Corporate criminals and their accomplices

August 12, 2010

Jeffrey St. Clair is co-editor with Alexander Cockburn of the muckracking Web site and newsletter CounterPunch--where he has written extensively on BP's Gulf catastrophe and other environmental issues. He is also author of numerous books, including Been Brown So Long it Looked Green to Me: The Politics of Nature and Born Under a Bad Sky: Notes from the Dark Side of the Earth.

At the Socialism 2010 conference in San Francisco, he described the conveyor belt between the executive suites of energy companies and the offices of government agencies that regulate them--and how this incestuous relationship set the stage for the BP disaster.

I DON'T know if you've heard this, but aside from BP, there's another troubled corporation that's trying to rehab its image--Toyota. Apparently they're preparing to release a new green car to replace the runaway Prius. The early word is that the secret new car will run on water--they call it the Hydro. There's just one catch--the water has to come from the Gulf of Mexico.

I got a call last night from our son Nathaniel, and he was depressed because he'd just broken up with his girlfriend. I tried to console him. I said, "It's all right, there's plenty of other fish in the sea." "Bullshit," he said, "BP's killed them all." I was also poking around this morning to get my advance tickets to Jazz Fest next year in New Orleans, and noticed that BP is going to be a corporate sponsor--a special tribute to Muddy Waters.

Not so funny, right? I agree. There's precious little comedy to be mined from this ongoing catastrophe. I'm going to begin my excavation into corporate and government criminality up in its natural habitat, also known as Alaska. Let us go there now.

The Deepwater Horizon oil rig after the explosion on April 21
The Deepwater Horizon oil rig after the explosion on April 21 (U.S. Coast Guard Eighth District External Affairs)

THE MOOD in the Alaska office of the Minerals Management Service (MMS) was festive. Word had just reached Anchorage that the president was preparing plans to expand offshore drilling in Alaska.

John Goll, the service's regional director, summoned his top lieutenants to his office for a briefing on this joyous news. After confirming the rumors that had circulated all morning, Goll invited all hands in the office to join him for coffee and pastries. At the center of the table, the cheering staffers were greeted by a large cake, with "Drill, Baby, Drill" scrawled across it in chocolate icing.

The year was not 2004, and the president was not George W. Bush. This scene took place in 2009, a few months into Barack Obama's first term as president.

As it turned out, Goll and his colleagues had several reasons to be upbeat. Not only had somebody in the new administration steamrolled environmentalist allies and decided to move forward with new drilling along Alaska's fragile coastline, but Goll and his troubled agency had survived the Presidential transition totally intact.

Goll, who was appointed to the powerful post of Alaska regional director of MMS in 1997 during the Clinton administration's drive to escalate drilling on the north slope of Alaska, had come into his prime as a bureaucratic facilitator of big oil under George W. Bush.

As detailed in a Government Accountability Office investigation of that Alaska office under Goll's tenure, the relationship between government regulators and the oil industry was incestuous at best. The report revealed an agency that approved nearly every drilling plan without restrictions, that muzzled internal dissent, and that gagged agency scientists. Environmental reviews, when they were undertaken--which was rarely--were cursory, and they were all fast-tracked.

The only obligation for the oil companies was: Just drill. Drill where you want. Drill when you want. Drill how you want. And the consequences be damned.

After Ken Salazar--he's our Interior Secretary under Obama, in case you don't know--pronounced himself the new sheriff in town and piously declared that he was going to reinvent the Minerals Management Service as a fierce regulatory watchdog, there's no indication, not the slightest, that Goll and his cronies up in Alaska did anything but chuckle.

Perhaps Goll knew more about the real Salazar than the mainstream environmental groups who had blindly lauded his appointment as Interior Secretary. In the first year of the Obama administration, Salazar's Interior Department put 53 million acres of offshore oil reserves up for lease, far eclipsing the record set by the Bush administration.

This staggering achievement probably came as no surprise to Goll and his oil industry cronies. When Ken Salazar served in the U.S. Senate from Colorado, he publicly chided the Bush administration for the lethargic pace of its drilling operations in the Gulf of Mexico. Peeved, Sen. Salazar cosponsored the Gulf of Mexico Energy Security Act, which opened an additional 8 million acres of the Gulf to new drilling.

In this optimistic spirit, Goll's office up in Alaska proceeded to swiftly and blithely approve one of the most contentious oil drilling plans of the last decade, a scheme by Shell Oil to sink exploratory wells in the Beaufort and Chukchi Seas, crucial habitat for, among other things, the endangered bowhead whale. The drilling plan was hastily consecrated on the basis of a boilerplate environmental review, despite the fact that even minor spills of oil in these remote Arctic seas would prove to be an uncontrollable ecological nightmare.

Indeed, under Goll's direction, the Alaska office of the Minerals Management Service was so disinterested in environmental analysis that it had failed to even develop a handbook for writing environmental reviews, as legally required by the Interior Department. Why bother with such trifles, when Shell Oil could be depended on to write its own environmental analysis. That's efficiency in action.

Now Goll wasn't the only Bush administration holdover at the MMS to survive the Obama transition. There's the curious case of Chris Oynes. I love this guy's name--it's right out of P.G. Wodehouse. He wears his name on his face, too--Mr. Oynes Oynes Oynes.

Oynes served for 12 years as the director of oil and gas leasing operations for the Mineral Management Service in the Gulf of Mexico. Those were buxom years for the oil industry. During his tenure in the Louisiana regional office, Oynes approved nearly 1,000 new drilling permits. Roughly one-fifth of all the current drilling sites in the Gulf of Mexico came from this man's signature.

Few of these operations underwent even the simplest environmental reviews or on-site safety inspections. Instead, as detailed in a blistering report from the Interior Department's Inspector General, under Oynes' watch, the repeat offenders in the oil industry were allowed to police themselves, writing their own environmental analyses, safety inspections and compliance reports. Often, they wrote these in pencil, for the MMS regulators to simply trace over in ink.

The inspector general concluded that the agency fostered a "culture of ethical failure." Now, that may be putting it mildly. For Oynes Oynes Oynes and his colleagues, it wasn't about ethics, but about serving the interests of big oil. And he did that in a big way, which meant billions for the Gulf oil drillers.

HERE'S HOW it all went down.

In 1995, Congress, in collaboration with the Clinton Administration--and this is a theme; from Clinton to Bush to Obama, it's a continuing criminal enterprise--passed something called the Deep Water Royalty Relief Act, a bill meant to incentivize oil companies like BP to begin the risky proposition of drilling for oil more than a mile beneath the surface of the Gulf.

As an incentive to drill, the deepwater operators were exempted from paying royalties on that oil until the oil produced hit a certain price and production triggers. These triggers were supposed to be written into the lease contracts. For example, the price trigger was set at $28 per barrel--the companies were meant to pay royalties to the MMS for all oil sold above this rate, which was substantially below the market price of crude in the 1990s.

But this language mysteriously disappeared from the contracts. One MMS staffer later told investigators with the inspector general's office that he had been instructed to remove the price-trigger language from the leases.

Now, the man who signed off on almost all of the 113 deepwater leases offered in 1998 and 1999 was the MMS's regional director at the time, Chris Oynes Oynes Oynes. Oynes told investigators that he simply overlooked the missing language.

But executives at Chevron, ever conscious of their bottom line, noticed the absence of price triggers, and called a meeting with Oynes Oynes Oynes. They met with Oynes Oynes Oynes three times to discuss the matter. Then, apparently satisfied with the sweet terms of the deal, Chevron plunged into the deepwater bonanza in the Gulf. For his part, Oynes said he had no recollection of these meetings.

A year later, officials at the Interior Department discovered the mistake. Panicky e-mails flew back and forth inside the agency. But instead of exposing the debacle and trying to rectify the problem and get the money back from the oil companies, they covered it up for the next six years.

The assistant director of the Minerals Management Service simply decided not to inform the head of the agency, and the sweetheart deal with the deepwater drillers remained buried, until 2006, when it was unearthed by Inspector General Earl Devaney, one of the few heroes in any of this--who called the affair a "jaw-dropping example of bureaucratic bungling."

Devaney put dozens of Minerals Management Service officials under the microscope in an attempt to identify the official who ordered the price triggers to be removed from the deepwater leases. Oynes Oynes Oynes himself was forced to undergo a polygraph test. But in the end, Devaney found no smoking gun, largely because of the convenient death of one of the central players in the affair.

Frustrated at every turn, the inspector general ended his investigation, appalled at the entire agency. He said: "Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior." Remember, this was during Clinton time.

What Devaney termed a "blunder" ended up allowing the deepwater drillers to stiff the Federal Treasury out of an estimated $50 billion--that's billion with a "b"--in royalty payments. Some might write this off as a monumental mistake. But at the MMS, and at the Interior Department itself, these kinds of fuck-ups always tend to end up bulging the pockets of the big oil companies, the big mining companies and the big timber companies.

As for Oynes Oynes Oynes himself, he survived the royalty affair unscathed. He wasn't indicted. He wasn't forced to resign. He wasn't even demoted. Instead, in 2007, Johnnie Burton, George Bush's head of the Minerals Management Service, gave him a promotion! He appointed Oynes to be assistant director of MMS in charge of offshore drilling.

His charmed career continued a year later, when our man Ken Salazar, ignoring furious protests from environmentalists and former Interior Department staffers, decided to retain Oynes Oynes Oynes in that fatal post.

Oynes is the one constant figure in the Deepwater Horizon catastrophe. The project originated during his term in the Bush administration, and was approved under his watch in the Obama administration. Despite the highly experimental nature of the deepwater drilling operations, the MMS's approval came without even the tiniest environmental review. In the end, it came without any restrictions or impositions on BP's operating plan, just like old times.

On May 16, however, after the explosion of the Deepwater Horizon rig, and with a new, damaging inspector general's report on the criminally lax safety inspections by the agency on Gulf drilling sites during Oynes' years as the head of the Louisiana regional office, Mr. Oynes Oynes Oynes quietly resigned his post.

But as Oynes skulked from his office, with oil tides coating the marshes of coastal Louisiana in an indelible brown crude, he must have looked back on his 30-year career with a real sense of pride. Servicing big oil is precisely what the MMS has always been about. After all, the agency was created during the Reagan administration by James Watt himself as a kind of bureaucratic handmaiden for the oil and gas industry.

Oynes had done his job, and he had done it well. As an MMS press release issued on the day of his resignation noted, "During his tenure in the Interior Department, Oynes conducted 30 lease sales and oversaw a 50 percent rise in oil production." And that, after all, is the name of the game.

NOW, DON'T feel sorry for BP. They weren't left out in the cold after Oynes left office. They owned several other insiders in the Obama administration.

Perhaps none of them WAS more important than Sylvia Baca. Sylvia Baca has a facility with moving through the revolving door in Washington so seamlessly, so fast AND so many times that she probably should have been given frequent flyer points.

Last summer, Ken Salazar appointed Baca to serve as his assistant administrator for lands and minerals in the scandal-rife MMS. This powerful but shadowy post didn't require Senate confirmation. Thus, Baca's previous career did not become the subject of public inquiry.

Salazar, it turns out, had plucked Baca right from the ranks of BP's executive suites--where, according to her curriculum vitae, she served as "general manager for Social Investment Programs and Strategic Partnerships at BP America Inc. in Houston." She'd held several major 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 had spent six years at the right hand of Bruce Babbitt, Bill Clinton's Interior Secretary--remember him?--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. It was a period when oil production on federal land soared far above the levels of the first Bush administration.

An internal Interior Department memo, written by Baca, from April 2000, spelled out the scope of this achievement for big oil. It said: "We have supported efforts to increase oil and gas recovery in the deep waters of the Gulf of Mexico." Recovery--that's drilling. Not the kind of recovery they're trying to do now. It went on: "We have conducted a number of extremely successful, environmentally sound offshore oil and gas lease sales." What's an environmentally sound sale? I mean, doesn't that come afterwards? And further: "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 in the northeast section of the reserve are located."

The memo goes on to highlight the situation in the Gulf of Mexico itself, which saw a tenfold increase in oil leasing during the Clinton years. "From 1993 to 1999," the memo states, "6,583 new leases, covering approximately 35 million acres of the outer continental shelf were leased. Lease sale 175 in the central Gulf of Mexico held on March 15, 2000, offered 4,203 blocks."

That equals 22.9 million acres for lease. The Interior Department received 469 bids on 344 blocks. There were more than 334 leases awarded. More than 40 million acres of federal outer-continental shelf blocks are currently under lease thanks to them. Approximately 94 percent of the existing outer-continental shelf leases--7,900 of them--are in the Gulf. And about 1,500 of these leases are producing.

We issued over 28,000 leases and approved over 15,000 permits to drill. We implemented legislation changing the competitive lease term from five years to 10 years, something the oil industry was really pushing for--and allowing leasees greater flexibility, which is what they needed, in exploration without endangering the lease.

Thus had the table been set by the Clinton administration for the depredations of the 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 an environmentally enlightened corporation that was engaged in a mighty war against the evil forces of climate change.

When Baca left BP to join the Obama administration, the company again wasn't left in the lurch. As the curtains closed on the Bush administration, BP recruited one of the Interior Department's top guns in the oil business to join its team. As the chief of staff for the Minerals Management Service in the Gulf region, John 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 wildly in this endeavor, BP enticed Grant to join its team as their "Regulatory and Environmental Compliance Manager" for the Gulf of Mexico, and assignment that included shepherding the Deepwater Horizon project through the regulatory--well, I wouldn't call it a maze exactly--at the Minerals Management Service.

Grant began lobbying his former colleagues in the Interior Department to open currently protected areas to oil leasing, particularly on the eastern Gulf of Mexico, near the coast of Florida. Grant also warned the Obama administration, including his former colleague, Sylvia Baca, not to cave in to demands by pesky environmentalists for "policies that may establish exclusionary zones, disrupting MMS leases or affecting the opportunities for economic growth." He needn't have worried.

SYLVIA BACA shouldn't have been eligible to resume her job at the Interior Department. After all, President 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 the 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. Salazer told Holder that Baca was "an indispensable member of his team," emphasizing her "detailed knowledge of interiors, land and energy responsibilities."

According to Deputy Interior Secretary David Hayes, Baca recused herself from all leasing decisions regarding BP. However, several sources inside the Interior Department tell me that Baca played a key role in a procedural decision early in the days of the Obama administration that allowed the Deepwater Horizon project and other big oil operations on federal lands to move forward with scant environmental review.

There's a law called the National Environmental Policy Act, or NEPA--a federal law that was passed during the glory days of environmental legislation, otherwise known as the Nixon administration. It requires a full-scale environmental impact statement for any federal project that might pose a "significant impact on the quality of the human environment."

These so-called EISs often run to more than 1,000 pages in length, and evaluate the possible ecological, social and economic consequences of the proposal, including worst-case scenarios. The documents are prepared by the permitting agency, with consultation from the U.S. Fish and Wildlife Service and the Environmental Protection Agency.

But an administrative order prepared during the second Bush administration allowed the Minerals Management Service to issue so-called categorical exclusions from NEPA compliance to big oil projects in the Gulf, in Montana, in Alaska and just about anywhere they wanted. 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 the MMS.

From 2001 to 2008, more than 2,400 oil leases had been allowed to go forward in the Gulf alone without any serious environmental review because they were all categorically excluded.

When the Obama administration came into power, this policy was under furious political and legal assault by environmental groups. But Salazar was anxious 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, Sylvia Baca warned, would slow down the approval process for leases by a year or more. And even worse, such NEPA compliance would make the projects vulnerable to protracted litigation by those lawsuit-happy environmentalists. She counseled Salazar that it would be better to stick with the Bush-era rules. Salazar agreed.

And so it came to pass that on April 6, 2009, the Interior Department granted BP a categorical exemption for lease number 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.

So what is to be done? I don't know. I think we're fucked. What's left to us is basically just to resist. As Michel Foucault said, "It's resistance that unites us." It's the act of resistance that fuels hope and forges change.

For as the Boss says, "We made a promise we swore we'd always remember. No retreat baby, no surrender. Brothers and sisters in the stormy night with a vow to defend. No retreat, baby, no surrender." So, small people unite.

Transcription by Andrea Hektor

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