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Obama’s Half-Truth on the BP Oil Disaster


During President Obama’s remarks today on the ongoing BP oil disaster in the Gulf there was the following exchange between the POTUS and a reporter asking a question:

Q On April 21st, Admiral Allen tells us the government started dispatching equipment rapidly to the Gulf, and you just said on day one you recognized the enormity of this situation. Yet here we are 39, 40 days later, you’re still having to rush more equipment, more boom. There are still areas of the coast unprotected. Why is it taking so long? And did you really act from day one for a worst-case scenario?

OBAMA: “. . . the question of how is it that oil companies kept on getting environmental waivers in getting their permits approved. Well, it turns out that the way the process works, first of all, there is a thorough environmental review as to whether a certain portion of the Gulf should be leased or not. That’s a thorough-going environmental evaluation. Then the overall lease is broken up into segments for individual leases, and again there’s an environmental review that’s done. But when it comes to a specific company with its exploration plan in that one particular area — they’re going to drill right here in this spot — Congress mandated that only 30 days could be allocated before a yes or no answer was given. That was by law. So MMS’s hands were tied. And as a consequence, what became the habit, predating my administration, was you just automatically gave the environmental waiver, because you couldn’t complete an environmental study in 30 days.”

I want to focus on Obama’s claim that MMS has only 30 days to approve a specific oil company’s permit, and therefore the agency’s “hands were tied”. Obama is referring here to 43 USC § 1340(c)(1) which says, in part,

. . .prior to commencing exploration pursuant to any oil and gas lease issued or maintained under this subchapter, the holder thereof shall submit an exploration plan to the Secretary for approval. . .The Secretary shall require such modifications of such plan as are necessary to achieve such consistency. The Secretary shall approve such plan, as submitted or modified, within thirty days of its
, except that the Secretary shall disapprove such plan if he determines that (A) any proposed activity under such plan would result in any condition described in section 1334(a)(2)(A)(i) of this title, and (B) such proposed activity cannot be modified to avoid such condition.

Now we move on to 43 USC § 1334(a)(2)(A)(i) which states that:

continued activity pursuant to such lease or permit would probably cause serious harm or damage to life (including fish and other aquatic life), to property, to any mineral (in areas leased or not leased), to the national security or defense, or to the marine, coastal, or human environment.

So while Obama is correct that Congress required MMS to approve or disapprove plans within 30 days, the MMS clearly can disapprove a leasing plan if there is a finding that such a plan could “cause serious harm or damage to life” etc. So the question is: were the risks to the environment and workers of drilling in 5,000 feet of water and 13,000 into rock fully known to government scientists? I think the record will show that there were indeed scientists at the National Oceanic and Atmospheric Administration and other agencies who raised the specter of such risks, but their warnings went unheeded. So Obama told a half-truth (or a half-lie, depending on your perspective) because it is clear that MMS does indeed have discretion beyond a 30 day bondage – if the agency had bothered to listen to other scientists and not just Big Oil. Obama needs to do a better job learning the lessons of this crisis – and fast.

-Tyson Slocum is Director of Public Citizen’s Energy Program

3 Comments leave one →
  1. 05/27/2010 7:57 pm

    Hi Tyson you might be interested in the following story i wrote

    Transocean drilled in Burmese waters linked to drug lord
    Thursday, 27 May 2010 19:49 Thomas Maung Shwe

    Chiang Mai (Mizzima) – Swiss-American firm Transocean, presently embroiled in the BP Gulf of Mexico disaster, did exploratory drilling last autumn in Burmese waters owned by a partnership between a Chinese state-run energy company and a firm owned by Stephen Law, a junta crony alleged by the US to be a major drug-money launderer, according to corporate filings with the US stock market regulator.

    Stephen Law, (a.k.a. Tun Myint Naing), his Singaporean wife and his “narco warlord” father are on the US Treasury Department’s Office of Foreign Assets Control’s (OFAC) blacklist, officially called the Specially Designated Nationals (SDN) list. All three are also on a similar European travel ban and sanctions lists.

    The SDN blacklist targets the Burmese junta’s senior leadership, its cronies and the financial networks that continue to support the military dictatorship. The US Treasury website states that when an individual, firm or other entity is added to the sanctions list “any assets the designees may have subject to US jurisdiction are frozen, and all financial and commercial transactions by any US person with the designated companies and individuals are prohibited”.

    Transocean International’s corporate 8-K filing to the US Securities and Exchance Commission on November 2 last year shows that Chinese state-run energy company CNOOC hired Transocean’s semi-submersible Actinia, a Panamanian registered drilling rig, to operate in Burma from last October to December. An 8-K form is the “current report” companies must file with the US market regulator to announce major events that shareholders should know about. The 82-metre-long, 78-metre-wide rig was hired at a daily rate of US$206,000. Transocean could not be reached for comment.

    According to the CNOOC website, all of the firm’s stakes in Burma’s gas industry are held in partnership with China Focus Development (formerly known as Golden Aaron) and China Global Construction, with CNOOC as the operator. China Focus Development is a privately owned Singapore-registered firm whose sole shareholders are Stephen Law and his wife Ng Sor Hong (a.k.a. Cynthia Ng). The US and EU sanctions list show Ng Sor Hong to be chief executive of the firm, which is also among more than a dozen companies controlled by Law on the OFAC blacklist of banned Burma-related entities.

    Industry journal International Oil Daily reported last February that the CNOOC-China Focus Development partnership held onshore blocks C-1, C-2 and M and offshore blocks A-4, M-2 and M-10. It also said CNOOC’s attempt in 2008 to swap its stake in two of its blocks with the Thai national oil firm PTEEP was vetoed by the Burmese regime.

    Law’s Sino-Burmese father Lao Sit Han (a.k.a. Lo Hsing Han) is believed by US drug-trafficking analysts to have controlled Southeast Asia’s best-armed narcotics militias during the 1970’s.

    According to the US Treasury in February, 2008: “In addition to their support for the Burmese regime, Steven Law and Lo Hsing Han have a history of involvement in illicit activities.”

    “Lo Hsing Han, known as the ‘Godfather of Heroin’, has been one of the world’s key heroin traffickers dating back to the early 1970s. Steven Law joined his father’s drug empire in the 1990s and has since become one of the wealthiest individuals in Burma,” the Treasury statement said.

    Calls for a US government investigation

    In an interview with Mizzima, Wong Aung of the Shwe Gas movement called on the US government to immediately probe the links between Transocean and Stephen Law.

    “Transocean’s drilling for Stephen Law’s natural gas consortium appears to be a serious breach of American sanctions on Burma,” he said. “The US government must investigate Transocean’s Burmese operations as soon as possible and send a clear message that it is not acceptable for multinational firms such as Transocean to do business with Burma’s most notorious narco-oligarch.”

    Last month Transocean was involved in what has been described as one of the worst environmental disasters in US history. On April 20, 2010, Transocean’s Deepwater Horizon rig exploded in the Gulf of Mexico while it was drilling under contract for oil giant BP. The explosion killed 11 workers.

    Early this month at a special US congressional hearing convened to investigate the disaster, senior executives from BP, Transocean and contractor Halliburton all testified the other firms were responsible for the blast and subsequent unprecedented oil spill.

    Following the hearing, a furious US President Barack Obama chided the executives for their refusal to accept responsibility saying, “I did not appreciate what I considered to be a ridiculous spectacle”. He added that the millionaire executives were “falling over each other to point the finger of blame at somebody else. The American people could not have been impressed with that display and I certainly wasn’t”.

  2. Tim Murray permalink
    05/28/2010 12:27 pm

    I caught your comments on Fox…uninformed and irrational are the most appropriate labels for you. Raising the liability limit to $10BN far exceeds the GLOBAL $1.5BN of offshore insurance capacity. Offshore producers unable to insure their operations will abandon their offshore operations, shutting down 30% of America’s domestic oil production offshore and putting at least 55,000 gainfully employed people out of work. The impact on the US economy and specifically on the Gulf Coast States will dwarf the tempoorary impact on the relatively small offshore fishing industry. Please check your facts on the EIA website before you open your mouth. A prudent and well-reasoned cost benefit analysis can balance the safety, environmental, and domestic energy priorities. Offshore drilling has generated billions for the US Treasury, produced significant amounts of domestic energy offsetting foreign imports, employs thousands and supports a huge industry infrastructure vital to the Gulf Coast economy, and has had only two accidents in over 60 years of operation. At risk is the livelihood of the Gulf Coast economy, and the national economy as 30% of our domestic crude oil and 11% of our natural gas is produced offshore – replacing that with foreign imports will drive up gasoline, diesel, and jet fuel prices and severely impair our national energy security. Curtailing domestic production due to an emotional reaction to pictures of oil-soaked birds and idled fishermen pales in perspective to the lives of our military and cost of stabilizing the Mideast. Please do not make hasty and irrational comments without a full cost-benefit analysis of the industry and its vital importance to the Gulf Coast and our nation.

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