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CRC In The News

Interior's No. 2 Dogged by Ethics Issues


Denver Post
June 6, 2003
Mike Soraghan

WASHINGTON - Steve Griles was a gregarious $585,000 a year lobbyist for oil and gas companies when he persuaded Congress, in the late 1990s, to speed up approval for his clients' coal bed methane wells in northeastern Wyoming's Powder River Basin. Even after President Bush appointed Griles as Gale Norton's top deputy at the Interior Department, where his stewardship of the nation's lands is bound by strict conflict of interest laws, he kept working to ease the introduction of drilling rigs into the basin, the site of the biggest domestic energy project in the country.

Brushing aside a warning from an Interior ethics officer, who told Griles not to take any precipitous action regarding his prior clients, Griles interceded with the Environmental Protection Agency with a letter on behalf of the project in April 2002.

Griles wrote the EPA the day after meeting with his former gas company client, according to entries in his calendar obtained by The Denver Post.

A few days later, he joined other Interior officials for a cookout at the Washington home of the top lobbyist for the group of gas companies hoping to drill in the Powder River area.

Griles' behavior in the Powder River case is the latest in a series of alleged conflicts of interest that have followed him since he came to Interior with controversial Secretary James Watt and through regular tours since as an energy lobbyist.

'When Griles took office, he forgot to switch baseball caps,' said Tom Darin of the Wyoming Outdoor Council. It has fought the administration on gas development.

Griles says there's an innocent explanation for the meetings, each of which he says was cleared by department ethics officials.

'There's so little substance about this, but there's been huge amounts of chatter,' Griles said. 'My obligation is to uphold that office with great respect and with great honor. I have done that. I have met all the ethical standards of my oath of office.'

The department's ethics lawyers have ruled that he did not violate the law.

But environmentalists Tuesday asked Attorney General John Ashcroft to appoint a special prosecutor to investigate.

And Interior's inspector general, prompted by a request from Sen. Joe Lieberman, D Conn., is already investigating whether Griles has violated the rules banning him from regulating people he used to represent.

'These reports raise numerous, troubling questions about whether the deputy secretary has successfully avoided conflicts of interest, or the appearance of conflicts,' said Lieberman, ranking Democrat on the House Government Reform Committee.

'Guy who gets things done'

Griles, a barrel chested, white haired Southerner with a drawl that softens a booming voice, stands out among both allies and adversaries as a red tape cutting 'guy who gets things done' at Interior.

He met at least twice with Bush on energy issues and runs the daily operations of an agency that controls about one fifth of the nation's lands, mostly in the West. Colorado is more than one third federally owned. Wyoming's land is nearly half federal. Underneath those lands lie nearly one third of the nation's energy reserves.

Griles has worked to end some of the worst abuses of the energy industry. But environmentalists say his regular contacts with old clients from the coal and oil industries illustrate how Bush has stacked key posts with business lobbyists.

Griles and his backers say he is a victim of an old Washington parlor game in which people who disagree with your policies attack your ethics for fun and fundraising.

'The principal reason the president wanted him to be in the government was his expertise,' said Marc Himmelstein, who runs the lobbying firm where Griles worked before Interior, and is one of his best friends. 'He sold coal at one point. He understands coal. That's one of the reasons the president wanted him there, so people can ask him,'If you do X,what happens to coal?"

When he took office on July 12, 2001, Griles agreed to recuse himself for one year from dealing with former clients. But he kept a financial tie to Himmelstein and his old Washington lobbying firm, National Environmental Strategies (NES), which is paying him $1.1 million, in four annual increments of $284,000, for his interest in the company. He agreed to steer clear of NES clients for six years.

'I will not be involved (with) any activities or any clients, (or) any of the issues that I have been associated with in terms of my prior private practice,' Griles said at his confirmation hearings, adding he would do his 'utmost to prevent the appearance of any improprieties or conflicts.'

Repeated contact with ex-clients

But documents obtained by The Post through Freedom of Information Act requests by the environmental group Friends of the Earth indicate he has huddled repeatedly with former clients and NES officials. Among those contacts:

An Aug. 7, 2001, conference call with NES chief Himmelstein and officials of an odor control company. An Interior spokesman said the call was among four golfing buddies and didn't involve business.

A Sept. 10, 2001, meeting on air pollution legislation with 13 chief executives from member companies of the Edison Electric Institute, a former client still represented by NES.

Two September 2001 meetings with Interior colleagues on offshore oil and gas leases involving former Griles clients Chevron USA Inc. and Devon Energy, still represented by NES. The meetings figured in a dispute that ended with the Bush administration paying Chevron $46 million to abandon a natural gas drilling project off of Florida.

At least three meetings with the National Mining Association, a former client still represented by NES, at a time when the association was lobbying on possible revisions to mining regulations.

Interior officials say Griles has also met repeatedly with environmentalists. Environmentalists say he doesn't include them when it counts. 'I have found him very accessible,' said Wilderness Society president Bill Meadows. 'I don't know that it's made a lot of difference.'

Griles called him the day before Interior announced an agreement to limit wilderness designations across the West, but 'it was after the decision was made,' Meadows said.

James Steven Griles, 55, hails from Clover, Va., and went the University of Richmond. In 1968 he joined the Virginia Department of Conservation and Economic Development, ultimately becoming executive assistant director. In that post, he said, he added parks across Virginia and expanded the mining oversight staff from five to 150 to implement federal coal mining regulations.

'The coal industry disliked me as much as anybody in Virginia,' Griles said.

While he was there, the state sued to block implementation of the mining regulations. As a career employee, he had no say in that, Griles said.

When he went to work for Watt and was charged with enforcing the rules nationally, critics say, he gutted the enforcement staff.

Griles also worked to eliminate abuses such as a loophole that let coal firms dig unregulated mines smaller than 2 acres. Yet he didn't act on his own. At the time, the department was being sued on the issue.

Griles moved up at Interior, becoming assistant secretary overseeing the Bureau of Land Management and the Office of Surface Mining.

Griles' departure from the Reagan administration sparked the first charges of self dealing. In September 1988, Griles recused himself from many decisions while he job hunted. But critics say he still worked out 'sweetheart deals' for the coal industry.

When the BLM balked at his plan to reduce coal royalties from 8 percent to 5 percent, Griles ordered a new study, said K.L. McIff, then a lawyer for one of the companies and now a district judge in Utah.

A document obtained by the liberal Community Rights Counsel through the Freedom of Information Act indicates that Griles participated in the decision after his recusal. The November 1988 draft memo from BLM to Griles states that 'this memorandum formalizes the decisions you have made concerning the royalty rate for underground federal coal leases.'

Griles joined Virginia based United Co., which did not mine federal coal. In 1995, he moved to NES, the lobbying firm.

His clients included the biggest names in the energy business, including several with interests in the Powder River Basin. The basin covers more than 12,000 square miles of rangeland in Wyoming and Montana.

Coal bed methane is a type of natural gas. The basin is thought to hold enough to meet the nation's current gas demand for a year.

There are already 12,000 methane wells in the basin, and plans call for drilling another 39,000. That would also mean nearly 18,000 miles of new roads, 20,000 miles of pipeline, and as many as 3,000 new jobs, says the Bureau of Land Management.

But drilling for federally owned methane was suspended while the BLM conducted a massive environmental impact statement. Several NES clients eager to start drilling united to pay for the study.

Griles defends EPA overtures

In the midst of the work, Bush nominated Griles for Interior.

The first draft of the environmental statement was published in January 2002. But the EPA said the drilling would unearth salty water and wreck agriculture.

The EPA's objections threatened to delay the project by at least 10 months.

Griles stepped in. On April 12, 2002, he wrote to his counterpart at the EPA, complaining about the agency's lack of cooperation. He appeared to urge the EPA not to send a letter that would delay the project.

The letter, would 'create, at best, misimpressions and possibly impede the ability to move forward in a constructive manner,' he wrote.

When the environmental statement was published in January, it included a new discussion about salty water's affect on agriculture. But it did not set standards for salinity in streams. Instead, a task force was created to look at the question even as development ramped up in the basin.

Griles maintains that his actions were appropriate, despite his recusals.

An Interior staffer had complained that EPA officials weren't returning calls about the project, so the letter was meant to urge more cooperation, he said.

'It was appropriate for me to establish lines of communication,' Griles said. 'I don't think I can say I have regrets about something where I didn't do anything wrong.'

But several documents obtained by The Post through the Freedom of Information Act appear to indicate more than a simple request for communication.

While Griles cited the staffer's complaint about lack of phone calls, the EPA later sent Interior a long list of the times it had expressed concern to BLM about salt.

Griles said he called Interior's ethics lawyers to inform them of the April EPA letter.

On May 3, Interior attorney Timothy Elliott wrote Griles, opining that the EPA letter wasn't an ethical problem, because it was 'procedural in nature.'

Concerns of alleged conflicts grow

On May 21, Elliott followed up, writing that he was traveling when Griles first contacted him about the EPA problem, and that he asked Griles not to send the letter until he had reviewed the recusal accords.

'You advised me that until you heard from me, you would take no action relative to coal bed methane,' Elliott wrote.

Griles signed another recusal in May, specifically pledging to stay out of the Powder River project.

Once Griles' EPA memo was made public, it generated 55 pages of internal documents, according to the Interior Department, which refuses to release any of them.

The day before the letter to EPA, Griles met with an executive of Western Gas Resources, the company that cut the checks to fund the environmental statement, and a former client. Griles' calendar indicates the meeting was to discuss 'natural gas economics.' Company and Interior officials said Powder River was not the topic.

Three days after the EPA letter, Griles and other top Interior officials met for a cookout at NES chief Himmelstein's home. Himmelstein said Griles asked him to organize a dinner party and paid for the food, and no business was discussed.

Meanwhile, concerns about Griles' alleged conflicts grew. His meetings on the Florida gas sale were disclosed in April by The Associated Press. In May, the inspector general's office agreed to investigate.

The administration has stuck by Griles. At a recent appearance, Norton gave her right hand man the thumbs up.

"Steve is a very conscientious and very hard working person," Norton said. "He has striven to meet the highest standards of ethics. We are working within our department to see that all of us do that."

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