The MacNeil/Lehrer Report; 8018; Watt Interview

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ROBERT MacNEIL [voice-over]: Ever since he became President Reagan's Interior Secretary, environmentalists have been trying to unseat James Watt. Tonight an interview with the administration's most controversial figure.

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MacNEIL: Good evening. Interior Secretary James Watt today gave final approval to a plan to greatly accelerate the development of offshore oil and gas. Under the plan next month the government will begin selling oil and gas leases for nearly a billion acres of coastal waters. That represents a twenty-five-fold increase in the offshore acreage available to the oil companies for development. The Reagan administration hopes this dramatic increase will reduce the country's dependence on imported oil. But there's widespread concern that this is too much, too fast. Some politicians of coastal states and environmental groups fear damage to fragile marine habitats and commercial fishing areas or to tourist amenities. But the new offshore leasing plan is only one of many controversial actions by Interior Secretary James Watt. They have made him the butt of hundreds of jokes and cartoons and, according to a Democratic polster, Peter Hart, the most hated man in America. Tonight, a talk with James Watt. Jim?

LEHRER: Mr. Secretary, welcome.

Sec. JAMES WATT: Good to be with you.

LEHRER: Why such a large offshore leasing program? One billion acres.

Sec. WATT: America needs to look at all of its resources and we have one billion acres of outer continental shelf lands that needs to be explored so that we can identify the potential oil and gas that can be there for Americans to use.

LEHRER: We don't know whether or not there is oil and gas out there, right?

Sec. WATT: That's correct. Unfortunately most of it will not be productive. We've only looked at 2 1/2% of all that we have and there's not been proper invertorying, proper exploration. We simply don't know what wealth we have, and if we're going to meet consumers' needs and have strong military defense capabilities, we've got to gain the knowledge and hopefully gain the oil and gas that might be there.

LEHRER: Well, the one billion acres essentially is the entire outer continental shelf around the United States -- the Gulf, the Atlantic, Pacific, the whole deal, right?

Sec. WATT: Right, with half of it being in Alaska. One state has about 500 million acres of outer continental shelf lands.

LEHRER: Is the United States oil industry ready and able to explore this?

Sec. WATT: We found after we made preliminary announcements that not only are they ready, willing and able; they're enthused and determined to pursue the program. Because of our early announcements of this program last year, the industry has committed $12 billion to make this program a success, and that means about 600,000 new jobs have been created because of what the Reagan administration did in this one subject matter.

MacNEIL: Mr. Secretary, one of the objections to the size of this projected leasing -- and these sales will be made over the next five years, as I understand it, starting next month -- is that the public won't get a fair return on these resources because if you sell them all at once, you sell the leases all at once, the companies who buy them will get them at a very, very low price, whereas years down the line they would be worth a great deal more.

Sec. WATT: It's a legitimate concern that really comes from those who don't understand the issues. We are going to make one billion acres available over the next five years; that does not mean that all those lands will be explored and developed. In fact, the most number of acres that have ever been leased in the 30-year program has been 2.2 million acres last year. Hopefully, we'll sell five to seven to 10 to 12 million acres in a year as the market might determine. They can handle that, it's not too much; if it's too much they won't bid it. Now, one of the interesting philosophical things is that in past administrations they have sought to keep the supply down, thus jacking the price up. The price is up to consumers. If you have a consumer orientation, like the Reagan administration, you want to increase supply and increase competition and let more than the seven or so big, major oil companies dominate this area. We want as many competitors as we can possibly get into the program.

MacNEIL: Why have you reduced the royalty rate that the government will get from the sale of the resources in these leases from, as I understand it, 16.7% to the minimum allowed by law: 12 1/2%?

Sec. WATT: The statutes dictate that it be the one-sixth percent on the outer continental shelf. Now, there is some flexibility for us on the onshore leasing, but the outer continental shelf leasing is dictated by statute.

MacNEIL: One-sixth percent being one-sixth of what? Sixteen percent.

Sec. WATT: Of the gross sales.

MacNEIL: Sixteen percent of the gross sales. You have not reduced it for the outer continental shelf.

Sec. WATT: That is set by statute.

MacNEIL: I see. I come back to the point, isn't this, by making so much available immediately, isn't this a gift to the companies which can develop them, whereas hanging on to them longer would mean that the public treasury would gain more from them in later years?

Sec. WATT: Well, number one, the consumers of America need the oil and gas now so that we won't be dependent upon the Arab and OPEC nations. Number two, the companies have to pay the royalty that we've talked about and they have to pay the big bonuses. Now, last year we had a sale in California, off the coast of California, one tract nine square miles of sea water sold for $334 million. The largest sale ever in the history of America. The companies are paying up-front money, they're paying the royalty and investing it, hopefully to bring oil and gas so consumers can heat their homes and havejobs. That's of paramount importance to us.

LEHRER: Mr. Secretary, as we sit here now the whole business of drilling and exploring for oil and gas is going through a depression of sorts, there's an oil glut, etcetera. Do you really expect there to be widespread exploration of a new one billion acres when they're not even exploring what's even available now?

Sec. WATT: Yes. They're eager to explore and eager to get involved. In fact today we have 16 ships working off the coast of Alaska of a total fleet of 60. There's tremendous excitement there. One of the problems with government in past years is that public policy has been made on short-term considerations: there's an oil glut so we don't lease anything. Public policy should be stable and consistent through time and that's why we're determined to enunciate a five-year program so that industry can make the investments and create the jobs. Now, as I've said we've created 600,000 jobs in this one program in the Department of Interior alone. Private jobs, not government jobs.

LEHRER: Let's move on to the other major concern that's been expressed about your program and that, of course, is the environmental concern. The question is: can all of this drilling be done without endangering the environment, the various wildlife habitats and the other things that are involved?

Sec. WATT: Very definitely. The record for the environmental protection on the outer continental shelf is a beautiful record. We have not had a major spill since Santa Barbara in 1969; we learned a lot from that and tough conditions have been put on all the drilling and production operations since that time. The biggest threat to the environment comes from importing foreign crude oil on foreign ships. In fact, the National Academy of Science has done a study and they have found that over the world there's an average of 14,000 barrels spilled because of OCS activities on the entire ocean and 13 million barrels have been spilled by tankers washing out, spills and the like. So, we're talking about 14,000 barrels worldwide on the oceans compared to 13 million barrels. It's the safest, most environmental secure way to do it and if anyone is concerned about the environment, they should accelerate our program as we're doing it. It's a beautiful program.

LEHRER: Above and beyond oil spills, what about just doing that much exploration, that much activity, what it might do to marine life and the delicate balance as it's called? You're not concerned about that?

Sec. WATT: We are concerned about it and that's why we have such stiff, rigid conditions; and we've spent $280 million in accumulated studies that accumulates the information so that we have more of a body of knowledge on environmental impact because of ocean activities along with the outer continental shelf drilling program than in any other segment of our whole ecological system. It's a sound program, it's proved itself and it's getting better each year.

MacNEIL: Mr. Secretary, let's turn to coal for a moment. In April, there was a huge sale of coal in the Powder River basin which crosses Wyoming, Montana areas. There have been congressional hearings, the General Accounting Office is now doing an investigation into that sale and your department has been accused of underselling that coal, selling that coal much too cheaply. What is your response to that?

Sec. WATT: I'm somewhat amused at that charge. I'm well familiar with it, of course. It's a competitive market; we take the bids and it's a competitive matter.I talked to Governor Herschler of Wyoming about that and I was concerned about the sale and he said, "Jim, don't worry about that. The economists are always telling you that you haven't sold it at a high enough price but never have I seen an economist bid on anything." And I thought that was a splendid answer. If the market forces say the price is what it is, that's what it is and that's the fair return to the taxpayers.

MacNEIL: But just before the sale was undertaken your department lowered the minimum bid required to $25 an acre. Why did you lower the minimum bid requirement?

Sec. WATT: Our geologists made the studies and surveyed the issue and determined that that would be a minimum level entry that would be meaningful, and because of that we rejected two of the sales. One of the bids came in for $11 million on one of the tracts and we determined that that was not sufficient and rejected that. That land will go up for resale later this summer and hopefully will draw a bigger price.

MacNEIL: After the sale, you called that sale a resounding success.

Sec. WATT: Yes.

MacNEIL: It totaled just over $54 million. And yet I have seen it reported that the people in your department, the mineral management field staff, had valued that same coal at $94 million.

Sec. WATT: The sale was the largest sale in acreage that had ever been held by the United States government, it was the largest dollar return, it promises more jobs, it is good environmental program, it was carried out in full cooperation with the states of Montana and Wyoming with total accord on all issues. It was just a resounding success no matter how you measure it. And the marketplace determines the value, not some bureaucrat in Washington, and it's just a great program.

MacNEIL: Well, getting back to the point I was making on oil, some of your critics have raised it even more explicitly with regard to the coal, that if you sell coal now in huge amounts at an average of 4 to 8 a ton, it may encourage companies to speculate in that coal as they did in the '50s and '60s and as the Nixon administration tried to stop them doing by reducing the amount of lease sales.

Sec. WATT: Yes, that is the criticism engendered by those who criticize everything and they're simply not presenting all the facts. That's the up-front cost. In addition to that there's a royalty payment, as we've talked about, the 12 1/2% on coal as well as on oil, and in addition to that they must bring on that coal mine and produce it within 10 years. So a coal company cannot speculate because that lease is only valuable for 10 years unless he starts production. Congress has set that, it's statutorily established, I have no discretion on it. I think Congress has done it wisely. The critics fail to point out those facts.

MacNEIL: Another fact they point to is that there is 16 1/2 billion acres of coal already under lease, enough, it is said, to last the developing companies for 200 years. Why suddenly lease a great deal more at very low rates?

Sec. WATT: The number of coal acres leased is substantial. Most of it was leased in the 1960s because in 1972 there was a freeze put on and we've not had any significant coal leasing since then. Since the 1960s, we've had 40 or so new statutes put on the books, like clean air, clean water, endangered species and on and on they go, that make most of that coal uneconomical to mine. If we're interested in jobs, if we're interested in improving the environment, if we're interested in exporting greater commodities, we need to make that coal which is most attractive to the marketplace available. And that's why we're going ahead and letting the market determine which is the best coal to mine.

LEHRER: You mentioned, Mr. Secretary, that you consulted with, I think you said the governor of Wyoming on the coal plan. Did you consult with all the coastal states in drawing up the offshore leasing plan as well?

Sec. WATT: Yes. The statutes again there also require that you have full consultation with all of the states. There's 22 coastal states plus the Great Lakes states that are involved in that process and they've all participated in it and reviewed it as has Congress.

LEHRER: But they all haven't approved it.

Sec. WATT: Five of the 22 have had criticism and we'll probably be sued by two or three of those states. We can always expect a lawsuit from California for political reasons.

LEHRER: Well, they've sued you on an earlier transaction and actually won the lawsuit, did they not? California did, right?

Sec. WATT: Yes, California always sues you, anyway under Governor Brown they always sue you, and they always win the first lawsuit in the district court and up to now they've always lost on appeal -- and we expect them to lose again. Those are politically postured lawsuits, not good, sound lawsuits.

LEHRER: Now, why do you say that? You're saying that their only concern is politics?

Sec. WATT: I wouldn't want to say the only concern, but that's the driving force --

LEHRER: That's essentially what you're saying.

Sec. WATT: The driving force is political posturing. Now, Alaska will probably sue us as well because they've got as I've said 50% of the outer continental shelf and they have some technical concerns, but we have complied with the court decisions in the past, and in conversations I've had with Governor Hammond, we expect to prevail on all points there as well.

LEHRER: As you know, when you first came to Washington one of the things you said over and over again was that the federal government has been telling the states too much what to do, and the sagebrush rebellion grew out of that, all that sort of thing. Aren't you essentially doing the same thing [unintelligible] criticizing prior administrations doing the offshore leasing?

Sec. WATT: On offshore leasing we're exercising the national issues above state issues. Right today, we have raging in Iran and Iraq a war that could disrupt the delivery of crude energy throughout the free world. We have in Israel a war that could disrupt and tear the whole Mideast crisis apart. I have a national responsibility. I took an oath to help secure the national interests of America and that requires that we have energy.So yes, I have overruled some of the governors, governor of Alaska, governor of California on a few very small issues because there's a national need that the farmers in Iowa need oil as much as California.

LEHRER: But my point is, isn't that exactly what the Democrats used to say when they would take a national policy and override governors? You're just doing it on different issues but you're following the same basic concept, that the federal government knows best.

Sec. WATT: The major difference is that now we don't have a sagebrush rebellion because I worked with the Democrats: Governor Herschler, Governor Schwinden, Governor Lamm, Governor Matheson, Governor Babbitt, Governor King. They all worked with us, and we have a good relationship.

LEHRER: But you would concede my point, would you not? I mean the concept is the same, that the federal government knows best. You're following the same idea.

Sec. WATT: Yes. But the attitude is different because I do consult and cooperate with them.And we don't have the hostilities out of those Democrat governors that those Democrat governors gave the Carter administration because we've been good neighbors about it.

LEHRER: But they are taking you to court.

Sec. WATT: A couple governors will on this issue. And on any issue the one governor will take you to court.

LEHRER: I see. Robin?

MacNEIL: Mr. Secretary, is it true as it's reported in the Los Angeles Times today that you have --

Sec. WATT: Probably not. Before you ask your question. [laughs]

MacNEIL: Well, let me ask the question. That you have suggested to some lumber company executives that parts of the national forest near the Redwood National Park in California be sold in order to pay for the remaining outstanding bill for expanding that Redwood National Park.

Sec. WATT: Robin, I'm not familiar with the article in the Los Angeles Times, so speaking generically to the issue, probably the answer is yes in that we are looking for exchanges wherever we can to reduce the cash flow, and if it would be in the government's best interest to exchange lands for lands that were taken for park purposes, the taxpayer would be much better off. So the specifics of the case I can't refer to, but generally I would encourage and favor exchanges of land; and in that Redwood situation we didn't buy the lands, we took them from the lumber companies and then said we'll figure out what they're worth and pay you later. And that's the negotiating situation in which I entered government.

MacNEIL: Do you recall telling these lumber company executives that the government was broke and invited them to suggest ways of coming up with $200 million to pay that remaining part of the bill?

Sec. WATT: Yes, I would have likely have said that as I've said it to many people: you give us the ideas so that we can react to them and that might be a very favorable idea; I need to look at it. We'll see what they propose.

MacNEIL: The National Forest Service which does not come under your department is quoted in the same article as strongly opposing such a sale and saying there would be a lot of political difficulties with it. And you don't have the power to sell that national forest, do you?

Sec. WATT: No, the President would have that authority with Congress working on it and, of course, I can't do anything that's not statutorily sound. I'm willing to look at it and of course there would be a lot of politics involved. We'll work it out and I think -- first of all I need to see the proposal.

MacNEIL: Yeah. Can I read you a quotation from an editorial in the Sacramento Bee? Among the sort of harsh things that are said about your general policy of developing these resources more quickly than previous administrations have done, Bernard Sparks, as assistant to the secretary of the California Resources Agency is quoted in this editorial as saying, "Watt is directing the plundering of public resources at a scale unmatched in the corrupt history of public lands." What would your response be to an observation like that?

Sec. WATT: Well, first I'd smile and then I'd ask to look at the record. When I came on in January of 1981 the National Park System, which is in the Department of Interior, was in a state of disrepair. The past administration had not taken care of our national parks. And the secretary of interior has a stewardship responsibility, and yet in shameful management the past administration allowed raw sewage to flow into the streams and lakes. They didn't take care of our parks. They were destroying the very natural resources that we're trying to protect that are so beautiful in our national parks. So I've come in and I've asked Congress to double the commitment to restoring the parks.We have a five-year program that will carry over a billion dollars when we're through with it to bring the parks back to health and safety standards. When you look at the 84 million acres of wildlife refuge, the same story there. You see, this administration understands stewardship: taking car of the land. And I can report to you that today, 18 months after this administration came into being the parks are in better shape than they were when I inherited them, they're under better management as is the wildlife range, as is the public lands, as are all the lands because we understand stewardship. The past administration knew how to take but not take care and we're taking care of the land.

LEHRER: And yet your critics, quote another one, the National Wildlife Federation, says that you have "plunged forward to transfer the public's energy wealth into private ownership in a manner that can only be described as reckless."

Sec. WATT: And I'm supposed to reply to that? I take my --

LEHRER: How would you describe it?

Sec. WATT: We've introduced a balanced, common-sense approach that recognized there are national security needs, that there are consumer needs. We should not be dependent upon Arab and OPEC nations for 40% of our crude energy needs as was the case in January of 1981. We should not be subject to the pressures of foreign influences when we have this wealth. We need to be a strong, secure nation so that we can take care of our needs as well as our allies' needs in time of a crisis. America today, Jim, is vulnerable to a natural resource war. Not only are we importing these huge quantities of energy from foreign sources; we import the majority of the strategic minerals needed for military might and industrial strength from Russia and the south African nations. I want to repeat that so that everyone understands. We are importing the strategic minerals needed to keep America going from Russia and south African nations. That need not be the case. We need to manage these lands.

LEHRER: As Secretary of the Interior, you see that and you've said it many, many times just this evening already, that your priority appears to be number one, number two, number three, number four, development of energy resources. You have not yet mentioned conservation and that, of course, is what your critics say. That you're out there only trying to develop energy and way down on your list is conservation. Is that true?

Sec. WATT: No, it is not true. And I've just talked about the parks, the wildlife refuges, and the public lands.I'm the one pouring the money in. The Democrats didn't do that. I've asked Congess to make these changes in priorities and Congress has gone basically with us. Which is very encouraging to me. The office I sit in, Jim, is a very controversial office. I am one of the chief environmental officers for America. I'm also the chief strip miner of coal, I'm the chief park ranger, I'm the chief oil and gas developer, I'm the chief wildlife protector and I'm the chief dam builder for water that's needed to drink and to keep industry going and farms moving. I'm also the taker of the endangered species program that implements it. So I have tremendous conflict. Now, what I inherited, Jim, was a program so far out in left field that I'vehad to make many pro-development decisions to bring the pendulum down into the main stream of America. And in doing that I have made many pro-development decisions, I've moved on the outer continental shelf to try to reduce our dependency on the Arabs, I've leased lots of coal land so that we can meet those needs and hopefully have some export capability. I've also taken care of wetlands, we've done more for wetlands than probably anybody else. The coastal barrier island program is a beautiful program that we've aggressively pursued. The parks we're restoring, the wildlife areas. We've done it all. The critics don't talk about the good things we do. They talk about their special interest groups. I understand that but if you look at the record, most of that criticism that you, Jim, and Robin are quoting is criticism of six months ago. That's pretty much behind us. We have faced criticism, Congress has gone with us. We've won those battles because we're in the middle; we're bringing common-sense balance. We are making development decisions, we are making preservation decisions. It's a good balance program.

MacNEIL: Let me quote a criticism that comes just today, Mr, Secretary, by Congressman Markey of Massachusetts, the Chairman of the House Interior Oversight Committee, about the plan that you announced today. He said, "It lacks any sense of compromise, it lacks any concern for our ocean environment and lacks any appreciation for the impact on the affected coastal states." You just said the Congress has gone along with you. He says he's going to introduce a resolution trying to overturn this plan.

Sec. WATT: That congressman that you quote from Massachusetts is chairman of the subcommittee. He's held hearings in the 60-day period that the law allows him to hold hearings. He never brought one issue to vote. He never had one vote in his subcommittee criticizing any dimension of this plan and now after it's finalized and formalized he makes a political statement to get you to read it. Why didn't he bring his committee to vote if he criticized it? He did not. It's political posturing on his part. Congress could have, they had a responsibility to do it and I think they've recognized that it's a wise, balanced program that's needed if we're going to be cognizant of the war in the Mideast and the shortages and the dependencies and the blackmail potential. And I think Congress has endorsed us or they would have moved in that 60-day period.

MacNEIL: Speaking of politics, do you get the feeling in the administration you're regarded as a political liability these days with an election coming up?

Sec. WATT: My gosh, if you'd look at my travel schedule, you'd say there's no liability there. I've been on the move.

MacNEIL: Haven't you been asked to pull in your political horns a little bit? It was noted some time ago that you cancelled a string of speeches you were going to make in California and you declined to appear before certain House committees?

Sec. WATT: Well, I've also been accused of taking a low profile and here I am on your TV program tonight. So it's not too low today, is it?

MacNEIL: I see. Are you invited to go and campaign for people who are running for the House and Senate this fall?

Sec. WATT: I've been -- tremendous campaign schedule. In fact some of my critics also criticize I'm away from the office too much because I'm out campaigning.

MacNEIL: I think the serious point behind the question is, is the environmental movement really being cut down to size politically -- and I wonder whether that's your aim -- but is it being cut down to size and can it be confronted as you appear to be confronting it without negative political consequences?

Sec. WATT: We think that we are addressing it and bringing some common-sense balance to it and we feel and know that you can have proper environmental protection and economic development. We have every faith in that, we've worked with the governors on it, we've ended a sagebrush rebellion, we've brought tremendous progress, created jobs and enhanced the parks and wildlife refuges. We're the ones bringing conservation and good stewardship to the parks, the wildlife areas, the coastal barriers, the wetlands, etcetera. We've done it.

MacNEIL: What do you feel when you're described as the most hated man in America, as I quoted at the beginning?

Sec. WATT: Well, it hurts but it also helps draw crowds for conservative, Republican candidates as well.

MacNEIL: Thank you, Mr. Secretary, very much for joining us. Good night, Jim.

LEHRER: Good night, Robin.

MacNEIL: That's all for tonight. We will be back tomorrow night. I'm Robert MacNeil. Good night.