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Sally Jewell: Obama's Pro-Fracking Climate Czar


Sally Jewell: Obama's Pro-Fracking Climate Czar

Photograph by Benjamin Rasmussen

Sally Jewell has just seen a ghost. Several, really. As she enters the aisle between two rows of eight-foot-tall shelving units, the U.S. Secretary of the Interior has come face to face with more than a dozen severed tiger heads. She lets out a quiet “ooh,” somewhere between gasp and sigh. The heads are all taxidermied—jaws open, fangs bared, startled eyes, comprising a gallery of silent roars. A U.S. Fish and Wildlife (USFW) officer tells Jewell how few of these cats remain in the wild; such trophies can fetch thousands of dollars on the black market. Jewell listens and, moving down the aisle, reflects on how values take time to change—until they do. When she was little, she recalls, her gram owned a snow leopard coat. Later, when her grandmother learned it was from an endangered species, she donated it to a zoo.

Jewell is touring the National Wildlife Property Repository, a 10,000-square-foot facility outside Denver where items made from protected animals get cataloged. The warehouse calls to mind the conclusion of Raiders of the Lost Ark. Instead of crated artifacts, however, it’s packed with the remains of animals: tortoise shells; a trunk of shawls made from the wool of a Chiru, a Tibetan antelope; bear claws; ivory shards. As the tour continues, Jewell has a suggestion for Steve Oberholtzer, who runs the repository: invite the fashion trade. “When they see this stuff close up,” she says, “the message will get through, and they’ll be more careful about their sources.”

The policing of poachers, smugglers, and exotic pet owners is but one of the federal functions Jewell supervises, and although it keeps 205 agents busy full time, it’s one of the smaller ones. Interior manages more than 500 million acres, one-fifth of all the land in the U.S., on an annual budget of $12 billion. It controls 23 percent of the nation’s energy supply—mostly oil, gas, and coal on federal lands—and last year disbursed $14.2 billion in energy revenue to federal agencies and state, local, and tribal communities. Interior is also the largest wholesaler of water in 17 Western states, a life-and-death matter for thousands of farms and rural communities. And, of course, it runs more than a thousand parks, monuments, and wildlife refuges, natural and cultural attractions estimated in 2011 to contribute, through tourism, $48.7 billion to the economy. In all, the department estimates that its “value added” economic activity and production contributed $200 billion to the U.S. economy during 2013. (Interior appears to prefer this “value added” figure to straight income because it still spends more than it takes in.)

The agencies that comprise Interior are almost comically at odds with one another. The Bureau of Reclamation operates dams that disrupt fisheries. The USFW endeavors to keep fisheries robust. The U.S. Geological Survey studies rising seas’ impact on coastal areas. The Bureau of Ocean Energy Development facilitates deep-sea drilling permits. The department restores Superfund sites, most notably at the Rocky Mountain Arsenal National Wildlife Refuge, where the U.S. military made sarin gas during World War II. On the Rocky Mountain Front, the department promotes fracking, a drilling technique that environmentalists contend is toxic. “One of the best ways to tell if we’re doing something right is when both sides are ticked off at us,” Cecil Andrus, President Jimmy Carter’s Interior secretary, famously told an assistant.

Jewell, 58, seems uniquely qualified to balance these contradictions. The former CEO of Recreational Equipment Inc., a Seattle-based outdoor gear and apparel retailer, she worked previously as a commercial banker, starting at a regional bank assessing the value of oil and gas reserves as debt collateral. “From your résumé, I can see you worked on the Alaska pipeline, and you’re an oil and gas engineer,” Senator Lamar Alexander (R-Tenn.) began, recapping her CV during her April 2013 confirmation hearing. He sought—and got—her mostly nodded affirmation for each point: “And you said you once fracked a well? You were a banker for 20 years? The chief executive officer of a billion-dollar company?” He paused dramatically. “How did you get appointed by this administration?!”

When asked if her values as an outdoorswoman and conservationist conflict with her fossil fuel expertise, Jewell says, “There’s no reconciling to be done.” It’s the day after her repository tour, and she’s sitting in the lobby of a Hampton Inn & Suites in Las Cruces, N.M. “I’m going to be flying home on an airplane. Planes burn fossil fuels. So I don’t think we can afford to be hypocritical,” she says. “I just think we need to open our eyes and understand that these things have tradeoffs. And we need to apply our ingenuity to a future that we didn’t understand in the ’70s and ’80s, when we were really focused solely on fossil fuels.”

Coming in as an outsider and taking on Interior’s unwieldy portfolio, Jewell has performed admirably, says Bobby McEnaney, deputy director for the Western Lands and Energy Project at the Natural Resources Defense Council. “She’s saying that in exchange for expediting energy permits, she’s going to follow through on safety, inspections, and enforcement, which is a big deal after 30 years of ‘drill first, ask questions later,’ ” he says. That said, McEnaney adds, “We do not share her optimism about responsible fracking. The way it’s being done now is not in a responsible fashion.”

Before dedicating the new Organ Mountains-Desert Peaks National Monument in May, Jewell explored it on footPhotograph by Benjamin RasmussenBefore dedicating the new Organ Mountains-Desert Peaks National Monument in May, Jewell explored it on foot

The fracking debate is sure to follow her, but Jewell faces two greater challenges. First, as a businessperson accustomed to making decisions with dispatch, she must contend with gridlocked Washington. It took eight months for Congress to confirm her deputy, Michael Connor, her main man on water issues. More profoundly, she’s responsible for protecting natural resources already stressed from climate change, but doing so requires budget approval from legislators who are skeptical about global warming or deny it altogether. (Maybe this explains why her first secretarial order led to an academic-sounding “Landscape-Scale Mitigation Strategy to Encourage Dual Objectives of Smart Development and Conservation.”) Whatever you call it, the order signals that she’s on the front lines of President Obama’s renewed push on climate and ready to reform decades-old energy practices.

“People accuse businesses of thinking short term,” Jewell says with a laugh. In the Capitol, “We don’t even know from year to year what our budget is going to be. And that is completely inconsistent with running a business. And businesses—certainly we did this at REI—you look at where the landscape is going. What are the big trends that are going to hit me? Changing demographics was one. Climate change was one.” At Interior, she likes to say, “We’re in the forever business”—making sure Yellowstone National Park and Jamestown, Va., are there for our grandchildren’s grandchildren. Her job is to get the stalematers to take the long view.
 
 
Born in London in 1956 to two Brits, Jewell emigrated to Washington State in time to start kindergarten. She earned her engineering degree at the University of Washington and took a job with Mobil Oil (now ExxonMobil (XOM)) in Oklahoma after college. That well she fracked—in 1979—was to get the very last from an oil and gas play near Countyline, Okla.

Many of Jewell’s formative experiences took place outside the classroom, beginning, she says, with a two-week camping trip when she was 9. “For each week we had different graduate students that taught us about nature,” she says. “The first week was about the trees and fauna of the Pacific Northwest. The second week was about meteorology and archeology and a little bit of entomology. So from a very young age I got a dose of not just being out in nature but getting to understand nature.” At 15 she made her first attempt to climb Mount Rainier, the 14,409-foot glaciated volcano visible from Seattle. In 1971, Jewell’s team found itself in a whiteout, keeping her from reaching the summit. She made it on her next try and has since topped out seven times. (She’s surely capable of an eighth: In D.C., she’s known to take the stairs to her sixth-floor office, even multiple times per day.)

“We’re in the forever business”

After three years in Oklahoma, she and her husband, Warren, also an engineer, returned to the Pacific Northwest. They wanted to raise a family near family, and they missed the Cascades. In 1981 she took the first Seattle job she could find, helping Rainier Bank decide if it should get into oil and gas lending. “Primary interest was over 20 percent. Indigenous industries in the Northwest—timber, fishing, Boeing (BA)—were all struggling, and so the crosstown rival, Seafirst Bank, was doing a lot of energy lending,” she recalls. “Rainier said we want to do that, too, but first let’s find someone who can help us value the collateral in the ground.” Jewell completed an analysis of the oil and gas investments available and cautioned against them.

“There was a lot of competitive pressure to get in on this business,” remembers Ernie Johnson, who worked with Jewell at the time and is now CEO of New Wave Group USA (NEWAB:SS), a Swedish-owned, Seattle-based sportswear company. “Each quarter we’d hear about our rivals’ earnings, and our CEO would come back to [Jewell] and say, ‘Are you sure we aren’t missing something?’ It would have been a lot easier to say yes,” he says. “But she didn’t back down. She said there was no substance behind these loans. And she was right. When the music stopped, the other banks all defaulted. They lost a lot. And we came out clean.” Several banks, including SeaFirst, careened toward bankruptcy and became cheap takeover targets.

“I credit the people who hired me, not me, because the engineering decisions were obvious,” Jewell says of that early call. The others “didn’t pay attention to the engineers. Or some engineers, I guess, were swept up in the ‘oil is going to be $100 a barrel,’ which is one of the numbers that were out there. I was naive and young enough not to know that when Citibank wants you to participate in something, you probably just ought to go along. … I just knew that I was analyzing the engineering data, and the engineering data said there’s a high probability that this isn’t going to generate the type of revenue needed to pay back the loan. It’s just as simple as that.”

Security Pacific bought Rainier in 1992. In the ’90s, Jewell worked for WestOne BanCorp, then Washington Mutual, before leaving in 2000 for REI, a then 62-year-old company that’s a consumer cooperative, meaning its members have a shareholder’s say in its leadership.

“You can have a beer with her. She’s not a wine drinker”

Mark Schoonover, who worked with Jewell off and on since the mid-’80s and at Washington Mutual, praises her for teaching him the value of a more diverse workforce and getting everyone together in one room to hammer out solutions. “We were able to kid each other,” says Schoonover, who’s now chief credit officer for Washington Federal (WAFD). “I’m from the east side of Seattle, more of a frat boy, and she’s more the tree hugger.” Their jock-nerd dynamic was a source of mutual respect. “She’s down to earth,” he adds. “You can have a beer with her. She’s not a wine drinker.”

The first big decision Jewell faced at REI was what to do about e-commerce. It wasn’t a new dilemma, but it was understood as a choice that could revive REI’s flagging fortunes or consign it to also-ran status. “The dot-com bubble was about to burst, but it hadn’t yet, and we were doing a lot of soul searching,” says Dennis Madsen, who was CEO in 2000. “Do you keep the online side embedded or do you spin it off and raise money for it in the public markets?” Madsen says Jewell’s analysis was critical to their decision to keep it all one company.

After several years as COO, Jewell took the reins from Madsen in 2005. On her watch, from 2000 to 2012, REI grew from $600 million in annual sales to more than $2 billion and more than doubled its number of stores. REI.com is profitable, too.

For Kara Stone, general manager of REI’s flagship store in Seattle, what stands out about Jewell as a CEO is how quick she was to seize employee ideas, and her advocacy of work-life balance. “I told her once I was too focused on my career to go surfing or to meet someone,” Stone says. “She very clearly said that I needed to get a life, that that was part of our mission at REI.” The two had become acquainted when Stone proposed a way to reduce wastepaper that Jewell soon approved for every store.

It’s the inability to move as swiftly to implement big and small ideas that sometimes tries Jewell’s patience in D.C. Her personal motives for accepting the job were to get young people into nature—not much opposition there, though not much funding, either—and to act on climate change, where even modest sums to study possible impacts can be highly controversial. “You go from a 12-member board of directors to a circumstance where you’ve got the whole U.S. Congress making a decision on your budget,” she says.

“Let’s say you want to restructure,” she adds, by way of example of the private-to-government transition. “I’m going to get out of the catalog business and focus on online, to make an obvious distinction. Maybe the people I need in catalog are different than online. So in business, you take a chance against earnings. Everyone applauds you. Your stock prices go up.” At Interior, she says, “it comes out of the current budget. It basically makes it very difficult to make the kinds of strategic changes that you might want.”
 
 
In the cafeteria of Oñate High School in Las Cruces, a few dozen VIPs mingle awaiting the public designation of Organ Mountains-Desert Peaks, the newest national monument. Desert Peaks encompasses almost half a million acres and four mountain ranges. An economic analysis suggests the monument will generate $7 million annually for local businesses through tourism. Jewell insists she’s there to recognize the work of others, and it’s clear that even under a hard sun, this is the fun part of her job. In her remarks she refers to a hike she took that morning on a trail into the Organ Mountains, and to the dedication of the people who look after it. Recently some far less pleasant events gave her cause to admire Bureau of Land Management regulars, too.

In March, a protest group supporting Nevada rancher Cliven Bundy staged an armed standoff with BLM officials when the bureau, acting on a judge’s order, began to round up his cows. The cattle were on BLM land, and he’d refused to pay grazing rights for decades. Prior to some racist remarks he made, Bundy was a widely quoted cause célèbre on Fox News. Jewell followed the standoff closely and approved a de-escalation—letting the cattle go for now. The last thing she wanted was a federal employee getting shot over a few cows. She and BLM Director Neil Kornze say the government is pursuing other means to get Bundy to comply with the law.

With Obama and Chuck Hagel; meeting forest firefighters in BoiseFrom top: Mandel Ngan/AFP/Getty Images; ReutersWith Obama and Chuck Hagel; meeting forest firefighters in Boise

Where Jewell is likely to make her greatest impact is reforming federal land energy development. Her agenda includes reauthorizing the Land and Water Conservation Fund, a 50-year-old program that uses fees from offshore drilling permits to expand national parks or even build local ball fields. Jewell wants the government to continue to raise money from energy producers to pay for sea walls, wetlands restoration, and other measures that will make communities more resilient to climate change. She also wants to reform oil and gas permitting so that industry gets permission faster, while underwriting environmental impact evaluations and inspections Interior can’t afford. And it’s not just for fossil fuels, Jewell says. The U.S. needs the same arrangement—faster permit processing in exchange for fees from industry for safety analysis—from wind and other renewable energy producers.

For offshore oil and gas production, Jewell says, it works. Onshore, it doesn’t. “So we’re criticized for not processing permits fast enough,” she says. “And we have a report from the [U.S. Government Accountability Office] saying we’re not inspecting high-risk wells. And we can’t do that because we don’t have the resources. So we’re working with members of Congress and in the industry to say let’s be rational about matching supply and demand.” She insists it’s not a partisan issue.

Some of those high-risk wells in the GAO report are fracking operations. The controversial practice has unlocked massive shale gas reserves and led to a boom. It’s also divided environmentalists, some of whom see natural gas as a “bridge fuel” from oil and coal to carbon-free alternatives. Opponents, however, point to two concerns. Oil and gas wells in North Dakota, for example, produce so much oil that they just burn, or “flare,” the natural gas released—discharging CO2 without using the gas for fuel. Fracked wells have often been shown to leak methane, which pound for pound is 20 times as potent as CO2 for trapping solar energy in the atmosphere. As such, a growing number of activist organizations call for an outright ban on fracking, while the more pragmatic Environmental Defense Fund calls on industry to do it right. Can fracking be done responsibly? “Absolutely,” Jewell says.

“One of the things that I have observed coming in here,” she says, “is that many of the regulations we have go back 30 years. Thirty years ago was the time I was actually working in the industry. So we know that we can employ some new practices that are less impactful on the environment, which is why we are undergoing a lot of review and change in our regulations, particularly around things like fracking, but also methane capture.” The technology exists, Jewell says, to collect both the gas now flared and the methane leaked from the wells—it’s just a matter of cost.

Jewell is cautiously optimistic about the renewal of the Land and Water Conservation Fund. She is working with Democrats and Republicans to get it reauthorized and to tie its appropriations to rural communities that lose out on such things as property tax revenue. “It’s a challenge working through Congress,” she says, “but you find common ground on things that are important to [each of the representatives] and, from there, find a path forward.”
 
 
Even in death, a bald eagle has a somewhat regal cast, and it’s striking to see the national symbol so inert. The raptor lies on a steel table, its dark wings folded in, eyes closed in a squint as Jewell leans in to get a closer look. In a nearby walk-in freezer there are 200 more, their corpses shipped here, to the National Eagle Repository, by animal control officers, rangers, or citizens who discover them.

The repository exists under the same roof as the National Wildlife Repository, and as Jewell examines the eagle, Steve Oberholtzer introduces Dennis Wiist, whose full-time job it is to clean the dead eagles and gather their feathers for use in Native American regalia. The U.S. Department of the Interior includes the Bureau of Indian Affairs, so eagle feathers are yet another of the obscure but vital services Jewell oversees. Wiist has a three-week backlog of requests, and Oberholtzer is tactfully making the case for getting him an apprentice. Jewell suggests a renewed effort to recruit Native Americans, even recommending where to post job openings. When politicians refer casually to federal employee “waste, fraud, and abuse,” Jewell says, she has a harder time letting it pass because of people like Wiist.

“There are incredibly hardworking people in the federal government that I would put up against the private sector any day,” she says later. “The people in the wildlife trafficking area, the guy that was picking feathers off the eagle—I guarantee you he’s not making much money.” Most Interior personnel, she says, “haven’t had a meaningful raise in four years. They haven’t had a budget increase in four years. They had sequestration last year, which made them cut the programs that were the most important to their future, like seasonal ranger programs that employed young people, and volunteer coordinators that could leverage volunteers that are dying to come out and protect these public lands. Those are the things that got cut.” Under sequestration, Jewell points out, no vacant position could be filled. If the vacant position was a volunteer coordinator—someone who might add tens or even a hundred bodies to a project—the loss of that one job cost that office a key “force multiplier.”

Her role, she continues, “is not for the faint of heart. But it is incredibly rewarding because of the people doing the job they’re doing.” Then she makes a face, knowing that that’s a right-thing-to-say quote. But she doesn’t take it back.

Wieners_190
Wieners (@bradwieners) is an executive editor for Bloomberg Businessweek.

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