The judge yesterday who struck down Obama's 6-month drilling moratorium affecting over 30 existing exploratory wells has come under attack by progressives for having oil and natural gas industry investments, in particular, BP's rig partners, Transocean and Halliburton. The obvious point, by the environmentalists protesting the judge's decision, is that the judge should have recused himself from the case because he presumably had a material interest in the decision outcome. (This objection, conveniently, came out after the decision was made.)
This is clearly not a substantive response to the judge's decision itself, which essentially responded that the government hadn't supplied compelling evidence that the other 32 or so deepwater rigs issued permits by the federal government had specific issues relevant to the BP Deepwater Horizon disaster; the only thing in common is that they were deepwater rigs. For example, when an airline crashes, there can be a variety of reasons--an act of God (weather-related, birds, whatever), or (say) part failure due to poor maintenance. We do not ban flying as intrinsically dangerous just because one plane has an accident. If it is something under the airlines' control, e.g., skipping routine maintenance, we can target the specific airline's policies. We do not assume other airlines as well skip routine maintenance, raising the riskiness of flights. There have been some anecdotal allegations that BP cut some corners on costs and safety factors, but the very fact of the blanket moratorium suggests that the Obama Administration believes the risk is intrinsic to deepwater drilling and any risk is unacceptable risk. But they have been issuing these permits, and companies have invested assets and resources based on the permits. Judge Feldman is saying to the Obama Administration is, "Look, if you believe there are some safety gaps in BP's drilling protocols, you can put those on hold--but you can't revoke permits arbitrarily, to competitors which have different operating procedures and safety records."
But let's go to the investment allegation. This is clearly ludicrous for a number of reasons. First, the drilling moratorium doesn't affect all offshore drilling, just deepwater ones; we are talking about some 30-odd rigs out of thousands representing the bulk of offshore operations. Second, many investors are not traders but invest for the long run. The stock market will price things like the 6-month moratorium as a temporary blip on earnings, based on the aggregate profit of contributed by their SHARE of the 30-odd rigs, as a percentage of their overall profits. Third, energy industry companies involved in the Gulf go beyond BP, Transocean and Halliburton.
In looking at conflicts of interest, one would need to look at the directness and materiality of the decision relative to a judge's financial position. For example, if the judge's retirement consisted primarily of BP stock and BP was being sued for billions in damages, possibly affecting its survival, I would expect Judge Feldman to recuse himself.
Now I should say that I am not an expert in the area of professional ethics for lawyers, and I know that accounting firms are anal-retentive about reporting any shares involving clients. I've worked for consulting divisions of accounting firms, and I had to review pages of publicly held company clients and report (and quickly dispose of) any relevant shares, even though I had no access to relevant auditors or materials. I think the latter is overkill. For example, I diversify my investments, so the fate of any one particular investment is not going to kill my portfolio (unlike Enron employees whom kept buying company shares during the bubble). The accountants want independence in appearance as well as fact.
But luckily we don't have to rely on environmentalists, whom oppose any and all oil drilling as a matter of principle, grasping for straws: we have Feldman's legal judgment based on the Obama Administration's arbitrary cancellations of existing permits. In fact, the White House has admitted that its expert panel did not review the issue of existing permits, and many panel members have distanced themselves from that position.
Gen. McChrystal Fired, Replaced by Petraeus
I fully agree with Obama's decision and stated reasons to terminate General McChrystal. Fox News Channel definitely had a pro-McChrystal bent on the lead up to the decision announcement, and online posts on the issue showed something like 60-odd% in favor of retaining McChrystal, I think about 15% for the termination and the rest undecided. A lot of people dismissed it as simply one bad misstep, others didn't like McChrystal having to take responsibility for outrageous things said by his staff, and others saw it as a matter of free speech, in fact, based on valid observations of Obama and others. There was also a consistent theme that, effectively, McChrystal was "too big to fail"; he was singularly qualified, and you don't change horses in the middle of a race.
Actually, a surprising number of Fox military commentators, including Oliver North, had concluded McChrystal would be fired and/or agreed with it; as North points out, disrespectful behavior towards the chain of command is grounds for a court martial. In Monday's post, I mentioned (in the context of the oil spill) a story about how a promising admiral had his career cut short by some provocative action taken by an enlisted man during an inspection. Military officers are taught to control what they say and do and to maintain a respectful demeanor; remember the Barbara "Call Me Senator" Boxer kerfuffle? "Sir" and "ma'am" are part of military protocol, but the general, without skipping a beat, complied with Boxer's request. The author of the piece said that a lot of things were said that didn't make the article; the point is, the general was responsible for his staff, and he and his staff said unprofessional things in the presence of the media.
I don't believe that McChrystal was too big to fail, but I find it both ironic and predictable that Obama decided to pick Petraeus, whom Obama barely acknowledged and whose surge policy he opposed during his Presidential campaign. I'm concerned there might be unrealistic expectations that Petraeus can quickly remedy a strategy where military restraint, based on anti-insurgent "hearts-and-minds" policies, is emboldening the enemy to pick off American casualties, e.g., booby-trapped houses, etc. But I'll leave that general question to a future post.
Political Cartoon
Nate Beeler reminds us that clean energy accounts for less than 10% of national usage, despite heavy government subsidies.
Quote of the Day
I can’t write a book commensurate with Shakespeare, but I can write a book by me.
Sir Walter Raleigh
Musical Interlude: Chart Hits of 1973
Stevie Wonder, "Superstitious"
Chicago, "Feelin' Stronger Every Day"
Paul McCartney, "My Love"
Carly Simon, "You're So Vain"
The Rolling Stones, "Angie"
