Weekend Edition
November 19 - 21 , 2010

The Bi-Partisan Path to the Gulf Catastrophe

Let Them Eat Oil

By JEFFREY ST. CLAIR

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 of the 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. 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 had several reasons to be upbeat. Not only had the new administration steamrolled its environmentalist allies and decided to move forward with new drilling operations along Alaska’s fragile coastline, but Goll and his troubled agency had survived the presidential transition intact. Goll, who was appointed to the powerful post of Alaska regional director in 1997 during the Clinton administration’s drive to escalate drilling on the North Slope, 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 the Alaska Office of the MMS under Goll’s tenure, the relationship between the government regulators and the oil industry was incestuous. The report revealed an agency that approved nearly every drilling plan without restrictions, muzzled internal dissent and gagged agency scientists. Environmental reviews, when they were undertaken – which was rarely – were cursory and fast-tracked. The only obligation for the oil companies was: just drill. Drill where you want, how you want.

There’s nothing to indicate that after Ken Salazar piously declared that he was going to weed out and reinvent the MMS as a fierce regulatory watchdog, Goll and his cronies did anything but chuckle.

Perhaps Goll knew more about the real Salazar than the mainstream environmental groups who had blindly lauded the man-in-the-hat’s appointment as interior secretary. In the first year of the Obama administration, Salazar’s Interior Department had put 53 million acres of offshore oil reserves up for lease, far eclipsing the records set by the Bush administration. This staggering achievement probably came as no surprise to Goll and his oil industry cronies. When Salazar served in the U.S. Senate, he publicly chided the Bush administration for the lethargic pace of its drilling operations in the Gulf of Mexico. Peeved, Salazar co-sponsored the Gulf of Mexico Energy Security Act, which opened an additional eight million acres of the Gulf to new drilling.

In this optimistic spirit, Goll’s office 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 Beaufort and Chukchi Seas, crucial habitat for the endangered bowhead whale.

The drilling plan was hastily consecrated on the basis of a boilerplate environmental review despite the fact that even minor oil spill in these remote Arctic seas would prove to be an uncontrollable ecological catastrophe. Indeed, under Goll’s direction, the Alaska office of the MMS was so uninterested in environmental analysis that it had failed to even develop a handbook for writing environmental reviews as required by the Department of Interior. Why bother, when Shell Oil could be depended on to write its own environmental analysis? That’s efficiency.

Goll wasn’t the only Bush holdover at MMS to survive the Obama transition. There is the curious case of Chris C. Oynes. Oynes served for 12 years as the director of oil and gas leasing operations for the MMS 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 oil drilling permits, roughly a fifth of all the current drilling sites in the Gulf of Mexico. Few of these operations underwent even the most simplistic environmental reviews or on-site 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 in pencil for MMS regulators to trace over in ink.

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

Here’s how it went down. In 1995, Congress, in collaboration with the Clinton administration, passed the Deep Water Royalty Relief Act, a bill meant to encourage 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 until the amount of oil produced hit 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 MMS on all oil sold above this rate, which was substantially below the market price of crude in the late 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.

The man who signed off on most of the 113 deepwater leases offered in 1998 and 1999 was the MMS’s regional director at the time, Chris Oynes, who duly told investigators that he simply overlooked the missing language. But executives at Chevron, ever conscious of the bottom line, noticed the absence of price triggers and met with Oynes three times to discuss the matter. Apparently satisfied with the 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 emails flew back and forth inside the agency. But instead of exposing the debacle and trying to rectify the problem, they covered it up for the next six years. The assistant director of MMS decided not to inform the head of the agency, and the sweetheart deal with deepwater drillers remained buried until 2006, when it was unearthed by Inspector General Earl Devaney, who called the affair “a jaw-dropping example of bureaucratic bungling.”

Devaney put dozens of MMS officials under the microscope in an attempt to identify the official who ordered that the price triggers be removed from the deepwater leases. Oynes himself was made to take 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: “Simply stated, short of a crime, anything goes at the highest levels of the Department of Interior.”

What Devaney termed a “blunder” ended up allowing the deepwater drillers to stiff the federal treasury out of an estimated $12 billion in royalty payments. Some might write this off as a monumental mistake. But at the MMS, these kinds of screwups always seem to end up bulging the pockets of the oil companies.

As for Oynes, he survived the royalty affair unscathed. He escaped indictment. He wasn’t forced to resign. He wasn’t even demoted. Instead, in 2007 Johnnie Burton, Bush’s head of MMS, appointed Oynes assistant director of MMS in charge of offshore drilling. His charmed career continued a year later, when Ken Salazar, ignoring furious protests from environmentalists and former Interior Department staffers, decided to retain 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 drilling operation, the MMS’s approval came without environmental review. It contained no special 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 new IG report on criminally lax safety inspections by the MMS at Gulf drilling sites during Oynes years as head of the Louisiana regional office looming, he quietly resigned his post.

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 sense of pride. Servicing big oil is precisely what MMS has always been about. The agency was created during the Reagan administration by James Watt as a bureaucratic handmaiden for the oil and gas industry. Oynes had done his job and done it well. As an MMS press release noted, “During his tenure in the Gulf of Mexico  he conducted 30 lease sales and oversaw a 50 per cent rise in oil production.”

And that, after all, is the name of the game.  

Jeffrey St. Clair is the author of Been Brown So Long It Looked Like Green to Me: the Politics of Nature and Grand Theft Pentagon. His newest book, Born Under a Bad Sky, is published by AK Press / CounterPunch books. He can be reached at: sitka@comcast.net.

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