Corruption at the Department of Interior

The federal Justice Department is looking into the alleged corruption of former Interior Secretary Gale Norton. Under Norton, Interior’s corruption reached baroque proportions, particularly in issues involving California, as stories beneath indicate. For underlying documentation, readers are urged to consult Interior’s Office of Inspector General’s special reports at http://www.doioig.gov/index.php?menuid=2&viewid=-1&viewtype=REPORT&pgid=...
 
 
Badlands Journal editorial board
 
 
9-17-09
Los Angeles Times
Former Interior Secretary Gale Norton is focus of corruption probe
The Justice Department investigation centers on a 2006 decision to award oil shale leases in Colorado to a Royal Dutch Shell subsidiary. Months later, the oil giant hired Norton as a legal counsel...Jim Tankersley and Josh Meyer
http://www.latimes.com/news/nationworld/nation/la-na-norton17-2009sep17,0,340619,print.story
The Justice Department is investigating whether former Interior Secretary Gale A. Norton illegally used her position to benefit Royal Dutch Shell PLC, the company that later hired her, according to officials in federal law enforcement and the Interior Department.
The criminal investigation centers on the Interior Department's 2006 decision to award three lucrative oil shale leases on federal land in Colorado to a Shell subsidiary. Over the years it would take to extract the oil, according to calculations from Shell and a Rand Corp. expert, the deal could net the company hundreds of billions of dollars.
The investigation's main focus is whether Norton violated a law that prohibits federal employees from discussing employment with a company if they are involved in dealings with the government that could benefit the firm, law enforcement and Interior officials said.
They said investigators also were trying to determine if Norton broke a broader federal "denial of honest services" law, which says a government official can be prosecuted for violating the public trust by, for example, steering government business to favored firms or friends.
The Interior Department's Office of Inspector General began the investigation during the waning months of the George W. Bush administration and more recently made a formal criminal referral to the Justice Department. Norton is the first Bush official at the Cabinet secretary level to be the subject of a formal political corruption investigation.
Shell spokeswoman Kelly C. op de Weegh declined to comment on behalf of both the company and Norton, who did not respond to numerous calls. "Shell has not received an official notification with regard to a government investigation. Consequently, we are not in a position to comment at this time," she said.
The Justice and Interior departments also would not comment.
Interior Department investigators referred the case to the Justice Department after concluding that there was sufficient evidence of potential illegal conduct, according to federal law enforcement and Interior officials. The officials spoke on the condition of anonymity because of the sensitive and confidential nature of the case.
Those officials said the referral was based on an already comprehensive Interior Department investigation that included interviews with numerous Interior employees. The Justice Department has assigned prosecutors from its public integrity section and the U.S. attorney's office in Washington to the case.
Norton, 55, was President Bush's first Interior secretary. She had worked as an Interior Department attorney before being elected Colorado's attorney general. Later, as a private lawyer, she represented mining, timber and oil companies.
As Interior secretary, she embraced an industry-friendly approach to environmental regulation that she called "cooperative conservation" and pushed the department to open more public land for energy production.
Norton also backed commercial development of the oil shale reserves buried in the rocks of the Mountain West. Known as "the rock that burns," oil shale refers to rocks that release liquid petroleum when heated to extreme temperatures. The highly controversial process promises immense fuel production, but environmentalists argue that it contaminates rugged landscapes and drains precious water.
In early 2006 -- following the recommendations of a team representing several federal agencies and states -- the department announced that it planned to award Shell three oil shale leases. Norton resigned two months later, saying that she had no job lined up. In December of that year, Shell announced it had hired Norton as in-house counsel to its unconventional fuels division, which includes oil shale.
The Justice Department, working with Interior Department investigators, is looking into whether Shell received a competitive advantage or other preferential treatment from the Interior Department in the awarding of the leases.
"If [Norton] had feelers out, or was in discussions with Shell in any way, she is absolutely forbidden from participating in any way from doing anything with Shell," a law enforcement official said.
The federal government long has sought a cost-effective way to extract the abundant oil resources from Western shale rock.
Then-Vice President Dick Cheney's energy task force recommended aggressive steps to encourage private industry to develop such technology. In response, the Bureau of Land Management issued six oil shale "research, development and demonstration" leases. The leases, five in Colorado and one in Utah, granted access to up to 160 acres of federal land apiece to develop shale programs -- with an option to increase that to 5,000 acres once a technique proved commercially viable.
On average, each of those 5,000-acre lease tracts holds an estimated $700-billion worth of recoverable oil (at today's $70-per-barrel price), said James T. Bartis, a shale expert at Rand. Shell has estimated the costs of recovering the oil at $30 per barrel, leaving a potential profit of about $1 trillion after royalties if all the oil is extracted.
Shell was the only company to receive more than one tract.
"Shell got some of the best lands" that the government made available, Bartis said.
At the time, critics accused the Interior Department of undermining a central goal of the leases by awarding three of them to Shell. The leases were meant to allow companies to test distinct methods for extracting shale from rock. But each of Shell's tracts was granted for a variation of the same process.
Critics also raised questions about the fairness of the process, given that Shell filed its first lease application just a day after the department issued its call for proposals in June 2005.
That August, Bush signed the Energy Policy Act of 2005, which included a provision that changed federal law to allow companies to hold multiple oil shale leases. Interior Department officials said they did not notify potential bidders that the law had changed. Shell, which had lobbied Congress to allow companies to hold more than one lease, quickly filed two more applications, BLM records show.
No other company applied for more than one lease.
The lease proposals were evaluated in the fall of 2005 by the interdisciplinary team that included representatives of several Western governors and from the Energy and Defense departments. The team's recommendations included awarding three leases to Shell.
The Interior Department investigation initially focused on whether agency officials had improperly assisted Shell and other private-sector companies. Three of the interviewed BLM employees -- who all spoke on condition of anonymity because an investigation was ongoing -- said the questions investigators posed focused on Norton and her role in the lease process.
 
 
 
12-22-08
High County News
As Interior Turns
An eight-year soap opera in which federal officials screwed the environment, the taxpayers, and each other …Jonathan Thompson
http://www.hcn.org/issues/40.23/as-interior-turns
There's plenty in Washington for the new administration to clean up, but perhaps the biggest messes can be found in one agency: the Department of Interior. Over the last eight years — mostly between 2001 and 2005 — the agency charged with managing millions of acres of public land has been racked by scandal. During a veritable orgy of ethical lapses, federal coffers were deprived of oil and gas royalties, fragile species denied protection, and industry given yet more power to wreck public land in the name of greed. The questionable behavior was department-wide, but three major spheres of controversy stand out: The corruption around J. Steven Griles; the "Minerals Management Service Gone Wild" scandals; and Julie MacDonald's enthronement of ideology over biology. 
Some may dismiss the incidents as just a few bad apples spoiling the barrel. But the patterns suggest otherwise — in every case, either ideology or money or both were allowed to triumph over common sense. Former lobbyists and industry executives held too many top posts, and links to property-rights and pro-industry organizations were too strong. Interior Secretary Gale Norton was heavily involved in ideologically hard-right causes before she entered public service, and then went to work for the oil industry afterward. Griles was a lobbyist, Rejane Burton the former vice president of an oil and gas exploration company, and so on. In recent weeks, some of these same officials have "burrowed" into — or been shuffled around —- the agency, transformed from political appointees into career employees. That will just make this mess harder to clean up.
Here are some of the stars and other players — in As Interior Turns.
Once upon a time, Jack Abramoff was a very powerful lobbyist. He could raise money for himself (including millions of dollars in fees from his clients), and for others (more than $100,000 for the Bush campaign). He urged his clients — including various Western tribes —- to donate huge chunks of cash to politicians and to political appointees' pet organizations. In exchange, he provided enviable access to government officials. If this sounds corrupt, it's because it was, and Abramoff finally got caught and was convicted of defrauding Indian tribes and corrupting public officials. He brought plenty of folks down with him, including J. Steven Griles, a top dog at Interior, lobbyists and politicians. He never worked directly for the Bush administration (though they seemed to be working for him, at times), but he has become the primary symbol of the corruption by money of politics during the last eight years.
J. Steven Griles was a leading man in As Interior Turns, holding the number-two spot in the agency and ending up in bed with everyone from Jack Abramoff to the coal and electric power industry, to (literally) Italia Federici. He first worked for the feds in the 1980s under James Watt, at the U.S. Office of Surface Mining. In 1995, he founded J. Steven Griles and Associates, a lobbying group that eventually became part of National Environmental Strategies, another lobbying group that worked for the  mining and fossil fuel sectors. In 2001, he became Gale Norton's deputy. At the time, he signed onto a special agreement that allowed him to continue being paid (about $1 million) by his former lobbying firm, as long as he didn't meet with former clients; he did anyway. He hung out with officials from the National Mining Association, and pushed for looser mountaintop-removal mining standards. He met with Edison Electric Institute folks, and tried to ease federal clean air rules on power plants. All the fun came to an end when Griles was caught in Abramoff's sticky web — he helped Abramoff navigate Interior on behalf of his clients. Griles resigned in 2004, and two years later pleaded guilty to obstruction of justice. Though Griles is gone, his legacy remains: Mountaintop removal rules were recently eased up by the Bush administration.
Italia Federici was never a part of the Department of Interior, but her tentacles reached into the agency in more ways than one. Federici and Griles began a relationship in 1998, which continued in some form or another after Griles became Norton's lieutenant. Federici then served as a liaison between Abramoff and Griles; in return, Abramoff funneled at least $500,000 from his clients to Federici's charity, the Council of Republicans for Environmental Advocacy, which Norton helped start in the late 1990s. Federici pleaded guilty in 2007 to obstructing the investigation into Jack Abramoff.
Sue Ellen Wooldridge was Norton's deputy chief of staff and then counselor before being appointed Interior solicitor in 2004. Then in 2005 she became U.S. assistant attorney in charge of environment and natural resources. She also secretly dated Griles while both were working for the feds (they later got married). In 2005, Griles, Wooldridge and ConocoPhillips executive Don Duncan bought a $1 million beach house together. Wooldridge later gave ConocoPhillips extra time to pay millions of dollars in fines. She resigned under the cloud of scandal in 2007.
Matthew McKeown was yet another private-property-rights ideologue who moved into Interior in 2001, at the beginning of the Bush reign. As one of Interior's top legal eagles, he played a large — if unseen — role in getting the Bush agenda implemented on the ground. (He later moved to the Justice Department along with Wooldridge.) He had a primary role in the Healthy Forests Initiative, publicly bashed the Endangered Species Act, negotiated settlements that gutted the Northwest forest plan, and negotiated an agreement between Interior and the state of Utah making it easier for the state to control roads that cross federal land. As Bush prepared to leave office, McKeown was converted from a political appointee to a civil service post, meaning he'll remain in Interior under Obama.
­­Rejane "Johnnie" Burton was the director of the Minerals Management Services, the agency responsible for collecting billions of dollars of royalty payments from oil companies that operate on federal land. She oversaw MMS during a time when staff members were cavorting with one another and oil industry officials, and as energy companies skirted some $1 billion in royalties that should have gone into federal coffers. She resigned in 2007.
Donald Howard, Jimmy Mayberry and Milton Dial were all MMS officials during the Bush administration, and they all pleaded guilty. Howard accepted a hunting trip from an oil industry contractor, and Mayberry and Dial violated conflict-of-interest laws.
Greg Smith directed MMS's Royalty in Kind Program, which accepts oil and gas from energy companies in lieu of royalties for drilling on public land. The program was expanded in the late 1990s at industry's behest, after the straight cash royalty program was tightened up to prevent chronic under-collection from oil companies. The program is set up to have very little oversight. (The Government Accountability Office characterized it as operating under an "honors system.") Which was good for Smith, because he apparently had other things on his mind. A federal investigation revealed this year that during his tenure, Smith took drugs with and coerced subordinates into having sex with him. On one occasion, he pestered an employee for cocaine, settling finally for methamphetamines, which he snorted off a toaster oven. Smith also accepted golf outings, drinks and meals from employees of Shell, Chevron and Gary Williams Energy Corp. Meanwhile, he was moonlighting as a salesman for Geomatrix, an environmental services company that sometimes works for oil companies. From his MMS office, he made sales pitches to various energy companies — some of which he was supposed to be collecting royalties from — on behalf of Geomatrix, according to federal investigators.
Smith wasn't the only one with dirty hands in the Royalty in Kind branch of the Minerals Management Service. Federal investigators found that at least 1/3 of the staff were hanging out with and accepting gifts from oil industry folks between 2002 and 2006. At least one RIK staffer had a one-night stand with a Shell employee. During that same time, according to the GAO, the MMS could not account for the cost or benefits of the RIK program. Apparently staff was so busy taking ski trips and going to parties on the oil industry's dime that they forgot to keep track of whether those same oil companies were paying adequate royalties. In spite of these problems, Interior has tried to expand the program.
By the time she resigned in 2007, Julie MacDonald had become one of the most notorious of the many notorious Interior officials. MacDonald first came to Interior in 2002 as an advisor. Then, in 2004, Norton promoted her to the powerful post of deputy assistant secretary for fish, wildlife and parks. In just a few years, she did more to tinker with her own scientists' findings, and thereby derail protections on endangered species, than anyone in the history of Interior. MacDonald's subordinates suffered under her — she "bullied, insulted and harassed the professional staff," according to a federal investigative report — and she did the same to wildlife. The arroyo toad, white-tailed prairie dog, Preble's jumping mouse, Canada lynx, southwestern willow flycatcher and other species lost protection or critical habitat thanks to MacDonald. (The agency later reconsidered some of MacDonald's decisions.) She was also in cahoots with the conservative Pacific Legal Foundation and the California Farm Bureau, to whom she disclosed confidential info while at Interior.
E-mails reveal that MacDonald was working closely with Steven Quarles, a prominent lobbyist for forest, mining, agricultural and development interests, and former Interior official. One message from Quarles to MacDonald requested a meeting to "secure easy ‘yeses' to outrageous requests." Quarles continues to work with the Crowell and Moring lobbying firm, with clients such as the Village at Wolf Creek, Plum Creek, Anglogold and Rio Tinto.
A Government Accountability Office investigator testified to Congress that other Interior officials should have been examined as part of the MacDonald investigation, including Craig Manson, Brian Waidmann, Todd Willens and Randal Bowman. Though the three were never actually accused of wrongdoing, some did their part aboveboard to stick it to endangered species. Willens was once senior staff advisor to Richard Pombo, the notorious California congressman who attempted to gut the Endangered Species Act. While at Interior, he pushed to remove the Florida manatee and other species from endangered species protection. Willens left Interior in 2008 and — you don't say!? — became a lobbyist.
In spite of the fact that the most salacious scandals happened on her watch, former Interior Secretary Gale Norton has stayed above the fray. Bush appointed Norton, a one-time libertarian, protegee of James Watt and member of various right-wing think tanks, in 2001. During her years in Interior, the BLM issued drilling permits at a record pace. Norton favored drilling in the Arctic National Wildlife Refuge, voided critical habitat on millions of acres, increased the number of snowmobiles in Yellowstone, and so on and so forth. She resigned in 2006, just as the Abramoff/Griles connections were coming to light. Abramoff never directly rubbed off on her, but there are many links: Federici, for example, tried to arrange a 2001 meeting between Norton and Lovelin Poncho (Abramoff client and Coushatta tribal chairman). Eventually, the two met at a Council of Republicans for Environmental Advocacy fund-raising dinner that Abramoff helped coordinate. After leaving Interior, Norton went to work for Shell, and Dirk Kempthorne took her place. Most of the dirtiest scandals stopped after she left, but Interior has continued its questionable approach to the environment, stripping protection from endangered species, opening up 1.9 million acres to oil shale development, pushing through last-minute rules that favor industry, trying to lease thousands of acres for energy development -- even right next to national parks -- and blocking a congressional attempt to stop uranium mining next to the Grand Canyon.
 
9-14-06
New York Times
Interior Dept. blasted for ethics breaches
Agency officials accused of ignoring cover-ups, cronyism…Edmund L. Andrews
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/09/14/MNG31L58Q21....
 (09-14) 04:00 PDT Washington -- The Interior Department's chief official responsible for investigating abuses and overseeing operations accused the top officials at the agency on Wednesday of tolerating widespread ethical failures, from cronyism to cover-ups of incompetence.
"Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior," charged Earl Devaney, the Interior Department's inspector general, at a hearing of the House Government Reform subcommittee on energy.
"I have observed one instance after another when the good work of my office has been disregarded by the department," he continued. "Ethics failures on the part of senior department officials -- taking the form of appearances of impropriety, favoritism and bias -- have been routinely dismissed with a promise 'not to do it again.' ''
The blistering attack was part of Devaney's report on what he called the Interior Department's "bureaucratic bungling" of oil and gas leases signed in the late 1990s, mistakes that are now expected to cost the government billions of dollars but were covered up for six years. While these leases were the specific focus of the hearing, Devaney directed most of his criticism at what he called a broader organizational culture at the Interior Department of denial and "defending the indefensible."
He expressed particular fury at the willingness to dismiss two dozen potential ethical lapses by J. Steven Griles, a former industry lobbyist who served as deputy secretary of the interior during President Bush's first term.
Griles resigned after allegations surfaced that he pushed policy decisions that favored some of his former oil and gas industry clients and that he tried to steer a $2 million contract to a technology firm that had also been one of his clients.
In a 145-page report in 2004, the inspector general described Griles as a "train wreck waiting to happen." But on Wednesday, Devaney said he was appalled that the Interior Department's office of ethics dismissed 23 out of 25 potential ethical breaches against Griles and that Gale Norton, then secretary of the interior, decided not to act on the two remaining allegations.
Phone calls to Griles' office seeking comment were not returned.
Devaney said that case was typical of a much broader "culture of managerial irresponsibility and lack of accountability" in the top reaches of the Interior Department.
"I have unfortunately watched a number of high-level Interior officials leave the department under the cloud of OIG investigations," Devaney said, referring to the Office of Inspector General. "Absent criminal charges, however, they are sent off in the usual fashion, with a party paying tribute to their good service and the secretary wishing them well, to spend more time with their family or seek new opportunities."
That was almost exactly what happened to Griles, who was never charged with any formal violations and is once again a lobbyist in Washington.
Dirk Kempthorne, who succeeded Norton as secretary of the interior earlier this year, said on Wednesday that he took the inspector general's allegations "very seriously" and had sent a letter to all employees on his first day at the department on the need to follow ethical guidelines.
Kempthorne declined to say what additional actions he might take until he saw Devaney's final report.
Three years ago, Devaney scathingly criticized the Interior Department's auditing program for oil and gas royalties. Beyond finding that investigators had missed millions of dollars in underpayments, his office uncovered evidence that agency auditors had lost key files and then tried to fool investigators by forging and backdating the missing documents. In an acid rebuke of the agency, Devaney noted that the agency gave a bonus to the official who came up with the false papers.
Devaney's broadside against the Interior Department's culture dovetailed with his tentative conclusions in his most recent investigation: how the department had managed to sign 1,100 leases for offshore drilling that inadvertently let energy companies escape billions of dollars in royalties on gas and oil produced in the Gulf of Mexico.
The leases, signed in 1998 and 1999 during the Clinton administration, allow companies to escape normal federal royalties -- usually 12.5 percent of sales -- on the tens of millions of barrels of oil on each lease.
The royalty break was intended as an incentive for deepwater drilling, but it was also supposed to end if oil prices climbed above a "threshold" level of about $34 per barrel. The leases at issue omitted that restriction, and Interior Department officials kept quiet about their mistake for six years after they discovered it.
The problem was first disclosed by the New York Times in March, and government officials now estimate that the mistake could cost the Treasury as much as $10 billion over the next decade.
 
6-28-07
Rep. Miller News
MEMO
To: Interested Parties
From: The office of Congressman George Miller
Date: 6/28/07
Re: New "Revolving Door" concern at Interior Department
http://www.badlandsjournal.com/2007-07-12/00329
Senior members of the House Natural Resources Committee wrote to the Interior Department today to request information on Administration officials' use of the "revolving door" and its possible impact on federal policymaking. The letter follows below.
For more information, please contact Daniel Weiss at (202)225-2095.
Background
Jason Peltier once ran the Central Valley Project Water Association, an organization that lobbies on behalf of federal water contractors in California. He then became one of the Bush Administration's lead officials on Western water policy, apparently overseeing projects and policy decisions that directly affected his former clients. He most recently served as the Interior Department's Principal Deputy Assistant Secretary for Water and Science.
This week, he accepted a job with the largest irrigation provider in the country and one of the largest water customers of the Interior Department, the Westlands Water District, despite having been directly involved in a number of federal decisions that may impact Westlands.
Mr. Peltier was profiled last year in an article in the New York Times ("For Thirsty Farmers, Old Friends at Interior Dept."), questioning his role in influencing water policy decisions. The Westlands Water District recently revived a lawsuit against the United States charging that the government should be using less water to restore the environment under the Central Valley Project Improvement Act.
The congressional letter comes at a time when the Bush administration's Interior Department faces increased scrutiny. Yesterday, the Washington Post revealed that Vice President Dick Cheney's political interference led to a decision to withhold water from salmon, leading to a massive fish kill with devastating consequences for the Pacific Northwest ("Leaving No Tracks"). Earlier this week, the former second-ranking official at the Interior Department, J. Steven Griles, was sentenced to 10 months in prison for his role in the Jack Abramoff scandal.
Today's letter
The congressional letter sent today calls for an accounting of the decisions Mr. Peltier made as an Interior official that would affect his new employer, and requests an explanation for, and documentation of, the steps taken by the Department of the Interior to screen for and prevent conflicts-of-interest in the case, as well as in a similar earlier case.
The request was sent by Congressman George Miller (D-CA), a senior member of the House Natural Resources Committee, and Congressman Nick Rahall (D-WV), chairman of the Committee.
The full text of the letter to Dirk Kempthorne, Secretary of the Interior, is below. The letter was copied to Earl Devany, the Department's Inspector General.
< <20070628MillerRahallDOILetter.pdf>>
***
The Honorable Dirk Kempthorne
Secretary
Department of the Interior
1849 C Street, N.W.
Washington, DC 20240
Dear Secretary Kempthorne:
We write today expressing great concern over the imminent departure of the Department of Interior's Principal Deputy Assistant Secretary for Water and Science-Mr. Jason Peltier-who is leaving the Department to become the Chief Deputy General Manager of the Westlands Water District, the largest irrigation district in the country and one of the largest customers of the Bureau of Reclamation. While serving at the Department for the past six years, Mr. Peltier has played a major role in a number of California-related water issues that impact his prospective employer.
As members of Congress and Committees with oversight of the Department of Interior and its stewardship of the nation's natural resources, we are deeply troubled by the potential impact Mr. Peltier's use of
the "revolving door" will have on the Department's policymaking.
Although we have been advised that Mr. Peltier may have removed himself from decisions on some California-related water issues, former Secretary Gale Norton once described Principal Deputy Assistant Secretary Peltier as dealing "frequently with California water issues" on behalf of the Department. Accordingly, we respectfully request that you provide us with the documentation and communications addressing Mr. Peltier's involvement with California water, the San Luis Unit of the Central Valley Project, and the Westlands Water District, including Mr. Peltier's:
* role in implementing the Central Valley Project Improvement Act and the CALFED program;
* participation in the development of the Bay-Delta Conservation Plan;
* policymaking role regarding the Central Valley Project, including the renewal and awarding of contracts for Westlands and other CVP water users; and
* involvement in Trinity River matters.
In addition, it is our understanding that Mr. Peltier is actually the second official from the Department of the Interior to have joined the Westlands Water District within the last year. We have learned that Ms. Susan Ramos, the former Assistant Regional Director of the Bureau of Reclamation, presently represents the interests of Westlands in negotiations with her former office, the Bureau of Reclamation.
In light of these facts, we request that you provide us with the documentation and communications addressing steps taken by the Department of the Interior to screen for and prevent conflicts-of-interest in these two cases, especially regarding litigation between Westlands Water District and the United States. Specifically, we request:
1 a full-accounting of Mr. Peltier's and Ms. Ramos' efforts to negotiate their new employment, and an explanation of the actions taken to ensure that their exit plans did not and will not impact federal policymaking;
1 information demonstrating that these former government employees' new positions with Westlands Water District will not violate federal statutes prohibiting conflict of interest or "switching sides," including 18 USC §207; and
* any advice, counsel, or opinions the Department prepared on this matter.
We appreciate your prompt attention to our request, and would appreciate your response by July 27 of this year. Please coordinate the production of the requested information with Jeff Petrich, Chief Counsel, Committee on Natural Resources at (202) 225-XXXX.
Sincerely,
GEORGE MILLER NICK J. RAHALL, II
Member, Natural Resources Committee Chairman, Natural Resources Committee
CC: The Honorable Earl Devany, Inspector General, Department of the Interior
 

5-20-07
Contra Costa Times
Decision on splittail raises suspicions
  Official who had hand in getting fish removed from protected list may have had personal interests in mind … Mike Taugher
 

In an apparent conflict of interest, a former high-ranking Bush administration official helped remove a fish from the list of threatened and endangered species in a decision that eased an economic threat to her farm near Dixon.
Julie MacDonald resigned April 30 as deputy assistant secretary of the Department of Interior, a month after the department's office of inspector general issued a scathing report that accused her of altering scientific reports in the U.S. Fish and Wildlife Service's endangered species programs and improperly leaking internal reports to industry groups and friends.
The report said nothing about MacDonald's participation in the decision to remove the Sacramento splittail from protection under the Endangered Species Act.
But documents show she edited the decision on the fish, at one point softening scientists' conclusion that the species "is likely" experiencing a population decline to say it "may be" in such a decline.
The Sacramento splittail, which was classified as a threatened species from 1999 to 2003, appears to be the only fish -- other than those that have gone extinct -- ever removed from the list of threatened and endangered species.
Documents show MacDonald was deeply involved in crafting the language used to justify the final decision.
The decision to withdraw the protective status of the fish was first made in the Fish and Wildlife Service's Sacramento office, leaving the extent of MacDonald's involvement in

earlier stages unclear.
But her participation in the decisionmaking at any stage of the process may have violated conflict of interest rules because MacDonald owns an 80-acre farm in the Yolo Bypass, a floodplain of wetlands, pastures and row crops north of the Delta that is key habitat for the fish.
In almost all circumstances, federal law prohibits federal employees from participating in decisions in which they have a personal interest.
MacDonald did not return repeated phone calls seeking comment to her Washington and Dixon homes. Her husband, who answered the door at the Dixon farm this week, said she was in Washington.
In response to Times inquiries, the Department of Interior issued a written statement.
"To our knowledge, senior departmental officials were unaware of these issues," the statement read. "The Department of the Interior Inspector General investigated former Deputy Assistant Secretary MacDonald's role in administering the Endangered Species Act and issued a report. We rely upon the Inspector General's investigation and counsel. If it turns out that former Deputy Assistant Secretary MacDonald acted inappropriately regarding the Sacramento splittail, we will conduct an appropriate review of the regulatory process that led to the final decision."
The splittail is more dependent on floodplains than any other fish in the Delta. And the Yolo Bypass is the last big floodplain in the Central Valley.
That's why landowners in the bypass have been concerned about the splittail's status: A mandate to boost the splittail's population could lead to more flooding in the bypass, which could inundate crops and equipment. Farmers also worry that measures to enhance splittail populations could force them to install costly fish screens at water intakes and submit to stricter regulations on their use of pesticides.
"In the Sacramento drainage, the most important spawning areas appear to be the Yolo and Sutter bypasses, which are extensively flooded during wet years," according to a 2004 white paper on splittail biology.
According to financial disclosure reports, MacDonald's farm is worth more than $1 million, and she receives $100,000 to $1 million a year in income from it.
"At the very least, this certainly has the appearance of a conflict of interest," said Mary Boyles, spokeswoman for Common Cause in Washington.
"The government ethics rules clearly state that you're not supposed to participate" in decisions that affect you personally, Boyles said. "We need enforcement of these rules that are on the books."
In addition to influencing the agency's decision on the splittail, MacDonald has come under fire for meddling with scientific reports on other endangered species, including the California tiger salamander.
The March 23 inspector general's report concluded that MacDonald, an engineer with no background in biology, "has been heavily involved with editing, commenting on, and reshaping the Endangered Species Program's scientific reports from the field."
The wildlife agency's deputy director, Marshall Jones, described MacDonald to the inspector general's investigator as a Bush administration "attack dog."
Though the report found no evidence of a crime, it said she broke rules against granting preferential treatment and distributing internal agency information.
The report said MacDonald:
  Released an internal draft of regulations on designating critical habitat for endangered species to the Pacific Legal Foundation, a Sacramento-based law firm that regularly sues to weaken endangered species rules.
  Asked subordinates to gather internal information about Delta smelt that was requested by a California Farm Bureau lobbyist and then passed that information to the lobbyist.
  Forwarded to a California Farm Bureau attorney an e-mail she had sent to the Sacramento field office complaining about biologists' determination to keep Delta smelt on the list of protected species. MacDonald opposed that conclusion, and the Farm Bureau attorney immediately filed the e-mail in an ongoing lawsuit as evidence that the government was in disarray. Although MacDonald did not know it, Delta smelt populations were plummeting to perilously low levels at the time of her e-mail in 2004.
  E-mailed large internal files from the U.S. Environmental Protection Agency, including one on plans for water quality regulations, to e-mail accounts ending in chevrontexaco.com.
  Sent an internal document on Delta smelt to a friend she met during online role-playing games, through the e-mail address of the friend's father.
The report noted that the director of the Fish and Wildlife Service, Dale Hall, said MacDonald was particularly interested in endangered species issues in her home state of California. But the report did not draw direct connections between endangered species and her farm.
Before MacDonald went to work in Washington, she participated in development of a "Yolo Bypass Management Strategy." She is listed as a "landowner" in the report's list of participants.
Several of the other participants were contacted for this story, but none could recall much, if anything, about her involvement.
But the strategy document, completed in 2001, reflects a number of concerns that landowners in the bypass had regarding ecosystem restoration projects to benefit fish, including splittail.
The fish is also of deep concern to water users elsewhere in the state because it could add a new layer of complexity to the increasingly difficult task of maintaining the state's water supply for farms and cities, and protecting its ecosystems.
That is because splittail's dependence on floodplains is unique in the Delta, and that opens up a new set of potential impacts on water supply.
Splittail are large minnows that can grow to more than 12 inches long and live five to seven years. Their populations tend to drop substantially during long droughts and rebound dramatically in response to wet weather.
There is an honest disagreement among scientists about whether the fish belongs on the list of protected species, with some arguing that splittail are well-suited to bounce back from depressed population numbers and others contending the population is on a worrisome downward trend.
In response to concerns that splittail were in decline, the wildlife service added it to the list of threatened species in 1999.
Central Valley farmers sued to overturn the listing and, in June 2000, they won a court order that required government scientists to review their decision in light of new data.
When the court ordered the listing decision redone, it set off a highly unusual series of reports in which biologists in the wildlife service's Sacramento field office concluded repeatedly that splittail should be kept on the list of threatened species.
But none of those reports was sent to Washington for final approval.
Then, in January 2003, the head of the Sacramento office, Steve Thompson, called a meeting to hear the latest presentation from the splittail team. After hearing a report from Jason Douglas, the lead biologist, every scientist in the room except Thompson agreed that splittail should remain on the list, according to notes from that meeting.
Shortly thereafter, Douglas was replaced as the lead biologist.
"I thought it was clear we weren't going to be able to list it. In the face of uncertainty, you err on the side of the species," said Douglas, who now works in the agency's Tucson, Ariz., office.
The splittail report -- concluding that the fish be taken off the list of threatened species -- was then sent to the agency's Washington headquarters.
The rest of the roughly 100-page report, however, was largely intact, and that inconsistency angered MacDonald, according to a participant on a conference call with MacDonald at the time.
"She's hopping mad and saying this thing reads like a listing package," said the participant, a wildlife service official in Washington who requested anonymity out of fear of retaliation. "She said something to the effect that she would just have to do this herself."
The official added that although the recommendation to take the fish off the list was made in Sacramento, "without a doubt the decision was made the way it was because of pressure from Julie MacDonald. She was the one that forced the decision."
Thompson, the head of the Sacramento office who made the recommendation, said he did not specifically recall speaking with MacDonald about the splittail listing but added that he was sure the issue came up.
"Certainly, Julie MacDonald called me on a regular basis, and I'm sure she talked to me about it," Thompson said.
On Sept. 15, 2003, eight days before the decision to take splittail off the threatened species list was made final, the Washington office faxed to Sacramento six marked-up pages of the new rule with the cover page notation, "re: Julie MacD's latest comments/edits."
In it, MacDonald made numerous changes and comments, most of which appear to have been aimed at softening the language of the rule. In addition to changing the conclusion that splittail "are likely" declining to "may be" declining, she wrote that, "At this point, none of the threats individually or collectively rise to a level of concern that warrants listing."
That sentence does not appear in the final report.
MacDonald also took issue with the statistical methods employed by her agency's biologists.
At the time of the decision, there was a debate about how to perform statistical calculations to determine whether the splittail population was declining. The stricter method favored by some scientists, including biologists working for the state of California, did not offer a clear picture of a fish in decline.
But the relaxed method preferred by federal biologists did.
That dispute might have been rendered moot by a third statistical method that appeared to conclusively show that splittail was in decline.
The wildlife agency ignored the third method in its final rule, however.
In a memo filed in June 2003, former agency field supervisor Wayne White wrote that the new statistics reinforced what agency biologists had been saying since 1994: that the fish was in decline.
But, he noted, the new statistics had not been subject to public comment, and the officials who made the decision to take splittail off the list of threatened species were aware of the new data.
In the end, the agency concluded that even if the fish were in decline, new programs were in place to improve the fish's habitat.
Rep. George Miller, D-Martinez, a senior member of the House Committee on Natural Resources, said MacDonald's actions regarding the splittail listing were very serious and cast doubt on every endangered species decision she touched.
"This is like a police department where they tamper with evidence. You have to go back" and re-examine decisions that might be compromised, he said.
"It's clearly worthy of a criminal investigation," said Miller. "This was not an accident. She knowingly did this. She aggressively did this."
 
8-26-02
Natural Resources Defense Council
NRDC Condemns Bush Administration Abandonment of California Water Plan
Environmentalists Question Role of Former Water Industry Lobbyist
http://www.nrdc.org/media/pressreleases/020826.asp
SAN FRANCISCO (August 26, 2002) - Environmentalists are charging Interior Secretary Gale Norton with abandoning a widely supported California water plan. And they are calling on the Department of Interior to explain the role played by a former water industry lobbyist who now advises Norton on California water issues. At issue is the administration's controversial decision last week to quietly drop its appeal of a court ruling involving a critical component of the state's CalFed water plan.
At stake is the state-federal CalFed plan, which is designed to restore the San Francisco Bay-Delta and improve water supply reliability for California. Congress currently is considering legislation to authorize funding for the CalFed plan. However, a federal judge in Fresno ruled in February that federal regulators improperly allocated water to fish and wildlife. If upheld, the decision will reduce the amount of water available for protecting the environment. Environmentalists say that by withdrawing the government's appeal in the case, Secretary Norton is undermining the very cornerstone of the plan. The appeal was filed by the Department of Interior in May in a suit filed by Central Valley agribusiness interests in an attempt to weaken the CalFed plan.
"Secretary Norton is walking away from CalFed, even though she had pledged to support it," said Barry Nelson, senior policy analyst for NRDC (Natural Resources Defense Council). "This is another environmental rollback by the Bush administration, and it has serious consequences for California."
Norton's key staffer on CalFed issues is Jason Peltier, previously a longtime lobbyist for Central Valley agricultural interests. For over a decade, as the head of the Central Valley Project Water Association, Peltier led efforts to oppose federal water reform. Despite Peltier's efforts, President George Bush Sr. signed into law the Central Valley Project Improvement Act (CVPIA) in 1992. The CVPIA was a major overhaul of the federal project that delivers water to farmers and other California water users. It guaranteed that water would be made available for environmental protection. The Department of Interior wrote rules to implement the CVPIA, which serve as the foundation of the CalFed plan.
On October 31, 1992, the day after CVPIA became law, Peltier pledged in the San Francisco Chronicle, "We'll do anything and everything to keep from being harmed. If that means obstructing implementation [of the bill] so be it."
"We call on Secretary Norton to explain the role of former water lobbyist Jason Peltier in this decision to capitulate to his former clients," said Nelson. "If Peltier is behind this, then it means he is finally delivering on his decade-old promise to block implementation of the Central Valley Project Improvement Act. Industry special interests should not be charged with protecting the environment."
The lawsuit in question was brought by the Westlands Water District, the largest and most powerful member of Peltier's former employer. It challenged complex water accounting rules that enable the Bureau of Reclamation, a Department of Interior agency, to track 800,000 acre-feet of water dedicated by the CVPIA to the restoration of the bay-delta and its fisheries. The rules were developed as part of the CalFed plan to protect fish from getting sucked into the massive state and federal water pumps in the delta. The Westlands lawsuit sought to force the bureau to count water that is delivered to farmers as water delivered to fish and wildlife.
If upheld, the decision by U.S. District Judge Oliver W. Wanger in Fresno will dramatically reduce the amount of water available for bay-delta restoration. But environmentalists say the damage could go beyond fish and wildlife; the ruling threatens no less than to bring down the carefully balanced CalFed program and its promise of reliable water supplies for the rest of the state. Under CalFed, urban and agricultural users get legal guarantees, which reduce the likelihood that unexpected fisheries problems in the delta will interrupt water supplies as they have in the past. The only reason that state and federal agencies can provide these guarantees in the first place is because CalFed allocates enough water for the environment. Without the environmental allocation, the whole deal unravels.
"Secretary Norton is risking a return of California's water wars, which would damage the state's economy and environment - exactly what CalFed was designed to avoid," said Nelson.
During the past eight years, the Bureau of Reclamation and the Fish and Wildlife Service jointly defended the implementation of the CVPIA from legal attacks from the Westlands Water District. However, in another clear indication of the new attitude of the Department of Interior, the Fish and Wildlife Service was not allowed to testify in court to defend the allocation of water for the environment. As a result, environmentalists say, this made it more likely that Judge Wanger would rule against the Department of Interior and throw out the accounting rules. The department has since announced that it will rewrite its rules to allocate more water to farmers and less to fish and wildlife.
NRDC and other environmental groups are appealing the ruling to the Ninth Circuit court of appeals.