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Morning-After Drill

How Obama made an oil disaster more likely.

In the summer of 2008, Democrats had a serious oil problem. Just as the presidential primaries were winding down, gas prices were soaring toward $4 per gallon. Anxious voters were watching their budgets gobbled up by fuel costs, while truck drivers were protesting across the country—at one point circling the Capitol in hornhonking caravans. Republicans were dominating the message war: Newt Gingrich had just launched his “Drill Here, Drill Now” campaign, gathering more than 1.3 million signatures. And Democrats, for their part, were in retreat: As Eric Pooley reports in The Climate War, their internal polling revealed that voters had zero patience for any energy platform that lacked a hefty drilling component.

Everyone wanted to see how Barack Obama would respond. In July, Senate Majority Whip Dick Durbin hinted to The Wall Street Journal that Democrats might be open to “responsible production,” but he was soon asked by Obama to hold off. At that point, Obama still saw drilling as a gimmick, insisting that it wasn’t the solution to America’s oil crunch. Only after a month of agonizing—and watching Democrats get clobbered on the issue—did the campaign relent. In August, Obama announced he would support new offshore exploration as part of a broader mix of climate and cleanenergy policies.

At the time, Obama’s decision was considered a savvy rope-a-dope, the kind of bipartisan gesture that would come to define his first year in office. If Democrats embraced drilling, they could take away the GOP’s best talking point on energy and force a deal on climate policy. “Politically, Democratic energy bills are often caricatured as focusing only on constraints,” says Jason Grumet, a former campaign adviser. The new approach was a way of breaking that deadlock.

Within the campaign, advisers came to embrace the policy rationale. After all, if Congress enacted an economy-wide cap on carbon pollution, then new production couldn’t make global warming any worse. And domestic drilling could help the country reduce its reliance on imports while it made the transition to electric cars and other clean alternatives. The logic was sound. Yet the policy still grew out of a frenzied political moment—it was a defensive maneuver, not one born of strong conviction.

Nonetheless, after the election, Obama followed through. One of his first acts was to nominate Ken Salazar, a Colorado senator who had championed offshore drilling, to run the Interior Department. And, in March of this year, the administration announced a plan to expand offshore oil production. The proposal was designed to attract conservative votes for climate legislation, especially in the Senate, where Lindsey Graham had said he’d be amenable to a cap on carbon pollution in exchange for more offshore drilling. But it was also intended to get out in front of rising gas prices this summer and avoid a repeat of the insanity of 2008. The strategy looked shrewd—until, that is, BP’s Deepwater Horizon platform went up in flames and millions of gallons of crude started bubbling up into the Gulf of Mexico.

In the wake of the Gulf spill, both the press and Congress have zeroed in on BP’s recklessness and the numerous oversight lapses by Salazar’s Interior Department. But it’s worth looking at how Obama’s original decision to pursue drilling made the spill more likely—and how a tactical move devised during the heat of a presidential campaign turned into the administration’s biggest blunder.

When Ken Salazar first arrived at Interior, he initially focused on the spectacularly lurid scandal at the Minerals Management Service (MMS), which oversees oil and gas drilling in federal waters. Employees in the royalty-collecting wing of MMS had been taking thousands of dollars worth of gifts from the oil firms they were supposed to oversee—and allowing companies to underpay the government. Worse still, the manager of the program had been steering contracts to his outside consulting firm, all while buying cocaine from and sleeping with subordinates. Salazar dubbed the affair “one of the worst examples of corruption and abuse in government.” That January, he visited the Denver office of MMS wearing his trademark Stetson hat and announced, “There’s a new sheriff in town.” He quickly laid down new ethics rules, referred several employees to prosecutors, and ended the royalty-in-kind program at the heart of the scandal.

Yet, as it turns out, the sex and drugs were a distraction from the much deeper structural problems at MMS. “That was an easy issue,” says John Leshy, who cochaired Obama’s transition team for Interior. “The more difficult issue was where the agency just wasn’t doing its job.” The real trouble lay in MMS’s leasing program, which had little contact with the infamous royalties wing. Companies had been getting offshore-drilling permits with stunningly little scrutiny.

In the Gulf, too many drilling projects were granted “categorical exclusions” to speed through environmental review. (Categorical exclusions are generally supposed to be given to tiny projects like stop signs, but a little-noticed policy during the Bush years allowed massively complicated deepwater-drilling projects to qualify.) Up in Alaska, the situation was worse. Staff scientists were scrutinizing the ecological impact of new drilling proposals, but higherups would ignore or change these analyses if they ran the risk of bogging down the permitting process. In 2006, a marine biologist at MMS named Jeff Childs found that a spill in the Beaufort Sea, near Alaska, would have severe repercussions for the local salmon population. But his findings would have triggered a new environmental review of the leases, delaying the permitting process by a year or more, and so, his bosses told him to modify his conclusions. As a Government Accountability Office investigation later confirmed, such stories were commonplace in the Alaska division. Managers were assessed (and given bonuses) based on how quickly they approved permits—safety and environmental rules were boxes to tick as swiftly as possible. “The leasing program always trumped environmental assessments,” says one former MMS employee. “Too many managers were of a mind to support the oil and gas industry. They were seen as our clients, our shareholders.”

Despite all the warning signs, Salazar never addressed this dynamic, likely for a couple of reasons. For one, the entire Interior Department was in disarray after the Bush years—not just MMS. In the Fish and Wildlife Service, for instance, political appointees had been tampering with scientific findings over endangered species. “There were so many fires to put out, and so many systemic problems following the damage done by [Bush appointees],” says one congressional aide. “They were on the losing end of a court case involving tens of billions of dollars in missing oil royalties, and they were getting pressure on guns and on endangered species. Every Interior agency needed attention.”

What’s more, revamping the culture at MMS would have taken years, and the administration didn’t have that kind of time. Thanks to Obama’s commitment to “energy independence,” Interior was focused on approving permits in a timely manner. In Salazar’s first year, Interior opened up a record 53 million new offshore acres for drilling. (Salazar applied the same urgency to renewableenergy projects, too, directing MMS to push through a long-delayed offshore wind project near Cape Cod.)

Meanwhile, the White House was working on a broader proposal to open up the Arctic, the Southeastern Seaboard, and new areas of the Gulf for drilling. This policy was based on a five-year plan hastily devised and published in the last days of the Bush administration. Some outlets reported that Salazar and Obama had scuttled the Bush plan, but, in fact, they merely opened it for public comment and, in the end, adopted most of it. White House officials have insisted that the offshore drilling policy was carefully evaluated on the merits, but there’s ample evidence that political considerations loomed large. The Interior Department, for instance, brushed aside concerns from experts at the National Oceanic and Atmospheric Administration that the plan should be delayed until a full interagency study of ocean zoning could be completed later in the year. By then, the drilling proposal would emerge too late to influence the congressional climate debate. “If they had gone to the Senate and said, well, we’re scrapping the [Bush] plan entirely, and we’ll get back to you when we have something new—that wouldn’t have ended well for climate,” says one Senate aide.

All of that may explain why Salazar was so slow to overhaul MMS. Gulf drilling projects continued to get categorical exclusions. And Salazar kept John Goll, the regional manager for the dysfunctional Alaska office, in place. (After The New York Times revealed that the Alaska office had been systematically suppressing scientific reports, Goll sent out an e-mail to the agency apologizing—but only for having served a cake at an office party with “Drill, Baby, Drill” written in frosting.) Nor did the Interior Department set new policies to protect its own scientists’ findings, even though Salazar had the ability to do so. (The White House was tardy on this front, too: The Office of Science and Technology Policy had promised to draw up scientific-integrity recommendations by July 2009, but they have yet to materialize.)

Unfortunately, all that haste helped precipitate the Deepwater Horizon accident. As we now know, BP’s 582-page spill-response plan for its Gulf of Mexico operations, submitted in 2009, was rife with errors. (It mentioned, among other things, steps to protect walruses, which live nowhere near the Gulf.) Yet no one with expertise appears to have reviewed it, and BP was granted a categorical exclusion that same year. When the platform blew up and oil started spewing into the Gulf, these regulatory lapses all reeked of ineptitude. But they were partly the result of an administration rushing to expand drilling before it had time to fix the structural problems at Interior.

As a final irony, the drilling push turned out to be of little help in the congressional climate debate. “That’s the sad part of this story,” says Grumet. “It got very little traction in the climate front.” None of the pro-drilling Republican senators whom the administration had hoped to win over changed their minds about voting for a carbon cap. Lindsey Graham eventually pulled out of talks, and it’s uncertain whether any robust climate measure can pass the Senate this year.

A major ecological catastrophe has a way of focusing the mind. In the weeks after the BP blowout, Salazar ditched his cowboy hat and pledged a number of genuinely significant selereforms to the Interior Department. The head of MMS, Elizabeth Birnbaum, was pushed out (though Birnbaum’s supporters say she was always quite reformminded and was never given a mandate to make sweeping changes). And Salazar proposed to split MMS into three pieces, so that the division dealing with environmental analysis isn’t lumped in with the one that handles leasing.

Even so, some experts think the regulatory failures laid bare by the Gulf spill are so fundamental that they’ll require far more extensive fixes—including, potentially, an overhaul of the underlying environmental rules. “I don’t know of any project that’s ever been stopped by nepa [the National Environmental Protection Act],” says Rick Steiner, a University of Alaska marine specialist who helped lead the response to the Exxon Valdez spill. “Companies always find a way to subvert concerns, understate risks, overstate benefits, make it look like environmental concerns are being addressed, even if they’re not. It’s a forty-year-old law, and that may be something we have to look at.” But that would take time and could put a crimp on further drilling—a dicey political proposition. When the administration issued a six-month moratorium on new deepwater drilling in the Gulf, coastal senators like Mary Landrieu and David Vitter raised a furor about lost jobs. (In late June, a federal judge struck down the moratorium.)

And yet, so long as the country charges ahead with drilling, a repeat of the Gulf fiasco is entirely possible. In the aftermath of the spill, the administration has focused on putting a temporary hold on 33 new deepwater-drilling endeavors, while hundreds of existing projects continue to go forward—even though many of them received the same thin scrutiny that Deepwater Horizon did. (In the Beaufort Sea, for instance, BP is still forging ahead with a controversial plan to construct an artificial island and drill miles below the water for crude, although Salazar recently ordered a fresh review of the undertaking.) And, while the administration clearly recognizes the need to proceed more cautiously, its grand drilling plan remains intact. Salazar has been careful to reassure the “drill, baby, drill” crowd that any proposed moratorium will only amount to a “pause” on new production. Even after the worst oil spill in U.S. history, the politics of drilling remain as difficult for Obama to navigate as ever.

Bradford Plumer is an assistant editor of The New Republic. 

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