For Oil Projects, Corps' Answer Is Almost Always 'Yes'

By Michael Grunwald
Washington Post Staff Writer
Wednesday, September 13, 2000; Page A1

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PRUDHOE BAY, Alaska The North Slope of Alaska was once the last frontier of The Last Frontier, an immense expanse of treeless wilderness inhabited by a few rugged Eskimos and countless Arctic critters. That was before the oil industry colonized the Slope, decorating its tundra with a sprawling industrial complex the size of Rhode Island.

Now the polar bears, caribou, seals and swans here at the top of America have been joined by 19 oil fields, 4,000 wells, 500 miles of roads, 1,100 miles of pipelines, 22 gravel mines, 450 waste pits and two dozen production plants. Over the last three decades, oil firms have filled in 20,000 acres of the North Slope's rugged wetlands. They report a spill a day at Prudhoe Bay. Today, this ancient enclave of nature and silence emits twice as much smog-producing nitrogen oxide as the entire District of Columbia.

But according to the Army Corps of Engineers, this transformation of the Arctic landscape has had no significant impact on the environment.

Under frequent pressure from industry executives and Alaska's muscular congressional delegation, the Corps has handed out about 1,100 permits for oil-related activities in North Slope wetlands, every one justified by a "Finding Of No Significant Impact." It has rejected just three. To be sure, oil development has been an economic bonanza for Alaska. But the Corps has never even prepared an environmental impact statement to gauge the overall effects of onshore oil development here, as it is legally required to do if it suspects the environmental impacts "may" be significant.

The Army Corps, a Pentagon-based construction agency that has altered more wetlands with its dams, levees and other water projects than any other American developer, is also the nation's unlikeliest regulatory agency, assigned by the Clean Water Act to protect wetlands from development. A review of its work in Alaska and around the country shows that its $117 million regulatory program is mostly just a permitting program, approving well over 99 percent of developers' requests to drain, dredge and fill wetlands, consistently finding that even sensitive projects would have negligible impacts.

Alaska still holds more than half of America's marshes, bogs, streams and other federally protected wetlands, but Corps regulators are also permissive in the increasingly drained-out and paved-over lower 48. In West Virginia, the Corps has let the coal industry decapitate scores of mountaintops and dump them into neighboring valleys, burying more than 1,000 miles of streams – and the agency has never detected a significant impact. In Mississippi, the Corps has permitted 20 casinos along the Gulf Coast, transforming a rural backwater into a booming resort – again, finding no significant impact every time.

"It's like a regulatory car wash: They squirt you off and send you on your way," said Jeff Ruch, director of Public Employees for Environmental Responsibility, which has published reports criticizing the Corps regulatory program in general and the Alaska District in particular.

In recent years, Corps leaders have pledged a clean break with their agency's history and culture of environmental destruction, touting a new "greening of the Corps." They have publicly embraced President Clinton's push to save wetlands, which can serve as feeding, nesting and spawning grounds for wildlife, improve water quality and reduce flood damages by absorbing excess runoff. But data obtained under the Freedom of Information Act suggest that the agency's regulatory program has become even less aggressive under the Clinton administration.

Last year, the Corps denied less than half as many applications to fill wetlands as it did in 1992. It approved more than twice as many wetland fills through near-automatic "nationwide" or "regional" permits. It conducted far fewer inspections to check for wetlands violations, and took far fewer violators to court. One Corps memo announced that on minor violations, "the Corps will normally do nothing further," and even on some major ones, it will try to "end its involvement with the case."

Michael Davis, the number two Clinton appointee overseeing the Corps, points out that America was losing more than 400,000 acres of wetlands a year during the 1970s, and is now losing only 100,000 acres a year. He said that even though the Corps' regulatory program rarely rejects permits, its very existence has prompted developers to avoid wetlands.

"I submit that the Corps has had a very real effect on reducing those wetlands losses," Davis said. "It used to be no big deal to see a single project take out 500 acres."

But several current and former Corps regulators describe the Alaska District as a stark case study in the agency's reluctant approach to regulation. Their criticisms are bolstered by internal agency documents.

For example, after the recent district commander, Col. Sheldon Jahn, fast-tracked a permit for a BP Amoco oil field known as Northstar – a project high on the Alaska delegation's wish list – he bragged in a March 1999 e-mail that "I have done everything possible to get to this point including significant 'arm-twisting' and compression of the process." Jahn's predecessor, Col. Peter Topp, pledged in a September 1996 e-mail to smooth the way for a road project demanded by Senate Appropriations Committee Chairman Ted Stevens (R-Alaska): "I'll have my regulators look into it with an eye to required permits so they don't disrupt the planned project schedule."

Alaska has just three members of Congress – Stevens, Sen. Frank H. Murkowski (R) and Rep. Don Young (R) – but they have served a combined 80 years on Capitol Hill, and they chair powerful committees that intensify their builder-friendly influence on the Corps. For years, they have fought to exempt Alaska from national wetlands policies, and at times they have warned the Corps directly about overly aggressive green-policing. "Obviously, we take the delegation's concerns about regulation very, very seriously," said one Alaska District official.

Jahn, however, insisted that the perception of the Alaska District as a regulatory rubber stamp is "absolutely incorrect." He said his regulators often require changes before approving permits to fill wetlands, and noted that some Alaska developers complain that the Corps is too tough.

"We have a very challenging and difficult responsibility here," Jahn said during a brief interview in Anchorage, at a hearing on a wetland-fill proposal by the Ted Stevens International Airport. "We're working very diligently to do this right." He declined to comment further, citing orders from Gen. Joe Ballard, then the agency's chief engineer.

The Corps has a difficult job in Alaska, where almost half the state is considered wetlands. To the business community, this abundance creates an obvious rationale for looser environmental standards. To the conservation community, it makes Alaska a kind of Alamo, a last chance for regulators to protect a vast unplundered wilderness. The Corps stands uncomfortably in the middle, under constant pressure from both sides.

Last year, the Alaska District forced developers to modify some projects. But 99.7 percent of its requests for wetlands permits were approved, allowing developers to fill 93 percent of the wetlands they originally requested. The district also required developers to create one new acre of wetlands for every six acres they eliminated, a "mitigation" ratio far below the national average. To conservationists such as Michael Frank, an attorney at Trustees for Alaska, that is nowhere near the middle.

"Just once, I'd like to see the Corps come down on our side," Frank said.

The Heat Is On

Robert Oja used to open his window in January. That may seem odd in Anchorage, but his office temperature sometimes reached 120 degrees. Which may seem odd as well, but Oja thinks it had a lot to do with his approach to regulation.

Oja served as the Corps Alaska District's regulatory chief from 1985 until 1997, when he was stripped of his title and relegated to receptionist duties. He was a by-the-book guy, intense about his job, obsessive about the law. He was also a brash critic of his bosses, frequently accusing them of thwarting his efforts to enforce wetlands violations, bending to pressure from oil executives and sacrificing science to appease their congressional patrons.

So during the seven winters when his work space sweltered like a northern outpost of Hades – and Oja was documenting the temperatures in his daily planner – Oja was under figurative heat as well. One time, an aide to Rep. Young called Corps headquarters to try to get him removed, Corps documents confirm. Another time, according to Oja, his commander asked, "Do you know how much Murkowski wants you fired?" One of Stevens's top aides, a former Corps colonel, used to call the district regularly to complain about regulatory issues.

In a statement, the Corps called Oja a good regulatory chief, and said renovations of district offices "resulted in heating and air-flow problems affecting many." But Oja suspects the political intrigue swirling around him might have had something to do with it, too.

"The district just doesn't believe in regulation," said Oja, who quit the Corps soon after his demotion, citing a stress-related illness. "If you even mention an environmental concern, you're not a team player. The pressure to look the other way is incredible."

Putting Permits on the Fast Track

Wednesday, September 13, 2000; Page A1

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The Corps, Oja knew, is primarily an engineering agency. It is known for pouring concrete and moving dirt, and its political influence flows from projects that bring jobs and money to congressional districts. In the Alaska District's organizational chart, Regulatory is officially subordinate to Construction. The district dredges dozens of the state's harbors; it builds hospitals, barracks, power plants, ice rinks and even ski slopes for the state's military bases; thanks to intense lobbying by top Corps brass, it is now gearing up to help build the national missile defense system, though the program has been delayed. The district claims an economic impact to Alaska exceeded only by the oil industry and state government.

"Regulatory is the sick orphan of the Corps," one civilian official explained. "We want to build things for people. That's what we do best."

In Alaska, Oja and other Corps whistleblowers have documented numerous cases of squelched regulatory efforts, from an illegal dumping incident in Nome to a mismanaged harbor project in Craig to the Stevens-ordered road to Metlakatla. And the pressure on Regulatory has been heaviest when Construction – or one of its contractors, or one of the "customers" who often steer work its way – has played a role in the project in question.

In 1997, for example, Corps regulators issued a notice of violation for an illegal temporary bridge at Fort Richardson in Anchorage. But after the fort hired the Corps to build a permanent bridge, the enforcement withered away. The same thing happened when Fort Greely built an illegal short-term berm; the violation vanished after the Corps agreed to design the fort's long-term flood-control plan.

"Let's just say it was extremely frustrating," said Jeffrey Towner, once the Alaska District's chief of enforcement, now a Fish and Wildlife Service supervisor in West Virginia.

Development advocates say the larger point is that Alaska still has wetlands to spare; it's hard to plant a shovel here without touching one. The state has 58 million acres of protected wilderness, more than the combined area of Pennsylvania, New Jersey, West Virginia and Maryland. Murkowski says Alaska's real problem is a swarm of environmental groups that use the state to raise money, groups that gripe anytime anyone wants to develop anything. If the senator has any beef with the Corps, it's that the agency takes too long to approve permits.

"The fact is, the wetlands of Alaska are not threatened at all," Murkowski said. "How much of Alaska do the environmentalists want to preserve? All of it? We have rights, too."

The Corps' Alaska District is well aware of those views, and of the power of the men who hold them. Murkowski chairs the Senate Energy and Natural Resources Committee, which oversees the oil industry. Young chairs the House Resources Committee, which handles a variety of environmental and development issues, and is vice chairman of the Transportation and Infrastructure Committee, which oversees the Corps.

And as Appropriations czar, Stevens has a say in just about every dollar the federal government spends, and personally secures every item in the Alaska District's $279 million budget. He also leapt to the defense of the Corps when it was under fire this spring, helping to block the Clinton administration's attempts to reform the agency, even sponsoring an amendment that would have blocked any reforms by future administrations.

So the Corps tends to accommodate them. Joseph Westphal, the assistant Army secretary who oversees the Corps, spent a week last year touring Alaska projects with Stevens; he even watched the senator march in the remote town of Ketchikan's Fourth of July parade. Gen. Ballard, the recently retired chief military commander of the Corps, threatened at one Pentagon meeting to oppose the entire national missile defense plan if the Alaska District did not get an individual contract, according to sources at the meeting. In its response to questions, the Corps could not cite a single instance in which it resisted pressure from Stevens.

"Sen. Stevens is very concerned about Alaska's future," the Corps said in its responses. "This often involves encouragement for the Corps to make decisions on permit applications as quickly as possible – not unlike other senators and congressmen across the country." Stevens's office declined to comment.

"Basically, the Corps is scared to death of the delegation," Oja said. "So there's unbelievable pressure to do whatever they want."

The Corps said that is perfectly normal: "Pressures related to the Corps regulatory program, and wetland issues in particular, are not unique to the Alaska District. . . . All districts, divisions and headquarters are subjected to pressures that go with the job."

'Due Process' Approach

This spring, the world learned about an obscure oil project called Northstar.

First Greenpeace activists camped out on the frozen Beaufort Sea to protest BP-Amoco's plan to connect a five-acre artificial island to the Arctic's first-ever subsea pipeline. Then protesters dressed as polar bears crashed a BP-Amoco meeting in London, and 13 percent of the firm's shareholders voted to abandon the project. Today, Northstar has become an international lightning rod for critics of offshore drilling, who warn that it will harm endangered birds, whales and other wildlife, and that BP has no adequate response plan for a major spill here.

In the spring of 1999, though, when BP-Amoco was desperate to start building – and the Corps was anxious to get them started – hardly anyone was paying attention to Northstar. The field is less than 2 percent the size of Prudhoe Bay, enough to fuel U.S. consumption for just nine days. But hundreds of internal Corps e-mails from that crucial period in the permit process provide a vivid example of the Alaska District's relationship with the oil industry.

The correspondence shows that Jahn and other Corps officials, under pressure from Alaska's ever-present congressional triumvirate, fought as hard as they could to accelerate the process, hoping to issue BP-Amoco a permit in time for the 1999 construction season. In the end, environmental concerns raised by the Interior Department's Fish and Wildlife Service caused enough delay to force BP-Amoco to postpone construction until 2000. But as Jahn wrote in a May 1999 e-mail: "We tried!"

"We thought the Corps did a very good job with the permitting process," said BP-Amoco spokesman Ronnie Chappell. "Our only concern was that it dragged on for as long as it did."

If the heat is always on Corps regulators in Alaska, the temperature rises when oil is involved.

The oil industry, after all, is more than Alaska's economic engine; it's practically the whole vehicle. Oil money funds three-quarters of the state budget. It supports a $28 billion endowment that sent every Alaskan a $1,769.84 check last year. It builds schools, roads and hospitals in isolated and impoverished Native Alaskanvillages. The rest of the nation also benefits from North Slope drilling: America now imports more than half its oil, so more domestic production can mean less dependence on foreign cartels, and somewhat lower prices at the pump.

Reluctant Regulator on Alaska's North Slope

Washington politicians benefit from Alaskan oil, too: Petroleum interests contributed nearly $100 million to federal candidates over the last decade. Young is the House's top recipient of oil money, and Murkowski and Stevens drill the industry's cash reservoirs as well.

The Alaska District set the tone for its approach to oil in 1972, when Congress passed the Clean Water Act, and the Corps simply refused to apply the law to the North Slope. In 1979, to avoid a lawsuit, the Corps finally required oil companies to seek wetland-fill permits on the Slope. But it never denied a major permit until a decade later, when Oja tried to stop BP-Amoco from building a gravel causeway into the Beaufort Sea. That denial was rescinded by Corps officials in Washington, after meetings with angry oil executives and the Alaska delegation.

In May 1990, Oja was the star witness at a congressional hearing on "The Manipulation of Science and the Regulatory Process Affecting Oil and Gas Development in Alaska," testifying that the oil industry had "systematically and successfully lobbied its self-interests at the expense of the public trust."

Less than a decade later, Jahn was holding private meetings about Northstar with impatient BP-Amoco officials, then ordering his regulators to pick up the pace. BP-Amoco was so eager to start construction last year that it spent $4 million to build an ice road to the site on spec, gambling that the Corps would approve its permit before the spring melt. And Jahn made it clear to his troops that he was determined to make sure that happened. "The feeling among the regulatory staff was that the pressure was totally inappropriate," one regulator recalled.

By early spring, though, there was still a major dispute lingering over project design. BP-Amoco wanted to run its pipeline beneath a sensitive lagoon – and the state of Alaska, the Minerals Management Service and the local Native Alaskan borough supported its plan. But Corps regulators had agreed with the Fish and Wildlife Service, the Environmental Protection Agency and the National Marine Fisheries Service on a different "environmentally preferred alternative," concluding it would be safer to avoid the lagoon altogether. The decision was up to Jahn, but the other agencies would have a right to appeal his decision to Corps headquarters.

On March 18, Gen. Carl Strock, Jahn's boss, warned Gen. Russell Fuhrman, then the deputy commander of the Corps, that Fish and Wildlife was threatening to appeal to Corps headquarters if Jahn chose the BP-Amoco plan. "This is a big deal because virtually any delay at this point will result in loss of a year to BP's schedule," Strock wrote. That same day, the Alaska delegation sent a letter to Jahn and Westphal, the assistant Army secretary, urging support for the BP-Amoco plan. The delegation repeated its arguments in a meeting with Strock, commander of the Pacific Ocean Division, and Stevens met separately with Ballard, the agency's military chief.

On March 30, Jahn chose BP-Amoco's plan. "Although there is currently no indication of repercussions, the cooperating federal regulatory agencies in this process could eventually claim 'foul ball,' " conceded Jahn, who recently transferred to an Army base in Alabama. "I have pushed our original agreed-upon process much faster than anyone ever imagined or believed possible, and now the pundits could come in and complain that they were not allowed 'due process' as was originally agreed to."

A week later, when Fish and Wildlife did appeal Jahn's decision, BP-Amoco announced that it was postponing construction at Northstar. Jahn e-mailed headquarters: "My recommendation is that we now fall back to a 'due process' approach."

"My team has been working under a lot of pressure up here (from me) to try and get a [permit] for the applicant this year – and have really stepped up to the plate," Jahn wrote. "It is frustrating that we apparently 'failed' (but not because of anything we did)."

In any case, now that "due process" had been reinstated, Fish and Wildlife pinned its hopes on its 19-page appeal. Congress built the appeal, or "elevation," process into the Clean Water Act to give environmental agencies a check on the Corps, which approves about 8,000 major permits a year. But the agencies almost never appeal, and the Corps almost never reverses its decisions, and rarely even agrees to review them. Before Northstar, Fish and Wildlife had appealed only 17 permits since 1992, and it was 0-for-17.

Still, Gary Frazer, the Fish and Wildlife Service's assistant director for ecological services, held out hope. His agency, after all, was legally the Corps' biological consultant on the Northstar project, and EPA and the National Marine Fisheries Service had threatened to appeal the BP-Amoco plan as well. The Corps' own documents had estimated a disturbing 11 percent to 12 percent chance of a major spill under the plan, after a draft report suggested a stunning 25 percent chance. "Northstar was by far the best elevation I had ever seen," Frazer recalled. "I thought we had a very good chance."

Three weeks later, the service was 0-for-18. Fuhrman recommended that Westphal should deny the request for review, and Westphal did so with a brief no-thank-you letter, never explaining why he disagreed with the service. The Alaska congressional delegation immediately released a joint press release congratulating the Corps. "Dr. Westphal clearly saw that the Corps Alaska Region did a great job in their review," Stevens said in the statement.

The Expanding Web

Today, the web of oil fields on the North Slope is expanding faster than ever. BP-Amoco's Badami project extended the complex 30 miles east, to the doorstep of the off-limits Arctic National Wildlife Refuge. Arco's new Alpine project extends it 34 miles west, to the edge of the National Petroleum Reserve Alaska. Northstar may usher in a new era of offshore drilling in the Beaufort Sea. And the Slope is buzzing with rumors of the first oil strike in the section of the petroleum reserve that was recently opened for drilling; meanwhile, in Washington, the Alaska delegation is pushing to open the Arctic refuge to oil exploration as well.

To Murkowski, this is a good thing. Until he sees proof of serious environmental damage, he'll continue to see the war over Alaskan oil as pure ecosilliness: "Everyone wants to complain, because who's for big oil? But that's emotion, not science."

The problem, scientists say, is that no one really knows the environmental effects of building America's biggest industrial complex in an undisturbed tundra ecosystem, and the Corps has refused to analyze the impact. Academic studies suggest that polar bears are doing fine, and caribou herds have grown. But even though the Slope's projects are all literally connected by pipelines, the Corps has analyzed every one of them in a virtual vacuum.

At this point, Chappell says even BP would support a review of "the totality of what's happened on the Slope," and Stevens secured $1.5 million for a compilation of earlier studies. But the Corps has continued to resist pleas by state and federal agencies for a comprehensive look. Oja's staff once spent more than $100,000 laying the groundwork for a "cumulative impacts analysis," but in 1992, the effort was killed in infancy by officials in Corps headquarters, and a memo from the district commander declared it "a dead issue."

The good news is that horizontal drilling technology has reduced the "footprint" of oil development. The hulking Prudhoe Bay complex was advanced for its day, but it littered the tundra with roads, buildings, smokestacks and airstrips. The new Alpine pad covers less than 1 percent as much tundra, and didn't even require a road. Today, a rig on the White House lawn could pump oil from underneath the entire District and a bit of the Virginia suburbs.

"The Corps recognizes how seriously we take our environmental standards," said Craig Dotson, Alpine's construction manager. "We've all learned from the mistakes of Prudhoe Bay."

The bad news is that last year, Alpine workers somehow lost 2.3 million gallons of drilling chemicals while burying a pipeline under the scenic Colville River. There have been other impacts, too. The state recently identified 76 contaminated sites on the Slope. A million gallons of oil spilled here from 1996 to 1998. No one has figured out how to revegetate the Slope's used gravel pads. And there are troubling hints that man's presence has altered the natural way of life here; for example, Arctic foxes, after scavenging behind polar bears for millions of years, now seem to prefer Dumpster-diving at Prudhoe Bay.

For biologists, the fear is not only what has happened on the Slope, but what could happen. Last fall, after the Northstar permit study suggested a 1 in 8 chance of a major spill, the state tested the industry's offshore responses with two "spill drills" in the Beaufort Sea. They were both abject failures. The first drill replicated a major spill in calm seas; the boom that was supposed to contain the oil broke. The second drill rehearsed a rough seas scenario; the lead response boat never made it to the imaginary spill.

Chappell called the drills "a learning experience."

Environmentalists thought so, too.

"Can you imagine a big oil spill in the Arctic?" asked Pamela Miller, a former Fish and Wildlife biologist who is now an environmental consultant in Anchorage. "The oil companies say: 'Don't worry.' The Corps says: 'Don't worry.' Well, I worry."