Friday, January 30, 2009

Some early thoughts on MMS's new code of conduct

This is the logical response to what Interior I.G. Earl Devaney and his investigators found when they began to look into allegations of outrageous conduct in the Minerals Management Service's Denver-based royalties management division. I wrote an extensive story about it last night after dinner, but it essentially comes down to this: MMS employees should not accept gifts from people or companies the agency regulates, even if no monetary compensation is involved. They should not even appear to accept gifts from what the bureaucrats call "prohibited sources." They also shouldn't hold outside positions where they work for people or companies MMS regulates. If they see one of their co-workers doing any of this, they should let their supervisors or other authority know. If they have any questions, they should not be afraid to ask someone.

Pretty basic, right? Anybody in Washington who has tried to take a federal employee to lunch will tell you so. (The government worker always picks up his or her check if he or she even agrees to join you, and lunch is always at someplace decidedly unglamorous.)

One aspect of what happened in Denver has been bothering me for months. In his reports, Devaney said that abuses occurred because a very few MMS employees decided the rules didn't apply to them. They decided to act more like marketers than government workers and happily went to social functions hosted by companies the agency regulates, ostensibly to "network."

So why were they even invited? Were the folks hosting the events so determined to get a competitive edge at the next royalty-in-kind sale that they didn't stop to ask if there would be a conflict of interests?

Clearly, those few MMS employees weren't thinking. Neither were the company officials who aided and abetted them, some of whom worked for firms which maintain offices here in Washington. The ones who don't may belong to trade associations with officials who should readily remind them of the rules and why they exist.

This particular ethics lapse gave MMS a black eye. But the oil and gas industry didn't escape without some bruises of its own.

Sunday, January 18, 2009

It seems I've heard this song before

Well, that didn't take long at all. Two weeks into 2009, US Sen. Joseph I. Lieberman (I-Conn.) introduced a bill to designate the 1.5 million acres of the Arctic National Wildlife Refuge as wilderness. "The Arctic National Wildlife Refuse is a pristine natural treasure that must be preserved for future generations. We do not have to choose between conservation and exploration when it comes to our energy future; we can do both simultaneously while moving toward a sustainable and diverse national energy policy," he said in a Jan. 14 floor speech introducing the bill.

Earlier in his remarks, however, he noted that wilderness designation would restrict human activities to non-motorized recreation, scientific research, and other non-invasive activities. "Logging, mining, road building, mechanized vehicles, and other forms of development are generally prohibited in designated wilderness areas. However, since these particular lands are in Alaska, some public motorized uses will be permitted for subsistence and traditional use. For example, subsistence hunting as well as limited backpacking and hiking will be allowed," Lieberman said. Twenty-two other Senate Democrats are co-sponsoring the measure.

US Sen. Lisa Murkowski (R-Alas.) and Alaska Gov. Sarah H. Palin immediately criticized Lieberman's bill for attempting to lock up ANWR's coastal plain. "Let's not forget: Only six months ago, oil was selling for nearly $150/bbl while Americans were paying $4/gal and more for gasoline. And today, there is potential for prices to rebound as [the Organization of Petroleum Explorting Countries] asserts its market power and as Russia is disrupting needed natural gas to Europe for the second time in three years," Palin said in a statement.

"As I traveled throughout the country campaigning for vice president, I was glad to hear politicians, including President-elect Barack Obama, promise ‘everything was on the table’ to address America's great challenges. I also found that when Americans were apprised of the facts, most people became supporters of responsible oil and gas drilling in Alaska. So, I want to remind our national leaders of this promise, and to make the case against this legislation that would permanently take off the table any consideration of responsible ANWR drilling,” she continued.

"Given that we were at record oil prices only a few months ago, it makes no sense to deny Americans access to lower-cost energy by permanently locking up North America's largest potential source of oil and gas," said Murkowski. "I'm confident that through the use of modern drilling technology, we can develop our natural resources, including ANWR, without harming the environment. Developing ANWR offers an opportunity to reduce our dependence on foreign oil and improve our national security. Taking ANWR permanently off the table at a time of volatile energy prices and economic hardship is simply not wise public policy."

But the proposal quickly put congressional Democrats on record as remaining against authorizing federal oil and gas leasing on ANWR's coastal plain. Not that anyone expected this to happen anytime soon . . .

Thursday, January 8, 2009

Subcommittee chairman change reinforces House panel's new direction

The House Energy and Commerce Committee's transition continued today with the announcement that Reps. Edward J. Markey (D-Mass.) and Rick Boucher (D-Va.) will switch subcommittee chairmanships in a few more weeks. Markey will take the Energy and Environment Subcommittee's helm and Boucher will lead the Communications, Technology and Internet Subcommittee.

The switch comes several weeks after Rep. Henry A. Waxman (D-Calif.) successfully challenged Rep. John D. Dingell (D-Mich.) as chairman of the full committee. The subcommittee leadership change reinforces the full committee's transition to a leadership ready to more aggressively pursue global climate change programs, particularly a carbon cap-and-trade program. It also moves Markey from the sidelines to a spot where he can begin developing the sort of bill that Waxman and House Speaker Nancy Pelosi (D-Calif.) want.

The subcommittee chairman switch is not surprising. Boucher comes from a coal-producing district. He worked closely with Dingell to formulate a cap-and-trade proposal during 2008 that some House Democrats considered too cautious and deliberate.

Markey has not been shy about criticizing either the Bush administration or the oil and gas industry during the two years he's been chairing the House Select Committee on Energy Independence and Global Warming. While he's held some interesting hearings, he hasn't been in a position to push legislation very far. He will be now and it could be lively.

Tuesday, January 6, 2009

Will economic reality trump environmental overconfidence?

Have I been hibernating? Hardly. I got a new heart valve on Election Day and have been slowly recovering. Between that and my limited computer skills, this has been my first posting since late October. A lot has happened since then.

Let's start with Henry A. Waxman's successfully challenging John D. Dingell to chair the House Energy and Commerce Committee. Speaker Nancy Pelosi carefully stated her neutrality in the contest, but it was clear for months before that she was not happy with Dingell's deliberate approach to global climate change and cap-and-trade. Waxman's arrival means there will be someone in charge of this committee who's more willing to move aggressively. One reason it's been relatively quiet so far is that several people are holding their breath.

That's not the only House committee where things could get lively in 2009. Natural Resources chief Nick J. Rahall announced plans to examine the Bureau of Land Management's multiple use concept in an apparent continuation of his suspicion that the Interior Department agency has been too accommodating to oil and gas producers. The royalty-in-kind program scandal over at the Minerals Management Service obviously hasn't raised his opinion of recent federal lands management.

Environmental organizations clearly relish the possibility that political appointees in the new administration will be more sympathetic to their concerns. Several have launched attacks on BLM's resource management plans in Utah and Montana, which won't win them friends among rank-and-file employees who developed the strategies. The agency has worked hard to engage more stakeholders in recent years. So has MMS, as anyone who attended its OCS Policy Committee meeting in December discovered.

Public reactions to soaring gasoline prices forced Congress to let federal Outer Continental Shelf leasing moratoriums expire at the end of September. One question now is whether new restrictions will replace them, such as the bill which Pelosi and Rahall presented before the election.

Then there are the president-elect's energy and environment nominations. Former Envrionmental Protection Agency Administrator Carol Browner's return in a new position as White House energy, environment and climate change coordinator worried some people I spoke with, although others said her experience as a federal administrator could actually be an asset. Barack Obama clearly wants closer coordination of environmental and energy matters, but he's also nominated people to lead the Energy and Interior departments who could have ideas of their own.

At Interior, the biggest question is which Ken Salazar will be in charge: the one who inserted a moratorium on oil shale leasing into the department's fiscal 2008 budget at the 11th hour, or the pragmatist who brings warring factions together to reach workable agreements. Salazar, like Obama, is smart enough to dispense with dogma when political survival is at stake. It probably won't be now that oil and gas prices have plunged in response to falling demand as US and world economies head into recession.

That recession means that providing an economic stimulus will be at the top of the new administration and Congress's agenda initially. Having to pay for it will come later. Some folks already have noted that leasing of federal land at Interior is the second-biggest source of revenue after the Internal Revenue Service. But it's questionable whether this will be enough to overcome objections to expanded leasing. Pressure from voters dissipated when oil and gas prices fell.

2009 promises to be every bit as lively as 2008. It's good to be back.