Saturday, June 19, 2010

It's Just a Horrible Accident

It is about day 60 since the horrific explosion of the Deepwater Horizon Drilling Rig that killed 11 people and will probably result in the largest oil spill in the history of man’s exploration and production of oil and gas. It is a tragic and horrible accident. The loss of human life, the survivor’s remorse, those who will forever be reliving that accident and wondering what went wrong and how they could have prevented it, and the impact on the environment that will be played out over the ensuing decades—these are all the horrific outcomes of a tragic accident.

But all of that will most likely be eclipsed by the self flagellation that America will put itself through in the form of investigations, special commissions, second guessing, prosecutions, new laws and rulemaking, and lost opportunity that comes from overreacting to what in the final analysis is just a horrible accident. We have a history of doing this to ourselves in the wake of accidents. It can be described in six distinct phases of almost any given project: 1) Enthusiasm, 2) Disillusionment, 3) Panic, 4) Search for the Guilty, 5) Punish the Innocent, and 6) Praise for the Uninvolved.

Prior to the explosion that occurred on April 20, President Obama showed enthusiasm as he announced plans to expand offshore oil and gas leasing for a number of good and sound reasons. There is tremendous potential to develop domestic oil and gas supplies offshore as improved technology has proven the existence of huge oil and gas reserves under the ocean floor and our offshore oil and gas exploration and development industry has a sterling record of safety and environmental responsibility. Consider that when Hurricane Katrina went right through the heart of the Gulf of Mexico’s offshore drilling region in 2005, all the drilling rigs and production platforms were successfully shut down. Even though some platforms were wrecked beyond belief and blown ashore, nobody was hurt, the spillage was nominal, and full production was back online in a matter of months. Secretary of the Interior Ken Salazar testified before Congress a few weeks ago that the United States had successfully drilled and developed more than 36,000 offshore wells without a serious incident or spill up until the Deepwater Horizon accident.

Then came the disillusionment. A huge explosion rocked the rig. Lives were lost. The ensuing fire and efforts to put it out in an attempt to save the lives of those men who were missing at the time resulted in the floating rig sinking which collapsed the drill stem and broke it near the bottom of the ocean 5,000 feet below the surface. The blowout preventer—a device used on all drilling rigs to prevent accidental spills after the 1969 Santa Barbara oil spill—failed either as a result of human error or the shear magnitude of the pressure produced by this gusher.

We are still in the panic phase. How do you cap a blowout that is 5,000 feet under water when the rig that can handle the equipment is lying on the ocean bottom nearby? In typical American fashion we oversimplify or ignore the physics and engineering challenges. We argue about how much oil is actually flowing out of the hole as though that really matters. And even though the oil industry standard for volume measurement has always been the Barrel, we estimate the spill in gallons which makes the number much bigger and adds to level public panic and media hyperbole. Tourism in the Gulf Coast region is almost none existent this year because the public believes the oil is ankle deep from Texas to Florida, even though most of the oil is still offshore at this time.

Of course, since a quick and easy fix did not present itself and this disaster now has the potential to play out all the way into September, political expediency requires us to jump right to the search-for-the-guilty and punishment-of-the-innocent phases.

There is and should be culpability and accountability for this accident. The measured and appropriate punishment is the means by which society corrects wrong or inappropriate behaviors that may lead to accidents. This is the natural course of action for us to follow. Personally, I believe BP to be that guilty party and they have already owned up to this by their unflinching commitment to stop the leak, clean up the mess, and keep whole those impacted by this disaster. However, it is not lost on me that British Petroleum has for about a decade tried to market themselves as Beyond Petroleum. Despite the fact that oil and gas exploration, development, refining, and retail sales makes up the vast majority of their business portfolio, they have been spending millions of dollars trying to convince us all that they are “green.” If you look into their history, I suspect you will find that BP does not have the best track record of safety and maintenance practices and a higher than industry average of accidents and spills.

In the world of government we always rush to punish the innocent. In Washington, DC, this usually takes the form of “throwing someone under the bus.” The President is the Chief Executive, but the spill is not his fault. The Secretary of the Interior is in charge of the Minerals Management Service (MMS) which is the office responsible for selling oil and gas leases, collecting the royalties, and enforcing safety on offshore rigs. But, Ken Salazar is not to blame. In an ah-hah moment, Salazar visits the Director of the MMS, and like a good loyal political appointee, she throws herself under the bus. But, it does not stop there. An old Inspector General Report that reveled that sex and drugs were corrupting a few MMS employees in the Lakewood, CO, office suddenly becomes news again. I do not support corrupt behavior, but corruption by sex and drugs is hardly a novelty in America today. I dare say, and the annual reports of Inspector Generals across government support this, that you can find a corrupt employee in every single federal agency. It is true of the private sector, too. However, to suggest that the people cited in the report somehow were the cause of this accident is ludicrous.

I happen to have worked with many of the top managers at the Minerals Management Service and I personally know them to be honest, hard working, smart, and highly motivated to do the best possible job they can. This is one of the smallest of federal agencies, yet through their work selling oil and gas leases and collecting federal mineral royalties, they are responsible for the second largest source of revenue to the United States Treasury. In recent years they have collected as much as $16 billion a year, second only to the Income Tax in total revenue. There are, as in any organization, a few bad apples and they should be and have been punished. But, let us not, in our zeal to punish the innocent, throw the whole agency under the bus.

Many people who have no direct association with this accident or its mitigation will soon rush to try to fix the problem which will lead to praise for the uninvolved. Let me again suggest that this oil spill is the result of a horrible accident. Horrible accidents happen every day. In excess of 40,000 people die as a result of car crashes every year, but automobiles have not been outlawed and automobile use and safety has increased. From time to time an airplane crashes sometimes killing hundreds of innocent people, but we still fly in record numbers every year and flying on a commercial airline is one of the safest modes of travel we can use. People die daily in hospitals sometimes due to human error, but we don’t close down the hospitals or imprison the doctor who makes an unfortunate, but honest mistake. Let us learn from this tragic accident in the Gulf of Mexico, let us work together to mitigate this environmental disaster, let us hold accountable those responsible, but please, please, let us not stop exploring for and developing domestic supplies of oil and gas. We are the most environmentally responsible nation in the world and our track record, even with this accident, is excellent. And like it or not, we need reliable domestic supplies of oil and gas to sustain our economy, quality of life, and to get us through to the next generation of energy sources.

Friday, June 4, 2010

Let My Species Go

“Let my people go!” uttered Charleton Heston in Cecille B. Demille’s classic, The Ten Commandments. It is one of his most famous lines. Today, the Endangered Species Act—a well-intentioned law hijacked by environmentalists—has many fish and wildlife professionals crying out, “Let my species go!”

Recalling the Biblical account from Genesis and Exodus, the Israelites went to Egypt because a severe drought in the Promised Land threatened the very survival of God’s chosen people. Joseph, the son of Jacob who was sold into slavery in Egypt by his jealous brothers, had interpreted Pharaoh’s dream that foretold the drought and so Egypt had set aside grain for the seven years of famine. Thus, Joseph was able to save his father, brothers, and all the rest of the Israelites from extinction.

But all did not end well for the Israelites who sought refuge in Egypt. Oh, they prospered in the Land of Goshen and in time they numbered in the hundreds of thousands. But, subsequent Pharaohs were not as benevolent as the one for whom Joseph worked. The Israelites were put into slavery making the bricks for Pharaoh’s pyramids and elaborate tombs. God sent Moses to lead the Israelites out of Egypt. Pharaoh was hard hearted, and even after Moses performed nine miracles, he would not release the Israelites until the tenth miracle took the life of Pharaoh’s own first-born son. Finally, the Israelites, who fled to Egypt to prevent their own extinction 400 years earlier, were free to leave.

We have set up a new kind of Egypt right here in the United States which is supposed to prevent the extinction of species that are threatened or endangered. Species that are in peril because of types of drought or famine are sent to a kind of Land of Goshen for recovery only to later find that they are being held captive by Pharaoh-like environmentalists who want to enslave the species to do their bidding.

Passed by Congress in 1973, the Endangered Species Act is supposed to identify species that are faced with extinction in the foreseeable future because of loss of habitat, excessive harvesting, disease or predation, inadequate regulations, or other manmade factors. Species added to one of two possible lists, threatened or endangered, receive federal protection until such time as the species is considered to be recovered and no longer warrants protection.

The goals of the Endangered Species Act are laudable enough. Humans should—indeed we are the only species that can—take steps to ensure that our actions do not unnecessarily or inadvertently cause the extinction of other species. The problem is that we have successfully identified and listed nearly 1,400 species of animals and plants in United States, but we have removed fewer than 50 species from the same list. Only 21 of those species removed from the list are identified as recovered, nine of the species are extinct, and the rest were removed because they were originally listed because of a data error.

Suppose you operate a hospital and 1,400 people have walked through the doors since you started taking patients 37 years ago. During same that time period, about 20 checked out because they were there by mistake, nine died, and 21 were cured and sent home. The rest—a staggering 1,350 people—are still in that hospital. No matter how well they feel, no matter how cured they are, and without regard to the doctors saying they should be released, these 1,350 patients are being held captive in that hospital.

There are a number of reasons why the Endangered Species Act has so struggled in achieving its fundamental purposes of protecting and recovering species.

For one thing, environmental groups have learned that the Endangered Species Act can be used to stop virtually any kind of project or activity that they do not like. The law has become a de facto form of federal control of land use that can significantly impact the use and development of private land as well as lawful private sector activities and uses of public lands and resources. It works like this. There is a proposed development in your community that a group of people do not like. They hire a biologist to find an existing threatened or endangered species on that land, or absent the presence of a listed species, find a new sub-species that is so unique as to warrant listing, and petition to have that new species listed as threatened or endangered. Suddenly, what was once a private sector decision, regulated only by local city or county land use planning, is elevated and becomes a proverbial federal case.

Another problem is the law is written in such a way that environmental lawyers can easily sue the government and win in court. For instance, a petition to list a species as threatened or endangered must be reviewed and determined whether it warrants further analysis within 90 days. If the agency is one day late, they have violated the law and any judge will likely rule against the government. A final decision on a listing petition is due within 12 months, and again, one-day late is a violation of the law. Another matter of law equally well understood by environmental lawyers is that if you sue the federal government and win, the government must pay all reasonable attorney fees and costs. The end result is many environmental groups are nothing more than environmental law shops that are self funded by taxpayer dollars. The environmentalists flood the pipeline with petitions to list species, the government gets further behind, there are more lawsuits, more money going to environmental groups, and the cycle continues. Most importantly, the agencies are overwhelmed which results in courts and judges making decisions about species recovery instead of science-based management being conducted by fish and wildlife professionals. Another outcome is limited federal resources, which could be used for species conservation and recovery, are wasted on litigation.

Adding to the challenges, certain threatened or endangered species are considered to be charismatic mega-fauna. These are the grizzly bears, wolves, whales, bald eagles, etc. that environmentalists exploit as pawns in their fundraising juggernauts. Who would not want to protect polar bears, or penguins, or sea otters? Especially with Hollywood helping out with movies such as Free Willy, or Happy Feet, or An Arctic Tale. The reality is that the bulk of the protected species are plants and among the animals on these lists are a number of spiders and insects.

The science is not conclusive either. Biologists are nearly equally split into two camps—the lumpers and the splitters. Splitters believe that the slightest morphological difference between a species justifies designating it as a sub-species. These sub-species are immediately classified as rare because they have limited geographic distribution and smaller populations and they, therefore, become instant candidates for listing. If you applied the same standard of morphological differences to human beings, one could easily imagine every single person out there as a distinct sub-species because of observed differences in the size of heads, shapes of noses, colors of skin, differences in ear configurations, hair color, etc. The biologists in the lumpers’ camp would say most humans have two eyes, one nose, one mouth and two ears and are therefore part of the broader human race.

The Endangered Species Act has become a sacred cow. Much like the Social Security system, even though it is broken, no one dares to try to fix it. This is indeed unfortunate because the current law is not achieving the desired outcome and instead results in species being keep in a bureaucratic bondage much like the Israelites were enslaved in Egypt. What we need is Moses-like Senators and Representatives who will emphatically demand that the Pharaoh-like environmental groups, “Let my species go!”