denver] Mayor [John Hickenlooper, the Democratic gubernatorial candidate] have been the best jobs program the state of Pennsylvania could have ever had. And it isn’t just Pennsylvania. It’s Wyoming.”

State Rep. Steve King, R-Grand Junction, on the passage of the new drilling rules (Denver Business Journal, March 9, 2009):

“175 pages of job-killing bureaucracy.”

State Rep. Cory Gardner, the Republican candidate for the 4th Congressional District, on a vote rejecting his bill to limit Colorado Division of Wildlife input on oil and gas drilling, a key tenet of the new Colorado drilling rules (Pueblo Chieftain, Feb. 23, 2009):

“They made their point loud and clear today – property owners beware. New Mexico gets it, Wyoming gets it, Utah gets it. Unfortunately, those in charge in Colorado, especially Gov. Ritter don’t. Jobs will continue to leave our state and will undoubtedly go to those states. It’s shameful.”

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SRED, like a group of retired federal and state regulators of public lands two weeks ago, wants to make sure the onshore oil and gas drilling reforms proposed by Salazar in January and finally outlined in detail last week, are meaningful in order to “ensure that what happened in the Gulf of Mexico doesn’t occur onshore and jeopardize important wildlife habitats.”

The half-page ad (pictured) juxtaposes photos of Roosevelt and Salazar and reads, “Two of a Kind.” It also features a quote from Roosevelt 100 years ago in Denver when he told the Colorado Cattlemen’s Association: “The nation behaves well if it treats the natural resources as assets which it must turn over to the next generation, increased and not impaired in value.”

It goes on to urge Salazar to continue the Rough Rider’s environmental agenda: “No one has a better opportunity to continue Theodore Roosevelt’s legacy than Interior Secretary Ken Salazar,” the ad reads. “Secretary Salazar, thanks for protecting our outdoor heritage for our children and grandchildren.”

Salazar is under intense pressure to shake up the federal Minerals Management Service, charged with regulating and simultaneously extracting royalties from powerful energy conglomerates. He announced there was “a new sheriff in town” in January of 2009 in Lakewood, when he vowed to clean house after an MMS drug, sex and influence-peddling scandal at the Colorado office.

However, a new report from the Interior Department’s inspector general reveals the same sort of shenanigans at the MMS Lake Charles, La., office that has oversight of offshore drilling in the Gulf of Mexico. Employees reportedly accepted hunting trip, tickets to football games and other perks while signing off on oil and gas production facilities.

Salazar is once again talking tough, promising to take “any and all appropriate personnel actions, including termination, discipline and referrals of any wrongdoing for criminal prosecution.”

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Salazar last week announced plans to split up the Mineral Management Service (MMS), the federal agency charged with extracting billions in on- and offshore drilling revenues. Critics claim the scandal-plagued agency – infamous for the sex, drugs and influence-pedaling debacle at its Lakewood office in recent years – is way to close to the industry it’s supposed to regulate.

Salazar in January announced a plan to reform U.S. Bureau of Land Management oil and gas leasing policies to better reflect the need for environmental and public health safeguards. Observers say he has yet to act on those previous promises before embarking on the latest round of badly needed reforms.

In a press release announcing the letter last week, several retired federal and state officials provided the following comments:

Interior Secretary Ken Salazar

Mike Dombeck, former chief of the Forest Service and Director of the Bureau of Land Management:

“After spending nearly my entire professional life managing public lands, I know the challenges of balancing energy development with good stewardship. We’ve seen in recent weeks in the Gulf what can happen when balance, common sense and enforcement are sacrificed. It is imperative that we restore balance to energy development both on and off-shore in order protect the health of our land and water – we hope that Secretary Salazar’s leasing reform will do that.”

George Lea, former Deputy Director of the Bureau of Land Management:

“As retirees, we believe we can now offer an objective and non-bureaucratic view of what is really happening to the public lands. It’s a tough job to balance these issues, but it is Salazar’s responsibility to bring management of leasing and development on our public lands back in check, to allow energy development to continue while preserving other important uses of our public lands.”

Gloria Flora, former superintendent of the Lewis and Clark and Humboldt-Toiyabe National Forests, Montana:

“I was happy to hear Secretary Salazar’s announcement on Tuesday of leasing reforms for offshore drilling, and we are hopeful that we will soon see the final announcement of onshore leasing reforms as well. Drilling has major impacts both off and onshore – those we know and anticipate, but even more importantly, those we pray never happen.”

John Ellenberger, former state Big Game Manager, Colorado Division of Wildlife:

“In Colorado, much of the richest energy resources are located under some the best wildlife habitat in the state. But the state’s wildlife, and the hunting and fishing it supports, can’t thrive unless good management practices are in place to ensure its protection. It takes a genuine effort on both sides, state and federal agencies and the energy development companies, to ensure that an appropriate balance is struck in order to maintain wildlife habitats and allow reasonable energy development.”

Bill Eikenberry, former Associate State Director, Wyoming BLM:

“As users of these wonderful lands we have a responsibility to future generations to ensure their delicate and balanced management.”

And here’s the text of the letter sent to Salazar on May 13:

Dear Secretary Salazar,

As former federal land management agency officials, wildlife managers, and energy regulators throughout the West, we applaud your announcement of new policies for onshore oil and gas lease reform and your efforts to restore balance to the leasing process on public lands.

We recognize the arduous and complex task of balancing energy development with stewardship of our land, air, water, and wildlife. As defined by multiple-use mandates of federal land management agencies, it is important to preserve the integrity of our public lands and our wildlife habitat as we develop our important natural resources. Your proposal to reform the leasing policies for oil and gas seems to restore much needed balance to the leasing process, and is an important step forward for this administration.

Policies like those you outlined – but have not yet finalized and implemented – will help to restore balance and common-sense values to management of our public lands, while still allowing development of our energy resources. They represent good- government policy that will balance multiple uses and are in synch with public and local opinion.

As you have said on many different occasions, these lands belong to American taxpayers. Over the past decade, a great deal of taxpayer dollars and agency resources have gone into dealing with protests and lawsuits. Your reforms to the BLM oil and gas leasing program will provide certainty to oil and gas companies while restoring balance to the management of our public lands, decreasing the amount of controversy over leasing decisions and adequately involving the public in the leasing process.

We commend you for your work to date, and encourage you to move forward with this important onshore lease reform work.

Sincerely,

Mike Dombeck
Former Chief
United States Forest Service

Dale Bosworth
Former Chief
United States Forest Service

Jim Baca
Former Director
Bureau of Land Management

Mike Penfold
Former Assistant Director
Bureau of Land Management

Jim Furnish
Former Deputy Chief
United States Forest Service

George Lea
Former Deputy Director
Bureau of Land Management

Jim Ruch
Former Director
Colorado Division of Wildlife

Perry Olson
Former Director
Colorado Division of Wildlife

Elaine Brong
Former State Director
Oregon/Washington Bureau of Land Management

Ann Morgan
Former State Director
Colorado Bureau of Land Management

Mat Millenbach
Former State Director
Montana Bureau of Land Management

Larry Hamilton
Former State Director
Montana Bureau of Land Management

Bill Eikenberry
Former Associate State Director
Wyoming Bureau of Land Management

Brad Powell
Former Regional Forester
Pacific Southwest Northwest and Northwest Regions
United States Forest Service

Ellie Towns
Former Regional Forester
Southwest Region
United States Forest Service

Dave Roberts
Wildlife Program Leader
Wyoming Bureau of Land Management

John Mumma
Former Regional Forester, Northwest Region
United States Forest Service
Former Director

Colorado Division of Wildlife
Rich Stem
Former Deputy Regional Forester
Region 2
United States Forest Service

Richard Long
Former Director
Region 8 Air Program
Environmental Protection Agency

Gloria Flora
Former Forest Supervisor
Lewis and Clark National Forest
Humboldt-Toiyabe National Forest

Gary Long
Former Wilderness and Recreation Coordinator
Wyoming State Office
Bureau of Land Management

Gene Reetz
Senior Environmental Scientist
Region 8
US Environmental Protection Agency,

Walter Rule, Jr
Former District Ranger and Public Affairs Officer
United States Forest Service

Jack Kelly
Former Field Office Manager
Lander Field Office
Wyoming Bureau of Land Management

Steve Belinda
Former Wildlife Biologist
Wyoming Bureau of Land Management

Steve Torbit
Former Wildlife Biologist
Wyoming Fish and Wildlife Service

Fred Roberts
Former Wildlife Biologist
Pinedale, WY and Lewistown MT field offices
Bureau of Land Management

Bob Elderkin
Former Oil and Gas Regulator
Bureau of Land Management

Steve Norris
Former Assistant Director
Colorado Division of Wildlife

Larry Gerard
Wildlife Biologist
Alamosa, Rawlins, Lander, Buffalo Field Offices
Bureau of Land Management

Todd Malmsbury
Former Chief of Information
Colorado Division of Wildlife

Lee Otteni
Former District Manager
Farmington field office
New Mexico Bureau of Land Management

Ivan James
Former Hydrologist
United States Geological Survey

Tom Heffernan
Former Realty Specialist
United States Forest Service

John Ellenberger
State Big Game Manager
Colorado Division of Wildlife

Dennis Buechler
Former Wildlife Biologist
US Fish and Wildlife Service

Wes Wilson
Former Environmental Engineer
Region 8
US Environmental Protection Agency,

Dan Grenard
Former Geologist
Royal Gorge Field Office
Bureau of Land Management

Dennis Willis
Former Recreation Planner
Price Field Office
Bureau of Land Management

Rob Firth
Former Chief of Law Enforcement
Colorado Division of Wildlife

Arch Andrews
Former Public Affairs Manager
Colorado Division of Wildlife

Bruce Gill
Former Big Game Research Leader
Colorado Division of Wildlife

Len Carpenter
Former Terrestrial Research Leader
Colorado Division of Wildlife

Tom Powell
Former Aquatic Research Leader
Colorado Division of Wildlife

Gary Miller
Former State Ecologist
Colorado Division of Wildlife

Bob Towry
Former State Wildlife Manager
Colorado Division of Wildlife

Pam Schnurr
Former Habitat Biologist
Colorado Division of Wildlife

Gene Byrne
Former Area Biologist
Colorado Division of Wildlife

Chuck Loeffler
Former Wildlife Biologist
Colorado Division of Wildlife

John Seidel
Former Area Wildlife Manager
Colorado Division of Wildlife

Dave Kenvin
Former Habitat Biologist
Colorado Division of Wildlife

John Toolen
Former Habitat Biologist
Colorado Division of Wildlife

Rebecca Frank
Former Wildlife Commission Member
Colorado Wildlife Commission

John Woodling
Aquatic Researcher
Colorado Division of Wildlife

Bill Heicher
Former Wildlife Manager
Colorado Division of Wildlife

Nick Pinell
Former Wildlife Manager
Colorado Division of Wildlife

Bob Hernbrode
Former State Big Game Manager
Colorado Division of Wildlife
Former Arizona Wildlife Commissioner

Gayle Joslin
Former Wildlife Biologist
Montana Fish, Wildlife and Parks

Jim Posewitz
Former Bureau Chief, Ecological Services Division
Montana Fish, Wildlife and Parks

Lynn R. Kaeding
Former Fishery Biologist
U.S. Fish and Wildlife Service

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“I’m gonna wear that everywhere,” Stewart said after Salazar presented the host with his own cowboy hat and bolo tie, though Salazar had to point out Stewart first donned the hat backwards.

In the brief interview, Salazar and Stewart take a jab at the infamous $235,000 bathroom renovation by former Secretary of the Interior Dirk Kempthorne, Salazar’s predecessor.

Stewart asks how Salazar is cleaning up the Minerals Management Service scandal, which found oil-and-gas companies “literally in bed” with the Lakewood-based agency responsible for collecting billions in royalties for drilling on public lands.

“We continue to clean up the mess every day,” Salazar said, pointing to a revised Interior Department ethics code he established shortly after winning confirmation. He blames “a few bad apples at the very top [who] essentially created lots of problems,” and says, “they’re out.”

Here’s Jon Stewart’s Daily Show interview with Salazar:

Interior Sec. Ken Salazar is set to appear on Comedy Central’s “The Daily Show with Jon Stewart” for a one-on-one interview Thursday.

Says CNN Political Ticker:

Interior officials are expecting Salazar to at least get ribbed about his trademark Stetson and bolo tie, which he showed off when Obama introduced him as Interior Secretary-designate during the presidential transition.

Interior spokeswoman Kendra Barkoff told CNN that Salazar is looking forward to talking about “his work implementing President Obama’s vision for building a clean energy economy and his efforts to protect America’s treasured landscapes. Time permitting, of course, the Secretary will be glad to offer Stewart some fashion tips, including how best to sport a cowboy hat and bolo tie.”

It’s probably a safe bet that Stewart will also tweak the secretary about the scandal in the previous administration, which featured Interior officials improperly getting sex and drugs from oil company executives they regulated.

After Salazar laid down the law at the scandal-ridden Minerals Management Service days after being confirmed by the Senate to lead Interior, Stewart may not know what’s he’s gotten himself into.

Colorado’s one tough hombre is no Jim Cramer.

Stay tuned.

Secretary of the Interior Ken Salazar, center, addresses the media outside the Minerals Management Service offices in Lakewood, Colo., on Jan. 29, 2008. (Photo/Ernest Luning)

Secretary of the Interior Ken Salazar wants the Justice Department to take another look into scandals at the Minerals Management Service with an eye to further criminal prosecution and plans to undertake a “fundamental restructuring of the MMS royalty program,” which last year reaped $23.4 billion from oil and gas companies that drill on public land. Salazar, the former Democratic senator named recently to the Obama Cabinet, announced his plans for MMS Thursday afternoon after meeting with the agency’s employees in Lakewood.

Salazar unveiled a strict code of ethics for the agency, the subject of scathing internal reports last fall that found employees engaged in sex, illegal drug use and deals with oil and gas companies that led to two criminal convictions on conflict-of-interest charges. Justice officials declined to prosecute two MMS employees cited in the reports, and they couldn’t be disciplined because they had already left the agency.

“There’s a new sheriff in town,” said Salazar, flanked by the department’s inspector general, Earl Devaney, and chief of staff, Tom Strickland, who was U.S. attorney for Colorado when Salazar served as the state attorney general.

Salazar announced that Strickland will lead a review of possible criminal conduct by MMS employees involved in the scandals. “Given the seriousness of the findings of the OIG (Office of Inspector General),” Salazar said, “I want to make sure that those who blatantly … (flouted) the law receive the appropriate sanction.”

Strickland said that after the review he hopes to be able say that “the people who have betrayed the public trust have been held accountable.” The former prosecutor will also review personnel actions taken against MMS employees involved in the scandals. Last year eight employees were punished, with discipline ranging from reprimands to termination. Strickland will “determine whether the sanctions were appropriate, or if additional sanctions are needed,” Salazar said.

At the root of the scandals, Salazar told MMS employees, was “an outdated and flawed royalty collection system,” including the controversial royalties-in-kind program, which collects royalties in oil and gas instead of cash. Critics charge the program cheats taxpayers out of billions of dollars by selling the oil below market value.

Salazar said his review of the royalty system would include establishing payment for renewable energy, such as wind farms, produced on public lands. “All ideas for reform will be on the table,” Salazar said. “We need a system that delivers a fair value to the taxpayer, is straightforward and transparent, and is less vulnerable to the type of abuses we have seen.” He told reporters he would be more specific “in the next month or so.”

Last year Colorado collected a record $178.4 million from MMS for its share of royalties from drilling on public lands. The state ranks third in the nation in royalty revenue, behind Wyoming’s $1.2 billion and New Mexico’s $614.8 million.

The several hundred MMS employees who gathered to hear Salazar welcomed their boss “with open arms,” he said, even though he came to deliver a tough message directed at an agency whose reputation he has described as “tarnished.” “I am speaking with you because the ethical lapses in this office, and the individuals who engaged in blatant and criminal conflicts of interest and self dealing, set one of the worst examples of corruption and abuse in government,” Salazar told the employees, according to a transcript of his remarks.

Salazar said he “assured them most of them are good employees,” and he blamed the scandals that rocked the agency on inadequate oversight. The sweeping MMS code of ethics Salazar introduced with the admonition, “The American people must have no reason to question the loyalty, reliability, or integrity of MMS employees,” includes a strict ban on accepting gifts — a practice at the heart of the scandals exposed in last year’s reports. “[E]ven if a regulatory exclusion or exception may apply,” the code reads, “it is never inappropriate and frequently prudent for an employee to decline a gift offered by a prohibited source or because of his official position.”

“Our agenda for reform will reach every part of this department,” Salazar told MMS employees. “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.”

__________________________________

Here are the OIG reports on the MMS scandals, thanks to Paul Kiel at ProPublica. Some of the PDF files are quite large.

• Here’s the cover letterfrom Inspector General Earl Devaney, providing an overview of the scandal and the “culture of ethical failure” at MMS.

• A redacted report on Gregory Smith details the sex, drugs and oil lease imbroglio the inspector general discovered.

• A redacted report on MMS oil marketing examines ethical problems with the group charged with selling oil on behalf of taxpayers. As many as one-third of the MMS employees in this office accepted gratuities from the industry, according to the report.

• A redacted report on former Associate Director Lucy Denett, accused of handing contracts to a friend, who pleaded guilty to federal charges earlier this year.

Secretary of the Interior Ken Salazar climbs the Statue of Liberty National Monument on Jan. 23. (Photo/Tami Heilemann, DOI-NBC)

Secretary of the Interior Ken Salazar announced Wednesday he plans to visit Lakewood Thursday with a message of sweeping reform for the department, which he said has been “tarnished by ethical lapses and criminal behavior that has extended to the highest levels of government.”

In scathing remarks delivered at the White House, the former senior senator from Colorado said he plans to meet with federal employees at the Minerals Management Service (MMS), the agency that collects billions of dollars for the federal government from oil and gas companies that drill on public land. Salazar said he would make it clear he “will no longer tolerate” the “ethical transgressions” that led to last summer’s MMS “scandal involving sex, drugs, and inappropriate gifts from oil and gas companies.”

A series of reports from the Department of Interior inspector general issued in September charged MMS officials with a “culture of ethical failure” and a “culture of promiscuity and substance abuse” at the agency charged with collecting energy royalties for taxpayers. MMS employees, according to the reports, accepted gifts from oil companies, had sex with industry contacts and did drugs at the office and at oil company parties. Other MMS officials steered business to their own companies and set up consultancies to win contracts they drew up themselves.

In November, Interior officials disciplined eight current and former MMS workers for their role in the scandal, with punishments ranging from reprimands to termination. Several of those implicated had already resigned and one pleaded guilty to felony conflict-of-interest charges. Also in November, a former top MMS employee was sentenced to two years probation for devising a scheme to win a $1.4 million consulting contract with MMS after his retirement.

Calling it the “first step of our long-term effort to enact comprehensive, top-to-bottom reform,” Salazar said he intends to review the scandal with MMS employees and discuss the department’s response, including “what additional steps need to be taken.”

MMS distributed a record $23.4 billion in payments from oil and gas companies in 2008, including a record $178.4 million paid to Colorado for its share of royalties from drilling on public lands. Colorado ranks third in the nation in royalty revenue, behind Wyoming’s $1.2 billion and New Mexico’s $614.8 million.

Here are the remarks Salazar made Wednesday at the White House press briefing:

“President Obama has immediately set high ethical standards for service in the federal government. He has shown a commitment to reform that will change business as usual in Washington.

“He has immediately made clear that the type of ethical transgressions, blatant conflicts of interest, wastes and abuses that we have seen over the last eight years will no longer be tolerated.

“Nowhere is President Obama’s commitment to reform and to cleaning up the waste, fraud and abuse of the past more important than at the Department of the Interior, which I now lead.

“Over the last eight years, the Department of the Interior has been tarnished by ethical lapses and criminal behavior that has extended to the highest levels of government.

“The former Deputy Secretary of the Department under the Bush administration, Steven Griles, was sent to prison. It is the department that the American people associate with Jack Abramoff.

“And it is the department that was tarnished by a scandal involving sex, drugs and inappropriate gifts from oil and gas companies.

“The Lakewood, Colorado, office of the Minerals Management Service is tasked with making sure that taxpayers collect their fair share from oil and gas development on our public lands. Last year, that office collected $23 billion on behalf of the American taxpayer.

“Yet during the last administration, some of the employees of that office violated the public trust by accepting gifts and employment contracts from the oil and gas companies they are supposed to be holding accountable.

“Some employees engaged in blatant and criminal conflicts of interest and self dealing. It is one of the worst examples of corruption, abuse, and of government putting special interests before the public interest.

“Tomorrow, I will be traveling to the Lakewood MMS office to meet with employees.

“I will also be announcing our own review of what happened, what has been done to address it and what additional steps need to be taken.

“It will be clear that we will no longer tolerate those types of lapses at any level of government, from political appointees or career employees.

“This is only the first step of our long-term effort to enact comprehensive, top-to-bottom reform of the Department of Interior.

“The American people should be proud of their government.

“Those who work for the government should be proud of their service to the American people. We will work to reform the Department of the Interior, restore the public’s trust and to restore the high level of ethics and accountability that the American people deserve.”

Find PDFs of the inspector general reports on the scandals here, thanks to Paul Kiel at ProPublica. Some of the files are quite large.

• Here’s the cover letter from Inspector General Earl Devaney, providing an overview of the scandal and the “culture of ethical failure” at MMS.

• A redacted report on Gregory Smith details the sex, drugs and oil lease imbroglio the inspector general discovered.

• A redacted report on MMS oil marketing examines ethical problems with the group charged with selling oil on behalf of taxpayers. As many as one-third of the MMS employees in this office accepted gratuities from the industry, according to the report.

• A redacted report on former Associate Director Lucy Denett, accused of handing contracts to a friend, who pleaded guilty to federal charges earlier this year.

CEW finds noteworthy transgressions at all levels of government, committed by everyone from a Democratic state legislator (since resigned) to a gambling town that lavished tax dollars on aldermen, from a state agency retaliating against a whistleblower to a federal department where sex, drugs and industry gratuities were the norm. Former Secretary of State Mike Coffman’s operation wins two spots on the list, though his departure for Congress surely means he’s on to new and bigger ethical challenges.

Below is CEW’s tally, listed in chronological order. Read a more detailed description of CEW’s list of ethical lapses here (PDF).

1. Sexual Harassment Allegations Force Rep. Michael Garcia to Resign: State Rep. Michael Garcia, Assistant House Majority Leader, resigned his seat on February 1, 2008 amid allegations that he exposed himself and made lewd comments to a lobbyist.

2. Governor’s Campaign Manager Mishandles Inaugural Committee Funds: Gov. Ritter announced in April that an internal review of his inaugural committee’s finances showed that his former campaign manager, Greg Kolomitz, had written unauthorized checks to himself and may have violated state law by using $217,164 in contributions to the Ritter inaugural committee to repay campaign debts.

3. El Paso DA Partying on Taxpayers’ Time and Dime: On May 6, a Colorado Springs TV station caught El Paso County District Attorney John Newsome on hidden camera drinking 11 beers in five hours during the middle of the work day, and then driving his county vehicle. Newsome also used public funds for a weekend trip to watch his alma mater in a football game.

4. Black Hawk Blows Tax Funds on Home Improvements and Vegas Parties: In May, it was revealed that Black Hawk Mayor David Spellman and some of the city’s aldermen have benefited handsomely from several million dollars the town receives each year for historic preservation and unrestricted direct grant money from the state limited gaming tax fund.

5. State Agency Covers Up $8M Mistake, Fires Whistleblower: In July, the Colorado Department of Health Care Policy and Financing (HCPF) fired department employee Annmarie Maynard after learning that she had gone public about an attempted cover up of an $8 million mistake within the department.

6. Oil and Gas Regulators in Bed with Industry: In September, it was revealed that some Department of Interior Minerals Management Service employees engaged in promiscuous sex with oil and gas industry representatives; drug abuse; and acceptance of gifts and gratuities from oil and gas companies, the very people they are responsible for regulating.

7. Election Director Abruptly Resigns During Conflict of Interest Investigation: On September 10, State Elections Director Holly Lowder abruptly resigned after Ethics Watch exposed that Lowder leased a condominium from voter database consultant John Paulsen, who had received at least $184,000 in state contracts from Lowder’s office — a blatant conflict of interest prohibited by state law.

8. Shamed U.S. District Court Judge “Naughty” Nottingham Resigns Lifetime Appointment: U.S. District Court Judge Edward Nottingham resigned in October 2008 amid complaints of judicial misconduct, including accessing pornographic websites from his court-issued computer and soliciting prostitutes on his court-issued cell phone.

9. Secretary of State Coffman’s Grand Exit — The Great Voter Purge of 2008: A federal voting rights lawsuit against Sec. Coffman in October, and a subsequent decision by a U.S. District Court judge, revealed that his office illegally removed an estimated 12,000 voters from voter registration lists after the federal cutoff date.

10. Chiropractic Lobbyist Has Rep. David Balmer’s Back: When House Minority Leader Mike May made the surprising announcement in December that he changed his mind about leaving his leadership position, Colorado voters learned of a potential vote-buying scheme in Rep. David Balmer’s bid to replace Rep. Mike May.

Check out this CEW roundup of Colorado’s most corrupt public officials — including a couple still on this year’s list and a few who lost elections in 2008 — issued last spring.

What did CEW leave off its 2008 list? Nominate your top Colorado ethical scandals from the last year in the comments section below.