On March 20, 2019, the U.S. Department of the Interior (DOI) opened all planning areas in the Gulf of Mexico for the fourth-straight offshore oil and gas lease sale since President Donald Trump took office. Throughout the past 35 years, the DOI has typically auctioned leases in 1 of 3 Gulf sections at a time. But ever since David Bernhardt, the current acting secretary, was sworn in as deputy interior secretary in August of 2017, the whole Gulf has essentially been up for grabs. These Gulfwide auctions are likely watering down the competition, allowing the oil and gas industry to buy up America’s taxpayer-owned mineral resources at fire sale prices—and Bernhardt’s former industry clients are among those that benefit.
Bernhardt, who has the dubious distinction of being President Trump’s most conflicted cabinet nominee, is awaiting Senate confirmation to lead the DOI. He has so many conflicts of interest that he carries around a list of former clients in order to keep track of them all. Since Bernhardt came to the DOI in August 2017, it is clear that some of his past clients have received favorable decisions. Bernhardt has promised to recuse himself from decisions involving his former clients, but since his publicly available calendar skimps on details, it is impossible for the public to be sure.
One of Bernhardt’s former clients is the oil and gas giant Eni Petroleum. Just three months after Bernhardt was sworn in, Eni Petroleum became the first company approved to drill in federal Arctic waters since 2015. Bernhardt had recused himself, but that didn’t stop Interior Press Secretary Heather Swift from emailing a reporter that employees from the DOI’s Bureau of Safety and Environmental Enforcement (BSEE) were “working through Christmas to get Eni permitted” for Arctic drilling, noting that it would be a “nice Christmas present.”
Another former Bernhardt client, Noble Energy, made comments in December of 2017 on a DOI proposed rule. Noble pushed to amend offshore regulations and extend the time-period to submit documents related to offshore oil and gas safety systems from 60 days to 90 days. The final rule issued, in 2018, included that extension, which means that Nobel and other offshore oil and gas companies can now delay their safety compliance reporting by a month.
Bernhardt’s lack of transparency in his dealings at the DOI and the fact that his past clients appear to be reaping the rewards of the department’s loosening of regulatory actions and expansion of drilling options, puts his potential conflicts of interest on full display and highlights why he is unfit for the DOI’s top job.
Bernhardt continues to rip off taxpayers
According to the DOI’s press releases, Bernhardt has been a key figure in the department’s Gulfwide lease sales since at least February 2018. As a previous Center for American Progress column explained, this Gulfwide approach is fiscally, legally, and environmentally problematic. It undervalues America’s natural resources, shortchanges taxpayers, and puts fisheries and coastal economies at risk.
The oil and gas industry has been able to take advantage of the Trump administration’s Gulfwide sales to buy up ocean resources for below fair market value through single, uncontested bids. During yesterday’s lease sale, only 22 of the 227 parcels sold had more than one bidder, meaning that 90 percent of sales were noncompetitive. There is also an oversaturation of leases. The Gulfwide lease sales each attracted bids on less than 2 percent of acres the DOI has offered. (see Table 1) By continuing to flood the market, despite low industry interest, the administration is reducing competition among bidders and lowering returns for American taxpayers.
Bernhardt’s industry buddies win
The companies that Bernhardt worked for or represented are winning leases in the Trump administration’s Gulfwide sales. Cobalt International Energy was one of the bidders in the August 2017 sale. In between working for President George W. Bush’s DOI and returning to Trump’s, Bernhardt lobbied on behalf of Cobalt against a deep-water drilling ban in the Gulf of Mexico and for multiple congressional bills that would have expanded offshore oil and gas drilling in the aftermath of the Deepwater Horizon disaster. The U.S. Department of Justice (DOJ) was investigating Cobalt for violating the Foreign Corrupt Practices Act, until the DOJ abruptly ended the investigation two weeks after President Trump took office.
Bernhardt has also provided past legal services for the National Ocean Industries Association (NOIA), a group representing the offshore oil and gas industry. Nine companies represented on the NOIA’s board of directors have been the beneficiaries of the Trump administration’s Gulfwide lease sales through mostly noncompetitive bids, which allows them to buy at the lowest price offered. In the aftermath of the Deepwater Horizon disaster, Bernhardt represented the NOIA as an intervenor defendant in place of the federal government and successfully challenged a lawsuit that was brought against the Bureau of Ocean Energy Management (BOEM) over its approval of lease sales near the site of the Gulf of Mexico’s now infamous oil spill. The NOIA also hopes to benefit from the Trump administration’s plans to expand offshore drilling in the Gulf of Mexico, Atlantic, Pacific, and Arctic oceans.
Oil and gas is also receiving more favorable overall treatment than comparable industries, such as offshore wind. As acting secretary, Bernhardt is currently overseeing the BOEM’s new five-year plan, which proposed opening up around 90 percent of U.S. coastal waters to offshore oil and gas development. During the partial government shutdown, while almost 83 percent of the DOI’s staff were furloughed, a group of BOEM workers were given essential status so that they could continue to work on offshore oil and gas leasing. Seventy-one offshore drilling permits were handed out during the shutdown, with 53 of those permits given to companies that sit on the NOIA’s board. Meanwhile, the offshore wind permitting process, which the BOEM oversees, ground to a halt.
Next week, the Senate Committee on Energy and Natural Resources will hold a nomination hearing to consider Bernhardt as the next secretary of the interior. If nominated, he will lead a department that takes advantage of the president’s “knack for keeping the attention of the media and public focused elsewhere” while they work to sell off the oceans for far less than they’re worth. It seems his former oil and gas clients have much to gain with his confirmation—and the American people have much to lose. But it’s clear from the DOI’s actions with Bernhardt in the copilot seat—first as deputy secretary, then as acting secretary—that a vote for Bernhardt is a vote for reckless and wasteful offshore drilling.
Margaret Cooney is the campaign manager for Ocean Policy at the Center for American Progress. Mary Ellen Kustin is the director of policy for Public Lands at the Center.
The authors would like to thank Miriam Goldstein, Christian Rodriguez, Will Beaudouin, and Keenan Alexander for their contributions to this column.