Ethics Audit: the Deep-Water Oil-Drilling Ban Saga

President Obama’s ban on deep-water oil drilling in the wake of the Deepwater Horizon Gulf oil disaster pits important ethical values against each other: fairness vs. responsibility. On both sides of the equation is prudence. New Orleans federal judge Martin Feldman over-ruled the ban and issued an injunction against it, saying in effect that there was no contest: the ban isn’t fair, prudent, or responsible.

The Obama Administration’s ethical argument supporting the ban goes something like this: “We thought that the technology and regulations were in place to make deep water drilling safe for the environment, at least to an extent that would preclude catastrophic oil leaks. Since that belief has been shattered by what occurred in the Gulf, the only responsible course is to determine whether the disaster was an anomaly in an otherwise sound system, or, in the worse case, proof that the assumed safety measures are in fact inadequate, and need to be repaired before further deep-water drilling occurs.”

The ethical brief opposing the argument is that the ban will lose jobs, deplete energy resources and further hurt the economy of the Gulf at a time when all of these have already been harmed by the BP spill. An unprecedented occurrence does not justify imposing widespread harm on innocent parties to avoid a risk that may or may not be real. The ban is unfair, because it does not make any attempt to balance the interests involved, and it is irresponsible because it recklessly imposes significant harm without any attempt to mitigate.

This criticism of the ban on ethical grounds doesn’t even include the accusations being leveled from the Right, which accuse the Obama Administration of cynically using the Gulf disaster to inhibit oil production as part of a long-term plan to push the country toward climate change legislation and raise the price of gasoline, which would build public support for the development of alternative energy sources. “I’m telling you: Obama doesn’t care about the lost jobs!” screamed radio ranter Mark Levin. If this were in fact true, the Administration would be engaged in a particularly brutal act of utilitarianism, causing short-term injury to large numbers of individual citizens in order to accomplish a “greater good” in the long-term. Such a pure “ends justifies the means” strategy would have to be nearly certain to work to have any valid ethical defenses, and perhaps not even then. Being sure they are right wouldn’t be enough to make such a plan ethical. The Administration would have to convince everyone, including those who would lose their jobs, that they are right. This is all speculation, however, and based more on over-heated distrust of President Obama by ideologues than it is on facts.

The question is really whether safety and protecting the environment is an absolute, justifying any consequences to other stakeholders in the decision. Environmentalists obviously support the ban, because to them the environment is an absolute. That’s how advocacy groups are.  A President, however, cannot ethically refuse to engage in balancing interests.

This is where Judge Feldman entered the fray, in his ruling on the suit challenging the ban brought by off-shore oil service firms. Because he was to determine whether the ban was “arbitrary” and an abuse of discretion, he was making an ethics call as well as a legal one. The question was whether the ban was reasonable and fair.

The judge didn’t think it was either. In his order, Feldman wrote, “The Court is unable to divine or fathom a relationship between the [Interior Department’s] findings and the immense scope of the moratorium.” he said. In other words, there was no reasonable balancing of the speculative risks being addressed and the certain damage the moratorium would cause. Hence the ban was unfair, and irresponsible.

The administration’s drilling suspension, he wrote, “does not seem to be fact-specific and refuses to take into measure the safety records of those others in the Gulf…the blanket moratorium, with no parameters, seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger.”  He ruled that the suspension was arbitrary in length. Why six months and not four? Or eight? When millions of dollars in local commerce, jobs and livelihoods hang in the balance, it is unfair and irresponsible to just pick a length of time out of a hat.

Judge Feldman issued the injunction lifting the ban while stating that the Interior Department had failed to demonstrate that the Deepwater Horizon rig blowout by itself showed that there was imminent danger on all deep-water drilling rigs in the Gulf. Since the “blanket, generic, indeed punitive, moratorium” would do serious and inevitable harm to the industry, the regions, the local economies, individuals and their families, stopping the drilling was unfair, wrong and an abuse of power.

The judge made an ethics call: fairness and prudence outbalanced speculative safety considerations, and, in his view, environmental safety was not an absolute, justifying eliminating all risk.

We have to remember that there is no “right” answer to this conflict. When ethical values compete, different individuals will weigh them differently. Judge Feldman’s reasoning is ethically sound, but he could have just as easily and ethically concluded that the ban was reasonable, saying, for example, that the only reason deep water drilling had been permitted at all was because regulators believed oil industry representations that they knew how to minimize the damage when and if a an oil spill occurred. Since the BP incident proved that this was not true, it was not unreasonable for the Department of the Interior to shut down drilling until it was confident that the next spill, whenever it occurred, could be contained. The six month limit, by this reasoning, was proof that the Administration was trying to minimize that financial harm to others, because an indefinite ban could be justified.

Feldman’s ruling didn’t stop the ethics controversy, because anti-drilling forces immediately challenged his ethics. Environmental groups and others flatly declared that the judge had a pro-drilling bias, because his 2008 financial disclosure form showed that he had invested in companies involved in offshore oil and gas exploration. If they were right, then Feldman had a clear conflict of interest, because he would be one of the individuals who could be financially harmed by the moratorium. Under such circumstances, his judgment would be suspect even if his own holdings never entered into his reasoning at all. It would have been unethical for him to decide the case, because it would appear improper.

His deciding the case was not unethical however, because Feldman had sold those investments. Then, just hours before hearing the drilling ban case, Feldman sold his remaining oil investments, Exxon stock. This was an interesting thing to do, because it was both ethical and practical. Ethically, it removed a conflict of interest: he no longer had a financial interest in the case. Practically, he unloaded stock that he knew his own ruling might devalue, if he upheld the ban. I think his conduct is powerful evidence that he was committed to making a fair and unbiased ruling.

At this point, only the critics of the decision who continue to impugn Judge Feldman’s integrity (like the New York Times editorial staff, which is either unaware that Feldman divested himself of drilling and oil investments before ruling, or chooses to keep its readers ignorant of that inconvenient fact) are behaving unethically. So far, the ethics audit of this difficult situation shows this:

The deep-water drilling ban: ethically defensible.

The argument against the ban: ethically defensible.

Judge Feldman’s ruling declaring the ban unethical, and thus an abuse of power: also ethically defensible.

Stay tuned.

9 thoughts on “Ethics Audit: the Deep-Water Oil-Drilling Ban Saga

  1. With some background, the intent of Obama’s declaration becomes clear… CEO of BP as well as Goldman Sachs sold over $500 million of BP stock between them, days prior to the Deepwater Horizon explosion, BP acquired an oil spill cleanup company weeks before the explosion, and drill rig supervisory engineers were overheard, in their conversation with BP Houston bosses to say, “Are you happy, are you happy? I told you this was going to happen.” All in the public record. This was a “black flag” operation, with intention to close down Gulf drilling, and create the circumstances for carbon tax passage. Why would the US government now be giving Brazil $2 billion so that BP can deep water drill in Brazil, who will sell the oil to China?

  2. Dear Jack: Being a former petroleum geologist and having been on offshore rigs (even as a kid!) I could probably write a small book on this incident right here. I’ll refrain, though! I’ll just point out that Obama’s argument about the safety of offshore drilling- to the environment or anything else- reveals his stupidity (if he means it) or his duplicity if he doesn’t. Any drilling project anywhere and under any conditions is inherently dangerous and dirty work. That so few accidents have occurred is due to the high professional standards that are normally set. In this case, they failed. British Petroleum likewise failed to have effective measures in place to prevent subsequent spillage. However, the U.S. Government did have options to render swift and effective assistance… which they failed to access, whether by incompetance or by callous political design. Given Obama’s tight stance with the environmental movement- among other political factors- there’s much suspicion that the latter element is dominant. I suspect it is, too.

    • All of which is irrelevant. It’s certifiably insane to do something like this without the technology to stop a worst case scenario disaster. I’m all for drilling, but if I was President, I would simply require that drilling would commence when there was a proven system in place that could be counted upon to plug a hole like the one in the Gulf. From a safety standpoint, the decision to have a moratorium is no different than stopping the Space Shuttle flights after the Challenger blew up. Pure prudence.

      • Problem is that no president has the right under law to do such a knee jerk ban. Peoples economic lives depend on the production in the gulf. Obama is running the county as a facist state and it must stop.

        • The President, through the executive departments and agencies, does have the power to do this, Ron. The system works this way: all Presidents try to see how far their power goes, and when they over-step, the courts stop them. Just like here.

  3. From my readings, there was precedent for drilling this deep……. on land. The Russians have done it, and found well pressures WELL above the typical found, i.e. 20,000 psi vs. 1,500 psi. Some sources have it that NO existing man-made technology can provide backup and blow-out prevention under such conditions. To attempt to drill to such depths under these conditions would not be simply foolish, but downright sociopathic. There were some reports that cracks in the drill casing were known weeks before the decision was made to finalize the project. To those familiar with petroleum geology, please correct me if wrong…

  4. No, Jack. I don’t think this is irrelevant at all. That BP failed to provide for a worst case scenario is noted and understood. The point is that, when this nearly unprecedented incident DID occur, the federal government failed to provide help in a timely manner… and fails still. Also, they share in the fault inasmuch as their oversight procedures failed as well. In fact, in a conversation with some BP engineers just this Saturday, I learned that wells like Deep Horizon are no longer considered extreme technology. Perhaps not. But, as Heinlein put it, “Blowups happen”! Maybe they became too comfortable with the technology and failed to allow for Murphy’s (Immutable) Law. That’s hardly unprecedented in history, either. But the failure of the U.S. Government- for whatever reason- eclipses BP’s failures and has led events from a localized tragedy into a national one.

    • Tony Hayward sold most of his BP stock days before the explosion. (Proven) Goldman Sachs sold $250,000,000 of their BP stock but no other oil company proximate to the explosion (former chairman of BP in GS hierarchy). (Proven) Ditto, Wachovia. Halliburton bought Boots and Coots oil spill cleanup co several weeks before the explosion. Engineers on the rig are on record (Coast Guard hearings) as saying to the Houston bosses, “We told you this was going to happen” after using improper technique of water injection in the final stages of operation. BLM “inspectors” on the rig 2 hours before a “bomb” was detonated on the platform. Dutch and Norwegian ships with super-skimmers offered help in cleanup but were shooed away by Obama. Ditto the state agencies trying to protect their estuaries. What does it take to recognize this for what it is?

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