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Birnbaum 'took fall' after MMS played catch-up after lapses in ethics, oversight

By Juliet Eilperin and Scott Wilson
Washington Post Staff Writer
Saturday, May 29, 2010; A01

At the conclusion of a more than two-hour meeting Wednesday night in the Oval Office, President Obama turned to Interior Secretary Ken Salazar and made clear that he had to do more to ensure that his agency could manage the Gulf of Mexico oil spill, a growing problem for an administration that prides itself on competence.

"You need to have people in the top jobs who can actually do them," Obama told Salazar, according to one senior administration official who attended the meeting.

Salazar, a politically savvy former senator from Colorado, responded that he had lost confidence in Elizabeth Birnbaum, the director of the Minerals Management Service, adding that he would soon be making changes. The next morning, Salazar and his deputy secretary David Hayes knocked on Birnbaum's office door and told her they planned to move her to another job; she resigned instead.

But Birnbaum's abrupt departure, coming just 10 months after she had taken the agency's helm, says more about the Obama administration's inability to improve MMS and the industry it regulates than Birnbaum herself. Facing a historically troubled agency, Salazar and his top deputies focused first on promoting easy-to-achieve changes and offshore wind development rather than conducting a broad agency overhaul.

A little over a week after taking office, Salazar traveled to the agency's Lakewood, Colo., office to launch an Interior Department ethics program, complete with a new employee code of conduct, and he moved quickly to abolish a controversial royalty-in-kind program that allowed energy companies to avoid paying billions in federal revenue. But he moved more slowly on plans to change the way MMS operated, with mid-level managers routinely overruling the analysts who provided guidance on leasing decisions.

"It's like focusing on low-hanging fruit while ignoring orchard blight," said Jeff Ruch, executive director of Public Employees for Environmental Responsibility.

Birnbaum, an environmental lawyer and advocate, spent much of her time on policy initiatives such as Cape Wind, a project that is poised to be the nation's first offshore wind farm. After nearly a decade of political wrangling, Salazar green-lighted the project just days after the Deepwater Horizon explosion.

Top officials, including Birnbaum, discussed the idea of splitting MMS to address the potential for conflict of interest long before the oil spill in the gulf. But in the wake of the disaster, sources said, she became an obvious target.

"They needed someone to visibly take the fall," said a former Interior official who worked with Birnbaum and did not want to comment publicly on a personnel matter. "She was the director, and that's what happens when something goes wrong."

Birnbaum did not return a message left Friday on her home answering machine. Interior officials declined to comment for this article.

From the start of her tenure, Birnbaum told others in Interior and elsewhere that she worried about the culture of MMS and about her ability to change it when so many of its employees worked outside of Washington.

"She knew there were problems. She saw this as an agency that was both demoralized and captured by the industry," said one federal official who spoke with Birnbaum early in her tenure and requested anonymity to comment on a personnel matter. "She was fumbling around on how to do these [reforms] and looking around for ideas."

Although plenty of outsiders lobbied Birnbaum to shake up MMS, she made it clear that she saw herself as working under Salazar's direction to pursue a pragmatic but conservation-minded approach to energy development.

After Ruch and colleague Paula Dinerstein wrote to suggest a few changes in the agency, Birnbaum replied in an Aug. 28 letter, "My job as Director is simply to help make the Agency work more effectively, in terms of energy development, environmental protection, and revenue management. . . . Many of the suggestions you make are items on which Ken Salazar and I are already working."

In many ways, Interior officials have played catch-up for the past year and a half, extinguishing one scandal at MMS only to be faced with another. In September 2008, the department's inspector general published a devastating report focusing on the agency's royalty collection program and officials in its Lakewood office who engaged in drug use and sexual activities with industry officials.

A year later, Salazar eliminated the royalty-in-kind program, which allowed energy companies to fulfill their federal obligations by giving the government oil and gas rather than cash. Salazar has adopted 72 of the 110 recommendations issued by the Royalty Policy Committee, a bipartisan commission established by the Bush administration.

But while Salazar and others spent time on revamping the way MMS collected royalties from oil and gas companies, they devoted less attention to possible problems in the leasing side of the equation, according to sources. This changed March 8, when the Government Accountability Office issued a report specifically on offshore oil and gas development, questioning the adequacy of environmental assessments performed by the agency's Alaska regional office.

Three weeks later, Birnbaum hired Alan Thornhill, who had served for nine years as the Society for Conservation Biology's executive director, as her science adviser. In an interview, Hayes cited the appointment as an example of how the Obama administration was working to restore "scientific integrity" to leasing decisions.

Even Birnbaum's ouster has not quieted the agency's critics, however. On Friday, Salazar announced Bureau of Land Management Director Bob Abbey would return from the Houma Incident Command Center, where he was helping respond to the oil spill, to serve as acting MMS director.

The activist group In Defense of Animals immediately attacked Abbey for removing wild horses on public land to make way for energy development.

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