Early in the disinformation campaigns put out by the government were attempts to make otherwise tenable situations look absurd. One such tenable situation involved the Men-In-Black, whom many humans have encountered after answering a knock at their door. As the Men-In-Black are residents of Earth, having been transplanted here, they have not been bound by the same rules that visitors from other planets must adhere to, and thus encounters with the Men-In-Black are remembered consciously. Appearing and disappearing without a trace, but without ships, the Men-In-Black were perfect candidates in the minds of many for subterranean living.
As your government had itself begun to burrow, both for Alternative 2 and to setup facilities for aliens in the Service-to-Self, with whom they had arrangements at that time, they didn't want the curious populace snooping around. To discredit any discussion of subterranean living, they set out to make the premise absurd, which Commander X took on as one of his missions. The hollow Earth premise is absurd, as anyone giving half a thought to what flows from active volcanoes can conclude. What kind of living takes place in the midst of white hot lava?