IG: Bolden Violated Ethics Pledge But Not Law in Contacting Oil Company

NASA Administrator Charles Bolden

The NASA Office of Inspector General has concluded that Administrator Charles Bolden did not violate any federal laws in consulting an oil company about the viability of an alternative fuel project in which the agency is involved. However, Bolden did break an Ethics Pledge he had signed and raised concerns about an appearance of a conflict of interest, the IG concluded in a report released today.

The matter relates to an algae fuel  project called OMEGA that NASA Ames is working on. Bolden consulted Marathon Oil Corporation on technical matters when considering whether to approve an MOU with the U.S. Navy for collaboration on the project. Conflict of interest issues were raised because Bolden owns stock in the company and formerly sat on its Board of Directors.

The IG’s report clears Bolden of any legal wrongdoing but said the matter raised some ethical issues:

In sum, we found no evidence that Bolden or Marathon received a present or promised financial benefit as a result of Bolden’s call. We also found that the information Bolden received from Marathon did not cause him to withhold funding to the OMEGA project or to direct that the proposed MOU with the Navy be abandoned.

We concluded that Bolden’s contact with Marathon regarding OMEGA did not violate federal laws or regulations pertaining to conflicts of interest. However, we found that the contact was not consistent with the Ethics Pledge he, as an Administration appointee, had signed, and that it raised concerns about an appearance of a conflict of interest involving the NASA Administrator and a large oil company to which he had financial ties.”

The controversy concerned a relatively small fuel development project being worked on at NASA Ames. According to NASA’s website:

The OMEGA system consists of large plastic bags with inserts of forward-osmosis membranes that grow freshwater algae in processed wastewater by photosynthesis. Using energy from the sun, the algae absorb carbon dioxide from the atmosphere and nutrients from the wastewater to produce biomass and oxygen. As the algae grow, the nutrients are contained in the enclosures, while the cleansed freshwater is released into the surrounding ocean through the forward-osmosis membranes.

Potential benefits include oil production from the harvested algae, and conversion of municipal wastewater into clean water before it is released into the ocean. After the oil is extracted from the algae, the algal remains can be used to make fertilizer, animal feed, cosmetics, or other valuable products. This successful spinoff of NASA-derived technology will help support the commercial development of a new algae-based biofuels industry and wastewater treatment.

According to the report, NASA Ames Center Director Pete Worden and OMEGA Lead Scientist Jonathan Trent had been promoting the project aggressively both within the agency and to partners outside of it.

In fact, on his own initiative Trent made a telephonic presentation regarding OMEGA in September 2009 to Linda Capuano, Marathon’s Vice President for Emerging Technology. Capuano told the OIG that although she found Trent’s presentation interesting, she considered OMEGA to be at the concept stage, and that Marathon was not interested in participating in or pursuing OMEGA-related research. Apart from this single telephone conversation, Capuano said she has had no further contact with Trent,” the IG’s report states.

Worden and Trent obtained the backing of NASA Deputy Administrator Lori Garver, who wanted to fund the project at $10 million. Others within the agency, including Aeronautics Research Mission Director Jaiwon Shin, had doubts about the technology’s feasibility. Shin was also concerned that the expenditure would divert funds from other valuable projects, and he expressed doubts about whether developing new fuels was within the mandate of the Aeronautics program.

The matter eventually landed on Bolden’s desk the following spring when he reviewed a proposed memorandum of understanding with the U.S. Navy for collaboration on OMEGA. Bolden received a technical briefing on the project. The IG’s report indicates that he generally sided with Shin’s views on the project, but he decided to obtain additional information at Garver’s urging.

This effort eventually led to a 10-15 minute conversation between Bolden and Marathon Vice President Capuano, to whom Trent had earlier pitched the OMEGA project. The IG’s report indicates that that discussion focused on the technical issues involved in developing and commercializing algae-based fuels. Marathon’s position that it did not want to be involved in OMEGA had not changed, according to the report.

In the end, Bolden decided that OMEGA would go forward despite his misgivings. In an email to Garver and others involved in the project, he wrote:

I continue to have doubts about the viability of this project [OMEGA], especially after discussions with representatives of the Marathon Oil Corporation who received a brief recently from Trent. I have found no one outside NASA who feels this is a good investment in research funds at this time due to significant problems with process control and any promise of production in quantities to be of any use to industry. As long as you feel comfortable, however, with the information you have received to date and no one else has strong objection, I suggest we keep the ball rolling on the MOU, but insure that we have our technical act together before the MOU is actually signed.

Bolden’s email was also sent to NASA Ames Director Worden, who sent a blistering e-mail to Garver.

Jonathan [Trent] tells me he talked to some guy from Marathon Oil a year ago on the phone and that was it. In the interest of open government and transparency I think my folks are entitled to know who talked to Charlie and the basis of their criticism so we can respond. This is frankly the worst of NASA and I don’t like it. It is “good ole boy” networks at it’s [sic] worst and not worthy of NASA and this Administration. Anything I can do about it? It seems to be happening a lot. Charlie talks to “someone” he knows – often an astronaut. We get “convicted” without knowing the evidence, the accuser or with any due process.

I know you are frustrated too. But this is the “Never the Straight Answer” NASA we came to fix. At least Griffin allowed us a day in court with an open discussion of the technical facts and conflicts of interest out on the table

In the meantime, we are lining up the technical counters. But to do a professional job I need to know the “facts” being used against us.

The IG’s Office concluded that since Bolden did nothing to obstruct a project in which Marathon had no interest, there were no laws broken.

With regard to Section 208, there is no evidence that Bolden had a financial interest in whether NASA proceeded with the MOU with the Navy or in the amount of NASA funding OMEGA would receive. Although he owned stock in Marathon, there is no logical scenario in which Bolden’s decisions regarding OMEGA would affect the value of that stock. Even OMEGA’s supporters do not suggest that the project is anywhere near to producing fuel in the commercially viable amounts that would be needed to have an effect on the stock price of a company like Marathon. Moreover, despite his doubts about the project, Bolden did not take steps to limit NASA’s funding of OMEGA or derail the proposed MOU. Finally, as the Justice Department prosecutors we consulted with noted, Bolden made no effort to conceal his communication with Marathon.

Similarly, we concluded that Bolden’s actions did not violate Section 502 because although he had a “covered relationship” with Marathon due to his stock ownership, Marathon was not a party to the MOU or any other matter relating to OMEGA. As discussed above, Marathon, having previously been briefed about OMEGA by Trent, expressed no interest in participating in the project, a position that did not change after Bolden’s conversation with Marathon executive Capuano.

Although Bolden didn’t break any laws, he does seem to have violated an ethics pledge he made when he joined the Obama Administration.

With regard to the Ethics Pledge, OGC lawyers told the OIG that the White House Deputy Associate Counsel expressed the view that Bolden should have acted more prudently concerning his contact with Marathon and characterized his actions as a procedural violation of the Pledge. They said the Deputy Associate Counsel recommended that Bolden receive refresher ethics training, which the OGC lawyers said they provided to Bolden on June 1, 2010.

During his interview with the OIG, the White House Deputy Associate Counsel said that his office has made no formal determination as to whether Bolden violated his Ethics Pledge. However, he said that based on the limited facts before him at the time of his conversation with the OGC attorney, he believed that Bolden “could likely have violated” the Pledge, and that counseling was the appropriate response.

Bolden has received an ethic refresher course and has recused himself from any further involvement in the OMEGA program.

Report Summary

This report summarizes a NASA Office of Inspector General (OIG) investigation into allegations that NASA Administrator Charles F. Bolden, Jr. inappropriately consulted with Marathon Oil Corporation (Marathon), a company in which he has a significant financial interest, while he was considering NASA’s involvement with an alternative fuel development project. The project, known as the Offshore Membrane Enclosure for Growing Algae or OMEGA, seeks to produce fuel through controlled offshore reactions of wastewater and algae. Complaints received by the OIG claimed that Bolden engaged in a conflict of interest by consulting with Marathon. The allegations against Bolden became public on June 20, 2010, when an article appeared in The Orlando Sentinel.

On April 30, 2010, Bolden spoke by telephone with a senior Marathon official for approximately 10-15 minutes seeking her technical perspective on the viability of algae-based fuels. At the time of his call, Bolden was considering a proposed memorandum of understanding (MOU) between NASA and the Department of the Navy (Navy) relating to the OMEGA project. Also at that time, Bolden owned between $500,000 and $1 million in Marathon stock and had served on Marathon’s Board of Directors for the 6 years immediately prior to his becoming NASA Administrator.

During the course of our investigation, we interviewed 15 NASA employees, including Administrator Bolden, Deputy Administrator Lori Garver, Ames Research Center Director Simon “Pete” Worden, Aeronautics Research Mission Director Jaiwon Shin, OMEGA’s lead scientist Jonathan Trent, and General Counsel Michael Wholley, as well as officials from Marathon, the Navy, and the White House Counsel’s Office. We also reviewed hundreds of e-mails and related documents from NASA and Marathon and consulted with officials at the Federal Bureau of Investigation, the Department of Justice, and the Office of Government Ethics.

In sum, we found no evidence that Bolden or Marathon received a present or promised financial benefit as a result of Bolden’s call. We also found that the information Bolden received from Marathon did not cause him to withhold funding to the OMEGA project or to direct that the proposed MOU with the Navy be abandoned.

We concluded that Bolden’s contact with Marathon regarding OMEGA did not violate federal laws or regulations pertaining to conflicts of interest. However, we found that the contact was not consistent with the Ethics Pledge he, as an Administration appointee, had signed, and that it raised concerns about an appearance of a conflict of interest involving the NASA Administrator and a large oil company to which he had financial ties.

When interviewed by the OIG about this matter, Bolden readily acknowledged that he had erred in contacting Marathon. Bolden said he has since recused himself from issues involving OMEGA and has received supplemental training regarding his ethical responsibilities.

In a related matter, we disagree with the determination made by NASA attorneys that it was not necessary to report Bolden’s contact with Marathon to the OIG.