Note to Industry: Regulation and business success are not mutually exclusive

Today’s public is demanding more from corporate America than ever before: They expect transparency, accountability, and a commitment to operating responsibly. Across industries, securing the public license to operate is essential to ensuring a strong corporate reputation and long-term success.

This appears, however, to have been lost on the oil and gas industry, and unfortunately, it’s one of the industries with the biggest impacts on communities’ health and well-being.

The most obvious example of the oil and gas industry’s reluctance to prove a commitment to operating responsibly is its continual knee-jerk reaction to any proposed regulation of its activities, no matter how reasonable.

Take House Bill 40, which was recently passed by the Texas Legislature and is headed to the governor’s desk. This piece of legislation was largely written by the oil and gas industry and represents an over-the-top reaction to the fracking ban passed in a landslide vote by residents of Denton, Texas in 2014.

The legislation threatens the right of communities to have a say on things like the distance drilling rigs can be located from schools, huge truck traffic, placing underground pipelines, and storing dangerous explosives. What’s more, none of these things are currently covered by state regulations, which means local communities would be left entirely defenseless, and totally without legal recourse.

By promoting this legislation, the oil and gas industry demonstrates that its distaste of regulation trumps any concern for the communities in which it operates.   

Corporate Citizenship

The industry shouldn’t be afraid of working with communities and policymakers to implement common-sense regulations.  Much of the current and proposed regulation of the industry is not only affordable and easily implemented but by protecting the public health and safety, also protects industry from the cost and backlash it faces when harm is done to communities.

The oil and gas industry spends an incredible amount of money on advertising and public relations efforts to convince the public of the good they’re doing in the world, but preventable accidents don’t align with those messages, and the public notices. For example, despite the industry’s efforts to convince the American people that fracking can be done safely and responsibly, a recent Gallup poll shows that 60 percent of them are undecided about or opposed to the practice.

Perhaps this is because companies consistently fight against any hint of oversight of fracking operations. The best way to prove to the public that a practice can be done safely is to support regulations that ensure it is.

Success Story Reduces Blowouts, Saves Lives

One of the most successful recent examples of oil and gas regulation is an update that was made to the Texas Railroad Commission rules to address, among other things, well integrity and create new requirements for the components of blowout preventer systems on certain wells, including those onshore in populated areas.

A well blowout is the uncontrolled release of crude oil and/or natural gas from an oil well or gas well after pressure control systems have failed. They are incredibly dangerous and can cause death and contamination of water supply, among other negative impacts.

The Environmental Defense Fund was actively involved in getting these updates made and we were happy to see that in just one year after they were implemented, well blowouts in Texas declined by nearly 40 percent, despite a rapid uptick in drilling. This result not only saved lives and other threats to public health, but protected companies operating those wells from the costly consequences of such accidents. These rules worked and despite them and many others, the oil and gas business continues to boom in Texas.

George Mitchell was one Texas businessman who understood the inherent dynamics between regulation and financial success, and supported requirements for responsible business operations. His work in the energy sector did not deter him from pursuing his passion for sustainability and environmental stewardship, and it has left him with a strong legacy.

The leadership of the oil and gas industry today — in both Texas and across the country — could stand to remember Mitchell’s example. He and others built a strong foundation for responsible oversight of the oil and gas industry, which is at risk of being wiped out by a sector that has moved toward resistance of regulation at all cost, even if it works in their favor.

 

Mark Brownstein is the Associate Vice President & Chief Counsel of the U.S. Energy and Climate Program at Environmental Defense Fund (EDF), and he leads EDF’s natural gas efforts. Follow Mark on Twitter @MarkSBrownstein and EDF on Twitter @envdefensefund.

The views expressed by contributors to the Cynthia and George Mitchell Foundation's blogging initiative, "Achieving a Sustainable Texas," are those of the authors and do not necessarily represent the views of the foundation. 

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