The Gulf Catastrophe

By Alan Shapiro

To the Teacher:

The catastrophic oil spill in the gulf, which killed 11 workers, is likely to have disastrous effects on the ecosystem and the economy.

An introduction for students, below, describes briefly what happened. The first student reading identifies "responsible parties" and emphasizes some of the consequences of their failures. The second details the records of two of those parties. The third details the record of the U.S. Interior Department's Minerals Management Service and differing opinions about the proposed reorganization of the MMS.

Introduction:
"A thundering explosion" in the Gulf

NASA satellite image of the oil slick.

The Deepwater Horizon oil rig floated on a calm sea 50 miles offshore in the Gulf of Mexico on April 20. Four executives from the energy company BP arrived via helicopter early that morning to honor rig workers, who were finishing a job, for their excellent safety record. They had been drilling an exploratory well about 47 miles off the coast of Louisiana and discovered oil. But since the Deepwater Horizon was not a production vessel, "the workers had been told to cap the well for later use and move on to the next job."

Just before 10 p.m., "a thundering explosion rocked the rig, the beginning of a terrifying night for the men who would survive one of the most harrowing disasters in the history of the oil business." A second explosion tore through the rig that some of those survivors called "a tornado of fire, a nuclear bomb, a jet engine exploding….'We all were sure we were going to die,'" said one. Eleven workers did die, and 17 were wounded. Another 115 miraculously survived and were uninjured. (Ian Urbina and Justin Gillis, "'We All Were Sure We Were Going to Die,'" New York Times, 5/8/10)

Chris Choy, an off-duty worker, was sleeping when the explosion woke him. "People were jumping off the rig," he said. "People were stopping people from jumping off the rig. People were scrambling for the lifeboats." Choy helped the wounded get off the ship. The experiences of that night, Choy said, have given him nightmares that do not stop. ("The NewsHour," www.pbs.org, 5/10)

Student Reading 1:
The "responsible parties"

BP leased 65% of the well that exploded from the US government, which owns the Gulf waters. Two other companies leased the rest. Together, these parties are legally responsible for cleanup costs. The owner of the oil rig, Transocean, provided most of the workers. Halliburton, a subcontractor, provided cement to seal the well. Cameron provided the blowout preventer that failed, possibly because of a leak.

"Responsible parties" also have to pay for property damage, lost business revenue, and damage to ecosystems at caps of about $65 and $75 million each. But they will have to pay much more if they are found to have acted with gross negligence or broke rules that resulted in the explosion and oil spill.

Seeking an explanation for the oil rig explosion, the Senate Committee on Energy and Natural Resources heard testimony from top executives. "The BP America chairman, Lamar McKay, blamed a malfunctioning blowout preventer installed by Transocean," noted a New York Times editorial. "Transocean's boss, Steven Newman, said the problem may have been a mishandling of the cement that is supposed to keep gas from escaping up the well pipe to the surface. Tim Probert, a president of Halliburton, suggested that his company was only following instructions from BP. Round and round the blame game went--the 'liability chase,' Senator Robert Menendez of New Jersey called it." (editorial, New York Times, 5/12/10)

Each of these companies apparently ignored tests before the explosion that indicated problems with safety equipment. "Yet it appears the companies did not suspend operations, and now 11 workers are dead and the gulf faces an environmental catastrophe," said Rep. Henry Waxman, the chair of the House of Representatives' Energy and Commerce Committee. Waxman demanded to know why work was not halted until safety problems were remedied.

"Even though it (the US government), leases the space to private investors, it is the government that is responsible for protecting public health, safety, and interests while allowing access to a needed resource through its regulatory authority," writes Jack Spencer, a research fellow at the Heritage Foundation. (www.heritage.org, 5/12/10)

The government and its agencies, it now appears, are also "responsible parties," according to information reported by the New York Times:

"The federal Minerals Management Service [MMS, an agency within the Interior Department] gave permission to BP and dozens of other companies to drill in the Gulf of Mexico without first getting required permits from another agency that assesses threats to endangered species--and despite strong warnings from that agency about the impact the drilling was likely to have on the gulf. Those approvals, federal records show, include one for the well drilled by the Deepwater Horizon rig….

"Under the Endangered Species Act and the Marine Mammal Protection Act, the MMS is required to get permits to allow drilling where it might harm endangered species or marine mammals." Those permits come from the National Oceanic and Atmospheric Administration (NOAA), whose scientists "were…regularly pressured by agency officials to change the findings of their internal studies if they predicted that an accident was likely to occur or if wildlife might be harmed…."

Despite the April 20 Deepwater Horizon's explosion and oil pouring into the gulf for a month with no immediate end in sight, the MMS "has issued at least five final approval permits to new drilling projects in the gulf."

"'You simply are not allowed to conclude that the drilling will have an impact,' said one scientist who has worked for MMS for more than decade. 'If you find the risks of a spill are high or you conclude that a certain species will be affected, your report gets disappeared in a desk drawer and they find another scientist to redo it or they rewrite it for you.'" (Ian Urbina, "US Said to Allow Drilling Without Needed Permits," New York Times, 5/14/10)

The Heritage Foundation's Spencer adds: "The MMS inspected the rig less than two weeks prior to the accident as part of a mandated monthly inspection regimen. Federal regulators also gave the rig's emergency shutoff valve a pass 10 days prior to the accident. The so-called 'blow-out preventer is meant to be the fail-safe mechanism to ensure that major spills do not occur." ("Gulf Coast Oil Spill: Does the Federal Government Share Responsibility?")

The full effects of the disaster remain to be seen as a torrent of oil pours daily into the Gulf of Mexico. Estimates of how much vary sharply but already run higher than the record Exxon Valdez discharge of 11 million gallons off the coast of Alaska in 1989. Threatened along the Gulf coast are fragile ecosystems that include bird sanctuaries, pelicans, crabs, shrimp, and many varieties of fish. The tourist industry is at risk, as are hundreds of thousands of jobs from Louisiana to Florida.

"The real disaster for the gulf would come if the polluted mangrove swamps and grassy coastal marshlands die from oil coating their roots….Since the swamps and marshes anchor barrier islands, losing them would put the islands at risk of being inundated by storm surges. In that case, the coasts they protect would be exposed to the full fury of tomorrow's Katrinas." (Sharon Begley, "How Quickly We Forget," Newsweek, 5/17/10)

Less than two months before the disaster President Obama announced his plan for comprehensive energy legislation that included new offshore drilling in the Atlantic Ocean from Delaware to central Florida. After the Deepwater Horizon explosion, he suspended this plan, saying his administration would approve no new offshore drilling until new safety regulations were established for rigs.

President Obama announced in mid-May that he would appoint an independent commission to investigate the cause or causes of the oil spill and the response to it.

For discussion

1. What questions do students have about the reading? How might they be answered?

2. What are immediate consequences of the oil rig explosion?

3. Who are the "responsible parties"? How is each "responsible"?

4. Why is it impossible to know the full consequences of the catastrophe?

5. What is your assessment of President Obama's response to it?

Student Reading 2:
The safety records of Transocean and BP

"Nearly three of every four incidents that triggered federal investigations into safety and other problems on deepwater drilling rigs in the Gulf of Mexico since 2008 have been on rigs operated by Transocean, according to an analysis of federal data," the online edition of the Wall Street Journal reported. "Transocean defended its safety record but didn't dispute the Journal's analysis…."

Since 2007, "Transocean has accounted for 24 of the 33 incidents investigated by the MMS (US Minerals Management Service), or 73%, despite during that time owning fewer than half the Gulf of Mexico rigs operating in more than 3,000 feet of water."
(Ben Casselman, "Rig Owner Had Rising Tally of Accidents," www.wsj.com, 5/10)

Once known as British Petroleum, BP (which the company now defines as "Beyond Petroleum") also has had multiple accidents and safety violations.

• In the mid-1990s a company contractor was responsible for the injection of toxic waste
  into the wells at its drill site on Endicott Island off Alaska's Prudhoe Bay.
  
  
• Fifteen workers died and 180 were injured when its Texas City refinery blew up
  in 2005. The causes, according to the Chemical Safety and Hazard Investigation Board,
  were company deficiencies "at all levels of the BP Corporation," including cost cutting
  on maintenance and safety. A combined Justice Department and Environmental
  Protection Agency (EPA) criminal investigation led to a $50 million fine for violations
  of the Clean Air Act.
  
  
• In 2006, a poorly maintained BP pipeline fractured and spilled 200,000 gallons of crude
  oil over Alaska's North Slope. Another joint investigation resulted in a $20 million
  misdemeanor fine in 2007 that EPA officials viewed as inadequate--as they did the
  earlier $50 million. "EPA investigators pushed to charge company officials with a
  crime. 'Everybody was convinced we had a humdinger of a case,' says Scott West, the
  EPA special agent in charge of the probe, who has since retired." Witnesses--including workers on the pipelines and midlevel managers--told investigators how BP executives had ignored repeated warnings about corrosion. "There was a corporate philosophy that it was cheaper to operate to failure and then deal with the problem later rather than do preventive maintenance," West told Newsweek. According to the Newsweek report, the EPA wanted to get BP barred from future government contracts, but BP's influence within the Justice Department and the Pentagon appears to have prevented such action. BP is No. 1 among all oil companies supplying the military with $2.2 billion in oil sales last year. BP's reported profits for 2007 were $17.2 billion. (Michael Isikoff and Michael Hirsh,"Slick Operator," Newsweek, 5/17/10)
  
  
• In 2009 an Occupational Safety and Health Administration (OSHA) inspection found 700 violations at the same Texas City refinery that had exploded four years earlier. Many were in valves critical to safety because of pressures and high temperatures.
  
  
• Investigators are still studying a 2009 North Slope oil spill of 46,000 gallons. That same year BP workers at Prudhoe Bay were unaware that a stuck valve was responsible for a gas leak because security cameras not pointed in the right direction did not reveal an unlit pilot flame.
  
  
• Earlier this year a BP refinery in Toledo, Ohio, was fined $3 million for "willful" safety violations that involved valves like those that helped to produce the Texas City blast. "BP has systemic safety and health problems," said an OSHA official. In 2007 a BP-appointed panel headed by former Secretary of State James Baker criticized the company severely for putting profits before safety. (Jad Mouawad, "Fast-Growing BP Also Has a Mounting List of Spills and Safety Lapses," New York Times, 5/910) and Craig Welch, "BP's trail of accidents, scandals stretches to Alaska" (www.seattletimes.nwsource.com, 5/510)
  
  

For discussion

1. What questions do students have about the reading? How might they be answered?

2. How do you explain the safety records of Transocean and why? Of BP? How would those two companies explain them? If you don't know, how might you find out?

3. How do you explain the failure of the government to indict BP officials for crimes? What crimes?

Student Reading 3:
The regulatory record of the Minerals Management Service

Conflict of interest at MMS

BP spent $15.9 million on lobbying in 2009. Just 11 days before the oil rig explosion, the company successfully lobbied the Minerals Management Service to exempt it from enforcement of the National Environment Policy Act. MMS said that in making the decision, "neither federal regulators nor the company anticipated an accident of the scale of the one unfolding in the gulf."

The Washington Post reported that in 2007, MMS made three assessments of the environmental impact of oil drilling in the Gulf, "including a specific evaluation of BP's Lease 206 at Deepwater Horizon." In each case, the Post reports, MMS "played down the prospect of a major blowout." They not only estimated that there was only a limited possibility of an oil spill, but also predicted that any spill would not reach the coast.

"Kierán Suckling, executive director of the environmental group Center for Biological Diversity, said 'The agency's oversight role has devolved to little more than rubber-stamping British Petroleum's self-serving drilling plans." (Juliet Eilperin, "US exempted BP's Gulf of Mexico drilling from environmental impact study," (www.washingtonpost.com, 5/5/10)

MMS's own records show that from 2001 to 2007, there were 1,443 serious offshore drilling accidents that caused 41 deaths and 302 injuries, and 356 oil spills. Yet, reported the New York Times, "the federal agency continues to allow the industry largely to police itself." Walter Cruickshank, deputy director of MMS, said, "We have inspectors going offshore every day that the weather allows." He told the Times that MMS had ordered the shut down of oil operations 117 times last year. "The enforcement is quite strict," he said. (Eric Lipton and John Broder, "Regulators' Warnings Weren't Acted On; Backup Systems Were Never Installed," New York Times, 5/8/10)

In 2008, the New York Times reported on the Interior Department inspector general's investigation of MMS. That investigation, the Times reported,"concluded that several of the officials frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives. The investigation separately found that the program's manager mixed official and personal business. It accused him of having intimate relations with two subordinates, one of whom regularly sold him cocaine." (Charles Savage, "Sex, Drug Use and Graft Cited in Interior Department," www.nytimes.com, 9/10/08)

MMS employees enjoyed gifts of meals, golf outings, tickets to sports events, and ski trips from oil and natural gas representatives. The agency's director made more than $30,000 from improper outside work, courtesy of those representatives. A half dozen MMS employees were fined or put on probation and several were fired following an investigation.

MMS's controversial new organizational plan

Interior Secretary Ken Salazar recently announced his plan for reorganizing the MMS. "The job of ensuring energy companies are following the law and protecting the safety of their workers and the environment is a big one," he said, and "should be independent from other missions of the agency." (5/11/10)

Under the plan, MMS would remain a single agency, but would have two divisions. One division would focus on environmental enforcement and public safety, the other on leasing arrangements and collecting royalties from oil and gas companies. The latter amounts to about $13.2 billion a year.

"Not to be too glib, but absent more fundamental change, this amounts to little more than rearranging the deck chairs on the Deepwater Horizon," said Jeff Ruch, the executive director of Public Employees for Environmental Responsibility, a nonprofit alliance of scientists and law enforcement officials.

"Ken Salazar came into office announcing, 'There is a new sheriff in town,' and promised to reform the deeply corrupt Minerals Management Service," said Kierán Suckling of the Center for Biological Diversity. "He took action regarding personal, criminal actions but did absolutely nothing to address the agency's dangerous practice of rubber-stamping offshore oil-drilling permits." Suckling said that Salazar's proposed reform "doesn't commit to separating MMS's revenue and permitting arms. Thus it ignores the true scandal and allows the worst abuses to continue. MMS will still have a conflict of interest, still waive environmental reviews and still rubber-stamp drilling plans." New York Times, 5/12/10 and 5/15/10)

According to the New York Times, Britain, Australia, and Norway have created entirely independent agencies to deal with safety and environmental regulation, on the one hand, and revenue-raising, on the other.(Tom Zeller, "Mineral Agency's Split Follows Nations' Lead," New York Times, 5/12/10)

Jack Spencer of the Heritage Foundation argues that MMS's failures are "likely not the result of insufficient regulatory quantity: Getting a lease to drill offshore is already an onerous regulatory process, and once drilling operations commence, the lessee is subjected to constant monitoring and inspection. It was more likely the case that the current regulatory regime confuses responsibilities, undermines incentives for market-based safety solutions, and creates conflicts of interest between the regulator and those being regulated."

The troubles with MMS are hardly unique, Paul Krugman argues in a New York Times op-ed. "They were part of a broader pattern that includes the failure of banking regulation and the transformation of the Federal Emergency Management agency, a much-admired organization during the Clinton years, into a cruel joke. And the common theme in all these stories is the degradation of effective government by antigovernment ideology….

"If there's any silver lining to the disaster in the gulf, it is that it may serve as a wake-up call, a reminder that we need politicians who believe in good government, because there are some jobs only the government can do." ("Sex & Drugs & the Spill," 5/10/10)

For discussion

1. What questions do students have about the reading? How might they be answered?

2. How do you assess the effectiveness of MMS and why?

3. Why is the reorganization plan for MMS controversial?

4. What reasons does Spencer give for MMS's failure? What issues might they raise for reorganizing MMS?

5. Consider the Krugman quote that concludes the reading. What is Krugman referring to when he writes of "the failure of banking regulation"? Of "the transformation of the Federal Emergency Management agency (FEMA)…into a cruel joke"? If you don't know, how might you find out? What reasons do you have to agree or to disagree with Krugman?

6. Explain what "common theme in all these stories" Krugman refers to. Do you agree or disagree that "there are some jobs only the government can do"? What evidence would you cite to support your opinion?

7. What do you think are the major lessons for Americans about the gulf catastrophe?

For inquiry

Subjects that might be appropriate for student inquiry include:

• the 1969 Santa Barbara oil spill
  
• the 1989 Exxon Valdez oil spill
  
• the Texas City BP oil refinery explosion
  
• Gulf ecosystems
  
• the Minerals Management Service

Students might also explore the performance of other government regulatory bodies during disasters. For example:

• the Federal Emergency Management Agency and Katrina
  
• the Federal Reserve and the financial collapse
  
• the Federal Deposit Insurance Corporation and banking failures
  
• the Securities & Exchange Commission and the Madoff affair

(FYI, the Federal Election Commission, the Food and Drug Administration, and the Environmental Protection Agency are the subjects of "Big Problems at 3 Federal Agencies," in the high school section of www.teachablemoment.org.)

An inquiry process begins with questions. For suggestions on question-asking and question-analyzing, see "Thinking Is Questioning."

For writing

Read, meditate on and perhaps discuss in class the quote below. Then ask students to draft a 300-word essay in which they relate the quote to the Gulf oil disaster.

James Madison wrote 222 years ago: "What is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. (Federalist No. 51, February 8, 1788).

When drafts are completed, divide students into small groups to read them, respond to clarifying questions, discuss them briefly, then select the one they regard as best to be read to the whole class for further discussion.

For active engagement

The Gulf catastrophe raises questions about the social responsibility of corporations and government agencies. These questions might help shape a class project that reaches out to the school and community. For some suggested approaches see "Teaching Social Responsibility."

This lesson was written for TeachableMoment.Org, a project of Morningside Center for Teaching Social Responsibility. We welcome your comments. Please email author Alan Shapiro at: lnshapiro07@gmail.com.

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