505.842.5539     info@civicpolicy.com

A Case of Excessive Coziness with Oil and Gas

By Tracy Dingmann

Once upon a time in a little New Mexico town, a man who worked for the Bureau of Land Management took money and favors from the oil and gas industry he was in charge of regulating.

Who was this man, and exactly what did he do? His name was Steve Henke, and he was the district manager of the BLM in the oil-and-gas-rich town of Farmington, N.M. As district manager, Henke ran the Farmington BLM office, which oversees minerals production at the San Juan Basin – the largest minerals production area in the onshore United States.

According to a report from the Office of Inspector General of the U.S. Department of the Interior, Henke took gifts from a major oil and gas company in the area, Williams Exploration and Production — golf tickets, lodging and meals — and solicited about $8,000 in donations from the company for his son’s youth baseball teams. He also allowed his son to serve a three-month internship with Merrion Oil & Gas Company during the same time period that he helped the company expedite drilling permits from the BLM.

In addition, Henke was accused of misusing about $1,000 in BLM travel funds to attend the 2007 PGA Championship in Oklahoma as a guest of Williams Exploration &Production. In 2009, he attended the Masters Golf Tournament in Georgia with friends from the company but reimbursed them for some expenses. His annual financial disclosures did not mention any of the gifts.

Henke headed the Farmington BLM office until 2010, when he abruptly retired in the wake of the investigation and its findings. In July of 2010, Henke accepted a job as executive director of the New Mexico Oil and Gas Association, the state’s leading oil and gas lobby group.

Henke’s violation of ethical conduct during his tenure as BLM district manager in Farmington came to light last week, when the findings of a yearlong Department of Interior investigation against him were released. The investigation was referred to the U.S. Attorney for the District of New Mexico, who declined to prosecute.

The Department of Interior closed the case upon Henke’s retirement from the BLM.

When The Associated Press asked Henke to explain why he took the favors from oil and gas, Henke said:

“That’s part of living in a small town with an economy that is dominated by the oil and gas industry. Those are the folks who support the schools and civil activities.”

Details From The Report

The mainstream media reported on the investigation last week when the results were revealed (an environmental group obtained the report after filing a Freedom of Information Act request). However, because of the depth of information in the lengthy report, those stories were barely able to do this story justice. Readers, I’m afraid, may have missed the import of the story and its implications for us all.

So I thought it might be helpful to pull information directly from the Inspector General’s report, which contains many more details in context.

According to the report, as head of the BLM office in Farmington, Henke supervised 160 employees. As a BLM employee, Henke was subject to federal ethics standards contained in The Standards of Ethical Conduct for Employees of the Executive Branch, a code which explicitly prohibits employees from taking gifts from “any person, company or organization that conducts business with or is seeking to conduct business with the employee’s agency, or that has any interest which may be affected by the employee’s official duties.”

The investigation into Henke’s conduct was sparked by complaints from employees in Henke’s office, who had told the Government Accountability Office that Henke had showed favoritism to certain oil and gas companies. The GAO referred the complaints to the Department of Interior, who found areas of concern and launched an investigation into eight areas of Henke’s conduct.

By conducting interviews and examining documents, the Department of the Interior investigated the allegations against Henke and found that, among other actions, he had taken money from clearly prohibited sources and then falsified expense vouchers regarding it.

When confronted by investigators, Henke variously backpedaled, tried to conceal his actions or attempted to explain them away by saying he “saw nothing wrong” with them.

What Does It Add Up To?

The report deals with Henke’s transgressions at, quite frankly, a molecular level. And you might think that what the actual details add up to is petty. In fact, the investigation, though exhaustive and revealing, did conclude there was “no evidence of Henke improperly assisting or favoring Williams E&P, or any other energy company which he oversaw.”

But let’s look at what really happened here. Henke, who was supposed to be in charge of regulating oil and gas companies, was taking money and all kinds of favors from them on the side, in violation of known ethical rules. And when he got caught, he tried to cover it up or shrug it off by saying essentially – everyone does it; it’s the cost of doing business in a town that’s dominated by oil and gas.

Why is this so horrible? Because when we pay regulators to do their job, we expect them to hold companies accountable – not shuffle off to golf tournaments with them. Their code of ethics explicitly prohibits them from accepting money and favors from the companies they regulate – and there’s a good reason it’s wrong. Actually, there are a lot of good reasons. We – the American people – depend on regulators like Henke to keep companies in line and prevent disasters like the BP oil leak and the Massey Mine disaster from happening. And we expect them to act on our behalf in providing good stewardship of the public’s resources. If we can’t depend on the regulators to do their job, or have to worry about them being in cahoots with the industry they oversee, then what good are they?

Next Chapter: Coziness Between Lobbyists And The Industry

The Department of Interior quietly closed their investigation after Henke stepped down. But there’s yet another chapter to this saga.

Five local and national environmental groups are asking Department of the Interior Secretary Ken Salazar and U.S. BLM Director Ben Abbey to prohibit Henke from engaging in all lobbying of BLM on behalf the industry for two years because of his inappropriate relationship with industry while he worked for the government.

BLM codes of conduct prohibit former employees from appearing before the BLM on behalf of a specific matter when the employee knows or reasonably should know that the matter was pending under their official responsibility over the past year of their BLM services.

The report of gift-giving between industry leaders and government regulators in the Farmington field office is further proof that Henke should be prohibited from lobbying on behalf of the industry with BLM officials, Mike Eisenfeld, of the San Juan Citizens Alliance, an environmental advocacy group, told a Farmington newspaper.

“It’s sort of sad that this sort of behavior would be deemed acceptable,” Eisenfeld said.

In a July 21 letter to Salazar, the San Juan Citizens Alliance, New Mexico Wilderness Alliance, WildEarth Guardians, EARTHWORKS and Dine Citizens Against Ruining Our Environment joined together in asking Salazar to prohibit Henke from lobbying.

From the letter:

“The move, which occurred less than one month after officially leaving his Field Manager position in June and apparently in response to pressure related to an Inspector General report regarding questionable conduct involving Mr. Henke, raises legitimate questions over whether Mr. Henke’s decision-making during his tenure with the BLM was objective, unbiased, and not tainted by oil and gas industry influence.”

Furthermore, Mr. Henke’s hiring as President of NMOGA raises significant concerns regarding current and future interactions with the BLM in New Mexico in his new capacity as an oil and gas industry advocate and lobbyist.”

The groups also ask that the Interior Department to examine Henke’s past decisionmaking within the BLM to make sure Henke was representing it – and not the industry. That question comes in the wake of the BLM’s decision to oversee the “most extreme increases in oil and gas drilling experienced by any BLM office in the nation.”

“We cannot help but view Mr. Henke’s sudden hiring by NMOGA as an example of the cozy relationship between industry and government officials that Interior Secretary Salazar has committed to confronting.”

We’ll keep you posted as to what happens with their request.

One thought on “A Case of Excessive Coziness with Oil and Gas