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Obama and oil drilling: How politics spilled into policy

Just weeks before the worst oil spill in U.S. history, President Obama announced an expansion of offshore oil and gas exploration, at one point stating "oil rigs today generally don't cause spills." After the spill, in an Oval Office address to the nation, the president announced a six-month moratorium on deepwater drilling.

As Graham puts it, he has never seen climate change "as a religion." But he liked what he saw of Obama's evolving energy policy. If the administration followed through with a "balanced approach" - opening up new areas for drilling along with developing renewable energy sources - he was willing to help on the climate-change bill.

More drilling made political and economic sense to Graham. It "still polls well," he said in a recent interview. Over the long term, he believed, his home state would gain jobs and other benefits from drilling projects off its coast.

He set out to establish himself as a bipartisan conduit. In October 2009, he co-wrote a New York Times op-ed article with Sen. John F. Kerry (D-Mass.) offering ideas for a package of climate and energy legislation. The two were soon engaged in a very public effort with Sen. Joseph I. Lieberman (I-Conn.) to fashion a workable bill.

Behind the scenes, pro-drilling advocates were lobbying Graham. He received memos from Sen. Lisa Murkowski (R-Alaska), an ardent supporter of more drilling. If she was going to back a climate-change bill, she wanted Graham to wrest as many concessions as possible for new exploration.

As Obama prepared his State of the Union address in mid-January, Graham sent a passage to his speechwriters that offered a conciliatory way to frame the climate-change issue. "I basically [wrote], 'You don't have to believe in global warming to want to achieve cleaner air,' " he said, smiling. ". . . Obama said, 'Wait a minute, you don't have to agree with me on global warming' " to support clean-energy initiatives.

Obama's only mention of drilling - an ambiguous reference to "making tough decisions about opening new offshore areas for oil and gas development" - drew hearty applause from Republicans. A pleased Graham telephoned Obama. "I said, 'I thought that was a home run,' " Graham recalled. "He appreciated it."

At that point, Graham's stock could scarcely have been higher with the White House or with drilling advocates. If a bargain was in the offing, the groundwork had been laid.


Drilling in 'the right places'

The Obama administration had inherited a five-year plan for offshore drilling from the Bush administration, a proposal that dramatically opened portions of the Outer Continental Shelf, or OCS, for new leasing and exploration, including previously untapped swaths of the Pacific and Atlantic oceans. Under past moratoriums, those areas had been protected.

Salazar wanted to start from scratch in revising the OCS plan, without preconceived notions of what areas to exclude or leave in. Compounding his challenge was a federal court deadline for a revision, arising from a lawsuit over the Bush proposal.

As a Washington veteran, Salazar knew that every aspect of his plan would be scrutinized by lawsuit-ready industry and environmental groups. The law required public hearings, and Salazar chose to chair them. In 2009, he traveled to New Jersey, Louisiana, California and Alaska, where he listened to an array of public officials, environmental activists and industry representatives.

His equanimity, his questions and the roughly half-million public comments generated by the hearings enhanced the impression that he had not made up his mind where - or whether - he intended to open new areas to exploration. Only in San Francisco did Salazar hint that he might be heading in the same direction that Obama had foreshadowed in his campaign switch.

"I want to caution you all here that it is not a simple or one-size-fits-all solution," he told the audience. "We are not going to harvest the power of the wind and the power of the sun . . . overnight. We have some transition time ahead of us." The key phrase was "transition time," which was code for increased domestic oil production until the United States could develop robust wind- and solar-based substitutes.

Salazar likened the divisions on drilling to a civil war, evoking Lincolnesque language: "I am convinced that in the times that test these United States, in the past we have stood together and moved forward beyond the moats of division in times of crises."

By early 2010, Salazar's OCS plan had started to take shape. He would recommend new exploration in large sections of the Arctic Ocean north of Alaska. He would open up the Atlantic coast south of New Jersey for the first time in decades. The Pacific would remain off-limits, but he wanted to allow drilling closer to the Florida coast in the eastern Gulf of Mexico.

Environmental analysis and politics played into his thinking. Ecological concerns ruled out parts of Alaska, even where pro-drilling sentiment ran strong. Political concerns ruled out the waters off New Jersey and California, where opposition from elected officials was sharp.

The official map released with the plan showed that politics and geology had both influenced the decision about where to allow drilling. The areas ruled out were identified as those with "a lack of local support or low resource potential."

In a recent interview, Salazar vigorously rejected the word "expansion" to describe his OCS recommendations. From his perspective, his review eliminated many sites in the Bush administration's proposal. "It was about drilling and production in the right places and at the right time, okay?" he said. "So when you do the calculation, there wasn't an expansion here."

As part of his homework, Salazar said, he also plowed through the information that his subordinates had gathered about drilling operations off the Gulf Coast. He carefully studied this historical record, which he said included scant information on the failure rate of drilling equipment or the risks of going into ever-deeper waters.

The historical record was reliably predictive, Salazar concluded. "The essence of the information I was given was that there were 40,000-plus oil and gas wells drilled in the Gulf of Mexico, and the record is the empirical basis on which you can conclude that it is safe," he said in the interview.

As Salazar prepared his plan for Obama, his focus remained on where to allow exploration. The industry's safety record was not a major concern.


'Give me more ammo'

Other top officials at Interior shared Salazar's comfort level with the industry's safety performance. That included the Minerals Management Service, the primary federal regulator of offshore drilling. The MMS, charged with meeting the nation's energy needs, had declared itself a "partner" with industry in 1993. Over time, that partnership had spawned too-cozy relationships between MMS employees and industry representatives, amply documented by investigators from the Interior Department inspector general's office.

Salazar, vowing to reform the MMS, had brought in an outsider and environmental activist, S. Elizabeth Birnbaum, to head the agency. But he did not ask Birnbaum to take the lead on the drilling issue, even though the MMS oversaw the leasing of offshore sites and would implement the final OCS plan.

Instead, Salazar asked Birnbaum to focus on the renewable-energy initiative. According to friends and past colleagues, Birnbaum plunged eagerly into the important assignment, working to develop a plan to promote offshore wind and hydroelectric projects. But in her role as MMS director, it was still her job to field questions on offshore drilling and the agency's ongoing regulatory efforts.

On Oct. 20, 2009, she met with nine representatives from environmental groups at Interior headquarters. She knew some of them personally from her years at American Rivers, which works to protect the country's waterways.

The activists had come prepared to argue against an expansion of offshore drilling and were looking forward to a wide-ranging discussion. Their optimism faded quickly. Flanked by aides and MMS lawyers at the head of a long, rectangular table, Birnbaum made it clear that she would not be able to discuss the five-year plan, because the comment period had already closed.

A chill settled over the room, some participants said later. The representatives went through their list of questions: Did MMS officials worry about relying too heavily on industry-established standards? Did companies operating in U.S. waters have response plans and technology that would better handle the kind of spill then flowing into the Timor Sea, where oil had been gushing into Australian waters for nearly six weeks after an Aug. 21 blowout on a Thai company's offshore rig?

Birnbaum told them: We don't think Australia's regulatory apparatus is as good as ours. The Obama administration, she said, sees the Timor Sea blowout as an anomaly.

As the meeting broke up, Birnbaum spoke privately to a few advocates. Her demeanor changed.

"You need to give me more ammo," she said quietly. "These guys are here to lease, and you've got to give me information to push back."

The environmentalist groups didn't have that ammunition. They didn't have petroleum engineers on staff, or independent studies of the MMS's inspection practices, or the resources to track changes in drilling technology. Besides, they had given up on the MMS years before.

"The environmental groups working in D.C. never had the technical expertise to determine if MMS's regulations were as tough as they could be, or should be," said Environment America's Michael Gravitz, who attended the meeting.


'It was my decision'

The political and scientific strands of the offshore-drilling decision converged on Feb. 8, 2010. At a Monday-afternoon session with Obama and his advisers, Salazar delivered his revised five-year plan for leasing and drilling in the Outer Continental Shelf.

This was no roll-up-your-sleeves, give-and-take discussion of whether to drill. Salazar's presentation focused on explaining his rationale for opening some areas to exploration while ruling out others.

The law gave the interior secretary, not the president, legal responsibility for developing the five-year plan. Salazar said he took the distinction seriously. "It was important for the president to know what decision I was making concerning the OCS," he recalled in the recent interview. "But it was always recognized that it was my decision."

Salazar's proposal would go to the president and to Congress for approval, but in practical political terms, Salazar's plan would become Obama's. It was Obama's choice whether to embrace more offshore drilling, and it was Obama who would give the March 31 speech explaining why.

The meeting took place in the Roosevelt Room, not the Oval Office's more intimate confines. For an issue that cut across so many agencies, it wasn't a large gathering.

Browner was there, with two senior aides. Salazar came with his two top deputies. White House political adviser Jim Messina and senior White House adviser Pete Rouse also participated. An aide to Nancy Sutley, the director of the White House's Council on Environmental Quality, sat in. No one represented the Energy Department or the National Oceanic and Atmospheric Administration (NOAA).

Obama already had read lengthy memos that Salazar had sent to him. The memos had gone into depth on the environmental issues. If the president raised any safety or regulatory concerns about the risks of going into deeper waters, Salazar doesn't recall it. "I don't remember what the specific questions were he might personally have asked," Salazar said. "But he was interested."

While the law required Salazar to look at the environmental consequences, there was no comparable process for examining safety and engineering issues, or determining whether the many minor mishaps on offshore rigs merited a closer look. The absence of a catastrophic blowout created a false sense of security.

"It wasn't a question of 'safer,' " Browner said. "It's been safe, right? You [didn't] have a major deep-well accident like we have today. . . . People looked at the fact that there was this fact of safety, a safety record that was an important part of the consideration."

During Salazar's months of fact-gathering, he did not consult specifically with Sutley at the Council on Environmental Quality or NOAA Administrator Jane Lubchenco, they recently told a federal commission investigating the BP blowout. He relied on Lubchenco's 28 pages of written comments, some of which raised questions about the wisdom of more drilling. The law did not require Sutley to send anything in writing.

In their testimony to the commission, neither Lubchenco nor Sutley voiced displeasure about their level of input. But panel co-chairman Bob Graham, a Democrat who served as a Florida senator and governor, did.

"If you're developing a policy to expand offshore oil and gas exploration to the extent the president announced, consultation with the agency with responsibility for oceans management and . . . your Council for Environmental Quality would be two of the people on your consultation list," he said.

Salazar's circle of advisers on the issue stayed tight. Three weeks before the president's March 31 announcement, the MMS's Birnbaum, who would have to implement the revised drilling plan, did not know the exact details of what was coming.

On Capitol Hill, however, word had gotten around: Salazar and the administration were dangling expanded drilling in return for Republican support on the climate-change legislation.



Salazar knew his way around Capitol Hill, and he was determined to use his personal contacts to lobby for the OCS plan and the Obama energy package.

In the five months before Obama's March 31 speech announcing the expansion of offshore drilling, Salazar contacted 30 senators, almost all of them Democrats. He made two dozen phone calls and held 18 meetings, including a group session with 17 senators on March 8, according to his office.

Salazar's blitz led, among other places, to several sit-downs with Democrat Bill Nelson, Florida's senior senator and a drilling skeptic. Browner, once Florida's top environmental regulator, came along for one meeting; the double-teaming showed how much the administration wanted Nelson in the fold.

Nelson personified the administration's dilemma in making any sort of link between new drilling areas and the climate-change bill. Could the White House win over Lindsey Graham without losing Nelson and other Democrats wary of drilling?

Nelson had tussled before with drilling advocates. In 2005, he joined forces with Republican Mel Martinez, Florida's other senator at the time, against a proposal to open up areas to drilling within 50 miles of Florida's coastline. Their opposition led to a compromise: a limit of 125 miles in most places, and 235 miles off the Tampa Bay portion of the eastern Gulf of Mexico, preventing conflicts with the many military bases that have training operations in the area.

Salazar wanted Nelson to reconsider and allow rigs inside the 125-mile limit. Nelson said that the proposal didn't make sense to him, that only about 10 percent of the gulf's oil was in the eastern section. "Why in the world would you want to trade off the future testing and training area of the U.S. military for 10 percent?" he demanded.

Salazar calmly replied, "We have to show that we all can give - we need to build a coalition."

Nelson was adamant: No change.

Neither Salazar nor Nelson wanted to go into detail about their talks, but Salazar described in general terms why he dropped the mile-limit issue. "That was not a negotiation," he said. "We concluded after looking at where the reservoirs were, that about 67 percent of the resource [in the gulf's eastern portion] could be accessed and still keep the [drilling] area 125 miles from the Florida coast."

Nelson's resistance was proof, though, of one fact: The politics of drilling stood in the way of building the coalition that Obama and Salazar envisioned.


No bargain

Behind closed doors with his Democratic Senate colleagues, a frustrated Nelson was making no secret of his unhappiness with the administration's deal making. Drilling advocates were getting concessions, while the climate-change bill appeared to be going nowhere. What sort of bargain was that? At a meeting on the bill in March, Nelson challenged Lindsey Graham.

Whose votes are you bringing with you? Nelson demanded.

"Only me," Graham replied.

Nelson pressed him: You're selling the gulf and you're only getting yourself?

Sen. Mark Warner (D-Va.), who liked the idea of his state receiving royalties from drilling, stood in defense of Graham. "It isn't just Lindsey Graham who wants offshore drilling," Warner said, according to Graham and others who were there. "I'm a coastal-state Democrat, and I support drilling."

On the day before Obama's March 31 drilling announcement, Interior officials began calling influential Democrats to give them advance notice. Salazar left phone messages for some of his old Senate friends.

"I took care of you, Bobby," he said in a voice mail to Sen. Robert Menendez (D-N.J.), an apparent reference to the plan's protection of New Jersey's coastal area.

But Menendez was still upset by Obama's decision to open Mid-Atlantic zones to possible exploration. A spill off Virginia, for example, might spread north with potentially devastating consequences for New Jersey's waters and tourism.

"You've lost a vote for climate change," Menendez told Salazar in a return voice mail.


The facts and the future

Browner and other senior administration officials sharply dispute that politics drove the drilling decision in any significant way. But Graham and others on Capitol Hill described how science and politics necessarily became intertwined.

The administration's eventual decision to shelve the climate-change legislation, at least for this year, has convinced some Democrats on Capitol Hill that Obama's team misplayed the politics of drilling from the outset. Eventually, Graham abandoned his support for the bill, concluding in the wake of the oil spill that it had no chance.

"I think the president had the right formulation," Graham said of the prospective dealmaking. He paused for effect. "And then the oil spill."

Inside the administration, the spill brought about a reassessment of the decision-making process that led to the OCS expansion plan. In his June 15 Oval Office speech to the nation on the BP blowout, an unhappy Obama voiced his displeasure with the year-long study that he, Browner and Salazar had closely overseen.

"A few months ago, I approved [the Salazar] proposal to consider new, limited offshore drilling under the assurance that it would be absolutely safe - that the proper technology would be in place and the necessary precautions would be taken," he said, without saying who had provided such assurances.

At the time, the BP well was still pouring oil into the gulf, so perhaps Obama's frustration was understandable. He had never before suggested that offshore drilling was absolutely safe. In other speeches, he had always stressed the inherent risks of trying to extract oil and gas from ocean depths that routinely exceed a mile or more.

Nor does it appear that questions about technology or precautions received much attention in Salazar's review. Browner's words - "It wasn't a question of 'safer,' "It's been safe, right?" - reflected the mind-set of government officials about the industry's safety record. David Hayes, the deputy interior secretary, said in an interview that the risk of a major oil spill in the gulf "wasn't in the top 30" on his lengthy list of worries.

Salazar acknowledges that he and other administration officials did not have all the facts they needed before Obama's March 31 announcement. The blowout created an urgency to ask better questions. Salazar, during the interview in his office, gestured at the mountains of paper on his conference table. "That's what I've been working on every day since April 20," he said.

The Macondo blowout forced "a complete overhaul" of how his department might execute the OCS plan, which has suffered "significant blowback," in the form of new doubts and questions, he said.

On Tuesday, as he announced that the temporary moratorium was being lifted and that deep-water exploration would soon resume, Salazar asserted that the industry's new safety standards has settled some of those doubts. But he was careful to say that no guarantees can be made in the world of offshore drilling.

"The truth is there will always be risks associated with deep-water drilling," he said. "But we have now reached a point, in my view, where we have significantly reduced those risks. . . . We are in a new day with respect to oil and gas drilling off the Outer Continental Shelf."

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