Grassley's strangehold on Obama nominations pays off. Documents released and Melson to testify in deal with Senator Leahy.

The latest from John Solomon: Armed for a Fight.

A deal between Sens. Leahy and Grassley has cleared the way for the ATF’s acting boss to testify before Congress on a controversial gun sting. A NEWSWEEK/DAILY BEAST Exclusive.

The head of the embattled federal agency that combats gun trafficking has agreed to talk with Senate investigators, a potentially important breakthrough as Congress tries to determine whether higher-ups in the Obama administration knew about a controversial sting that let assault weapons flow across the border into Mexico’s drug wars.

The testimony — expected next month from Kenneth Melson, the acting director of the Bureau of Alcohol, Tobacco, Firearms and Explosives — was brokered as part of a deal between Senate Judiciary Committee chairman Patrick Leahy (D-Vt.) and the committee’s top Republican, Iowa's Charles Grassley. Grassley and his fellow Republicans were given full access to ATF documents, Melson, and other key witnesses; and in return, Grassley agreed to release three Obama administration nominees he had been blocking, according to correspondence obtained by NEWSWEEK and THE DAILY BEAST.

Grassley had been fighting to get full access for months. He finally got it with a letter Leahy wrote to Attorney General Eric Holder requesting access for both his staff and Grassley’s investigators to the evidence and witnesses in the gun-sting investigation. In return, Grassley agreed to let proceed the nominations of Jim Cole to be deputy attorney general, Lisa Monaco to be assistant attorney general for national security, and Virginia Seitz to be head of the Office of Legal Counsel, the letter shows.

ATF has acknowledged it knowingly allowed more than 1,700 weapons—most of them semiautomatic assault weapons like AK-47s—to be sold by cooperating U.S. gun dealers to suspected straw buyers for the Mexican cartels during a 15-month sting in Arizona known as Operation Fast and Furious. Melson is the highest-known official to date to acknowledge approving a strategy to build criminal cases against Mexican drug cartels by allowing assault weapons to flow from U.S. gun stores through straw buyers and across the border. Officials said his testimony is considered a key piece of evidence, and Grassley’s investigators plan to interview him by the middle or end of July.

The revelation of the botched sting has generated outrage in both the United States and Mexico. Nearly half the weapons were later recovered at crime scenes on both sides of the border, including two at the murder of U.S. border agent Brian Terry last December and more than 300 at Mexican crime scenes. In recent days, evidence has emerged in the investigations conducted by Grassley and House Oversight and Government Reform Committee chairman Darrell Issa (R-Calif.) that the deputy attorney general’s office inside the Justice Department encouraged a new gun-fighting strategy in October 2009, just days before ATF started the Fast and Furious operation.

Holder, the attorney general, has denied knowing about the controversial ATF sting, which ran from November 2009 to February 2011, and he has ordered an internal investigation. President Obama has said he believes serious mistakes may have been made. Since the controversy erupted this spring, ATF and federal prosecutors have been ordered to stop all guns flowing to straw buyers. Frontline ATF agents have testified they strongly objected to the agency’s decision to “let guns walk,” meaning allowing straw buyers to buy guns with ATF’s knowledge and letting the weapons leave federal monitoring without being interdicted, the normal practice. Cooperating gun dealers also expressed concerns about the tactic.

Congressional investigators in both chambers want to know whether Melson discussed or sought approval for the strategy from Holder or his top deputies, the White House, or other senior law-enforcement officers. They also want to know whether Melson’s agency has run into roadblocks or poor information sharing in its efforts to combat larger gun trafficking.

As head of the agency that conducted the controversial sting, Melson has faced calls for his resignation. But in private conversations with congressional investigators in recent days, Melson has indicated he does not believe he did anything wrong because he carried out his bosses’ wishes and is eager to testify to describe the full picture, according to sources familiar with those conversations.

Issa, who is among those to previously call for Melson’s ouster, is hopeful the acting ATF director can answer crucial questions about what was known above him. “Director Melson has had a long and distinguished career at the Department of Justice. But in the eyes of the public he is, so far, the highest-ranking official who [knew] about gun walking,” Issa told THE DAILY BEAST over the weekend. “[But] I don’t believe he was the highest-ranking official at Justice who knew about or authorized this operation.

“He may still have an opportunity to set the record straight for his agency and get away from being the focus of demands for accountability. We certainly want to hear his full story and see all the evidence about what happened,” Issa said.

Melson would also have the opportunity to clarify for investigators what exactly he told members of Congress, including Issa, during an April 2010 classified briefing on efforts to combat Mexican gun trafficking. News stories and Democrats have alleged that Issa was specifically briefed on Operation Fast and Furious, an allegation Issa has disputed. Two people familiar with the briefing, who spoke on condition of anonymity because of the sensitivity of the details, told THE DAILY BEAST that during the briefing a year ago, held in a congressional skiff — a secure location for briefings — ATF officials described several ongoing cases for Issa, Rep. John Mica (R-Fla.), and other staff.

One of those mentioned was the Fast and Furious operation, though the briefers never specifically revealed the code name, the sources said. Instead, they said there was an investigation ongoing in Arizona in which more than 1,300 weapons had passed into the hands of suspected straw buyers and into the marketplace, according to the sources. The briefers explained that the goal of the investigation was to track the guns to the larger cartels so a bigger case could be made, and that three of the most popular weapons that had been trafficked included an AK-57 variant known as the 7.62, .50-caliber weapons, and an AR semiautomatic variant known as the 5.56. The briefers also mentioned a recovery of a weapon in Mexico and a specific amount of money used to buy the guns, according to the sources.

However, the briefers, including Melson, did not mention several of the most controversial topics uncovered recently by congressional investigators, including the name Fast and Furious, or the fact that ATF agents and even gun dealers had reservations about the tactics, the sources said.

A spokesman for Issa told THE DAILY BEAST that the congressman was briefed on ATF efforts to combat gun trafficking but remembers it being more general. “They offered a short and broad overview of ATF efforts along with some information about the reliability of statistics on Mexican crime guns that originated in the United States. What they certainly did not say was the controversial truth about one particular operation: instead of tracking and making every effort to interdict guns, agents were being ordered to let criminals walk away with them,” spokesman Frederick Hill said.

Before the deal with Leahy, Grassley had faced limited cooperation from the Justice Department even as he raised questions about the tactics used by ATF, in part because Republicans are in the minority in the Senate. Issa’s committee has subpoena authority with Republicans in control but also has complained of foot-dragging on the production of documents and witnesses in the investigation.