http://www.rollingstone.com:80/politics/news/17390/111965
Rolling Stone The Spill, The Scandal and the President The inside story of how Obama failed to crack down on the corruption of the Bush years - and let the world's most dangerous oil company get away with murder By Tim Dickinson Jun 08, 2010 PART 1 This article originally appeared in RS 1107 from June 24, 2010. On May 27th, more than a month into the worst environmental disaster in U.S. history, Barack Obama strode to the podium in the East Room of the White House. For weeks, the administration had been insisting that BP alone was to blame for the catastrophic oil spill in the Gulf - and the ongoing failure to stop the massive leak. "They have the technical expertise to plug the hole," White House spokesman Robert Gibbs had said only six days earlier. "It is their responsibility." The president, Gibbs added, lacked the authority to play anything more than a supervisory role - a curious line of argument from an administration that has reserved the right to assassinate American citizens abroad and has nationalized much of the auto industry. "If BP is not accomplishing the task, can you just federalize it?" a reporter asked. "No," Gibbs replied. Now, however, the president was suddenly standing up to take command of the cleanup effort. "In case you were wondering who's responsible," Obama told the nation, "I take responsibility." Sounding chastened, he acknowledged that his administration had failed to adequately reform the Minerals Management Service, the scandal-ridden federal agency that for years had essentially allowed the oil industry to self-regulate. "There wasn't sufficient urgency," the president said. "Absolutely I take responsibility for that." He also admitted that he had been too credulous of the oil giants: "I was wrong in my belief that the oil companies had their act together when it came to worst-case scenarios." He unveiled a presidential commission to investigate the disaster, discussed the resignation of the head of MMS, and extended a moratorium on new deepwater drilling. "The buck," he reiterated the next day on the sullied Louisiana coastline, "stops with me." Meet Obama's sheriff, Ken Salazar. What didn't stop was the gusher. Hours before the president's press conference, an ominous plume of oil six miles wide and 22 miles long was discovered snaking its way toward Mobile Bay from BP's wellhead next to the wreckage of its Deepwater Horizon rig. Admiral Thad Allen, the U.S. commander overseeing the cleanup, framed the spill explicitly as an invasion: "The enemy is coming ashore," he said. Louisiana beaches were assaulted by blobs of oil that began to seep beneath the sand; acres of marshland at the "Bird's Foot," where the Mississippi meets the Gulf, were befouled by shit-brown crude - a death sentence for wetlands that serve as the cradle for much of the region's vital marine life. By the time Obama spoke, it was increasingly evident that this was not merely an ecological disaster. It was the most devastating assault on American soil since 9/11. Like the attacks by Al Qaeda, the disaster in the Gulf was preceded by ample warnings - yet the administration had ignored them. Instead of cracking down on MMS, as he had vowed to do even before taking office, Obama left in place many of the top officials who oversaw the agency's culture of corruption. He permitted it to rubber-stamp dangerous drilling operations by BP - a firm with the worst safety record of any oil company - with virtually no environmental safeguards, using industry-friendly regulations drafted during the Bush years. He calibrated his response to the Gulf spill based on flawed and misleading estimates from BP - and then deployed his top aides to lowball the flow rate at a laughable 5,000 barrels a day, long after the best science made clear this catastrophe would eclipse the Exxon Valdez. Meet the Environmental Protection Agency's most progressive leader ever, Lisa Jackson. Hours after BP's rig sank on April 22nd, a white board in NOAA's "war room" in Seattle displays the administration's initial, worst-case estimate of the spill - 64,000 to 110,000 barrels a day. Photo courtesy of al.com Even after the president's press conference, Rolling Stone has learned, the administration knew the spill could be far worse than its "best estimate" acknowledged. That same day, the president's Flow Rate Technical Group - a team of scientists charged with establishing the gusher's output - announced a new estimate of 12,000 to 25,000 barrels, based on calculations from video of the plume. In fact, according to interviews with team members and scientists familiar with its work, that figure represents the plume group's minimum estimate. The upper range was not included in their report because scientists analyzing the flow were unable to reach a consensus on how bad it could be. "The upper bound from the plume group, if it had come out, is very high," says Timothy Crone, a marine geophysicist at Columbia University who has consulted with the government's team. "That's why they had resistance internally. We're talking 100,000 barrels a day." The median figure for Crone's independent calculations is 55,000 barrels a day - the equivalent of an Exxon Valdez every five days. "That's what the plume team's numbers show too," Crone says. A source privy to internal discussions at one of the world's top oil companies confirms that the industry privately agrees with such estimates. "The industry definitely believes the higher-end values," the source says. "That's accurate - if not more than that." The reason, he adds, is that BP appears to have unleashed one of the 10 most productive wells in the Gulf. "BP screwed up a really big, big find," the source says. "And if they can't cap this, it's not going to blow itself out anytime soon." Get your daily dose of political muckraking from Matt Taibbi on the Taibblog. Even worse, the "moratorium" on drilling announced by the president does little to prevent future disasters. The ban halts exploratory drilling at only 33 deepwater operations, shutting down less than one percent of the total wells in the Gulf. Interior Secretary Ken Salazar, the Cabinet-level official appointed by Obama to rein in the oil industry, boasts that "the moratorium is not a moratorium that will affect production" - which continues at 5,106 wells in the Gulf, including 591 in deep water. Most troubling of all, the government has allowed BP to continue deep-sea production at its Atlantis rig - one of the world's largest oil platforms. Capable of drawing 200,000 barrels a day from the seafloor, Atlantis is located only 150 miles off the coast of Louisiana, in waters nearly 2,000 feet deeper than BP drilled at Deepwater Horizon. According to congressional documents, the platform lacks required engineering certification for as much as 90 percent of its subsea components - a flaw that internal BP documents reveal could lead to "catastrophic" errors. In a May 19th letter to Salazar, 26 congressmen called for the rig to be shut down immediately. "We are very concerned," they wrote, "that the tragedy at Deepwater Horizon could foreshadow an accident at BP Atlantis." Tim Dickinson blogs about all the news that fits, from the Beltway and beyond on the National Affairs blog. The administration's response to the looming threat? According to an e-mail to a congressional aide from a staff member at MMS, the agency has had "zero contact" with Atlantis about its safety risks since the Deepwater rig went down. It's tempting to believe that the Gulf spill, like so many disasters inherited by Obama, was the fault of the Texas oilman who preceded him in office. But, though George W. Bush paved the way for the catastrophe, it was Obama who gave BP the green light to drill. "Bush owns eight years of the mess," says Rep. Darrell Issa, a Republican from California. "But after more than a year on the job, Salazar owns it too." During the Bush years, the Minerals Management Service, the agency in the Interior Department charged with safeguarding the environment from the ravages of drilling, descended into rank criminality. According to reports by Interior's inspector general, MMS staffers were both literally and figuratively in bed with the oil industry. When agency staffers weren't joining industry employees for coke parties or trips to corporate ski chalets, they were having sex with oil-company officials. But it was American taxpayers and the environment that were getting screwed. MMS managers were awarded cash bonuses for pushing through risky offshore leases, auditors were ordered not to investigate shady deals, and safety staffers routinely accepted gifts from the industry, allegedly even allowing oil companies to fill in their own inspection reports in pencil before tracing over them in pen. "The oil companies were running MMS during those years," Bobby Maxwell, a former top auditor with the agency, told Rolling Stone last year. "Whatever they wanted, they got. Nothing was being enforced across the board at MMS." Salazar himself has worked hard to foster the impression that the "prior administration" is to blame for the catastrophe. In reality, though, the Obama administration was fully aware from the outset of the need to correct the lapses at MMS that led directly to the disaster in the Gulf. In fact, Obama specifically nominated Salazar - his "great" and "dear" friend - to force the department to "clean up its act." For too long, Obama declared, Interior has been "seen as an appendage of commercial interests" rather than serving the people. "That's going to change under Ken Salazar." Salazar took over Interior in January 2009, vowing to restore the department's "respect for scientific integrity." He immediately traveled to MMS headquarters outside Denver and delivered a beat-down to staffers for their "blatant and criminal conflicts of interest and self-dealing" that had "set one of the worst examples of corruption and abuse in government." Promising to "set the standard for reform," Salazar declared, "The American people will know the Minerals Management Service as a defender of the taxpayer. You are the ones who will make special interests play by the rules." Dressed in his trademark Stetson and bolo tie, Salazar boldly proclaimed, "There's a new sheriff in town." Salazar's early moves certainly created the impression that he meant what he said. Within days of taking office, he jettisoned the Bush administration's plan to open 300 million acres - in Alaska, the Gulf, and up and down both coasts - to offshore drilling. The proposal had been published in the Federal Register literally at midnight on the day that Bush left the White House. Salazar denounced the plan as "a headlong rush of the worst kind," saying it would have put in place "a process rigged to force hurried decisions based on bad information." Speaking to Rolling Stone in March 2009, the secretary underscored his commitment to reform. "We have embarked on an ambitious agenda to clean up the mess," he insisted. "We have the inspector general involved with us in a preventive mode so that the department doesn't commit the same mistakes of the past." The crackdown, he added, "goes beyond just codes of ethics." Except that it didn't. Salazar did little to tamp down on the lawlessness at MMS, beyond referring a few employees for criminal prosecution and ending a Bush-era program that allowed oil companies to make their "royalty" payments - the amount they owe taxpayers for extracting a scarce public resource - not in cash but in crude. And instead of putting the brakes on new offshore drilling, Salazar immediately throttled it up to record levels. Even though he had scrapped the Bush plan, Salazar put 53 million offshore acres up for lease in the Gulf in his first year alone - an all-time high. The aggressive leasing came as no surprise, given Salazar's track record. "This guy has a long, long history of promoting offshore oil drilling - that's his thing," says Kierán Suckling, executive director of the Center for Biological Diversity. "He's got a highly specific soft spot for offshore oil drilling." As a senator, Salazar not only steered passage of the Gulf of Mexico Energy Security Act, which opened 8 million acres in the Gulf to drilling, he even criticized President Bush for not forcing oil companies to develop existing leases faster. Salazar was far less aggressive, however, when it came to making good on his promise to fix MMS. Though he criticized the actions of "a few rotten apples" at the agency, he left long-serving lackeys of the oil industry in charge. "The people that are ethically challenged are the career managers, the people who come up through the ranks," says a marine biologist who left the agency over the way science was tampered with by top officials. "In order to get promoted at MMS, you better get invested in this pro-development oil culture." One of the Bush-era managers whom Salazar left in place was John Goll, the agency's director for Alaska. Shortly after, the Interior secretary announced a reorganization of MMS in the wake of the Gulf disaster, Goll called a staff meeting and served cake decorated with the words "Drill, baby, drill." Salazar also failed to remove Chris Oynes, a top MMS official who had been a central figure in a multibillion-dollar scandal that Interior's inspector general called "a jaw-dropping example of bureaucratic bungling." In the 1990s, industry lobbyists secured a sweetheart subsidy from Congress: Drillers would pay no royalties on oil extracted in deep water until prices rose above $28 a barrel. But this tripwire was conveniently omitted in Gulf leases overseen by Oynes - a mistake that will let the oil giants pocket as much as $53 billion. Instead of being fired for this fuckup, however, Oynes was promoted by Bush to become associate director for offshore drilling - a position he kept under Salazar until the Gulf disaster hit. "Employees describe being in Interior - not just MMS, but the other agencies - as the third Bush term," says Jeff Ruch, executive director of Public Employees for Environmental Responsibility, which represents federal whistle-blowers. "They're working for the same managers who are implementing the same policies. Why would you expect a different result?" The tale of the Deepwater Horizon disaster is, at its core, the tale of two blowout preventers: one mechanical, one regulatory. The regulatory blowout preventer failed long before BP ever started to drill - precisely because Salazar kept in place the crooked environmental guidelines the Bush administration implemented to favor the oil industry. MMS has fully understood the worst-case scenarios for deep-sea oil blowouts for more than a decade. In May 2000, an environmental assessment for deepwater drilling in the Gulf presciently warned that "spill responses may be complicated by the potential for very large magnitude spills (because of the high production rates associated with deepwater wells)." The report noted that the oil industry "has estimated worst-case spill volumes ranging from 5,000 to 116,000 barrels a day for 120 days," and it even anticipated the underwater plumes of oil that are currently haunting the Gulf: "Oil released subsea (e.g., subsea blowout or pipeline leak) in these deepwater environments could remain submerged for some period of time and travel away from the spill site." The report ominously concluded, "There are few practical spill-response options for dealing with submerged oil." That same month, an MMS research document developed with deepwater drillers - including the company then known as BP Amoco - warned that such a spill could spell the end for offshore operations. The industry could "ill afford a deepwater blowout," the document cautions, adding that "no single company has the solution" to such a catastrophe. "The real test will come if a deepwater blowout occurs." Enter the Bush administration. Rather than heeding such warnings, MMS simply assumed that a big spill couldn't happen. "There was a complete failure to even contemplate the possibility of a disaster like the one in the Gulf," says Holly Doremus, an environmental-law expert at the University of California. "In their thinking, a big spill would be something like 5,000 barrels, and the oil wouldn't even reach the shoreline." In fact, Bush's five-year plan for offshore drilling described a "large oil spill" as no more than 1,500 barrels. In April 2007, an environmental assessment covering the area where BP would drill concluded that blowouts were "low probability and low risk," even though a test funded by MMS had found that blowout preventers failed 28 percent of the time. And an environmental assessment for BP's lease block concluded that offshore spills "are not expected to damage significantly any wetlands along the Gulf Coast." In reality, MMS had little way to assess the risk to wildlife, since a new policy instituted under Bush scrapped environmental analysis and fast-tracked permits. Declaring that oil companies themselves were "in the best position to determine the environmental effects" of drilling, the new rules pre-qualified deep-sea drillers to receive a "categorical exclusion" - an exemption from environmental review that was originally intended to prevent minor projects, like outhouses on hiking trails, from being tied up in red tape. "There's no analytical component to a cat-ex," says a former MMS scientist. "You have technicians, not scientists, that are simply checking boxes to make sure all the T's are crossed. They just cut and paste from previous approvals." Nowhere was the absurdity of the policy more evident than in the application that BP submitted for its Deepwater Horizon well only two months after Obama took office. BP claims that a spill is "unlikely" and states that it anticipates "no adverse impacts" to endangered wildlife or fisheries. Should a spill occur, it says, "no significant adverse impacts are expected" for the region's beaches, wetlands and coastal nesting birds. The company, noting that such elements are "not required" as part of the application, contains no scenario for a potential blowout, and no site-specific plan to respond to a spill. Instead, it cites an Oil Spill Response Plan that it had prepared for the entire Gulf region. Among the sensitive species BP anticipates protecting in the semitropical Gulf? "Walruses" and other cold-water mammals, including sea otters and sea lions. The mistake appears to be the result of a sloppy cut-and-paste job from BP's drilling plans for the Arctic. Even worse: Among the "primary equipment providers" for "rapid deployment of spill response resources," BP inexplicably provides the Web address of a Japanese home-shopping network. Such glaring errors expose the 582-page response "plan" as nothing more than a paperwork exercise. "It was clear that nobody read it," says Ruch, who represents government scientists. "This response plan is not worth the paper it is written on," said Rick Steiner, a retired professor of marine science at the University of Alaska who helped lead the scientific response to the Valdez disaster. "Incredibly, this voluminous document never once discusses how to stop a deepwater blowout." Scientists like Steiner had urgently tried to alert Obama to the depth of the rot at MMS. "I talked to the transition team," Steiner says. "I told them that MMS was a disaster and needed to be seriously reformed." A top-to-bottom restructuring of MMS didn't require anything more than Ken Salazar's will: The agency only exists by order of the Interior secretary. "He had full authority to change anything he wanted," says Rep. Issa, a longtime critic of MMS. "He didn't use it." Even though Salazar knew that the environmental risks of offshore drilling had been covered up under Bush, he failed to order new assessments. "They could have said, 'We cannot conclude there won't be significant impacts from drilling until we redo those reviews,'" says Brendan Cummings, senior counsel for the Center for Biological Diversity. "But the oil industry would have cried foul. And what we've seen with Salazar is that when the oil industry squeaks, he retreats." Under Salazar, MMS continued to issue categorical exclusions to companies like BP, even when they lacked the necessary permits to protect endangered species. A preliminary review of the BP disaster conducted by scientists with the independent Deepwater Horizon Study Group concludes that MMS failed to enforce a host of environmental laws, including the Clean Water Act. "MMS and Interior are equally responsible for the failures here," says the former agency scientist. "They weren't willing to take the regulatory steps that could have prevented this incident." Had MMS been following the law, it would never have granted BP a categorical exclusion - which are applicable only to activities that have "no significant effect on the human environment." At a recent hearing, Sen. Sheldon Whitehouse grilled Salazar about Interior's own handbook on categorical exclusions, which bars their issuance for offshore projects in "relatively untested deep water" or "utilizing new or unusual technology" - standards that Whitehouse called "plainly pertinent" for BP's rig. "It's hard for me to see that that's a determination that could have been made in good faith," Whitehouse said, noting that the monstrously complex task of drilling for oil a mile beneath the surface of the ocean appeared to have been given less oversight than is required of average Americans rewiring their homes. "Who was watching?" Not the Interior secretary. Salazar did not even ensure that MMS had a written manual - required under Interior's own rules - for complying with environmental laws. According to an investigation in March by the Government Accountability Office, MMS managers relied instead on informal "institutional knowledge" - passed down from the Bush administration. The sole written guidance appeared on a website that only provided, according to the report, "one paragraph about assessing environmental impacts of oil and gas activities, not detailed instructions that could lead an analyst through the process of drafting an environmental assessment or environmental impact statement." 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