Pendley’s Reagan years: Leasing zeal spurs coal ‘fire sale’

By Timothy Cama | 09/30/2019 12:40 PM EDT

As the Reagan administration planned its first Powder River Basin coal sale, William Perry Pendley pushed for the “highest possible level of leasing.” Writing for the Interior Department’s energy and minerals office, he declared, “‘Excess’ leasing neither degrades the environment nor creates community impacts.”

Acting Bureau of Land Management chief William Perry Pendley launched a federal coal "fire sale" while serving the Interior Department during the Reagan administration.

Acting Bureau of Land Management chief William Perry Pendley launched a federal coal "fire sale" while serving the Interior Department during the Reagan administration. Francis Chung/E&E News

When the Interior Department, months after President Reagan took office, was planning its first sale for coal in the Powder River Basin in Wyoming and Montana, William Perry Pendley weighed in, advocating for the "highest possible level of leasing."

"Our objective should be to lease more than enough coal to allow the states, industry, and the market place to function freely," Pendley wrote in a May 1981 memo on behalf of Interior’s energy and minerals offices, pushing for an unprecedented 18 tracts of land containing 2.5 billion tons of coal to be offered.

"’Excess’ leasing neither degrades the environment nor creates community impacts," the 36-year-old Marine veteran and former congressional staffer argued. "The deliberate or unconscious constraint on the market by withholding Federal coal — and especially low cost coal — can have serious economic consequences."


Pendley later called the lease sale, which sold the rights to a 1.6 billion tons of recoverable coal, "tremendously successful" in a speech at an industry event in Wyoming.

But by most accounts, the 1982 sale and another for the Powder River Basin later that year were fiascos. The House Appropriations Committee reported in 1983 that the sales, at $67.2 million, came in roughly $60 million under fair market value — a "fire sale," the panel said — while the General Accounting Office put the shortfall higher, around $100 million. Interior’s Office of Inspector General found that in March 1982, two coal industry attorneys took Pendley, his high-ranking colleague Dave Russell and their wives out for a $494.95 dinner, the same day the department changed the bidding procedures for the sale to be more favorable to industry.

The sale led Congress to convene an independent commission, which found that officials "had acted unwisely and had made significant decisions involving many millions of taxpayers’ dollars with significant impact on the environment without adequate documentation," David Linowes, the commission’s head, said upon the body’s release of its major report in 1984, according to The New York Times.

Pendley wrote the 1981 memo — part of 30 boxes of papers he donated to the University of Wyoming after he left office in 1984 — when he was deputy assistant secretary for energy and minerals. He was also the acting assistant secretary because Daniel Miller, the assistant secretary, had not been confirmed by the Senate.

Hundreds of pages of Pendley’s papers and other documents reviewed by E&E News show the memo wasn’t an outlier.

In his previous three-year stint at Interior, Pendley, who is now the acting director of the Bureau of Land Management, repeatedly and aggressively advocated within and outside the department for more drilling and mining, from the outer continental shelf to areas Congress had designated as wilderness and elsewhere. Pendley’s temporary appointment to head BLM expires today (see related story).

Pendley and the rest of the Reagan administration came to the government with what they perceived as a clear mandate. After the 1970s oil crises and the Carter administration’s policies that they saw as prioritizing conservation over extraction, the administration felt it had a duty to aggressively reverse course.

Reagan had declared himself a "Sagebrush Rebel" during the campaign — a label Pendley also identifies with — aligning himself with the movement of angered Westerners objecting to federal control of large swaths of land, and came in promising Interior would be a "good neighbor."

"This Department of the Interior, under the leadership of Jim Watt, has taken action where no action has been taken before because we have the courage to make the tough decisions crucial to the success of this nation," Pendley told an industry gathering in 1982, boasting about aggressive actions by Interior Secretary Watt’s efforts to boost coal, oil, gas and critical minerals production.

During his time at Interior — from March 1981 through December 1984 — Pendley kept busy. He was acting director of the Minerals Management Service for a time after its launch in 1982, was a leading player in Reagan’s 1983 declaration that the United States controls its offshore exclusive economic zone and the minerals there, and played a major role in the 1982 decision not to sign the U.N. Convention on the Law of the Sea.

But largely, Pendley helped the Reagan administration’s drive to drill and mine wherever possible. That fed the public’s perception that Interior under Secretary Watt cared only about extractive industries.

Through a spokesman, Pendley declined a request for interview on his first stint at Interior.

"I first worked for the Department of the Interior more than 35 years ago," he said in a statement. "Rather than dredging up ancient history, we continue to deliver on the priorities of President Trump and Secretary [David] Bernhardt for the betterment of the American people."

A major focus of Pendley’s work in the Reagan administration was his drive to explore for oil, coal and other minerals in wilderness areas. He made a controversial argument that in the Wilderness Act of 1964, Congress had made a "compact," locking up lands but also committing Interior to explore for minerals there over the next 20 years. He advocated for Congress to extend the exploration window another 20 years, saying previous administrations were derelict and never carried out the mandate.

"That’s what the Congress said, and that’s the compact they made with the American people, and promptly the Executive Branch ignored the congressional commitment," Pendley said in a December 1981 speech at an industry event. "Because we’re doing what the law tells us to do, some people are upset."

His zeal for resource extraction extended to other areas previously withdrawn or otherwise blocked from exploration or production.

"BLM through withdrawals, classifications and other means created 147! natural areas. In fact, 56 of them were created by publishing a final notice in the Federal Register," he wrote to Russell in a brief June 1981 memo. "I suggest you and Frank explore this; maybe some of these 147 deserve deletion."

Pendley boasted in a speech that the department had opened five national recreation areas for mineral mining leasing, arguing that it was Congress’ intent.

He advocated for Congress to repeal a law that allows for an area of federal land to be declared a wilderness study area — and subject to the standards of a wilderness area — for two years after a president asks for a wilderness designation.

Butter for minerals?

Pendley took the resource extraction industry’s side on disputes or questions where he had the opportunity.

In one case, acting U.S. Geological Survey Director Doyle Frederick had drafted a response to James Frasher, president of Teledyne Exploration Co., who had asked the agency to change some permit requirements for offshore drillers. Frederick had agreed with the ideas, but it wasn’t enough for Pendley.

"Can we give this man a little more encouragement than simply, ‘we are reviewing?’" Pendley asked in his April 1981 note.

That same month, Frederick told Pendley that an American Petroleum Institute request to change offshore regulations to allow drillers more flexibility in pausing their leases wasn’t necessary. But again, Pendley disagreed.

"The API proposal has merit given unacceptable Government dealys [sic] in the past," Pendley said, instructing Doyle to work to amend the rules.

Pendley also looked in unique places to boost the nation’s energy and mineral supplies.

At a June 1981 meeting of representatives from numerous government agencies, Pendley raised the specter of whether land owned by the General Services Administration — which generally provides office space for federal agencies — could be explored for fuels or minerals.

James Buckley, a GSA official, wrote later to Pendley to say that his agency had never really imagined that to be possible.

"There is no standardized method for setting priorities for the status of acquired land vis-à-vis natural resources development," Buckley wrote. "No survey has ever been made to determine the availability of acquired land for mineral leasing."

The Department of Agriculture’s reserves of butter at the time provided another potential venue for getting more minerals.

He wrote to Watt in May 1981 that the United States had traded federal cotton supplies with Turkey for chrome ore amid a Soviet embargo, and that the nation might want to look at butter next.

"Whether USDA’s excess butter, which the press reported was being considered for foreign sale, is a commodity that can be bartered for needed stockpile minerals is unknown," he wrote.

"However, from Interior’s mineral policy perspective, bartering, even in small quantities, could be a method for reducing stockpile shortages with minimum budget impacts."

‘Good neighbor’

William Horn, the Interior deputy undersecretary during Pendley’s tenure, said the Sagebrush Rebellion and the perception that the Carter administration was anti-Western were driving forces behind Pendley’s work.

"We are no longer going to have Washington be the absentee landlord, arrogantly telling the local peasants out West to toe the line. Let’s instead be a better neighbor and understand the needs and wants of the local folks with whom we share the landscape," Horn said in summarizing the Reagan administration’s "good neighbor" policy.

"Perry was an enthusiastic guy in terms of pushing the ‘good neighbor’ policy," Horn said.

Horn, who later served as assistant secretary for fish, wildlife and parks, said Pendley’s work sometimes clashed with conservation and other priorities at Interior. But that’s built into the structure of the department, he said, and part of Pendley’s job.

"That portfolio is essentially: open land for multiple use, oil and gas, mining, and such. And Perry took to the job with enthusiasm," Horn said.

Horn, who said he still keeps in touch with Pendley, described him as a "very energetic, hard-charging guy" who sometimes was "hard-nosed." His military service fed into his hard-charging persona, as well as his ability to take orders and recognize his duties.

But the Western Values Project, a conservation group, argues that Pendley’s previous stint at Interior shows he’s disqualified to return.

"William Pendley’s spent his career involved in either scandal or trying to undermine the public lands bureau he’s now tasked with running," said Jayson O’Neill, deputy director of the group, which has fought nearly all of the Trump administration’s Interior policies.

"The Trump administration’s corrupt actions look eerily similar to the extractive resource industry and special interest giveaways he orchestrated in the past. The simple fact is that he was unfit to serve when he was forced to resign from the Reagan administration for flagrant corruption, and he’s unfit today," O’Neill said, referring to Pendley’s departure in 1984.

‘I am fully prepared’

After Miller resigned in 1983, Reagan nominated Pendley to be assistant secretary for energy and minerals. His background check was conducted by John Roberts, a White House attorney who went on to become chief justice of the Supreme Court, according to Roberts’ files in the Ronald Reagan Presidential Library.

"America has great wealth and potential which, if properly managed, can meet our needs and help us maintain a strong leadership position abroad," Pendley said in his prepared remarks for his July 1983 confirmation hearing in the Senate Energy and Natural Resources Committee.

"The American people own vast resources both onshore and offshore. Our problem has never been a lack of energy or mineral resources. What we have lacked in the past is the balanced management of our resources for the benefit of consumers, our national security, and for the protection and enhancement of our environment."

The hearing went mostly well for Pendley, with Chairman Malcolm Wallop (R-Wyo.) calling him "an experienced, capable manager, lawyer, and policymaker with broad experience in energy and minerals issues," according to the transcript.

However, Sen. John Melcher (D-Mont.) aggressively questioned Pendley on numerous issues, such as why Interior had not combined onshore drilling inspection and royalty activities into one agency and why fines for companies that don’t file regular reports were set so low, at $10.

"Now if you are not prepared for this," Melcher said in one testy exchange, before Pendley interrupted, "I am fully prepared."

"That is not the point," Melcher shot back.

Pendley’s exit

Pendley’s downfall came, indirectly, from the 1982 Powder River Basin sale. At a September 1983 Chamber of Commerce event, Watt was asked if his picks to the congressionally chartered commission examining the coal leasing program were diverse enough.

"We have every kind of mix you can have. I have a black, a woman, two Jews and a cripple. And we have talent," Watt said, leading to quick condemnation from Reagan and lawmakers, and Watt’s resignation the next month.

Watt’s replacement, William Clark, removed Pendley, Russell and Deputy Secretary J.J. Simmons III in December 1983, weeks after he was confirmed and before the Senate could vote on Pendley’s nomination, according to The Washington Post. He stayed on in a lower role until February 1984.

Clark removed Pendley almost six months after the inspector general’s report on the dinner paid for by coal attorneys, but it’s unclear if that played into his decision. The Department of Justice declined to prosecute him for a potential ethics violation.

Pendley didn’t respond to E&E News’ question after a House hearing last month about whether he had been fired.

He went on to take over the leadership of the Mountain States Legal Foundation, which Watt had founded in 1977 and briefly led.

Reporters Jennifer Yachnin and Kellie Lunney contributed.