POGO Letter to Secretary Salazar Regarding Bureau of Land Management and the Revolving Door

The Honorable Ken Salazar

Secretary

U.S. Department of the Interior

1849 C Street, NW

Washington, DC 20240

The Honorable Bob Abbey

Director

Bureau of Land Management

1849 C Street, NW, Rm 5665

Washington, DC 20240

Via: Facsimile and Email

Dear Secretary Salazar and Director Abbey:

The Project On Government Oversight (POGO) wants to bring to your attention our concerns about the Bureau of Land Management’s (BLM) ethics policies and practices. Our investigation found that BLM’s senior management did not appropriately respond to the Department of the Interior Office of Inspector General’s (OIG) findings that BLM Farmington, New Mexico, District Manager Steve Henke accepted gifts from oil companies without reporting them. BLM’s management did not issue warnings, institute disciplinary actions, or otherwise hold Mr. Henke accountable. Nor did BLM’s ethics officials exercise sufficient due diligence when apprised of Mr. Henke’s stroll through the revolving door to go work as the president of an oil and gas association.

Mr. Henke’s actions, and BLM’s subsequent inaction, are of particular concern because BLM handles onshore oil and gas leasing. We need not remind you that the Deepwater Horizon disaster exposed how years of excessive coziness between the petroleum industry and the now-defunct Minerals Management Service (MMS), which handled offshore oil and gas leasing, was a significant contributing factor in the Gulf spill.

According to the Interior Department OIG, then-BLM District Manager Steve Henke accepted gifts such as tickets to golf tournaments and solicited donations from prohibited sources such as Merrion Oil & Gas and Williams Exploration & Production (Williams E&P). He did not report any of these gifts on his annual Confidential Financial Disclosure Reports.[1] Yet, despite the OIG’s report, and even Mr. Henke’s admission of misconduct to BLM New Mexico State Director Linda Rundell and Associate Director Jesse Juen,[2] BLM issued no warnings, administrative, or disciplinary actions to hold him accountable for his behavior in his final month at BLM.[3] A month after Mr. Henke confessed the OIG’s findings to management, he left the agency to become president of the New Mexico Oil & Gas Association (NMOGA).[4] NMOGA represents approximately 300 oil and gas companies,[5] and many of the companies that hold leadership roles in NMOGA have substantial financial interests in federal oil and gas policy.[6]

In stark contrast to BLM’s lack of action in response to the OIG’s findings regarding Mr. Henke, one of the prohibited sources, Williams E&P, announced that it plans to conduct an internal investigation in order to determine if it needs to reform its corporate ethics rules.[7]

In addition to our concerns about BLM’s inadequate procedures when ethical problems are pointed out in detail (or even admitted to by the individuals themselves), POGO is also concerned about BLM’s lax efforts to actively uncover conflicts of interest. For instance, a BLM ethics official—who vetted Mr. Henke’s move to NMOGA with BLM’s D.C. headquarters—told Henke she “didn’t see an issue with post-employment conflict of interest.” According to the ethics official’s written decision, she came to her conclusion in part based on her visit to NMOGA’s website, where she determined NMOGA’s purpose is “education and advocacy regarding New Mexico State oil and gas issues (versus federal O&G [oil and gas] concerns).” She also came to her conclusion in part based on information provided by Mr. Henke.[8]

While it may be common practice for ethics officials to take an employee’s word on what their potential employer does—which is problematic in itself—the lack of a watchful search of NMOGA’s website resulted in the ethics official overlooking documents indicating that NMOGA works with BLM, including BLM’s participation in NMOGA’s annual meeting.[9] Also, NMOGA is conflicted because its membership has a significant financial interest in BLM’s activities. For example, ConocoPhillips, the company that employs a co-chair of NMOGA’s Public Lands Committee, lobbies BLM on natural resource issues.[10] This co-chair also appears to have been BLM’s primary point of contact for NMOGA.[11] In addition to what was available on NMOGA’s website, a writing sample Mr. Henke submitted to NMOGA to get the job (and in possession of BLM, since he used his BLM e-mail account to submit his application) also should have raised questions had the ethics official reviewed it. Mr. Henke wrote that NMOGA “must be aware of and involved in planning efforts at the federal, state and local levels to positively influence decisions that potentially affect our members’ access to resources.”[12] This is a clear conflict of interest, and one that doesn’t appear to have been thoroughly examined.

POGO is concerned that the BLM Farmington office may have a cozy relationship with the industries it is responsible for overseeing, a situation similar to that at MMS. MMS’s cozy relationship with industry cast significant doubt as to whether that agency acted as an effective custodian of the public’s resources. Most recently, the Interior Department’s Outer Continental Shelf Safety Oversight Board issued a report that found there were numerous instances where industry pressured MMS inspectors to prevent them from enforcing regulations.[13] Mr. Henke began his tenure as District Manager by “unequivocally” announcing to his employees that the Farmington office was “back in the oil and gas business.”[14] We worry that this message may indicate an office more interested in pleasing industry than appropriately balancing regulatory and environmental concerns. Additionally, allowing Mr. Henke to retire in good standing sends a signal to his former subordinates that there will be no consequences for similar behavior.

We urge both Interior and BLM to seriously consider the IG’s findings, as well as the additional information about BLM’s ethics problems that we’ve presented here, to determine what changes are necessary to ensure that all of the Interior Department has an appropriate arm’s length relationship with the industries it oversees. We are pleased to hear that BLM plans to bolster its ethics program[15]—especially considering that Mr. Henke had satisfied annual training requirements.[16] BLM should conduct a review of its response to Mr. Henke’s prohibited behavior to ensure that the reformed ethics program can incorporate lessons learned.

We are also glad to see the stronger rules at the Bureau of Ocean Energy Management, Regulation and Enforcement[17] (BOEMRE, the successor to MMS), though we were disappointed at their narrow scope, targeting only offshore inspectors. The problems with conflicts of interest clearly are not limited to the Gulf, so these new restrictions on interference with official duties, the revolving door, and conflicts of interest should apply to all Interior agencies and all Interior employees. Additionally, these and existing ethics rules must be strictly enforced and swift disciplinary action for all instances of misconduct and conflicts of interest must be taken to ensure a meaningful culture change.

Therefore, POGO strongly recommends that Interior:

• Extend the recently issued restrictions for BOEMRE’s offshore inspectors to the rest of BLM and to all of Interior, including bureau Directors and the Secretary;
• Ensure new and existing ethics restrictions are strictly enforced;
• Review Interior Department ethics officials’ policies and practices when dealing with Department employees seeking employment, particularly high-level positions, at organizations that might have business before the Department;
• Ask the IG to determine if other BLM Farmington office employees have inappropriate relationships with companies or associations with a stake in BLM’s operations, and to evaluate BLM Farmington’s actions for favoritism;
• Consider revising Mr. Henke’s ethics decision and investigating whether any ethics violations have occurred; and
• Place a two-year restriction on Mr. Henke preventing him from representing any entity to any federal department, agency, or court on matters that were under his official responsibility during his last year of government service.

The inadequate response to Mr. Henke’s misconduct has sent the wrong message to BLM employees and to the public in general. We urge you to take action to ensure that all Interior employees have an appropriate arm’s length relationship with the industries they oversee.

Please contact me at (202) 347-1122 if you have any questions or need further information or evidence to aid your efforts. Thank you for your consideration of this very important matter.

Sincerely,

Danielle Brian

Executive Director

Enclosure

cc:Michael Bromwich

Director

Bureau of Ocean Energy Management, Regulation and Enforcement

Melinda Loftin

Director of Interior Ethics Office

Secretary of the Interior

[2] Case Number OI-CO-09-0259-I, p. 6.

[3] Letter from Department of the Interior, Bureau of Land Management, to POGO, August 26, 2010, p. 3.

[4] Staci Matlock, “NMOGA picks new president,” Santa Fe New Mexican, July 15, 2010. (Downloaded October 5, 2010)

[5] Public comment submitted by the New Mexico Oil & Gas Association on Environmental Protection Agency proposed rule, “Review of New Sources and Modification in Indian Country” (Docket ID No. EPA-HQ-OAR-2003-0076,) January 19, 2007, p. 1.

[6] For example, NMOGA’s Environmental Affairs Committee is co-chaired by Suzanne Holland of Chevron and Brittany Benko of BP America; NMOGA’s Legislative Affairs Committee is chaired by Gary Kilpatric, who represents ConocoPhillips; and the co-chairs of NMOGA’s Public Lands Committee are Rand French of Marbob Energy and Bill Rainbolt of ConocoPhillips. New Mexico Oil & Gas Association, “Environmental Affairs Committee.” New Mexico Oil & Gas Association, “Legislative Affairs.” Montgomery & Andrews, “Gary Kilpatric.” New Mexico Oil & Gas Association, “Public Lands Committee.” (All downloaded October 5, 2010)

[7] “Ethics probes of oil and gas regulators stretch past MMS to include BLM,” Inside Energy, August 30, 2010.

[8] Letter from Patrycia Sanchez to Steve Henke, “Advice Regarding Post-Employment,” May 19, 2010.

[9] New Mexico Oil & Gas Association, “NMOGA’s 82nd Annual Meeting.” (Downloaded October 5, 2010)

[10] ConocoPhillips, 2009 Lobbying Reports. Report 1, Report 2, Report 3.

[11] This is based on e-mails POGO obtained through FOIA.

[12] Writing sample submitted by Steve Henke to New Mexico Oil & Gas Association, May 4, 2010.

[13] Department of the Interior, Outer Continental Shelf Safety Oversight Board, Report to Secretary of the Interior Ken Salazar, September 1, 2010, pp. 9, 15. (Downloaded October 5, 2010)

[14] Writing sample submitted by Steve Henke to New Mexico Oil & Gas Association, May 4, 2010.

[15] Susan Montoya Bryan, “BLM Director Seeks Ethics Improvements,” Associated Press, August 27, 2010. (Downloaded October 5, 2010)

[16] Case Number OI-CO-09-0259-I, p. 6.

[17] Memorandum from Michael R. Bromwich to BOEMRE district employees, “Policy Regarding Interference with the Performance of Official Duties and Potential Conflicts of Interest,” August 30, 2010.