Sick Chickens, Oil Wells, and One Email

"All of the justices, Cardozo foremost among them, were incensed to learn that the Government was seeking to enforce a rule that existed in writing only on a single piece of paper inside a single bureaucrat's desk."

Yesterday afternoon, Ari Shapiro of NPR radio tried to explain how it is that Minerals Management Service (MMS) could issue "at least 17 drilling permits" after President Obama's supposed "freeze on offshore drilling." Incredibly, it turns out, "the freeze on offshore drilling was only "a verbal order."

Shades of Schechter Poultry Corp. v. United States (1935) and Panama Refining Co. v. Ryan (1935). These are two famous Depression-era Supreme Court cases decided by the "nine old men" of the Supreme Court. So famous, each has earned nicknames: the "Sick Chicken Case" and the "Hot Oil Case."

Each court decision struck down as unconstitutional key parts of Franklin Roosevelt's "New Deal" legislation known as the National Industrial Recovery Act (NIRA). More to the point, the two cases also spurred the development of the Federal Register, that daily publication which publicly prints new laws enacted by Congress, executive orders of the president, and administrative agency regulations.

In Panama City Refining, the Hot Oil Case, the supreme court was reviewing two oil company challenges to the federal government's retroactive enforcement of state quotas limiting sales and prices of petroleum products. As the official "50th anniversary" history of the Federal Register explains:

[T]wo Texas oil companies, had been charged with violating a provision of [NIRA] regulations that technically did not exist at the time the companies were charged. The defects in the case highlighted a fundamental problem facing a democratic government that was exploding with new agencies and new regulations. Amidst the ferment of orders and codes issuing from agencies, even individuals working at the highest levels of government found it difficult or impossible to keep track of all of them. And for the regulated public, this new body of “executive legislation” was inaccessible and virtually hidden.

The court majority essentially nullified one section of the NIRA as delegating excessive presidential powers. One justice, the brilliant Benjamin Cardozo, dissented. He wrote:

I am unable to assent to the conclusion that section 9(c) of the National Recovery Act, 15 USCA § 709(c), a section delegating to the President a very different power from any that is involved in the regulation of production or in the promulgation of a code, is to be nullified upon the ground that his discretion is too broad or for any other reason. My point of difference with the majority of the court is narrow. I concede that to uphold the delegation there is need to discover in the terms of the act a standard reasonably clear whereby discretion must be governed. I deny that such a standard is lacking in respect of the prohibitions permitted by this section when the act with all its reasonable implications is considered as a whole. What the standard is becomes the pivotal inquiry.

Cardozo in general supported the New Deal. So it is not surprising that he would find no constitutional impediment to congressional delegations of power to the president or one of the new administrative agencies created to handle the desperate emergency of the Great Depression. Cardozo convincingly said as much in his dissenting opinion.

Schechter (the "Sick Chicken Case") involved an analogous issue: whether the National Industrial Recovery Administration could constitutionally enforce against two New Jersey chicken producers a "Poultry Code" that required health inspections of the chickens before being sold in interstate commerce. (Also at stake under the Act was the federal power to regulate wages, benefits, and working conditions of poultry producer employees.)

Importantly, in this case the supreme court justices were unanimous. Even Justice Cardozo agreed. The interesting question is 'Why would Cardozo agree?'

Therein lies our story. The common professional synopsis of the "Sick Chicken Case" is that the congressional enactment known as the NIRA did not itself include specific cleanliness standards for poultry. Instead, Congress had merely empowered the President (or Executive office) to do so. A unanimous Supreme Court found this to be an unconstitutional delegation of legislative authority.

Of course, it is today a standard practice for Congress to delegate broad administrative powers to the executive or an administrative agency. No one expects, and today it is almost universally recognized that the Constitution does not require, Congress to explicitly enact every detailed jot and tittle of a regulatory requirement. Yet, Schechter has never been explicitly overruled.

The textbooks don't mention this and the court certainly did not, but in our era many law students learned a bit of background history to the Sick Chicken Case that helps to explain the court's sweeping ruling, Cardozo's surprising decision to go along with it, and why even today the court won't explicitly reject the Schechter decision. This is how we remember hearing about it from an aging Harvard Law School professor who in his youth had clerked for one of the unanimous "nine old men" --

On the day of oral argument one justice interrupted the lawyerly arguments to ask, 'About this regulation that defines when a chicken is sick and when it isn't -- where is it? We can't seem to find the rule in any of the parties' legal briefs.'

The government's attorney apologized. He said he wasn't sure where it could be found, but he promised the court he would track it down and provide it to the court. Some days later, after a frantic search through the disorganized files of newly-hired N.I.R.A. staff, the lone original typed regulation was "found in the top drawer of a staff employee's desk." A messenger then hand-delivered it to the Court. (This was, of course, before photocopy machines.)

According to the old professor, all of the justices, Cardozo foremost among them, were incensed to learn that the Government was seeking to enforce a rule that existed in writing only on a single piece of paper inside a single bureaucrat's desk. All were of the view that due process required some form of public notice about the exact wording of an executive order or agency regulation.

All felt, too, that it was an affront to the judiciary to ask them to review a Government regulation that no one could find unless he happened to personally know who might have it stashed away in a desk.

Back to Ari Shapiro's radio report. "One source of confusion" he reports, "is the apparent lack of an original document laying out all the details of [President Obama's] moratorium."

"We have, in fact, been trying to locate and to actually get from the Interior Department something that actually documents that there is in fact a suspension," says [ Mike Senatore of Defenders of Wildlife].

In fact, two Interior officials tell NPR the drilling suspension was not put into writing.

"It was a straightforward verbal order to the director of MMS, which was then transmitted within MMS," said one official in an email. [emphasis added]

Secret orders that no one can gain access to were a staple of the Bush-Cheney administration, in matters of oil policy as well as the 'War on Terror.' It is beyond disappointing that the Obama administration is adopting those same policies as his own.

minor edit 5-25 pm

Louisiana MMS: 'A Culture of Corruption'

Buried on page A-16 of today's Times is an investigative news item by Ian Urbina claiming that an inspector general's report into misconduct by Minerals Management Service (MMS) had been transmitted to the Secretary of the Interior, Ken Salazar. The report focuses on employees at the Lake Charles, Louisiana, MMS regional office -- the one which would have had the most direct conduct with BP oil industry officials and the Deepwater Horizon well.

As Urbina wrote, the report initially was "provided to The New York Times by a person familiar with the investigation who is not authorized to speak to reporters." And, it's a humdinger. What it describes is a culture of corruption, favoritism for the oil industry, and thorough incompetence.

As introductory materials in the report explain, "all of the conduct chronicled in this report occurred prior to 2007." The investigation had its origins in a whistle-blower's letter sent to the U.S. Attorney's office in Louisiana. The U.S.A. referred the matter to the I.G. for investigation.

Times reporter Ian Urbina describes one of the many deeply disturbing findings: "Federal regulators responsible for oversight of drilling in the Gulf of Mexico allowed industry officials several years ago to fill in their own inspection reports in pencil — and then turned them over to the regulators, who traced over them in pen before submitting the reports to the agency." (emphasis added)

Other activities of MMS personnel at Lake Charles included:

• Inspectors accepting "meals, tickets to sporting events and gifts" from "at least one oil company while they were overseeing the industry."
• In mid-2008, "a minerals agency employee conducted four inspections on drilling platforms when he was also negotiating a job with the drilling company, a cover letter to the report said."
• An MMS inspector from the Lake Charles office "admitted to investigators that he had used crystal methamphetamine, an illegal drug..." and is believed to have been under the influence of drugs while conducting an oil rig inspection.
• Employees from the Lake Charles office "repeatedly accepted gifts, including hunting and fishing trips from the Island Operating Company, an oil and gas company working on oil platforms... ."
• At least two Lake Charles MMS employees "admitted... using illegal drugs during their employment."
• Seven or more inspectors who are "cited in the report as having been involved in inappropriate or illegal activities were still employed by the agency when the report was completed in March."

The full IG report now has gone viral. It's available on Scribd and ABC-News and probably elsewhere.
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Law and Oiler Friday: May 21 BP Oil Spill Update

"Too much information is now in the hands of BP's many lawyers, and too little is being disclosed to the public. The Gulf of Mexico is a crime scene, and the perpetrator cannot be left in charge of assessing the damage."

-- Larry Schweiger, Pres., National Wildlife Federation
May 19, 2010

1. Pensacola Forecast.

Mostly sunny, warm, and light winds from the southeast until Saturday evening, according to NOAA's Mobile, Alabama, regional weather forecast. Not much change is expected until Monday, when winds may switch and start coming from the southwest for a day or so.

Several correspondents have written or posted messages asking if they should proceed with plans for a beach weekend in Pensacola. Our answer is that if we were in your position, we'd come ahead.

Based on the forecasted winds and currents, it seems likely BP's giant oil slick will stay offshore from Pensacola Beach and out of sight over the weekend, just as it has since the disaster of April 20. Odds are the weather will be, as predicted, warm and mostly sunny. The water likely will remain clear. As for odors, we've only smelled oil twice in the last month, and both times it was a transitory sensation that went away after a few hours.

Even if we prove wrong, there's a secondary reason to come. Just think: you'd be right here, just at the moment history happens. It'll be something to tell your grandchildren... in the unlikely event, that is, the oil comes ashore.

2. Sour Smells.

Yesterday taught us that the smells of BP's leaking oil well can be detected almost anywhere, even when the large river of oil at the surface is fifty to seventy-five miles away. What alarmed many is how acrid the odor can be at such a distance. To think what it will smell like when the oil is close enough to see is almost unimaginable.

3. Law and Oiler: Bush "MMS" Division.

Thunk-thunk. The massive BP oil spill, it is clear, hardly can be considered "Obama's Katrina," as most right-wingers would like to think. If anything, it's "Bush's Katrina II."

The former president -- with the assistance, most likely, of vice-president Dick Cheney -- left behind a time bomb we have come to know as the deeply dysfunctional and corrupt Minerals Management Services agency. As William Galston recently wrote in The New Republic:

After the Bush administration took office, the MMS became a cesspool of corruption and conflicts of interest. In September 2008, Earl Devaney, Interior’s Inspector General, delivered a report to Secretary Dirk Kempthorne that has to be read to be believed. One section, headlined “A Culture of Ethical Failure,” documented the belief among numerous MMS staff that they were “exempt from the rules that govern all other employees of the Federal Government.” They adopted a “private sector approach to essentially everything they did.” This included “opting themselves out of the Ethics in Government Act.”

On at least 135 occasions, they accepted gifts and gratuities from oil and gas companies with whom they worked. One of the employees even had a lucrative consulting arrangement with a firm doing business with the government. And in a laconic sentence that speaks volumes, the IG reported: “When confronted by our investigators, none of the employees involved displayed remorse.”

Even after the cocaine, bribery, and sex scandals at MMS came to light late in the Bush administration, as Carl Hiassen summed up with uncharacteristic seriousness, Bush-Cheney prosecuted only one of the twelve MMS executives considered to be among the worst (and most repulsive) miscreants.

As for the rest, Bush's Secretary of Interior, Dirk Kempthorne, prescribed merely a half-day of "ethics training." As one wag sarcastically observes, that was appropriate:

[H]ow could oil company execs know that plying public officials with cocaine and hookers in exchange for favors was against the rules? They don't tell you this stuff in business school.

4. Law and Oiler: Obama "NOAA" Division.

A mounting pile of news articles and editorials suggests the Obama administration is coming in for its own share of the blame. The chief complaint is that the administration has been too gullible in relying on BP corporation to inform the American public about the factual details of the leak and to mitigate damages the leak is causing.

At least one Obama appointee looks to us to be vulnerable: Jane Lubchenco.

Dan Froomkin's article on Huffington Post earlier this week ["Gulf Oil Spill: Government Remains Blind To Underwater Oil Hazard"] leaves the distinct impression that one of the government's problems is inside the National Oceanic and Atmospheric Administration. Froomkin writes:

[T]he National Oceanic and Atmospheric Administration, whose job it is to assess and track the damage being caused by the BP oil spill that began four weeks ago, is only monitoring what's visible -- the slick on the Gulf's surface -- and currently does not have a single research vessel taking measurements below.

Lubchenco is the director of NOAA. Froomkin's article got an extra boost yesterday from Justin Gillis' front-page article in the Times yesterday ["Scientists Fault Lack of Studies Over Gulf Oil Spill"]:

Tensions between the Obama administration and the scientific community over the gulf oil spill are escalating, with prominent oceanographers accusing the government of failing to conduct an adequate scientific analysis of the damage and of allowing BP to obscure the spill’s true scope.

Read the full article and you come away with the conclusion that it's not "the government" scientists are unhappy with. It's director Jane Lubchenco.

In an interview with Gwen Ifill on PBS' News Hour at the start of this week, Lubchenco seemed to be offering a far more sanguine -- not to mention deceptive -- take on the spill than is justified by the facts. And she failed to persuade anyone, except the credulous Ms. Ifill, that the scale of the government's response is appropriate to the size of the spill.

• During the interview Lubchenco endorsed BP's use of dispersants as "a lot less toxic than the oil." EPA yesterday ordered BP to switch to less toxic and more effective dispersants within 71 hours. (Or, maybe not, ABC was reporting late this afternoon.)
  
• Lubchenco did acknowledge "there's a very small stream of oil" nearing the Florida Loop. But then she predicted if any oil reached south Florida it "is not likely to have a very significant impact."
• When asked about reports an underwater lake of oil had been detected which is "300 feet thick in some places, 10 miles long,"Lubchenco confessed there was "something" seen at an unusual depth below the surface, but she blithely asserted NOAA was only "in the very early stages of understanding" what it was.
• During the Ifill interview, the director of NOAA clearly implied a research vessel, The Pelican, was under orders from NOAA to be sampling water on site and it was "in the very early stages of analyzing the samples that they took and looking at the information from the instruments that they had on board." It soon was revealed, however, that The Pelican wasn't a NOAA research ship at all. As the New York Times reported Wednesday:

  On May 6, NOAA called attention to its role in financing the work of a small research ship called the Pelican, owned by a university consortium in Louisiana. But when scientists aboard that vessel reported over the weekend that they had discovered large plumes undersea that appeared to be made of oil droplets, NOAA criticized the results as premature and requiring further analysis.
  
  Rick Steiner, a marine biologist and a veteran of the 1989 Exxon Valdez disaster, assailed NOAA in an interview, declaring that it had been derelict in analyzing conditions beneath the sea.
  

• Later, when asked about reports from scientists that The Pelican had "discovered large plumes undersea," Lubchenco characterized the reports as "misleading, premature and, in some cases, inaccurate."
• The UK Guardian reports that as recently as last night Lubchenco "tried to brush aside demands to produce an estimate for how much oil has now entered the gulf, and where it might be headed. "'At this point, it would not be appropriate to speculate on what that estimate is,'" she told reporters.
  

At best, if one were to give Lubchenco the benefit of the doubt, she's struggling to translate her scientific wait-for-definitive-proof style into effective and consistent public information. At worst, she's a "What Me Worry?" Alfred E. Nueman who still hasn't marshaled the necessary resources to get to the bottom of the BP leak and the dimensions of the threat it poses to the Gulf Coast.

"NOAA has missed the ball catastrophically on the tracking and effects monitoring of this spill," a marine conservationist told Froomkin. "They need 20 research ships on this, yesterday."

He added the agency's failure was "inexcusable." And, so we think quite possible, grounds for replacing the director of NOAA.

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Oil-A-Versary: Thursday BP Oil Spill Update

"There will not be any oil spills affecting Florida beaches."
-- MMS, June 2001, Palm Beach Post (Sept. 10, 2001, page 1A)

1. Happy Oil-a-versary.

One month ago today BP's Deepwater Horizon oil platform caught fire. We first took notice on this blog when the platform sank on April 22, Earth Day -- which just happened to be the one-year anniversary of the "drill, baby, drill" proposal Republicans unveiled in the Florida legislature.

Nice timing, G.O.P. Step forward, please, to receive your comeuppance.

2. Local TV Oil-Cast.

Oil slick predictions by local TV weathermen -- not the most reliable source we can imagine -- are leaving heads spinning in our household. At 10 pm last night, WEAR-TV's weatherman wore a long face as he dolefully told viewers it looked very much as if wind and water currents would be pushing the oil slick north and thus closer to Pensacola over the next forty-eight hours.

On line, however, a completely different weather-person offers a completely different oil-cast: "Over the next forty-eight hours we do not expect the oil to move toward the north." There is something to the overnight revised forecast. NOAA's Mobile, Alabama, regional weather station is predicting mostly south- to south-east winds through the weekend.

Now, we understand why WEAR-TV stopped uploading their full, unedited news broadcasts to their web site. It was simply too embarrassing.

Though the winds may be favorable, the WAVCIS map at LSU's Coastal Studies Institute (screenshot, above) shows an animation that brings the oil slick ever closer to Pensacola Beach over the next forty-eight hours.

3. Sizing Up the Leak.

McClatchey News reports that at yesterday's hearings by a House subcommittee headed by Rep. Ed Markey (D-MA), a string of scientists, one after the other, scoffed at BP's estimate that about 5,000 barrels of oil are leaking every day. Kate Sheppard, the reliable environmental reporter for Mother Jones Magazine, was live twittering the hearing yesterday. Check her highly compressed summaries of each of the scientific witnesses.

Science News reports that one engineering professor, Purdue University's Steven Wereley, told the subcommittee "that his calculations of two leaks that are on videos BP released on Tuesday showed 70,000 barrels from one leak and 25,000 from the other."

He said the margin of error was about 20 percent, making the spill between 76,000 and 104,000 barrels a day. However, Wereley said he'd need to see videos that showed the flow over a longer period to get a better calculation of the mix of oil and gas from the wellhead.

"At least four other independent engineers," Science News added, "have pegged the figure at between 25,000 and 100,000 barrels a day. Prof. Wereley testified that all of the estimates from outside the industry “are considerably higher than BP’s” and "there's a good overlap between the outsider estimates.”

This would suggest BP’s number is an outlier, said subcommittee chairman Ed Markey (Dem.-Mass.). It is, Wereley assured him.

4. Laying Low.

As Marisa Taylor and Renee Schoof were reporting for McClatchy News yesterday, BP has been deliberately withholding facts about the spill from scientists as well as the government -- "and government lets it." They quote Toby Odone, a BP spokesman, as claiming that the company has been sharing data only with "legitimate interested parties." But --

When asked whether the information can be released publicly, he responded, "Why would one do it? Any parties with a legitimate interest can have access to it."

Apparently, BP -- a British company flying the flag of the Marshall Islands -- doesn't see the residents of the U.S. Gulf Coast as "legitimate interested parties." More important to BP is the corporation's PR strategy of "laying low" while trying to mold public opinion.

As Daniel Stone writes for Newsweek Magazine, a leaked BP marketing memo to affiliates describes "the company's efforts to paint itself as humble and helpful."

They advised creating "a word-of-mouth network that can help diffuse or deflect negative commentary and help support the BP brand." Usually, the London-based company pays 50 percent of all local advertising costs, but if a partner uses prepackaged advertising directly from London, the company will cover 100 percent of the costs.

5. Live Leak Feed Coming?

In advance of the subcommittee hearing yesterday, Rep. Markey released a letter he had sent to BP's CEO "asking that the company make a live stream of video from the oil leak site publicly available to give unfettered access of the accident and recovery to scientists and the American public." The Associated Press reported over night that BP has agreed.

We shall see. A live feed of the oil spill" was to made "publicly available on the Web" as early as last night. Some reports suggested it was to be available on the web site of Markey's subcommittee.

As this is written, however, the subcommittee web site doesn't have it and we haven't been able to locate any such feed elsewhere.

6. Reorganizing Oil Drilling Agency.

Secretary of Interior Ken Salazar announced yesterday that he is reorganizing the Mineral Management Services agency "into three separate entities." MMS will be no more. According to an Interior Department public statement, it's being split into three separate agencies:

The reorganization of the MMS, which Secretary Salazar will carry out in consultation with Congress and which is the latest in a series of agency reform actions Salazar has taken since January 2009, will establish the:

• Bureau of Ocean Energy Management: A new bureau under the supervision of the Assistant Secretary for Land and Minerals Management will be responsible for the sustainable development of the Outer Continental Shelf’s conventional and renewable energy resources, including resource evaluation, planning, and other activities related to leasing.

• Bureau of Safety and Environmental Enforcement: A bureau under the supervision of the Assistant Secretary for Land and Minerals Management that will be responsible for ensuring comprehensive oversight, safety, and environmental protection in all offshore energy activities.

• Office of Natural Resources Revenue: An office under the supervision of the Assistant Secretary for Policy, Management, and Budget that will be responsible for the royalty and revenue management function including the collection and distribution of revenue, auditing and compliance, and asset management.
  

Click here, or on the graphic above left, to see the proposed reorganization chart.

The reorganization is long, long overdue.

7. MMS in Pensacola.

As residents of Pensacola may remember, MMS is the agency which back in 2001 was telling everyone from school children at "Susan Whitehurst's language arts class at Woodlawn Beach Middle School" to David Struhs, secretary of the Florida Department of Environmental Regulation, "There will not be any oil spills affecting Florida beaches."

That's a direct quote from a September 10, 2001, Palm Beach Post article by reporter Mary Ellen Klas (now behind a subscription wall):

Drilling rigs are carefully monitored for pollution, [MMS] said. Plants and animals disturbed by the development of oil and gas platforms, in time, "will be the same as they were before." Besides, humans always cause "some unavoidable harm to some groups of animals and plants," like insects smashed "by the simple act of walking down a sidewalk."

This response infuriated environmentalists.

"We realize we can't depend on the MMS to express the true hazards of drilling," said Enid Sisskin, a biologist and spokeswoman for Gulf Coast Environmental Defense, a Pensacola-based opponent of drilling off the Panhandle. "They don't even pretend to be neutral.

In the article, "MMS and the industry" were as one in articulating a unified response to all concerns about the risks of oil pollution. No surprise, there. In 2001, both MMS and the Interior department were "headed by former executives in the oil and gas industry."

They argue that the discharge is so diluted when it is dumped into the gulf that the toxins do no harm.

They also point to their safety record and advancements on drilling techniques that have resulted in a blowout rate - the uncontrolled flow of oil or gas - of only one in every 1,000 well starts since 1996.

Under former president George W. Bush, the MMS agency only grew worse. It became a grotesque nest of "sleeze, sex, cocaine and... billions in lost revenues" to the U.S. treasury. Even before that, however, local environmentalists like Enid Sisskin were warning --

If a spill were to reach our sugar white beaches, within a few months to 2 years after cleanup, although disturbed beach configuration would adjust to approximately predisturbance conditions, some oil that penetrated to depths beneath the reach of the cleanup methods would persist in beach sands and could be released periodically when storms and high tides resuspend or flush through beach sediments. During hot, sunny days, tarballs buried near the surface of the beach sand could liquefy and cause a seep to the sand surface.

In the Palm Beach Post article, MMS critics were very detailed -- and, as it turns out, prescient -- in their warnings:

A gas well blowout can devastate bottom habitat and produce a wide area of toxic conditions within the water column," the EPA wrote in its comments on the proposed sale of Lease 181.
* * *
Another issue complicates natural gas drilling. Discoveries off the coast of Mobile, Ala., indicate that the same formation that extends to Florida contains sour gas, or hydrogen sulfite, which is corrosive and very poisonous, said Klaus Gohrbandt, a retired petroleum geologist living in Pensacola. Rig workers must wear gas masks and the hydrogen sulfite is removed at the processing plant before the natural gas is shipped to the transmission line, he said.

Little known about that depth

Finally, environmentalists note that little is known about marine conditions below depths of 8,000 feet or what impact the release of oil and gas will have in this intensely cold, high pressure environment.

Scientists have discovered unique plants and animals, such as the tube worm, living near seeps in the oil and gas formations deep under water. Recent research has also determined that the deep waters of the gulf are also home to hundreds of endangered sperm whales.

The risks of drilling in this unknown frontier are twofold. With giant offshore wells pumping more that 200,000 barrels of oil a day in depths of more than 1,000 feet, the MMS predicts that a well blowout "could easily turn out to be a potential show stopper ... if the industry and MMS do not come together as a whole to prevent such an incident."

The industry has a plan in place for an oil spill but even federal regulators working for the MMS admit they don't really know how quickly the industry can respond, how fast it can stop the well flow and what the environmental impact might be.

It's been nine years since those warnings were issued out of Pensacola by Enid, among others. They were right. MMS and the entire oil industry was wrong.

And now, BP wants to treat them as people who are not "legitimate interested parties?" MMS is not the only entity that needs serious overhauling.