Report: Short review didn’t compromise lease sale

ANCHORAGE — A federal agency rushed through an environmental review of an Alaska offshore petroleum lease sale at the insistence of high-level managers but did not compromise its quality, a federal reviewer has concluded.

The Office of the Inspector General, which investigates fraud, abuse and misconduct, concluded that managers edited an environmental review of the 2008 Chukchi Sea lease sale and established an “expedited timeline” for its completion by an Interior Department agency.

The Environmental Protection Agency, however, concluded that the review contained adequate scientific information, according to the report. And the short timeframe for the review, ordered by Interior Department chief of staff Tommy Beaudreau, was put in place to protect the Interior Department from blame if Royal Dutch Shell PLC had decided it could not drill exploratory wells on its Chukchi leases in 2015, he told inspectors.

The report outlines factors faced by the federal Bureau of Ocean Energy Management in completing the sale for federal offshore drilling. Alaska officials seeking more oil for the trans-Alaska pipeline strongly support offshore drilling. Drilling is bitterly opposed by environmental groups that say a spill would devastate a fragile marine environment that’s home to polar bears, walrus, endangered whales and the Native Alaskans who rely on them.

The 2008 Chukchi lease sale was scheduled in the waning days of the administration of George W. Bush. It generated $2.6 billion in high bids, including $2.1 billion from Shell, which eventually would spend upward of $7 billion in the Arctic before it drilled into petroleum-bearing rock this summer.

Environmental and Alaska Native groups successfully sued over the inadequacy of the sale’s first environmental review. A federal court judge ordered a supplemental review.

A complaint by an Alaska regional environmental officer for a BOEM sister agency, the Bureau of Safety and Environmental Enforcement, led to the Inspector General report.

The unnamed complainant alleged scientific findings in the second review were manipulated for political purposes. The complainant also said upper level management set a short timeline for the review to benefit the oil and gas industry and that the Interior Department intended to sign off on the review, allowing drilling to proceed, even before the review was completed.

BOEM employees told investigators the environmental review was rushed and dozens of hours of extra time had to be worked to meet the short deadline. Some employees quit or retired because they concluded their work had been compromised.

Beaudreau was head of BOEM before he was promoted to be chief of staff for Interior Secretary Sally Jewell. Other environmental reviews have taken two years or more but Beaudreau proposed in May 2014 that the supplemental review of the Chukchi sale be completed by February 2015 and a record of decision issued in March 2015. He overruled agency officials who said it could not be done that fast and offered to pay overtime or bring in employees from elsewhere to complete the job.

Beaudreau told investigators he set an aggressive timeline that would allow Shell to drill during the short 2015 open water season because the federal judge in the case expected it and could impose his own.

He said Alaska’s congressional delegation, including U.S. Sen. Lisa Murkowski, would criticize BOEM if the environmental review was not done in a timely manner. He also said Shell could use BOEM as a scapegoat for its own failures if the company decided not to drill in 2015.

The review ultimately was accepted in the short timeframe. Shell drilled in 2015, found little oil and announced it was pulling out of the U.S. Arctic for the immediate future.

Erik Grafe, an Earthjustice attorney who worked on the challenge to the original review, said the report confirms that federal environmental review of the sale was flawed.

“The report emphatically confirms that the Bureau rushed its environmental review of the Chukchi Sea lease sale in order to allow for possible drilling in 2015 and that agency scientists and managers concluded they could not adequately do their review on this short timeframe,” he said by email. “Scientists could not engage in basic review of their work or peer review of other’s work; managers were concerned that legal requirements were not being met. It went so far that staff felt forced to end their careers at the agency because the agency wasn’t allowing them to conduct defensible science.”

It’s not surprising, he said, that the environmental review is now the subject of a lawsuit.

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