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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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