Obama interior pick says will reform department

By Ayesha Rascoe

WASHINGTON (Reuters) - Interior Secretary-designate Ken Salazar pledged on Thursday to clean up the "mess" at the Interior Department, which has been marred by scandals in recent years.

"Our first and foremost task will be to restore the integrity of the Department of Interior," Salazar, a Democratic senator from Colorado, told his confirmation hearing before the Senate Energy and Natural Resources Committee.

The department's Minerals Management Service, which runs a royalty-in-kind program, came under fire in September after its inspector general reported that employees used illegal drugs and had sex with and accepted gifts from workers at the oil companies they were hired to oversee.

The royalty-in-kind program collects and sells about $4 billion in oil and gas turned over by oil companies for use of federal lands for energy development. In its stewardship of public lands, the Interior Department is responsible for leasing federal lands for energy development.

Another key issue Salazar will face, if confirmed, is whether to move forward with leasing the Outer Continental Shelf for energy production.

Offshore drilling was banned in most areas for more than 20 years until Congress allowed the prohibition to expire in September, with the support of President George W. Bush and many other Republicans.

But many Democrats have been staunchly opposed to expanding drilling off U.S. coasts and have proposed reimposing the ban or placing more restrictions on drilling.

Salazar said he agrees with President-elect Barack Obama that offshore drilling should be a part of a comprehensive energy plan and that he will consult with lawmakers as he decides how to address the issue in the future.

As secretary of the interior, Salazar would manage the department's 500 million acres (202 million hectares) of surface land as well as 1.76 billion acres (71 billion hectares) of the Outer Continental Shelf, including 8,300 active oil and gas leases on 44 million offshore acres (17 million hectares).

In addition to energy issues, the Interior Department also manages U.S. national parks, federal relations with American Indian tribes and the endangered species program.

Lawmakers questioned Salazar about his position on commercial oil shale production. Salazar has been critical of the Bush administration's push to rush leasing for oil shale development and he reiterated his stance at the hearing.

"We need to look at it as part of a comprehensive energy plan, but we ought not be reckless or thoughtless about how we move forward," Salazar said.

Oil shale is a fine-grained sedimentary rock containing organic matter from which oil may produced.

Environmentalists have opposed oil shale production, which is not yet commercially viable, because it consumes large amounts of water and power, both of which are scarce in the West where oil shale is abundant.

Salazar also said he planned to work to expand the use of renewable energy on public lands, while continuing to develop traditional fossil fuels.