House Democrats asked the Interior Department’s inspector general on Tuesday to investigate whether Karen Budd-Falen, the agency’s third highest ranking official, played a role in the federal approval of a lithium mine after her husband entered into a $3.5 million financial relationship with the mine’s developer.
Representative Jared Huffman of California, the top Democrat on the House Committee on Natural Resources, and Representative Maxine Dexter of Oregon, the ranking Democrat on the oversight subcommittee, said Ms. Budd-Falen “failed to come clean to Congress about her financial and ethical dealings.”
The Interior Department did not immediately respond to a request for comment.
Ms. Budd-Falen worked as the deputy solicitor responsible for wildlife at Interior from 2018 until 2021. She returned to the agency last year and is now the associate deputy secretary.
In a letter to Caryl Brzymialkiewicz, the Interior Department’s acting inspector general, the two lawmakers said that records showed that during the first Trump administration, Ms. Budd-Falen met with executives from a mining company, Lithium Nevada Corporation in November 2019, when the company was seeking a permit from the agency to build a $2.2 billion mine called Thacker Pass.
One year earlier, Ms. Budd-Falen’s husband, Frank Falen, had sold water from a family ranch in northern Nevada to Lithium Nevada, a subsidiary of Lithium Americas, for $3.5 million, according to state and federal records. The bulk of the money from the sale depended on a permit approval for company.
The New York Times and Public Domain, an environmental news outlet, reported this month that Ms. Budd-Falen did not reveal the financial arrangement on any of the four financial disclosures she submitted to the federal government when she worked at the Interior Department from 2018 to 2021.
The water-rights contract also is not mentioned on a disclosure she filed when she joined the current Trump administration in May.
“Although the full extent to which Ms. Budd-Falen participated in or influenced these deliberations remains unclear,” the lawmakers wrote, “the record unequivocally reflects an official meeting between Ms. Budd-Falen and the Nevada Lithium Corporation scheduled during the pending federal review for the Thacker Pass lithium mine, combined with a continuing, multimillion-dollar financial interest tied to the project’s success.”
The Interior Department has declined to say whether Ms. Budd-Falen played any role in decisions regarding the 2021 approval of the mine. The agency has not responded to questions about whether Ms. Budd-Falen recused herself from decisions related to the mine, or whether she filed an ethics waiver that disclosed the fact that her husband would benefit from it.
A spokesman from Lithium Americas has said the company did not discuss Thacker Pass when it met with Ms. Budd-Falen.
In a telephone interview this month, Mr. Falen characterized his wife’s meeting with the mine representatives as purely social. He said that, at the time, he was discussing the water contract with Lithium Americas executives, who mentioned to him that they would be in Washington, D.C. “And I was like, ‘Well, my wife is back there,’” Mr. Falen said, suggesting that they meet. “It was my fault because I just said, ‘Yeah, you should stop by and say hi to my wife.’” He said the lunch was the “only time Karen has ever talked to anybody from Nevada Lithium.”
Lisa Friedman is a Times reporter who writes about how governments are addressing climate change and the effects of those policies on communities.
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