On Avoiding Blame, Part One, Or, Hear No Evil, See No Evil, Drill No Evil.

I am one of those people who will actually watch those boring, boring, hearings on C-SPAN that most of us flip right on past while watching TV, and this past week I’ve been watching one of the longer events the channel broadcasts...but it’s been far from boring.

The Coast Guard and what used to be the MMS were in Houston looking into what caused the Gulf oil spill and they’re taking testimony from representatives of the involved parties...and let me tell you, this is more than just an accident inquiry—it’s also a warm-up for the lawsuits that are surely going to follow.

We’ve had dozens of trial attorneys basically conducting a deposition process, witnesses who can teach a master course in “plausible unawareability”©, BP employees who have taken the Fifth and refused to testify at all, and, overseeing the entire process, a retired Federal District Court Judge and a Coast Guard Captain who might very well be on the way to trading his eagles for stars one day soon.

Do you really believe all those “we’ll make it right” BP commercials?
If you watch this hearing, that impression may well change.

When I talk on the stage, people often have the impression that I make up things as I go along. That isn’t true. I know a lot of things I want to say, I’m just not sure exactly when I’ll say them.

--From Lenny Bruce’s book “How to Talk Dirty and Influence People”

So if we’re going to keep this story under any kind of control, we’ll have to compress a lot of detail into some rather broad and sweeping statements, otherwise we’ll be at 3000 words before we know it.

Here’s the scene: a nondescript conference room in Houston is set with a table for the several Board members, who are drawn from across the Federal Government, including the old and exceptionally dysfunctional MMS (the Minerals Management Service), which has sort of morphed into the brand-new Bureau of Ocean Energy Management, Regulation, and Enforcement (the BOEM) and the Coast Guard.

In front of them is another table for the witness and their attorney, and right behind them are three very, very, long tables that are set up for the possibly four dozen attorneys that represent all the “parties of interest” who are involved in the hearing and require a bit of desk space (among that group are lawyers for BP, Transocean, Halliburton, certain individuals involved in the incident, and the Republic of the Marshall Islands, where the now sunken vessel was “flagged”; that Nation is conducting their own investigation). Behind that are rows of “gallery seats” for the interested public.

(You can see the entire thing by visiting the C-SPAN site...but do grab a beverage and some snacks first.)

The way this all works is that the Board begins the process of eliciting information by questioning the witness themselves. Next up is the attorney for the Marshall Islands; the witnesses’ attorney and employer’s attorney then “cross examine”, and then every other lawyer in the room gets a crack at the witness, should they so desire.

“Wrangling” all of this from his Co-Chair seat is retired Federal Judge Wayne Andersen; the Coast Guard has a “good cop/bad cop” team on the Board (the Board’s Recorder, Lieutenant Robert Butts, and Co-Chair Captain Hung Nguyen, respectively). Mssrs. David Dykes (the other co-chair) and Jason Matthews, who are representing BOEM on the Board, are among the technical and regulatory experts who are also asking some very pointed questions.

Since many witnesses also represent Halliburton, BP, and Transocean, there is very much a “trial of the century” atmosphere in the air...and everyone is trying to protect their own interests at the expense of the others.

As is common in these situations, the witnesses are busily playing “duck and cover”...and I have been privileged to watch what has essentially been the construction of the “pyramid of denial” by a team of master craftsmen.

Now these folks don’t deny like you or I would deny, instead, they have far more sophisticated techniques of obfuscation that they employ.

The first method: imagine a group of people, sitting in a circle, each pointing a finger at the person to their left.

Later, we saw a new approach: imagine a group of people, sitting in a circle, pointing both fingers at the people sitting to either side of themselves.

Even later, it became a three-dimensional game, as some of those in the circle began pointing either upward or downward...and the most sophisticated of all had personal attorneys available at the witness table to do some of that pointing for them.

Another effective tactic is to never be the person actually in charge of whatever it is someone wants to know about...and if your company operates worldwide, there are lots of places to move from, and to, along with lots of potential “shifting responsibilities”; sure enough, there are witnesses here who seem to be “Johnny-not-on-the-spot” over and over and over again.

The Fifth Amendment’s protection against self-incrimination can also provide a shield that’ll keep you out of the witness chair; that’s why BP engineers Mark Hafle and Brian Morel and Deepwater Horizon’s BP day shift manager Robert Kaluza have not given testimony to the Board.

Now this is not something your normal “mom and pop” denier can typically pull off, and that’s why it appears that at least some of these companies require an entire corps of specialists who don’t actually know anything at all, just so they can appear before courts and investigative boards such as this one, where they either “don’t recall”, or they spend an astonishing amount of time not looking into this “casualty”, as it’s described by those involved in the investigation.

One example that leaps to mind is a certain BP executive who, even though he’s in charge of the “drilling and completions” operations on various BP owned and leased oil rigs in the Gulf of Mexico, reports he has never read any information regarding this accident that BP might have developed since the April 20th event, and has never spoken to a BP investigator to enquire as to whether any “lessons learned” exist that he can apply to the operations he oversees.

There’s so much more to talk about—and apparently we’ll need a Part Two to make that happen—but for today what we need to know is that there has been another week of hearings, that if you watch those hearings you’ll have seen basically a 1/12th scale model of the lawsuits that are already piling up in Louisiana, Texas, and Federal Courts, and that if you watch certain portions of the hearings you can see bombast, tough questions...and the kind of elbow bending and finger pointing that can only lead to severe arthritis later on in life.

Next time, we’ll be talking about “command and control” on the Deepwater Horizon (did you know an oil rig is actually a ship?), about what actually happens down a well, and about why things like “centralizers” and “channeling” matter—a lot.

In the meantime, if you want to get your homework on, all the hearings, in more or less backwards order, can, as we said before, be found at the C-SPAN site...which is why we appreciate them very much.

So either get deeply buried in what will become the legal soap opera of the decade...or run away, quickly, depending on your needs...and when we meet again, we’ll have quite a bit more story to tell.

Republicans Intervene In Traffic Accident, Call Settlement “Shakedown”

Brighton, Colorado (FNS)—Attorneys from the Republican Study Group (RSG) descended upon the 17th Judicial District courtroom of Judge John T Bryan today to present an amicus brief and associated oral arguments in order to prevent a settlement in a lawsuit related to an automobile accident in this Colorado city.

The intervening attorneys claim the settlement reached between the two parties to the accident is a “shakedown” because the plaintiff had not yet exhausted all possible legal remedies when the agreement was finalized, and because the agreement was executed in the presence of the plaintiff’s brother, a well-known local attorney.

They hope Judge Bryan will decline to approve the settlement in today’s hearing, and that he will order the parties to move forward to trial.

“What we have is government transferring property from one party, an admittedly unattractive one, to others, not based on preexisting laws but on decisions by one man, a car czar”, said Crush Mimbaugh, attorney for the RSG, “and we are here today to protect all Americans from this legally sanctioned rape of an innocent driver.”

The facts of the case are as follows: Ms. Maya Normousbutt, a resident of Brighton, was taking her kids to the corn maze and haunted house at Murray Farms, also located in Brighton, when her parked vehicle was struck by another car driven by a Mr. Dick Timoneous, of nearby Northglenn.

Mr. Timoneous was placing a note on Ms. Normousbutt’s car when she returned to the parking lot and discovered that the accident had occurred.

Over the course of the next several weeks, she obtained several estimates for the damage, her insurance company paid for the repairs, and, during a meeting at her brother’s law office that he helped to arrange, she, the defendant, and all insurance companies involved made an agreement to resolve all remaining issues in the lawsuit that had been filed on her behalf to effect recovery of damages.

Republican Study Group attorney Moe Barten presented this argument to the Judge during the hearing:

“We have a system in America built up based on the British tradition over 200 years of due process and fairness, where people that -- that do bad things or, in this case, a person that's responsible for a bad accident, we want to hold them responsible, do what we can to make the liable parties pay for the damages.

I'm speaking now totally for myself. I'm not speaking for the Republican Party. I'm not speaking for anybody in the America but myself, but I'm ashamed of what happened in that attorney’s office yesterday.

I think it is a tragedy of the first proportion that a private individual can be subjected to what I would characterize as a shakedown, in this case, a $2000 shakedown, with an attorney, who is legitimately conducting a investigation and has every right to do so to protect the interests of his client, participating in what amounts to a $2000 slush fund that's unprecedented in our nation's history, that's got no legal standing, and which sets, I think, a terrible precedent for the future.”

Barten continued for several more minutes; unfortunately, the official transcript only records him as saying: “Harrumph, harrumph, harrumph” the entire time.

Near the end of the morning’s presentations Barten’s co-counsel, Bon Joehner, introduced a novel legal concept:

“I think the people responsible in the car accident—Mr. Timoneous and the federal government--should take full responsibility for what's happening there…”

Ms. Normousbutt’s attorney, Harry Paratestes, Esq., offered a statement during the lunch recess:

“We are very disappointed at the RSG’s efforts to become involved in this case.

My client, and her insurance company, were hoping to create a simple way to avoid litigation so that all claims might be promptly settled; if the RSG prevails we will have years of legal battles ahead of us before anything can be resolved and the plaintiffs in this case can be made whole for the damage done to them by the responsible party.

You know, folks, all we’re trying to do is get paid back for getting her bumper fixed, and I have no idea why the RSG has a problem with that.

We also cannot understand why the taxpayer should be stuck with even one penny of the bill for fixing my client’s car, and we surely can’t figure out why Republicans would want the taxpayer to bail out Mr. Timoneous, or his insurer, for his bad driving. I mean, talk about moral hazard…

…After all, it’s not like Uncle Sam was behind the wheel that afternoon; it was Dick Timoneous.”

So, guess what, Gentle Reader: once again we’re using satire to make a larger point, and once again all the speeches were slightly modified from the actual words of Rush Limbaugh, Joe Barton, and John Boehner—and I figured I’d better bring this to your attention now because I know I did such a good job of “obfuscating” the names in the story that no one would probably ever figure it out if I didn’t.

And just for the record, there really is a Judge John T Bryan, and his Court was added to provide a very real location for this very fake story—and I hope he has a sense of humor about that—and even more importantly, I hope he realizes that nothing was said about him here, defamatory or otherwise, except to acknowledge his existence.

Finally: I just can not, for the life of me, figure out how Republican consultants gather around a conference table and say: “Hey, why don’t we try to stick this one on the taxpayer—and then make sure we tell the public how much we support that idea…loudly.”

But then again, I guess that’s why I’m a fake consultant, and they’re real ones.

At Black Tie Ceremony, Feith Passes Torch To Barton

Honestly, I am absolutely sick of commercial air travel these days. Just dealing with security is bad enough, but then there’s the airlines, and...hey, all you really need to know here is that there has to be a pretty good reason for me to fly cross-country.

Well, I had one Saturday night, which is how I came to be in the Colonnade Room of the Fairmount Hotel, Washington DC with about 250 of my closest friends, in a classic shawl-collar tuxedo, attending one of the most exclusive “passing of the torch” ceremonies in recent Washington memory.

And when it was all over, Douglas Feith was a happy man.

Respect to your great place! and let the devil
Be sometime honour’d for his burning throne.

-- Duke Vincentio, from William Shakespeare’s “Measure for Measure”.

There are probably some of you who are thinking: “That Feith name is familiar, but why?”

You know the name because, as Undersecretary of Defense for Policy, he was the guy who basically planned how the Bush Administration would run the Iraq War.

To suggest he was not exactly a genius in the job would be the charitable interpretation; General Tommy Franks is famous for referring to him as the “dumbest mother@*&#er alive”, which is the official title he’s carried ever since.

But on Saturday night, the torch was passed.

And by the time the speeches had ended, and the applause had died down, Texas’ Congressman Joe Barton was the new keeper of the sputtering flame.

This was not the outcome most observers expected.

When my invitation arrived on Monday, it looked as though BP’s Tony Hayward would be wearing the sash and carrying the scepter (for those who don’t know, the scepter is a gold-colored three foot long extension cord...and if that’s the stupidest thing you ever heard in your life, you get the idea), having basically earned himself a “Lifetime Achievement Award” in a mere 60 days.

This was going to be tough for Hayward, of course, because he was already planning to skip his Farr 52 (I’m told he calls it “Bob”) in the 79th “Round the Island” race, back home in the UK on the same day (and he had a good race, too, coming second to “Leopard”).

But before BP could really address the question of who would accept the award on his behalf, Congressman Barton pulled off an amazing feat; eclipsing Hayward’s 60 days of corporate idiocracy in a mere five minutes by actually apologizing to BP for the Obama Administration’s insistence that they don’t go through all the necessary legalities before BP actually begins paying claims for damages.

Considering how he got the title in the first place, it’s fair to say Barton’s acceptance speech began with some classic “message confusion”...

“...Where I come from what we'd do about it would be take 'em out and string 'em up...We wouldn't go through the legalities that we have to because of our due process...”

...and then went on to include a few more pearls of wisdom:

“...If homosexuality was normal we wouldn't any of us be here...You have to have heterosexual behavior in order to recreate the species...”

“...In January 2009, I introduced the College Football Playoff Act of 2009. This isn't a government gridiron takeover. It simply says that the BCS can't call a game the "national championship" unless the participants are determined by a playoff. It doesn't dictate what kind of playoff or how many teams have to be involved—those decisions would rest with the BCS or NCAA.

The biggest complaint about my bill is that Congress shouldn't get involved. While this doesn't rise to the level of healthcare reform or climate change legislation, it is more important than honoring the 2,560th anniversary of the birth of Confucius—one of dozens of resolutions passed by the House in the past few months (I voted against it)...”

Luckily for me, my own prior life experience as a caterer had prepared me for the evening; I had tipped our server at the beginning of the meal, and with the amount of wine available at the table, I was already well enough along that there were no “spit takes” during Barton’s speech.

Possibly the happiest person in the room was BP Chairman Carl-Henric Svanberg. When I caught up to him over a glass of champagne he was happy to explain Hayward’s absence, although it’s clear he really isn’t a native English speaker:

“After it became obvious he wouldn’t be leaving with the award, I told him he needed to get back and replace Captain Neil; that he should handle the “Bob” himself, and I talked to him today, and he said he got all the way to second...”

At which point I just couldn’t take any more, and the interview came to an end.

And it’s at this point that I should say that while this story really didn’t happen, and that this was satire, Barton’s “acceptance speech” was actually assembled from his own very real words, found here, here, and here.

I should also say that in real life Doug Feith might have actually caught a break here; but with several months left until November, and the Republicans looking more and more “self-defeatable”, if I were Joe Barton I wouldn’t be building any expensive “shrines” for his new accoutrement, as another awards transfer ceremony could be coming up sooner than anyone thinks.

WARNING - Blatant Self-Promotion Ahead: It's Netroots Nation time once again, and the fine folks at Freedom To Marry have chosen me as a finalist for their Blog 4 Equality contest. If I am one of the chosen, it's off to Vegas...in July. You can vote for that Don Davis guy here, which is my "in person" name, once every 24 hours, so vote early and often. Voting ends June 25th. Thanks very much, and we now return you to your regular programming.

On Saving Louisiana, Or, Send Me Your Mud, Yearning To Be Free

AUTHOR'S NOTE: This is a story I originally posted in March of 2007 that seems so important right now I've brought it back for your consideration.

Let’s begin today’s discussion with a quick thought experiment.

What is the single most important thing necessary to ensure the survival of the State of Louisiana?

Improved government administration?
More and better levees?
The success of the “Road Home” project?

I submit it is none of these.

The single most important factor determining the future of the State of Louisiana is mud.

That’s right, mud.

Were you aware that the entire State consists of mud? When you look at a geologic map, there is nothing to be seen but sedimentary deposits dating back to the Cambrian period.

And the mud, it is a-sinking.

Katrina took out more than 57 square miles of land in Plaquemines Parish alone. That former land is now the Gulf of Mexico.

The Army Corps of Engineers has maps of the Mississippi river from 1998. When you get to the page, click on map 141. What you see is a portion of Plaquemines Parish. (Here’s the same place on Google Maps.)

Notice almost the entire map area consists of water, canals, and marsh. There’s only two narrow strips of solid ground evident. Now let’s pull out a bit. There’s just about nothing in the image but sinking ground. Now pull out just a little bit further, and guess what-there’s New Orleans.

This was the area of Louisiana most affected by Katrina.

It’s now time for you to meet Professor Oliver A. Houck. His essay “Can We Save New Orleans?”, published in the Tulane Law Journal, will be central to the remainder of this conversation, and I would encourage you in the strongest terms to take the time to read the document.

Here are some of the issues he brings to light:

--There is no consensus on what is to be done-should the emphasis be on maximizing the amount of developable land; or should the emphasis be on maximizing opportunities for natural processes to replenish the bayous? These are two mutually exclusive goals, and Houck suggests development is winning.

--The Federal government is responsible for maintaining navigation on the Mississippi, but flood control is managed locally. As a result of this and the huge amounts of money that are spread around through levee and other water control project construction, politics has more influence on the management process than science and inter-jurisdictional coordination.

--Environmental pollution-especially fertilizer runoffs-kill the marsh grasses that hold the soil together. As a result, the process of saving Louisiana starts in South Dakota, and is therefore a national, not just a State problem.

--It is easier to calculate the cost-benefit of industrial and commercial activity than the cost-benefit of saving lives-and safety advocates have fewer lobbyists.

--Money spent now, on non-development rights, for example, will be cheaper than money spent later on reconstruction or remediation.

And the most important of all:

--It’s the constant movement of silt down the river that makes it possible for there to be a Louisiana-and America’s history of “taming” the Mississippi has nearly brought that process to a stop. The River carried 400 million tons a year of silt 150 years ago, Houck reports, and today carries only 80 million. Without that “new” land to deposit in the Delta, there is no way to offset the erosion to the Gulf of Mexico.

That’s not the only reason the State is sinking, however. Pumping drinking water from aquifers has an impact, and the expansion of the ocean caused by global warming does, too. Even the weight of the levees themselves on the soft soil is affecting the situation.

Professor Houck, being a “fix-it” kind of analyst, has offered a ten-point prescription for Louisiana recovery. Here’s the “Reader’s Digest Condensed Version”:

1) Draw the map-in other words, there needs to be a set of decisions made regarding exactly where humans will be allowed to control the land, and where the river will have its say.
2) With a new map, reconsider the projects-Houck reminds us that Katrina changed everything, and that projects already designed or underway are probably the wrong solutions to today’s problems.
3) “Free the Mississippi 400 million”-open dams upriver to allow the 400 million tons of silt to do its thing downriver.
4) Free the rivers-the logical extension of point 3. Open the levees appropriately, and let the rivers do their thing.
5) Cut the upstream fertilizers-we discussed this above-fertilizer kills grass, and that kills land. This is where parties outside Louisiana have to step up to the plate-the EPA, the Corps of Engineers, the various States, and maybe even private actors such as the Nature Conservancy.
6) Heal the marsh-if grass holds the mud in place, then grass we must grow. Professor Houck uses a farming analogy-one in which Louisianans would essentially become “land farmers”.
7) Quit making it worse-dredging and filling for canals and subdivisions is the enemy. As we said above, prevention is cheaper than mitigation.
8) Make room for Nature-consolidate human development within protected areas to create room for natural restoration to work.
9) Dare to think retreat-Houck advocates completely removing residential development from threatened areas, through buyouts. He makes the argument that businesses can be sustained, however.
10) Global warming is real-Professor Houck suggests denial here just makes the problem much, much worse.

We have already seen the consequences of our desire to develop every inch of shoreline, and not just in Louisiana, but all along the Gulf Coast. And we already are beginning to understand that this is truly a national problem.

But if we hope to keep South Louisiana as a functioning economy or even as an above water piece of real estate, we better start talking about national solutions that help Nature’s solutions.

On Setting Things Straight, Or, An Open Letter To The United Kingdom

Dear The United Kingdom,

I just wanted to take a minute to say hello and to see how things have been for you lately, and to maybe bring you up to date on a bit of news from here.

Well, right off the bat, we hear you have a new Conservative Prime Minister and that his Party and Nick Clegg and the Lib Dems are in partnership, which I’m sure will be interesting; you probably heard that us Colonials are again having Tea Parties, which has also been very interesting.

I have a Godson who’s getting married this September, so we’re all talking about that, and I hear Graham Norton was even better than last year at hosting Eurovision, despite the fact that it’s…frankly, it’s Eurovision.

Oh, yeah…we also had a bit of an oil spill recently that you may have heard about—and hoo, boy; you should see how the Company that spilled the oil has been acting.

So before we go any farther I figured I’d let you know that we did get that letter from John Napier over the weekend, and to tell you the truth, we’re not really sure John understands exactly what’s going on over here.

Now it turns out that it was some company called BP that’s been out there in the Gulf of Mexico operating the oil rig that blew up, killing eleven people and leading to that uncontrollable geyser of oil that you may be hearing about, and our dear Mr. Napier worries that when we say we’re angry with BP, we’re being anti-British.

If anyone should see John, would you please let him know that nothing could be further from the truth?

I promise you, you would be hard pressed to find one single solitary American getting up this morning, seeing the live feed from the oil leak on TV, and thinking: “That BP is scandalously representing Britain, and for that I hate the British”.

I’ll tell what we are thinking, though, is that as bad as this situation is, BP’s been making it a lot worse by, time after time, being either amazingly unaware of or brazenly dishonest about what’s been going on.

Remember back in May when BP said they were capturing 5000 barrels of oil a day with their new containment procedure—while still claiming on the very same day that the total amount of the leak was 5000 barrels a day, even though anyone who could look at the image from the leak could clearly see with their own two eyes that what BP was saying could not possibly be correct?

I don’t know how far the word’s gotten out over there yet, but now even the “Daily Mail” (not the “Guardian”, for God’s sakes… but the “Daily Mail”) says it looks like BP guessed low on the amount that’s leaking into the Gulf by somewhere between 15,000 and 35,000 barrels a day…which, to us, looks like either incredibly bad guessing or an incredibly bad effort to deny how bad things really are.

You’ll love this, United Kingdom: BP continues to insist that there are no underwater “plumes” of oil in the Gulf, even though the people on the scene measuring them, and the US Government agency mapping them, say there are.

The BP position, as I understand it, rests on the definition of “plume”…and when you consider that Americans still make fun of Bill Clinton, to this very day, for basing his impeachment defense on what the definition of “is” is, you shouldn’t be too surprised if we treat BP precisely the same way for doing the same thing.

This isn’t the first disaster for BP in this country, either. You may not remember, but just about five years ago BP blew up a refinery in Texas, killing 15 workers, and just afterward had another major spill, this time in Alaska.

The US Government levied an astonishingly large £53 million fine against BP in 2009 for not fixing the problems that led to the 2005 refinery disaster.

That puts the five-year casualty total for BP at way too many people dead, two habitats wounded, and one refinery in critical condition.

If you think that’s bad, United Kingdom, it now looks like BP just made up the spill response plan that they would be putting in place now…if they had been telling the truth about their ability to execute the plan in the first place.

Now if you put all that together…don’t you think somebody’s ass needs to be kicked? Mr. Obama does, and we find that a refreshing change from Mr. Bush, who would have likely done a "heckuva job" himself in the same situation.

Mr. Napier wanted us to know that we’re personalizing this a bit too much; he reminds us that:

“If you compare the damage inflicted on the economies of the western world by polluted securities from the irresponsible, unchecked greed and avarice of leading USA international banks, there has not been the same personalized response in or from countries beyond the US. Perhaps a case of double standards?”

John, babe…if you think we’re lacking in “anger personalization”, perhaps you’ve never actually heard of the Tea Party? I know the "Daily Mail" has, and I’m surprised you missed it.

Perhaps you missed the left-leaning protesters in San Francisco that want to put the CEOs of banks in jail, or the protesters in West Virginia, of all places, or in Boston?

Perhaps you don’t think there’s a reason to take it a bit personally when someone kills a couple of dozen people or so in some sort of preventable accident or another, but over here, whether it’s a mine operator or BP, we do take it personally.

Trust me, there’s no double standard: ask almost any American and they’ll tell you they’d be equally happy to see either a Wall Street or a BP executive forced to spend several years in a really tiny jail cell with someone who has a prior record of doing disturbing things to small forest creatures.

OK, United Kingdom, now here’s a chance for you to do the Company a favor: BP announced just a couple of days ago that they have no earthly idea why their stock price might be going down.

With just the least little effort, we could fix that problem right away.

If any of you might be in London, and don’t mind making a local call for me, would you kindly ring up BP corporate headquarters at +44 (0)20 7496 4000, and when they answer, just let them know that the stock price is going down because of the oil leak and what it’s doing to the perception that BP will be as profitable in the future as they had been in the past?

I’m sure they’d be so appreciative of the assistance that they might even give you a cool BP hat or something just for helping them out—I know I would, if I were BP.

Anyway, I’m hoping this will clear up some of Mr. Napier’s questions, but before I go, I have to ask you about something:

They tell me that BP stock is a huge part of the UK’s investment portfolio; and that lots of pension funds are dependent on the stream of revenue BP dividends represent.

So dependent, in fact, that there is a great hue and cry over the possibility that BP might not be able to pay a dividend to its shareholders.

So here’s what I was wondering: in the US, if a company in which you were invested suffered a loss that might reach beyond £30 billion, it’s supposed to have a negative impact on the stockholders. It’s almost certainly going to affect any potential dividend distribution, and a company like that might find itself taken over by a stronger competitor.

Doesn’t it work that way in the UK?

I’m sorry that those folks got caught in a bad investment, and maybe the UK Government wants to extend some sort of assistance to those affected; nonetheless I can’t understand the legal logic behind the proposition that cleaning up the mess that BP caused and the payment of compensation claims based on BP’s reckless actions should have a lower priority than the distribution of income to stockholders.

To put it as simply as possible: lots of players in the UK markets were happy to accept the profits from this investment, despite the risks, and now it’s time to accept a loss. That’s how investing works; and if no one else has told you that by now, well…welcome to investing.

And while UK pensioners are worried about losing some income, American workers—thousands of them—are worried that they’ll be out of work for months, and maybe years, with no income at all, except for that provided by BP…unless they go broke and can’t pay.

So that’s what’s been going on here since I wrote you last, and I hope you do get a chance to call BP about that whole stock going down thing, so they know, and I hope you don’t think we’re in any way upset with Britain at all, ‘cause we are truly not.

British Petroleum, however, is a different story; and based on the record we feel that our anger is entirely justified…but that would have been just as true if it had been Chevron or Anadarko or any other deepwater driller—just as it was true for Exxon after the Exxon Valdez incident two decades ago.

Anyway, I have to go now, but I’ll try not to wait so long before I write again; and I hope BP is able to contain this stuff before it begins washing up on your beaches, which, believe it or not, is a distinct possibility.

As always, your friend,

fake

On Responding To Oil, Or, “Disaster, Or Emergency, Or Neither?”

We’re now into day way too many of the BP oil spill, and the President has just yesterday been down on the Louisiana coast—again.

There have been suggestions that the Administration should take action to essentially push BP out of the way and take over the work itself, particularly as it relates to the cleanup.

It may have even occurred to you that an official declaration of some sort might be needed, in order to bring the full power of the Feds into play.

That’s some good thinking, but before we go jumping right into declaring things we better understand the law, because if we don’t, we could actually make things worse.

It was a deathbed scene, but the director was not satisfied with the hero’s acting.

“Come on”, he cried, “Put more life in your dying!”

--From “10,000 Jokes, Toasts, & Stories”, Lewis and Faye Copeland, Editors

So right off the bat, we need to give credit to Francis X. McCarthy of the Congressional Research Service, who put together “Potential Stafford Act Declarations for the Gulf Coast Oil Spill: Issues for Congress”, which will, unless indicated otherwise, be our source for today’s discussion, and the most excellent Steven Aftergood, who, among his other good works, sends me those “Secrecy News” emails that should be coming to every one of your inboxes as well.

And with that said, let’s get to work:

In a situation such as the oil spill, the Stafford Act, which is the law governing emergency and disaster responses, gives the President a fairly limited number of options: he can do nothing, leaving BP as the lead party in the response, or he can declare, on his own initiative, that an “emergency” exists. He can also agree to respond if the Governor of a State declares that an emergency or “major disaster” has occurred within that State.

So which means what?

From the Stafford Act itself (42 USC 5122):

“(1) Emergency.— “Emergency” means any occasion or instance for which, in the determination of the President, Federal assistance is needed to supplement State and local efforts and capabilities to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe in any part of the United States.

(2) Major disaster.— “Major disaster” means any natural catastrophe (including any hurricane, tornado, storm, high water, winddriven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought), or, regardless of cause, any fire, flood, or explosion, in any part of the United States, which in the determination of the President causes damage of sufficient severity and magnitude to warrant major disaster assistance under this chapter to supplement the efforts and available resources of States, local governments, and disaster relief organizations in alleviating the damage, loss, hardship, or suffering caused thereby.”

It’s not just terminology, either…there are functional differences as well.

The biggest: if the President declares an emergency, on his own initiative, FEMA will not be permitted to offer Disaster Unemployment Assistance, which is a program that does just what you think it does for people like South Louisiana’s fishers and tourism workers. If the Governor declares a disaster, on the other hand, such assistance would become available.

Other “disaster-only” assistance would include paying for “emergency protective measures”; this means that FEMA, and not the State, would bear some of the cost of building the proposed “barrier islands” that might keep some of the oil off the coast.

For most emergency and disaster assistance the Federal “cost share” is 75%; it can be modified up to 100% if the President so declares.

So far, so good…but there is another side to this story.

In the aftermath of the Exxon Valdez incident the then-Governor of Alaska, Steve Cowper, tried, twice, to get George Bush the First to declare a disaster. He was unwilling to do so.

The reasoning behind this was that…well, how about if I just let you hear the story firsthand:

“The Department of Justice opposed a declaration of disaster by then-President George H. W. Bush on the basis that it might impact adversely the case of the United States against Exxon. When asked at a Senate Appropriations Committee hearing by Senator Ted Stevens (R-Alaska) why no declaration of disaster had occurred, the then-Acting General Counsel of FEMA, George Watson, said on the record that he had issued a legal opinion stating that no declaration of an oil spill could be made under the Stafford Act.

When Sen. Stevens asked for a copy of the opinion, Mr. Watson said he would furnish one. Instead of an opinion, a somewhat garbled statement was given by FEMA’s congressional liaison for insertion in the record. The statement basically concluded that where a parallel statutory scheme offered both compensation and better litigation rights to the United States than the Stafford Act, then the president would not declare a disaster or emergency.”

The money for these responses comes from the Disaster Relief Fund. This Fund is not part of the annual Federal Budget appropriations process; instead, it’s refilled, as the need arises, by supplemental appropriations.

The Fund is almost empty at the moment, and even before this event it was predicted that the money could run out by this month. (It’s estimated that the Fund is spending about $350 million a month to mitigate the various disasters currently on the books, with only about $600 million in the Fund as of May.)

A supplemental appropriations bill, part of which would provide $5.1 billion for the Fund, to cover past and future expenses, is before Congress right now (H.R. 4899).

The Senate wants its version of the bill adopted (it’s not just a FEMA bill: there’s lots of juicy defense appropriations in there as well, among other allocations), and they’ve asked for a House/Senate conference. Almost a third of the Senate is on the Conference Committee, so you know there are a lot of negotiations ahead—unless, suddenly, a new sense of urgency is felt by all parties involved.

(Fun Fact: There was a large cleanup of spilled oil associated with Katrina, to the tune of about 9 million gallons.)

We need to stop, for just a moment, and talk about two other potential sources of cleanup funding out there: the Oil Spill Liability Trust Fund (OSLTF), and, possibly, the EPA’s Superfund.

If BP should turn out to be unwilling to pay the billings being submitted by the US Government for cleanup and other expenses, or if the Company denies claims from third parties that the Feds think should be paid, then the Trust Fund is available to pay claims while collection actions against BP are underway.

However…the Fund can only pay claims associated with oil pollution. Claims related to pollution caused by other hazardous materials…like dispersant…cannot be paid by this Fund.

The normal solution would be to charge those expenses to the Superfund, but there’s a “however” attached to that. Long story short, the Superfund cannot pay for claims related to pollution in bodies of water.

There’s more: the OSLTF is limited, by law, to $1 billion, maximum, per incident, with only $500 million of that available for the natural resources cleanup associated with that incident.

(Fun Fact Number Two: There is such a thing as microwaveable haggis.)

At about this point, you’re probably thinking that we should declare something pretty much right away.

Not so fast there, Gentle Reader…because here’s the “you could make things worse” part:

If the Stafford Act is invoked, and an emergency or disaster is declared:

“Any person who intentionally causes a condition for which Federal assistance is provided under this Act or under any other Federal law as a result of a declaration of a major disaster or emergency under this Act shall be liable to the United States for the reasonable costs incurred by the United States in responding to such disaster or emergency to the extent that such costs are attributable to the intentional act or omission of such person which caused such condition.”

And therein lies the trouble.

If BP can successfully argue that they did not intentionally spill that oil, then the ability to recover money spent cleaning it up would be severely limited, if not entirely lost.

So as of this morning, that’s where we’re at: there’s a belief that BP is not doing all it can to fix this, or to clean it up, and that one way to get around that problem would be for the Federal Government to invoke emergency powers and take over the cleanup itself.

The Oil Pollution Act of 1990 provides some capability in this area, through the Disaster Relief Fund, but the money available for the task is limited, and probably insufficient for the work that needs to be done.

And while the Stafford Act provides additional authorities of its own, there is a real possibility that invoking the Act will let BP off the hook for the giant legal liability that appears to be facing them down today.

It’s a really tough situation for a national leader, and if you ever wondered why Barack Obama’s hair seems a bit grayer lately…well, this might be part of the reason why.