Helping Those Who Don't Want Help

Regulation Helps Level the Playing Field

As principal stockholder and chief executive of a growing manufacturing corporation operating in North America and headquartered in Colorado, I must take issue with what appears to be a blanket rejection of safety, environmental and financial regulations, especially among those subscribing to the principals of the Republican party and one of its enablers, the National Federation of Small Business.  

As one who has built several companies, both in manufacturing and in services, I find it amazing that the meme of mine (or plant) safety is even challenged.  Employees are expensive to train and their loss due to unsafe operations is simply unacceptable. So is the loss of expensive capital equipment, such as a mine. Safety is not something we should have only when "we can afford it".  If you want a perfect example of the costs of an unsafe operation, consider the Deepwater Horizon blowout in 5000 feet of water, due to very preventable circumstances and condemned by the president of NYSE-listed Sampson Oil in the Wall Street Journal about a month after 13 lives and untold damage was done, and, incidentally, a $250 million offshore platform was lost.   To object to operations safety and the regulations implementing them is a fool's errand, in my opinion.

The water supply for those of us living in a desert, as we do here in much of Colorado, New Mexico, Arizona and California, is heavily dependent on its purity as it melts in the mountains and is transported to the distant population centers or is extracted from underground aquifers.  To challenge the idea of regulating this life-enabling resource in order to permit private pollution of it, is simply uneconomic...unless you're the polluter or one of its stockholders who cares not a whit about the damage environmental mishandling can do. Ditto for the air: should we promote acid containing stack effluent or smog creating NOX and SOX to be once again as prevalent as it was in 1968?  Ditto for hazardous chemicals into the land and waterways.

Not only is this monumentally against the people of the US, including our children and grandchildren, it is also bad economics. I recall sitting in numerous meetings with top engineering executives of heavy industrial companies in the years immediately following the establishment of Nixon's EPA.  There was great gnashing of teeth and renting of garments during those meetings, and I was told that all capital equipment projects would be abandoned by 1975 since "no one could afford" the processes needed to clean up the pollution. But, that was wrong; those same corporations found that they saved a lot more by burning their fuels more efficiently and recovering their effluents for reuse in the form of nitric and sulfuric acids and other chemicals and materials.  There was even a profitable "clean air" solution to what American Electric Power's CEO called drowning in "lime slurry", a low energy use project which converted the slurry to inert aggregate used in road and railroad beds in the Northeast.   DuPont found it could clean up its super sites by making them in to wetlands, which dropped their costs for cleanup by orders of magnitude. Should regulations of the mining and processing of asbestos be removed, thereby substantially shortening the lives of any living nearby?  Who would pay for the damage to their lives and property values?   To say that environmental regulation needs to be suspended so we can have jobs, is simply shortsighted and is very likely not going to result in additional employment, rather in less.

If I can have the public or my neighbors absorb the cost of some of my processes, is that not a stealing from my neighbors?  How on earth can misbehavior by managers, seeking to maximize their quarterly bonus, be prevented in the absence of government regulations?  

If I can destroy a fishery in the Gulf of Mexico at no cost to me so that I can exploit a resource that even Jim Bob Moffet, of Freeport McMoran fame, has said was possibly a danger (which he did in the Oil & Gas Conference here in 2010--look him up, including the very nasty things said about him with his Freeport McMoran company in the past few decades to verify that he's not a tree hugger).

If I can dump the waste from my paper mill into a river, I don't have to pay for its reprocessing, but those living down stream have higher water and food costs as a result of my tort upon them.  

If I permit my hydraulic fracturing chemicals to leach or leak into the ground water of a town, that town will have to import its water at great expense to the residents, but not to me, while I see profits from 1,000,000 cubic feet per day of gas production at $3.50/1000 or 10,000 barrels of oil per day at $75 or more per barrel at a capital cost of about $4.5 million to drill and frack the hole. There is doubt that fracturing-related accidents, largely preventable by good engineering practice, have polluted the ground water in  Pavillion, WY, and surface tributaries of the Susquanna River in Pennsylvania, the latter, by the way is the primary water supply for more than 2 million residents and drains into the Chesapeake Bay and its great fishery.

In the absence of regulations of such industries, who decides who has damaged whom and who determines if the process was a safe one, following the best engineering practices?

"Fat cat bankers" have taken advantage of a lowered regulation environment for their industry which began with Ronald Reagan's Administration deregulating the S&L industry. We all know what happened then. Its reoccurance with the repeal of Glass-Steagel in 1999.  Some of us thought it was a good idea since the large European and Japanese banks would have an advantage over American firms in North America and world-wide. But now, even Randian Alan Greenspan has noted that he may have been a bit naive in promoting this unfettered casino, operating on inside information and unstable debt instruments which crashed our once world-wide envied transparent financial system. The financial crash of 2008 came as a result of inadequate regulation of the capital to loans outstanding, aided by unfettered insurance policies, some by AIG and others within the firms themselves which permitted excessive leverage. Derivatives are unstable and have brought down economies since the great Asian failure of the mid-1990's and the near total destruction of our financial system in September, 2008.  The failure of Enron and its enabler, the once sacrosanct Arthur Anderson accounting reporting giant, in 2001 came about from the removal of regulation of the electric power generating, transmission and distribution industry and the deregulation of public stock markets.  

Perhaps this election will turn on regulation and the need to free the markets.  I certainly hope it won't, as a short term result of further regulation destruction would very likely create an America livable in the same way as Shanghai with substantial infant and elderly mortality due to air and water pollution and unsafe workplaces which can and do impinge on those nearby.

As for the 150 miners at the Hanna mine in Idaho losing their jobs because the mine can't keep its operation safe, perhaps they and their families are better off than those of the two killed in accidents there, just as the coal miners in Massey Energy's Utah and West Virginia coal mines which were operated in knowingly unsafe ways are now better off that the Mine Safety Administration and the courts have taken action.

If some would remove these protections, let them do so, but make them pay for any and all damage caused with no exclusions, including bankruptcy.

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by: saindenver @ Sun Jan 15, 2012 at 04:08:43 AM UTC