BP's Inside Game

--- by Jeffrey St. Clair

By the morning of May 24, the tide had turned against President Barack Obama in the Gulf. Weeks of indecision at the White House and the Interior Department had shifted the balance of blame. BP was no longer seen as the lone culprit. Now, the Obama administration was viewed by many – including some senior members of their own party – as being fully culpable for the ongoing disaster off the coast of Louisiana. The political situation was so dire that Rahm Emmanuel called an emergency meeting in the Oval Office to regroup. Huddling with Obama and Rahm that bleak morning were Homeland Security Secretary Janet Napolitano, Interior Secretary Ken Salazar, Coast Guard Commandant Thad Allen, climate czar Carol Browner and, most cynical of all, economic advisor Lawrence Summers, author of an infamous 1991 memo at World Bank calling “the economic logic behind dumping a load of toxic waste in the lowest wage country […] impeccable and we should face up to that.”

The president was pissed. In a rare display of emotion, Obama ranted for 20 straight minutes. The target of his anger wasn’t BP but the press. He fumed that he was being unfairly portrayed as being remote and indifferent to the mounting crisis in the Gulf. “Hell, this isn’t our mess,” Obama railed. The president expressed particular contempt for Louisianan James Carville, whose nightly barbs on CNN seemed to have found their mark. After two hours of debate, Obama’s Gulf supposed dream team arrived at the dubious conclusion that the main problem was that there were simply too many public voices speaking for the administration. No one seemed to be in control. There were discordant accounts of the severity of the spill between the EPA and the Interior Department. Agencies were intruding on each other’s terrain.

So, it was decided that the administration would speak with one voice, and that voice would be Thad Allen’s, the portly Coast Guard Commandant who had been lauded in the press as a heroic figure in the aftermath of Katrina. It was the wrong lesson to draw after a month of false moves. The problem wasn’t message control, but a profound bureaucratic lethargy that ceded almost absolute control over the response to the spill to BP. This fatal misstep came courtesy of yet more bad advice from Ken Salazar, who told Obama that under the terms of the Oil Pollution Act of 1990, passed in the wake of the wreck of the Exxon Valdez, BP was legally responsible for the cleanup of the Gulf.

Salazar’s logic was perverse. He reasoned that, by giving free rein to BP under the cover of the Oil Pollution Control Act, the administration could keep its hands clean and blame any failures in the Gulf on the oil company. This strategy blew up in the face of the administration. It was all over once Rep. Ed Markey pressured BP into releasing the live video feeds from the remote-controlled submersibles, showing the brown geyser of crude erupting from the remains of the failed blowout preventer.

But then the administration was boxed into an untenable position. Instead of distancing itself from BP, the Obama team, thanks to Salazar, found itself shackled to the company. Two weeks after the blowout, a top Coast Guard official went so far as to praise “BP’s professionalism” during a nationally televised press briefing.

It should have been different. Within hours of the explosion, the federal government should have seized control of both the well and the cleanup operations. The only responsibility that should have been left to BP was to sign checks for billions of dollars. The authority for such a takeover derives from an administrative rule called the National Contingency Plan, which calls for the federal government to take authority over hazardous waste releases and oil spills that pose “a substantial threat to the public health or welfare of the United States based on several factors, including the size and character of the discharge and its proximity to human populations and sensitive environments. In such cases, the On-Scene Coordinator is authorized to direct all federal, state, or private response and recovery actions. The OSC may enlist the support of other federal agencies or special teams.”

The National Contingency Plan calls for the On-Site Coordinator “to direct all federal, state and private response activities at the site of discharge.” The Plan, written in 1968, came in response to one of the world’s first major oil spills and cleanup debacles. On March 18, 1967, the Liberian-flagged supertanker Torrey Canyon, taking a dangerous shortcut near Seven Stones reef, struck Pollard’s Rock off the coast of Cornwall, gouging a deep hole into the holds of the ship. Over the course of the next few days, oil drained into the Atlantic. Then, on Easter the ship itself broke in two, releasing all 35 million gallons of crude oil, owned by, yes, British Petroleum into sea. The wreck plunged the government of Harold Wilson into crisis mode. The government allowed BP to pour millions of gallons of an unproven but toxic dispersant on dark-stained waters – the chemical had been manufactured by a subsidiary of the oil company. When that proved to have little effect, the Wilson government called upon the Royal Air Force to conduct a bombing raid on the Torrey Canyon. The planes dropped 42 bombs in effort to sink the ship and burn off the oil slick. The sea burned for two weeks, but the incendiary raids did little to staunch the oily tides. In the end, more than 120 miles of the Cornish Coast were coated in oil and the spill took a heavy toll on fish, birds and sea mammals. The crude spoiled beaches from Guernsey to Brittany.

In order to avoid a similar cleanup folly in the U.S., the National Contingency Plan called for a single agency to take swift control over big oil spills. That agency was the newly created EPA. But when Rahm Emmanuel summoned the administration’s oil response team to the strategy session in the Oval Office, he didn’t send an invitation to Lisa Jackson, the spunky head of the Environmental Protection Agency. Why was Jackson missing? Because she had reportedly incurred the wrath of BP executives for pressing the company to curtail its controversial use of the toxic dispersant Corexit. Also noticeably absent from the Obama brain trust were two other officials who might have contributed a more realistic appraisal of the deteriorating situation in the Gulf: Jane Lubchenko, director of the National Oceanic and Atmospheric Administration NOAA, and Energy Secretary Stephen Chu, owner of the Nobel Prize, so often invoked by White House press secretary Robert Gibbs as a public assurance that the administration was on top of the situation. Each had been inexplicably exiled from Obama’s inner circle.

It didn’t help, of course, that in the early days of the disaster Obama’s officials opted to downplay the severity of the oil gusher erupting out of the crumpled riser pipe 5,000 feet below the surface of the Gulf. In the first official remarks from the administration after the explosion of the Deepwater Horizon rig, Coast Guard rear admiral told the press that the spill was expected to be very minor, amounting to only the few thousands gallons of crude present in the mile-long pipe at the time of the accident. This false information flowed directly from BP. A few days later, after the incinerated rig had toppled and sank to the bottom of the Gulf, this specious number was revised upward to a total of no more than 1,000 gallons a day. So said Admiral Thad Allen, head of the Coast Guard and Incident Commander for the Gulf. Again, Allen had made this optimistic assessment based solely on information coming from BP. Two weeks later, the upper limit for the leak was raised to 5,000 barrels a day.

But NOAA knew better. In fact, in the hours after the spill, top NOAA officials gathered in Seattle for an emergency session that was streamed live on the agency’s website. The video feed, which was later removed from the website, captured the agency’s top scientists at work. Their initial survey of the scope of the spill proved prescient. One scientist warned that the agency needed “to be prepared for the spill of the decade.” Another NOAA scientist charted out the worst-case scenario on a whiteboard: “Est. 64k – 100k barrels a day.” Right on the money, even though it took the Obama administration more than 50 days to admit that the oil was flowing at a rate of more than 14,000 barrels a day.

Of course, the administration could have simply subpoenaed BP’s own records, as Congressman Ed Markey eventually did. On June 20, Markey released an internal memo from BP that estimated that as much as 100,000 barrels a day might be surging out of the broken wellhead. Far from fact-checking BP’s information, some members of the Obama administration were acting as conduits for the company’s lowballing. None played a more important role than Sylvia Baca, whose facility with moving seamlessly between the government and the corporations she was meant to regulate should had won her frequent flyer points for trips through the revolving door. Last summer, Ken Salazar appointed Baca to serve as assistant administrator for lands and minerals of the scandal-rife Minerals Management Service (MMS). This powerful but shadowy post did not require Senate confirmation. Thus, Baca’s previous career did not become the subject of public inquiry.

Salazar had plucked Baca right from the ranks of BP’s executive suites, where, according to her CV, she served “as general manager for Social Investment Programs and Strategic Partnerships at BP America Inc. in Houston, and had held several senior management positions with the company since 2001, focusing on environmental initiatives, overseeing cooperative projects with private and public organizations, developing health, safety, and emergency response programs and working on climate change, biodiversity and sustainability objectives.” Prior to joining BP, Baca spent six years at the right hand of Bruce Babbitt, serving as assistant secretary of the Interior for Lands and Minerals Management.

Baca’s years in the Clinton administration proved very productive for the oil industry as a whole and her future employer in particular, a period when oil production on federal lands soared far above the levels of the first Bush administration. An internal Interior Department memo from April 2000 spelled out the achievement for Big Oil:

“We have supported efforts to increase oil and gas recovery in the deep waters of the Gulf of Mexico; we have conducted a number of extremely successful, environmentally sound offshore oil and gas lease sales; and we have opened a portion of the National Petroleum Reserve in Alaska to environmentally responsible oil and gas development, where an estimated 10 trillion cubic feet of recoverable gas resources lie in the northeast section of the reserve.”

The memo goes on to highlight the feats in the Gulf of Mexico, which saw a tenfold increase in oil leasing during the Clinton years.

“From 1993 to 1999, 6,538 new leases were issued covering approximately 35 million acres of the Outer Continental Shelf…. Lease Sale 175 in the Central Gulf of Mexico, held on March 15, 2000, offered 4,203 blocks (22.29 million acres) for lease. The Interior Department received 469 bids on 344 blocks. There were 334 leases awarded….More than 40 million acres of federal OCS blocks are currently under lease. Approximately 94 per of the existing OCS leases (7,900) are in the Gulf, and about 1,500 of these leases are producing…. Issued over 28,000 leases and approved over 15,000 permits to drill…Implemented legislation changing the competitive lease term from five years to ten years, allowing lessees greater flexibility in exploration without endangering the lease.

Thus had the table been set for the depredations of the George W. Bush administration.

Mission accomplished, Baca settled into her high-paying gig as a BP executive. One of Baca’s roles was to recruit Hollywood celebrities to help greenwash the oil giant as environmentally enlightened corporation, which was engaged in a mighty war against the evil forces of climate change. When Baca left BP to join the Obama administration, they weren’t left in the lurch. As the curtains closed on the Bush administration, BP recruited one of the Interior Department’s top guns to join its team. As the chief of staff for the MMS in the Gulf Region, James Grant had worked to make sure that deepwater leases moved forward with, as he put it in one memo, “few or no regulations or standards.”

Having succeeded in this endeavor, BP enticed Grant to join their team as their “regulatory and environmental compliance manager” for the Gulf of Mexico, an assignment that included shepherding the Deepwater Horizon through the regulatory maze at MMS. Grant began lobbying his former colleagues in the Interior Department to open currently protected areas to oil leasing, particularly in the eastern Gulf of Mexico near the coast of Florida. Grant also warned the Obama administration, including his former corporate colleague Sylvia Baca, not to cave to demands by environmentalists for “policies that may establish exclusionary zones, disrupt MMS leasing or affect opportunities for economic growth.” He needn’t have worried.

* * *

It’s clear that Sylvia Baca should never have been eligible to resume her job at the Interior Department. Obama had piously pledged to close the revolving door and bar corporate lobbyists from taking posts in agencies that regulated the activities of their former employers. Several environmental lobbyists were denied positions in the Interior Department and EPA under these supposedly ironclad ethics rules. However, Baca slipped through at the behest of Salazar who made a special appeal to Attorney General Eric Holder. Salazar told Holder that Baca was an “indispensable” member of his team, emphasizing her “detailed knowledge of Interior's land and energy responsibilities.”

According to Deputy Interior Secretary David Hayes, Baca recused herself from all leasing decisions regarding BP. However, sources inside the Interior Department tell me that Baca played a key role in a procedural decision in the early days of the Obama administration that allowed the Deepwater Horizon project and Big Oil operations on federal lands to move forward with scant environmental review. The National Environmental Policy Act (NEPA) is a federal law passed during the glory days of environmental legislation, otherwise known as the Nixon administration. It requires a full-scale environmental impact statement (EIS) for any federal project that might pose a “significant impact on the quality of the human environment.”

These EISs often run to more than a 1,000 pages in length and evaluate the possible ecological, social and economic consequences of the proposal, including worst-case scenarios. These documents are prepared by the permitting agency with consultation from the Fish and Wildlife Service and the EPA. But an administrative order during the second Bush administration ordered the Minerals Management Service to issue “categorical exclusions” from NEPA compliance to Big Oil projects in the Gulf and Alaska. In addition, the Bush administration allowed the oil companies to prepare their own safety and environmental plans, which would then be rubber-stamped by officials at MMS. From 2001 through 2008, more than 2,400 oil leases had been allowed to go forward in the Gulf without any serious environmental review.

When the Obama administration came into power, this policy was under furious legal and political assault by environmental groups. But Salazar was zealous that there would be no interruption in the pace of oil leasing in the Gulf. In fact, he wanted it speeded up. Restoring NEPA compliance to the oil industry, Salazar’s enforcer, Baca warned, would slow down the approval process for leases by a year or more and, even worse, make the projects vulnerable to protracted litigation by environmentalists. She counseled that it would be better to stick with the Bush era rules. Salazar agreed.

So, it came to pass that on April 6, 2009, the Interior Department granted BP a categorical exemption for Lease 206, the Deepwater Horizon well. The BP exploration plan included a skimpy 13-page environmental review, which called the prospect of a major spill “unlikely.” The company told the Interior Department that in the event of a spill “no mitigation measures other than those required by regulation and BP policy will be employed to avoid, diminish or eliminate potential impacts on environmental resources.” The request was approved in a one-page letter that imposed no special restrictions on the oil company, warning only that BP “exercise caution while drilling due to indications of shallow gas.”

Famous last words.