Palin explains her actions in Ruedrich case (11/19/2004)

Former oil and gas commissioner's missteps went beyond his partisan work.

Anchorage Daily NewsNovember 19, 2004 

Sarah Palin never thought of herself as an investigator.

Yet there she was, hacking uncomfortably into Randy Ruedrich's computer, looking for evidence that the state Republican Party boss had broken the state ethics law while a member of the Alaska Oil and Gas Conservation Commission.

Ruedrich had resigned on Nov. 8 -- so suddenly that when Palin, the commission's chairwoman, caught the news at the end of a television newscast, she didn't know whether he had quit the commission or quit the party to resolve his conflicts of interest. When she learned it was the commission, Palin wasn't surprised that she'd heard it first from the media, given her difficulty in getting any word from the governor's office about Ruedrich, who played a major role in Gov. Frank Murkowski's election.

The next week, when Palin went back to work at the AOGCC, she noticed that Ruedrich had removed his pictures from the walls and the personal effects from his desk. But as she and an AOGCC technician worked their way around his computer password at the behest of an assistant attorney general in Fairbanks, they found his cleanup had not extended to his electronic files.

The technician "said it looked like he tried to delete this, but she knew a way to go around and get some of the deleted stuff," Palin said in an interview. "I didn't know what I was looking for, but I was there."

Palin found dozens of e-mail messages and documents stacked up in trash folders, many showing work Ruedrich had been doing for the Republican Party and others showing how closely he worked with at least one company he was supposed to be regulating.

For Palin, a fellow Republican who was appointed to the commission by Murkowski about the same time as Ruedrich, the evidence came as little surprise.

For months, she had been receiving complaints about Ruedrich from staff, from a fellow commissioner and from the public, and she had been making her own observations as well. But though she carried the title "ethics supervisor" over the AOGCC and chaired the commission, she said she had little authority over the other two commissioners, who serve six-year terms and can only be fired for cause. She had been unable to affect Ruedrich's behavior, she said.

Much later, when Ruedrich settled state ethics charges June 22 by paying a record $12,000 civil fine and admitting wrongdoing, Palin said she finally felt some measure of vindication for bucking Ruedrich and members of her party. Over the months leading up to the settlement, Ruedrich had been saying the accusations were overblown, while other Republicans, including Murkowski, complained Ruedrich was unfairly targeted, primarily by the news media.

Originally muzzled by the confidentiality provisions of the state ethics law and unable to explain publicly what she had tried to do about Ruedrich, Palin found herself attacked from both sides: Ruedrich's opponents accused her of complicity with him, and his allies said she was providing ammunition for Democrats. She quit the commission in frustration on Jan. 16, months before the state's secret investigation and its formal charges became public.

Palin has been mayor of Wasilla, lost the 2002 primary for lieutenant governor by less than 2,000 votes, and has been described as a rising star in the Republican Party. Wanting to explain her actions, particularly to her Mat-Su neighbors, she agreed to an extensive series of interviews about the circumstances surrounding Ruedrich's resignation.

She and others at the commission said Ruedrich's questionable activities involved more issues than the partisan matters cited in the ethics charges and made public. She said Ruedrich had conflicts of interest with oil companies, and she said he sought reimbursement from the state for travel that included political events, accusations that Ruedrich denies.

A DIFFICULT TIME

The period she described had been a confusing one for Palin, who had trouble getting calls returned from the governor's office, and who said she was receiving mixed signals from other state officials, including Attorney General Gregg Renkes, Chief of Staff Jim Clark, and her own ethics supervisor in the Department of Administration, Kevin Jardell, now the governor's communications director.

In early September 2003, Palin said, she called Clark for help after staffers complained that Ruedrich was conducting party business on the job and Mat-Su Borough residents were complaining that Ruedrich was siding with the company trying to develop coal bed methane. Three weeks later, on Sept. 27, Clark finally got back to her, Palin said, and told her: "That's what a chief of staff is for -- I'll handle it."

Back in the office a few days later, Palin stopped Ruedrich and said, "I think Jim Clark's going to be calling you, Randy," she said.

"Oh yeah, he called me, he calls me every Sunday," Palin recalled him saying. "He asked me if I was doing anything wrong. I told him no."

Clark didn't return several calls seeking comment.

Even Ruedrich's departure provided little clarity, Palin said. As she began the ethics inquiry, she was under orders from the Department of Law to keep it secret from the AOGCC staff, even as she went through his desk and computer and solicited information from others in the office.

"It felt like somebody else should be doing this, because they probably know what to look for," Palin said. "I printed off things that were obvious Republican Party documents, because I figured that's what they meant when they said, 'Get on his computer and send us anything that you believe to be partisan.' "

THE AOGCC

It was a far cry from the job she expected in February 2003 when she became the "public member" of the AOGCC -- the seat reserved under Alaska law for a nontechnical commissioner. Murkowski appointed Ruedrich as the petroleum engineer commissioner, while Dan Seamount, a holdover from the Knowles administration with experience in the coal bed methane industry of the Rocky Mountain West, was the geologist commissioner.

The commission and its 21 staff members usually labor in obscurity unless they are responding to a serious oil-well accident or violation. Founded in territorial days and modeled after commissions in other oil states, the AOGCC is a regulatory board charged with protecting public resources when oil or gas is developed.

The AOGCC has three basic functions: to ensure that producing oil and gas fields achieve maximum recovery; to ensure that wells are safely constructed and operated; and to protect groundwater when oil and gas wells pass through aquifers or when drilling wastes are legally disposed underground.

The commission's structure has been relatively unchanged since 1978, when it was split from the Department of Natural Resources at the start of Prudhoe Bay production to insulate it from the pressures of the agency that's supposed to promote development, according to the AOGCC's official history.

Ruedrich, in interviews and in discussions with his fellow commissioners, saw the AOGCC differently. He said the commission's mandate to not waste oil and gas meant it should be promoting industry efforts to drill and produce, since he believed it would be "wasted" if it remained in the ground. Both Seamount and the current commission chairman, John Norman, reject that notion.

"We're not the resource owner, nor should we be," said Norman, a Republican appointed by Murkowski. "That would be an inherent conflict of interest."

DOYON'S DIRTY DRILLING DEEDS

On July 18, 1995, Randy Ruedrich, then general manager of Doyon Drilling Inc., BP Exploration (Alaska) Inc.'s drilling contractor at its Endicott Field, testified before the U.S. Senate Energy Committee and its chairman, Sen. Frank Murkowski, that a new method of disposing of drilling waste back down wells had greatly improved environmental conditions because it eliminated the waste pits that blighted the landscape.

Testifying on his own role, Ruedrich said, "I am responsible for the safe and environmentally responsible drilling and work-over operations of our rigs for the North Slope operators."

A month later, a cover-up of Doyon's environmental crimes on the North Slope began to unravel when a whistle-blower, ignored by Doyon officials at Endicott and in Anchorage, approached BP and reported that illegal and hazardous substances were being injected down the wells by the operators of its Rig 15 to save money. BP began an internal investigation that determined the allegations were true and reported itself to federal and state authorities, including the AOGCC.

After a criminal investigation by the FBI and Environmental Protection Agency, Doyon pleaded guilty to federal felony charges, as did BP, for not reporting Doyon's illegal activity sooner. BP paid a $500,000 fine and agreed to establish a nationwide environmental compliance program that has cost it more than $21 million. Doyon paid a $1 million fine and was ordered to spend $2 million more on training and compliance. Three Doyon employees also were convicted, with one sentenced to prison. BP will remain on probation until Jan. 31.

Ruedrich was questioned by investigators but wasn't accused of wrongdoing. He said in an interview he was "horrified" that Doyon employees acted improperly.

"I was left out of the process and only learned weeks later" that a drilling employee had tried to blow the whistle by informing other Doyon management, he said.

TOO CLOSE TO TWO CASES

The AOGCC determined that the federal criminal case resolved its own investigation of the dumping at Doyon Rig 15. But several months after Ruedrich joined the commission, he discovered that the state agency had an open file on a related case: BP's own improper injection of hazardous materials down a disposal well at Endicott. Jim Regg, an AOGCC staff petroleum engineer, said the improper dumping was discovered and reported by BP when it was investigating Doyon.

Seamount, the third commissioner, said he and Palin urged Ruedrich to recuse himself from discussions on that case because it was so closely related to Doyon and the activity took place at a time when Ruedrich was a senior official at Doyon, working as a BP contractor.

"They were pretty closely intertwined," Seamount said. "One of them led to federal charges and prosecution, and we were about ready to come up with a decision on the other one."

Instead, Seamount said, Ruedrich not only participated in the case, but set up a meeting on his own on July 9, 2003, to discuss the case with U.S. Attorney Tim Burgess and an assistant, Deborah Smith. Both had prosecuted the original case against Doyon and BP.

Smith declined to say what they talked about because it's against policy to discuss open cases. But one outcome of the meeting was that the U.S. attorney's office sent a stack of documents on the original Doyon case to Ruedrich's office at the AOGCC. Smith said all that material -- charges, plea agreements, compliance reports and other documents -- was publicly available in the case file and was sent to Ruedrich "as a courtesy." Ruedrich said he didn't remember receiving that material, though the AOGCC still has the files and made them available to the Daily News.

Ruedrich said he "never considered" declaring a conflict because he believed the cases were different.

But Norman, a resource attorney appointed by Murkowski to replace Palin as commission chair, said he reviewed the matter and concluded that Ruedrich's involvement "was an impropriety."

"Randy took it upon himself," Norman said. "He should not have been doing it. He should've formally recused himself. I would've told him, 'absolutely not.' But apparently he did it on his own."

Palin believed Ruedrich should also have stayed away from the AOGCC investigation of the Aug. 16, 2002, explosion of BP well A-22 at Prudhoe that severely injured a worker. The explosion could have an impact on BP's probationary status in the Doyon case because the company was under orders to not violate environmental or safety laws.

In discussions about possible penalties for BP over the A-22 explosion, Palin said, Ruedrich swung wildly, from $37 million to zero. The case is still pending.

While commissioners Seamount and Norman didn't believe Ruedrich needed to sit out the A-22 case, they and Palin agreed that Ruedrich acted improperly by holding at least one private meeting on the case with BP officials.

Ruedrich said he only discussed the timing of the commission's decision with BP. BP spokesman Daren Beaudo agreed that procedural issues were the "primary" reason for meeting with Ruedrich.

But if BP only wanted to discuss procedural questions, they should have done it with the AOGCC's attorney, not a commissioner, Norman said.

"If there's a need for the commission to meet, then policy would dictate that all commissioners meet," Norman said. "It's just the way you do the public's business."

Because he met privately with BP, Palin said she had trouble trusting Ruedrich's judgment.

"It created a situation that additional effort and additional resources on the commissioners' part had to be invested to make sure we were dealing with fact and science, as opposed to the personal relationship with BP management," Palin said.

Palin reported the Endicott and A-22 matters to the assistant attorney general conducting the ethics investigation against Ruedrich, but they didn't figure in the case against him.

Paul Lyle, the assistant attorney general who conducted the investigation, said he would only talk about what was charged, not what wasn't.

'WHY IS HE HERE?'

The community meeting in Sutton on Aug. 18, 2003, was supposed to be the first chance for the public to hear from the state agency that shocked the Matanuska-Susitna Borough by leasing the land beneath thousands of residential lots to a Colorado-based gas-producing company.

But about an hour into the meeting, a big man who spoke with a drawl took charge of the microphone. He wasn't from the Department of Natural Resources, which had leased the land, but from a different state agency. When he was introduced as Randy Ruedrich, Chris Whittington-Evans, the president of the nonprofit Friends of Mat-Su and one of the planners of the meeting, could hardly believe it.

Whittington-Evans hadn't recognized the face, but knew the name.

"Oh my God," Whittington-Evans remembers saying to himself, "why is he here?"

From media accounts, Whittington-Evans knew the basics of Ruedrich's bio: the general manager of Doyon Drilling when it was busted for illegal dumping, the current chairman of the state Republican Party and one of three members of the Alaska Oil and Gas Conservation Commission.

When Ruedrich tried to soothe the angry crowd with a series of slides purporting to show how safe development would be, it only heightened Whittington-Evans' suspicions: they appeared to be the same graphics that a company representative had shown him at a two-hour breakfast meeting in Palmer a couple of weeks earlier. Ruedrich also got a critical fact wrong: He claimed that no acid would be used to fracture coal underground to stimulate gas flow. Several weeks later, Evergreen admitted it would use hydrochloric acid.

Was this state official, Whittington-Evans wondered, colluding with the company he should be regulating?

Three months later, as Palin dug through Ruedrich's computer, she found a message dated Aug. 18 at 2:54 p.m. from John Tanigawa, Alaska representative for Evergreen Resources, the coal bed methane developer in the Valley. Four hours before the Sutton meeting was to begin, Tanigawa was shipping Ruedrich his slides over the Internet.

"See you tonight," Tanigawa wrote.

Over the next 2 1/2 months, Whittington-Evans watched with increasing anger as Ruedrich continued to attend meetings and speak for coal bed methane development. On Nov. 6, Whittington-Evans sent an e-mail to Palin, demanding Ruedrich be fired.

"Mr. Ruedrich's continued service calls into question the purpose and credibility of the AOGCC as well as its ability to act in an unbiased way to protect and conserve the resources of the state. Aggressive lobbying in favor of developments he obviously doesn't fully understand and continued use of his office in improper ways to press forward his agenda and that of the Republican Party reduce the commission to an ineffectual, biased body the public cannot trust," he wrote.

The message arrived as Palin was growing increasingly frustrated herself. She replied to Whittington-Evans: "this will not be swept under the rug." She forwarded Whittington-Evans' message to Clark, Renkes and the Commissioner of Administration, Mike Miller, who became a candidate for U.S. Senate.

Two days later, Ruedrich was out.

COZY WITH EVERGREEN

Ruedrich's computer contained 24 e-mail exchanges between him and Evergreen officials and lobbyists. One is well-known because it was the basis for one of the charges in the ethics complaint: Ruedrich leaked a confidential AOGCC legal memorandum to lobbyist-lawyer Kyle Parker that had been written by the assistant attorney general assigned to the agency, Rob Mintz.

But the range of electronic conversation is much more extensive. In March, Ruedrich had frequent contact with Parker and others in his law firm as they worked behind the scenes on legislation that weakened local control over coal bed methane development.

Sometimes the messages were just pleasantries, such as Parker's reminder to Ruedrich on Sept. 29, 2003, that they would see each other at a town hall meeting on coal bed methane in Sutton the next evening and have dinner together the day after that.

In at least eight instances, Ruedrich forwarded messages to Parker that he received or sent to state officials and Valley residents. Because they were blind copies or copies made after the original message was sent, the other parties had no way of knowing that the lobbyist was receiving them.

In his private messages to Parker, Ruedrich didn't try to hide his disdain for Sen. Scott Ogan, a fellow Republican from the Palmer area, who has taken credit for the legislation establishing the coal bed methane industry in Alaska and who, for a time, was on Evergreen's payroll as a $40,000-a-year consultant. Ogan quit the consultant job Sept. 30, 2003, under pressure and quit the Legislature last month in the face of a recall election.

On Aug. 27, 2003, Ruedrich forwarded to Parker from his work computer an e-mail he had earlier sent from home to Jim Clark and Dennis Fradley, Murkowski's communications director at the time. In his message, Ruedrich runs through a series of "myths" about coal bed methane, such as the risk to water contamination, and dismisses most as wrong.

But when it came to the "myth" that Ogan "is in bed" with the industry, Ruedrich wrote: "The fact is true." And he said that Ogan's "assertive support" of the local control law, including a debate he had with a conservation lobbyist during legislative hearings, "looks very questionable."

Later, when a similar local control law was thrown out by a court in Colorado, Ruedrich wrote Parker: "So much for the Ogan big state authority idea in Colorado."

And when Sutton resident Johnny Kirby wrote Ruedrich to say that while he was "very conservative" (in bold type) and generally in favor of development, he didn't like the conflict-of-interest "shenanigans" of Ogan or the "trust me" attitude of Tanigawa, whom he compared to a used-car dealer.

Ruedrich forwarded the message to Parker, saying it represented "a hole in our conservative wall" in the Matanuska-Susitna Borough. "Scott is not doing himself any favors," Ruedrich added, then appeared to criticize Tanigawa too. "Trust me is not it either."

Long before she found those e-mails on Ruedrich's computer, Palin came to fear that she and the commission would lose all credibility in the Valley. She attended many of the same meetings as Ruedrich, she said, and tried to be neutral. She said she was upset by his promotion of the industry.

But the final blow came when the commissioners were in a meeting in Anchorage in October, and she asked Seamount, who had firsthand experience with coal bed methane as a geologist in the Rocky Mountain states, to represent the commission on an Anchorage radio call-in program.

A few minutes later, Seamount charged into her office. "No, no, no, no, this isn't right. He should not be doing this," Seamount told her.

"And I was telling Dan, 'I thought you called in, I thought you were talking.' And he said, 'No, Randy heard you asking me to call in so he went over to his office and he just called in, and he's on the radio right now.' So I turned it on, and went, 'Oh, no.' "

Ruedrich sounded like he was speaking for the whole AOGCC and the Department of Natural Resources, but mainly, she said, "it sounded on the air like he was speaking for Evergreen Resources."

TENSION IN THE OFFICE

Ruedrich was also a source of contention inside the commission offices. Seamount said Ruedrich talked about looking up the political affiliations of each staff member.

"I've heard him say, 'We have to get all the Knowles people,' " Seamount said. Seamount himself was a Knowles appointee, but belonged to the Republican Party when tapped for the job and Ruedrich appeared to respect him, he said.

Ruedrich had special venom for Mintz, the assistant attorney general who has been the commission's lawyer for nearly 15 years.

Seamount said Ruedrich vowed to "politically execute" Mintz, whom he described as a "liberal Democrat." That puzzled Seamount, who said Mintz "was another one with integrity. That guy is incredible -- he's totally neutral."

Mintz is still working with the AOGCC.

Palin said Ruedrich's travel became a matter of some controversy inside the AOGCC, partly because he didn't follow procedures about getting travel approved in advance, but especially when he showed up at a meeting in Ketchikan as reported by the Ketchikan Daily News on Sept. 22, Palin said.

Palin said Ruedrich said he needed to go to Juneau on Sept. 19 to meet with Clark and return the next evening. And in the paperwork he filed to be reimbursed for a $200 plane ticket, he said he met with Clark, Commissioner Miller over what he described as "DOT delegation," and with leaders of the Department of Environmental Conservation. He also submitted a $100 per diem request for the two days of his trip.

The Ketchikan paper showed that Ruedrich was there on Sept. 20, for a Republican Party meeting that chose possible successors for Sen. Robin Taylor, who had just taken a job in the administration. By flying to Juneau first, the state paid to get him three-fourths of the distance from Anchorage to Ketchikan.

Clark's office said he had no recollection of meeting with Ruedrich on Sept. 19, and his calendar showed no appointment with Ruedrich. Miller said he might have met with Ruedrich in August or September, but not for anything having to do with the Department of Transportation. Only a DEC official in Juneau recalled meeting with Ruedrich at the time.

In an interview with the Daily News, Ruedrich said he may have been mistaken about claiming to have met with Clark. Perhaps, he said, he met with a Clark assistant. He also said his claim for $50 in state per diem for the day he spent in Ketchikan on party business was a mistake.

Ruedrich had ordered a state-paid airline ticket to Seattle for Nov. 11-12, 2003, to meet with EPA officials there. When he quit the week before, AOGCC successfully asked Alaska Airlines to cancel the ticket and issue a refund, less a $50 change fee. When Palin went through Ruedrich's computer, she found an e-mail dated Nov. 3 that Ruedrich sent from his home computer to work. The subject of the message was "Seattle Meeting." The message contained five attachments: all were analyses of an Oct. 27, 2003, poll done for the Alaska Republican Party by Hellenthal and Associates of Anchorage.

Palin said she was immediately skeptical about the Seattle trip: had it been timed so Ruedrich could meet on political business there?

Anita Frankel, an EPA official in Seattle, said Ruedrich was indeed scheduled to be there, but said his presence "wasn't essential."

In an interview, Ruedrich said he "mislabeled" the e-mail containing the polls and should have sent them to the Republican Party, not to his computer at work. As for Seattle, "there was not a political meeting of any kind that was contemplated or ever planned."

As concerns about Ruedrich mounted in October, Palin learned that Ruedrich had received special treatment when it came to the handling of his ethics disclosure statements.

MISSING DISCLOSURES

Under the Executive Ethics Act, state employees are asked to disclose possible conflicts to their ethics supervisor for a ruling. Palin reported that her husband, Todd, worked on the North Slope for BP. Seamount disclosed prior employment with several oil companies. But Palin said Ruedrich's statements were nowhere to be found. At the least, they might show whether Ruedrich had said he would continue to work on state party issues and whether that was approved by anyone.

The missing forms would involve Kevin Jardell, now the governor's communications director but then the assistant commissioner of administration. The AOGCC operated under the Department of Administration.

Jardell's relationship with Ruedrich went back long before Ruedrich's appointment to the AOGCC. In his financial statement at the Alaska Public Offices Commission, Ruedrich disclosed that Jardell was his wife's tenant in 2002. Jardell, a lawyer, said he stayed at Ruedrich's home for months while he represented the Republican Party in the legal fight against reapportionment. He was hired for the job by the national law firm Patton Boggs, the same firm for which Kyle Parker, the Evergreen lobbyist, works.

On Oct. 6, Linda Berg, administrative manager for the AOGCC, sent an e-mail to Jardell, asking if he had Ruedrich's forms.

"We need to find copies and make sure that they are in his personnel files in Juneau and also here in Anchorage," she wrote in the e-mail.

When she got no answer, she wrote again on Oct. 9. "I have received questions regarding the existence of these forms. Please advise regarding status of my previous request." On Oct. 22, Berg heard back from Jardell's assistant, Nancy Norton, who said, "I don't have it, I don't know if it was approved or not. If I see it, when I see it, I'll send you a copy."

Frustrated, Berg wrote Palin that day: "I don't get it -- why is this so difficult? Either there is an approved ethics disclosure or there is not. Yours is there, Dan's is there -- why is this one so weird? I guess that indicates to me that there is some problem. ..."

It turned out Jardell was keeping the forms to himself, which he said was legitimate.

According to Laraine Derr, director of boards and commissions in the governor's office, Murkowski named Palin chairwoman of the AOGCC on March 3, 2003. It was on that date that she became ethics supervisor for the commission. Jardell, ethics supervisor in the Department of Administration, to which the AOGCC is a part, was Palin's supervisor.

On March 9, Ruedrich e-mailed Jardell, not Palin, an outline of his potential conflict. Then, on March 27, Ruedrich submitted three draft disclosure statements to Jardell. Each document started, "To: Sarah Palin" even though she said he didn't provide them to her.

The first disclosure was about Ruedrich's chairmanship of the Alaska Republican Party, in which he pledged he would not conduct party business during work hours and would only concern himself with federal issues. The second concerned his continued work as an arbiter in a dispute between two drilling companies. And the third concerned deferred compensation he was still receiving from previous employers, including Doyon Drilling and BP.

On July 23, Jardell wrote Ruedrich that his "outside interests are not incompatible or in conflict" with his state employment.

In a recent interview, Jardell said he received Ruedrich's files in the first place because he wasn't sure when Palin was appointed chair.

"It was a confusing time," he said. "It was one of those things where Sarah was appointed chair after I had received them, or while we were looking at them."

Actually, the governor's office says, she was named chair on March 3, six days before Jardell received Ruedrich's e-mail of a potential conflict, and more than three weeks before Jardell received Ruedrich's three draft disclosures.

Once he had them, he figured that he had to make a legal determination about whether there was a conflict, he said, regardless of Palin's status. With state law requiring those disclosures be kept confidential, he didn't forward them to Palin, he said.

NO STRAIGHT ANSWERS

Palin printed out a batch of Ruedrich's e-mails on Nov. 12, 2003. The next day, she sent a message to Paul Lyle, the assistant attorney general in Fairbanks, and told him she was following his instructions.

But was there an investigation or not? Palin couldn't get a straight answer.

The next week, around Nov. 18, she reached attorney general Renkes on his cell phone just as he was leaving on a 2 1/2-week vacation. In her notes of the call, she wrote that Renkes "couldn't advise me on whether investigation was needed, but agreed RR's departure should be the conclusion to the problem. I expressed concerns re: state resources going toward investigation that is unclear whether it's needed. So who can advise me, I ask??"

In an interview, Renkes said Palin should not have reached the conclusion that Ruedrich's departure meant no investigation was needed, since Palin knew one was under way. When he spoke with her that day, he said, he hadn't been following the case closely.

Following up with Lyle in early December, Palin said she asked him, "Is this an investigation? I'm confused -- I thought Randy's gone, there's no need for an investigation. And he answered back, 'Randy's departure doesn't end an investigation.' "

On Dec. 11, Palin sent Lyle a package of material: printed e-mails, staff comments, documents from Ruedrich's desk and recycle bin.

"I don't even know what they're looking for," Palin said. "And we didn't hear back for a month that they even received it, nor that the appropriate personnel were reviewing it."

That's not unusual, Lyle said.

"I do not normally tell a ethics supervisor everything I'm doing in an investigation," he said. "We asked her to gather initial documents and initial witness statements." If the material was inadequate, he would have told her, he said.

But in the politically charged atmosphere of this investigation, Palin said she was feeling heat from the public and concern from the AOGCC staff. On Jan. 2, she sent a certified two-page letter to Murkowski, demanding action so that she wouldn't be seen as part of a cover-up.

Since Dec. 11, she wrote, "I have not received any further instructions except to be told to keep things 'confidential,' to deny media requests for information, and I have been threatened that I would face penalties if I were to divulge even whether or not there may be an ongoing investigation into the Ruedrich matter."

She told Murkowski that five months earlier, she began warning "those above me in the chain of command about Mr. Ruedrich's activities," and she cited more than a dozen contacts she made, even as the problem was "escalating" as Ruedrich "continued to dismiss my attempts to 'counsel' him."

Palin said that either the state should take over the investigation from her and publicly declare she was under orders to be silent, or that she be allowed "to handle this issue the way I deem is most appropriate." Given her choice, she wrote, she would have the state hire an independent investigator. And if her letter went ignored, she threatened, "I will take such further action as I deem appropriate to protect my reputation with regard to this unfortunate matter."

That next week, Lyle showed up at the AOGCC office to conduct his own investigation.

On Jan. 16, Palin resigned in a brief e-mail to Murkowski, making no reference to the issue that had been dominating her life for months.

That same day, Renkes recused himself from the Ruedrich case "to avoid any appearance of impropriety or conflict of interest" and turned it over to Barbara Ritchie, the chief assistant attorney general for opinions, appeals and ethics.

"I deem this action appropriate in this instance, given Mr. Ruedrich's role with the Republican Party of Alaska," Renkes wrote. "While I am confident that I could oversee this matter in a fair and impartial manner, this delegation (of authority) will remove any possible questions or perceived conflicts in that regard."

Renkes said the timing of his recusal had nothing to do with Palin's departure.

"I don't think I knew when she resigned," he said. "It wasn't a snap decision -- it was something I had thought about for some time."

On Feb. 27, the investigation came to a head when Lyle produced a 16-page ethics complaint against Ruedrich. But as provided by the ethics law, the complaint remained confidential.

The Daily News, KTUU-Channel 2 and the Associated Press sued in February to force open the evidence. On April 6, while those lawsuits were pending, Palin's lawyer, Wayne Anthony Ross, gave Ritchie an ultimatum: move to a public resolution of the ethics case in 10 days or Palin would call a press conference "for the purpose of setting forth, publicly, what she knows about this entire matter and why she chose to resign from the Commission."

About three weeks earlier, Ruedrich's lawyer had notified the media lawyer that Ruedrich was already planning to waive his right of confidentiality in the ethics case. On April 12, six days after Palin's threat, he made good on his offer to go public and meet with reporters.

State Sen. Hollis French, an Anchorage Democrat and former prosecutor, had called for an independent investigation from the beginning. When the case was made public, French wasn't satisfied.

"I don't want to say 'Keystone Kops,' but it's certainly not a professional, timely and thorough investigation," he said. It was a problem "from the get-go, as tight as he (Ruedrich) was with the administration, the fact that you have an attorney general whose line of authority stops at the governor and who is looking at the head of the Republican Party, a person who handed over $175,000 of Republican money during the election."

French said he came to respect Palin and got to know her as she attempted to bring forward the facts of the case.

"Sarah has been tortured by this for a long time," French said. "I feel she has never had a chance to let her story out."

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