Teapot Dome Redivivus: How Clinton and Gore Opened the Alaskan Arctic to Oil Drilling

Imagine building 70 new coal-fired power plants that will emit 9 million metric tons of carbon pollution a year (the same as two million gas-powered cars) and more than wipe out all emissions savings from renewable energy projects on U.S. public lands by 2030. Imagine constructing hundreds of miles of roads and pipelines, two airstrips, a gravel mine and a big processing plant on tundra and wetlands where the permafrost is already melting so quickly that it will have to be artificially-refrozen to keep the whole enterprise from collapsing.

That’s basically what you’re getting with the Willow Project, the massive oil drilling operation just approved on Alaska’s North Slope by Biden’s Interior Department. This grotesque operation prompted Al Gore to waddle forth with a rare rebuke of a fellow New Democrat: “The proposed expansion of oil and gas drilling in Alaska is recklessly irresponsible. The pollution it would generate will not only put Alaska native and other local communities at risk, it is incompatible with the ambition we need to achieve a net zero future. We don’t need to prop up the fossil fuel industry with new, multi-year projects that are a recipe for climate chaos. Instead, we must end the expansion of oil, gas and coal and embrace the abundant climate solutions at our fingertips.”

Gore makes a lot of sense here, except for one major blind spot: It was his own administration which first opened the National Petroleum Reserve-Alaska to drilling. He and Bruce Babbitt both lent their environmental credentials (such as they were) to drilling on the very same North Slope tundra into which Conoco-Phillips now plans to drill 200 oil wells. Here’s how it happened. –JSC

Forget the favors to Lippo. Forget those nightly rentals of the Lincoln bedroom. By far the biggest scandal in town, entirely unreported, is the new Alaskan oil rush. It is a multibillion-dollar giveaway reminiscent of the Teapot Dome fiasco, when Albert Fall, President Warren Harding’s Interior Secretary, secretly leased off a naval oil reserve north of Casper, Wyoming, to oilman Harry Sinclair. For his efforts, Fall received as much as $400,000 from Sinclair and a year in the federal penitentiary.

How is this contemporary version of the Teapot Dome being brokered? Following the standard script for the Clinton Administration, it is a story of special access and special rights, greased by well-placed lobbyists, secured by corporate campaign disbursements and involving the transference-on an almost unfathomable scale–of public wealth into private hands. At the center of this drama is the National Petroleum Reserve-Alaska, a glorious, fragile wilderness, the largest expanse of undeveloped public land in North America. In the wings is the Arctic National Wildlife Refuge, whose opening to oil leasing has been the decade-long goal of ARCO, British Petroleum and Exxon, the three major players in the state. Already, a couple of deregulatory curtain-raisers suggest the course of acts to come.

In the spring of 1996, amid a sphinx-like silence from the press, the Clinton Administration handed the oil industry a gigantic favor worth billions of dollars. It overturned the twenty-three-year old ban on the export of Alaskan crude oil. From the beginning, the opening of Alaska’s North Slope to drilling–and the construction of the leaky 800-mile Trans-Alaska Pipeline to transport the crude from the oilfields of Prudhoe Bay to the port of Valdez–was sanctioned by Congress only because the oil was intended to buttress America’s energy independence. At the time, however, Senator Walter Mondale warned that the oil companies would eventually have the export ban overturned. They envisioned a “Trans-Alaska-Japan pipeline,” he said, an opening to export large shipments of Alaskan crude to Asia in order to keep winter heating fuel prices high in the Midwestern states.

He turns out to have been right. Of course, the oil companies explain their intentions somewhat differently. Back in 1994, still at the nadir of public esteem because of the Exxon Valdez disaster and unsuccessful in efforts to whip up fears of an oil shortage that might open the Wildlife Refuge to drilling, they announced that the problem wasn’t a shortage at all, but a glut. Suddenly, they said, there was more oil in Prudhoe Bay than anyone had previously imagined, but because of laws prohibiting the sale of Alaskan oil to lucrative foreign markets–Japan, South Korea, Taiwan, China–the companies might have to scale back production and lay off hundreds of workers.

The winning strategy to lift the export ban was hatched by Tommy Boggs, the Rasputin of American lobbyists, whose firm, Patton Boggs, represents a thick portfolio of oil companies, including Exxon, Mobil, Shell and ARCO. In this instance, Boggs was the advance man for Alyeska, an oil consortium that operates the pipeline and supervises drilling on the North Slope. In an August 1995 memo to a prospective client, Boggs, a golfing pal of Bill Clinton, boasts of “having led the private-sector effort to get exports of Alaskan North Slope oil approved by the 104th Congress and signed by President Clinton.” Boggs’s typical price tag is a robust $550 per hour–or $22,000 for a forty-hour week.

Barely had Clinton signed the order lifting the ban before he handed the oil cartel another amazing gift: the Federal Oil and Gas Simplification and Fairness Act. The name is signal enough that dirty work was afoot. And indeed it was.

Approved by Congress on the last day of the 1996 summer session, the law places a seven-year limit on federal audits of oil company records of income from drilling on public lands. It turns over many auditing responsibilities concerning drilling on federal lands to the states. It permits the oil companies to sue the federal government to collect interest on royalty “overpayments,” and it allows those same companies to set the “market price” of the crude oil upon which the royalty payments to the government are based. In other words, the bill legalizes a scam Big Oil has been running for decades, underpaying billions in royalties on crude oil extracted from federal lands.

As he shoveled a mountain of cash to the oil companies, Clinton cast the measure as a simple matter of streamlining. “Many Americans don’t know it, but a significant percentage of the oil and natural gas produced in the United States comes from federal lands,” he declared. “Until today, regulatory red tape and conflict in court rulings had discouraged many companies from taking full advantage of these resources,” which he said he was now unleashing to increase domestic energy production.

The next public intimation that the Clinton Administration is among the federal properties leased by ARCO and Exxon came in the vulgar surroundings of Jackson Hole, Wyoming, on lands formerly owned by the Rockefeller clan. Here, Clinton played host to a platoon of oil company moguls, who took the opportunity to brief him on an even grander scheme to boost domestic oil production: open the National Petroleum Reserve to oil leasing. And here’s where we find Teapot Dome redivivus.

West of Prudhoe Bay lies the 23-million-acre reserve, set aside in 1923. Back then it was under the control of the Navy, the oil held in store against a national calamity. For decades, even during the fraught hours of World War II and the frenzied days of the energy crisis, the admirals fought off the oil companies and their allies in the Interior Department who lobbied to open the reserve to private exploitation under the guise of national security. In late 1980, Jimmy Carter gave the Interior Department the authority to sell the Navy’s oil. This was the fatal move, for Reagan’s Interior Secretary James Watt then quickly geared up to open the reserve to the oil barons. He was held off by a lawsuit brought by Eskimo elders, who argued that drilling would damage their subsistence rights to hunt and fish. Bill Clinton and Bruce Babbitt are now set to accomplish what Reagan and Watt could not.

Students of the political economy of the Clinton White House are correct in assuming, as this narrative unfolds, that the billions handed over by Clinton to the Alaskan oil cartel were predicated on a substantial river of cash flowing the other way. After all, ARCO the largest producer on the North Slope and likely to be the prime benefactor of the new Alaskan oil bonanza–is one of the pre-eminent sponsors of the American political system. In the 1996 election cycle, ARCO’s political action committee handed out more than $352,000. Over the same period, ARCO pumped soft money into the tanks of the Republican and Democratic national committees ($764,000 and $486,000, respectively).

On October 25, 1995, Robert Healy, ARCO’s director of governmental relations, attended a White House kaffeeklatsch with Vice President A1 Gore and Marvin Rosen, finance chairman of the Democratic National Committee. A few days before the session, Healy himself contributed $ 1,000 to the Clinton/Gore reelection campaign. Before the month was out, his company had put $32,000 into the D.N.C.

A man who does much of ARCO’s political dirty work in Washington is Charles Manatt, former chairman of the Democratic Party. Manatt runs a high-octane lobbying shop called Manatt, Phelps & Phillips, formerly the lair of Mickey Kantor. The lobbyist attended a White House coffee with Clinton on May 26, 1995. In 1993 and 1996, Manatt alone doled out $117,150 in hard and soft money. Members of Manatt’s family threw in $4,500, his law firm $24,500 and the firm’s PAC another $81,099. Inside the Clinton Cabinet, Manatt’s former partner, Kantor, became the most strident voice for lifting the export ban on Alaskan oil, promoting it as a vital element in the Administration’s Asian trade policy.

Lodwrick Cook, ARCO’s former C.E.O., is a personal friend of Bill Clinton. In 1994, Cook celebrated his birthday at the White House. The President himself presented the towering cake. Cook traveled with Commerce Secretary Ron Brown on a trade junket to China in August 1994. During that trip, Cook and Brown negotiated ARCO’s investment in the huge Zhenhai refinery outside Shanghai. The refinery is now ready to process Alaskan crude, which suggests that at least two years before Clinton’s executive order allowing Alaskan oil exports, ARCO had inside knowledge of what was to come.

A key role in this affair has also been played by Alaska’s Governor, Tony Knowles, known by some Alaskans as the Governor of ARCO. Knowles, who proudly asserts that in his youth he was a “roughneck” in the oilfields of West Texas, is the first Democrat to run the state in many years, and his 1994 campaign received more than $30,000 from ARCO. In recognition of this munificence, Knowles lobbied the Clinton Administration to open more federal land in Alaska to oil development. High on the list was the Arctic National Wildlife Refuge. However, as a pledge to the eco-lobby, Clinton had vowed to veto any measures to open the 17-million acre Wildlife Refuge to oil drilling. At that point, as the Anchorage Daily News regularly reported, Knowles countered that if the refuge was off limits, the Administration had to unlock the National Petroleum Reserve.

This was almost certainly the message that Tony Knowles delivered to Clinton when he slept at the White House in January of 1995, and was underscored by his Lieutenant Governor, Fran Ulmer, at a morning coffee in the Map Room on February 28, 1996. In his State of the State address this year, Knowles boasted, “Just five years ago, they said we’d be turning off the lights on the industry with one of the state’s largest payrolls. Now our motto should be that old bumper sticker: `DEAR LORD, PLEASE LET THERE BE ONE MORE OIL BOOM, AND I PROMISE WE WON’T WASTE IT.”‘ His prayers were soon answered by the Secretary of the Interior, Bruce Babbitt. On February 7, Babbitt announced that he was ordering an environmental impact statement on the leasing of the reserve. Babbitt went further, saying that “oil leasing is absolutely the goal of the environmental studies.”

That statement indicates the utter lawlessness of the crowd now running the country. As the National Environmental Policy Act stipulates, environmental review comes first, and a decision second. For Babbitt, it’s the other way around. He rationalizes this effrontery by gesturing toward a new consensual politics that does not require the pesky corsets of legal obligation: “We’d like to break away from the adversarial style and see if we can put together some new way of doing business with the oil industry. I think we’ve got lots of possibilities.”

Babbitt says he will go to Alaska this summer to hike over the 23 million acre reserve. “I want to get out on the ground and I want to look at every square inch of the National Petroleum Reserve. My plans now are to fly to Anchorage, change planes for Barrow, and then I want to disappear into the N.P.R. for as much time as I need, to understand every geological structure, every lake, every wildlife issue so that I will be prepared to be a meaningful participant in this process.” Perhaps he will come across the bones of Hale Boggs, the former oil Congressman from Louisiana, whose plane disappeared in the Alaskan outback in 1972. It would be an appropriate discovery. Boggs navigated the original Alaskan oil-drilling bill through Congress at the start of the seventies as a favor to his friend Edward Patton, the Exxon executive who became the C.E.O. of Alyeska, now represented in Washington by Hale Boggs’s son Tommy.

What kind of place is the National Petroleum Reserve? This 36,000 square-mile expanse of Arctic land is crossed by the Colville River, which sweeps in a giant arc from its headwaters in the Noatak National Park across the Anuktuvuk plateau to its delta at the icy Beaufort Sea. Grizzlies gather at the river in astounding numbers to feast on grayling, Arctic char and whitefish. As the river makes its final bend toward the Arctic Ocean, it slides along a sixty-mile palisade of cliffs, eroding away at the base to reveal mastodon tusks and the fossilized bones of dinosaurs. Two hundred feet up in these limestone bluffs nest peregrines, gyrfalcon and rough-legged hawks, making the Colville drainage the most prolific raptor habitat in the Arctic. It is this escarpment that the oil companies cherish most.

By far the region’s most dominant ecological force is the Western Arctic caribou herd, which roams across the reserve on migratory routes unimpeded for millennia. The 500,000-head herd is the largest in Alaska, three times the size of the famous Porcupine herd in the Arctic National Wildlife Refuge. In the wake of the caribou come the wolves, ravens, wolverines and native hunters, feeding on the detritus of this massive rush of life.

David van der Berg, a carpenter from Fairbanks, is one of the few people to have floated the 450-mile course of the Colville. “The Colville country is unquestionably the wildest place in North America,” he says. “The oil companies have occupied nearly every other tract in northern Alaska. True wilderness is now so much scarcer than oil.”

The National Petroleum Reserve encompasses an area the size of Indiana, yet the entire region is home to fewer than 6,000 people, most of whom live on its peripheries. On its eastern border is the hamlet of Nuiqsut, a village of 450 people built on the site of an ancient Eskimo settlement. By the early sixties many of the Eskimo had been moved off their traditional lands and relocated to the town of Barrow. In 1974, however, twenty-seven families decided to reclaim their lands at the mouth of the Colville. Back in Barrow, their neighbors shook their heads, thinking they would surely perish that first winter living in tents. But they finally built the village at Nuiqsut, which this year is celebrating its twentieth anniversary.

Now ARCO has come to Nuiqsut looking for help in gaining entry into the reserve. It has promised money and jobs. And, indeed, the villagers would like the money, but fear the cultural and environmental repercussions of an enormous oilfield development over which they would have no control.

Consider what’s already happened on the North Slope. The 500-plus wells in Arctic Alaska produce 840,000 gallons of waste each year. In 1985 and 1986 the Alaska Department of Conservation recorded 953 spills involving oil and other liquids. The contents of more than 250 pits, each filled with 13 million gallons of toxic pollutants, are pumped onto gravel roads or the open tundra. A January 1997 report by the Alaska Forum for Environmental Responsibility disclosed that a contractor for British Petroleum had been illegally injecting hazardous waste, including oil, solvents, paints and hydraulic fluid, into its wells on Endicott Island, one of the most productive oilfields in Alaska. When an oil worker refused to dispose of the waste in this manner, he was told by his superiors that illegal dumping didn’t matter because “no one lives on the North Slope anyway.”

From Nuiqsut on a clear day it is possible to see the foul haze of the operations at Prudhoe Bay sixty miles away. The industrial sprawl surrounding the bay is the best reason to keep the oil companies out of the petroleum reserve. These days Prudhoe Bay is something of a toxic armed encampment, entry to the area being totally controlled by the security forces of the oil companies.

As for the pipeline, it has leaked almost from the day the crude began to flow. In 1976 it was learned that one of Alyeska’s contractors had falsified X-rays of faulty welding on much of the pipeline. In 1979, one of the welds broke and more than 235,000 gallons of oil spilled into the Atigun River. Now the pipeline averages a major incident every ten days. Many of these problems have been brought to the attention of the company and federal officials by Alyeska employees. The oil company’s response has been to go after the whistleblowers.

“In 1990, Alyeska hired Wackenhut security to conduct an industrial espionage campaign to identify and harass whistleblowers,” says Richard Fineberg, an oil policy consultant to the Alaska Forum. “When the company’s espionage escapades came to light, Alyeska issued a public apology and settled lawsuits brought by six Alaskans who were targets of the spying effort.”

How much oil is buried beneath the tundra? According to explorations in the early seventies by Navy geologists, the Alaskan reserve may harbor as much as 35 billion barrels, worth nearly a trillion dollars if drilled to the last drop. The estimate is almost certainly conservative. ARCO knows more precisely the subterranean wealth at stake, because it has done extensive testing in the area and has just struck a 300 million-barrel oilfield on the reserve’s eastern border, near Nuiqsut. In fact, the oil companies have been poaching crude off the reserve for years, siphoning its hidden resources by slant drilling within the two-mile buffers established in 1923 by the Navy. But ARCO which swallowed up old Harry Sinclair’s oil company in 1969, the same year it struck oil in Alaska–says that to divulge what it knows about the oil in this public property would be to reveal proprietary information.

“Some conservationists might be tempted to trade off the largely unknown ecological treasures of the National Petroleum Reserve for a delay in the leasing of the Arctic National Wildlife Refuge,” warns Sylvia Ward of the Northern Alaska Environmental Center in Fairbanks. “That would be a tragic miscalculation. In Alaska we’ve come to learn that the oil companies won’t stop until they have it all.” A few days later, British Petroleum and Chevron announced their intention to sink exploratory wells within two miles of the Wildlife Refuge.

This story is adapted from Been Brown So Long It Looked Like Green to Me: the Politics of Nature.