On March 28, 1979, Three Mile Island suffered a partial core meltdown at Unit 2 of its nuclear reactors. The causes of the failure are now well documented but the consequences of the disaster to our national energy policies are not as clearly defined.
The Nuclear Regulatory Commission August 2009 report on Three Mile Island stated:
"The accident was caused by a combination of personnel error, design deficiencies, and component failures. There is no doubt that the accident at Three Mile Island permanently changed both the nuclear industry and the NRC. Public fear and distrust increased."
Moving to today, President Obama recently signed a loan guarantee for a nuclear power plant in Georgia which will be the first plant built in the United States in three decades. The Three Mile Island accident virtually stopped new nuclear plant licensing.
The same disaster to our national energy policy is brewing in the Gulf of Mexico.
Since the oil well disaster in the Gulf, I have heard pundits claim that more regulation is needed. Some have argued that all off shore drilling should be stopped and that no new leases be approved. Others have countered that we should stop buying BP products to "teach" the company a lesson.
Calls for more regulations should be viewed carefully. I suspect that the regulations already in force were followed. What I equally suspect is that something happened that no one thought of both in the government and in the company. It is difficult to regulate against the unknown.
Enterprise Risk Management is a program that all companies are expected to follow. Sarbanes-Oxley was intended to assist companies in evaluating their systems of internal controls. A more appropriate question might be to ask, "How did the disaster happen in light of all the systems in place to prevent it".
Simply asking for more regulations will only solve yesterday’s problem and not prevent tomorrow’s disaster.
Stopping offshore drilling all together is equally problematic. Our nation is facing a critical energy crisis and additional reliance on the Middle East from a strategic perspective is not a good idea. This is a case where the cure might be as equally bad as the disease.
Finally, I encourage calm about trying to boycott BP. While we may be angry, bankrupting BP merely means that you and I and future generations will have to cover the cost of this clean up. Do not for a second believe that bankruptcy will protect us. It will not.
Taking valuable time right now to place blame is counterproductive. This disaster requires a triage approach meaning that the most critical steps must be done first or the disaster will spread even more horribly than it has.
As such, I would recommend the following triage approach to the disaster.
First, stop the flow of oil and gas into the Gulf. We should not be distracting the company or the well operators. In fact, all agencies should be asking what they can do to help. Stop the bleeding! Stop the oil!
Second, limit the environmental impact by marshalling all available sources to contain the oil and remove it from the waters in the Gulf is critical. Hurricane season is ahead of us and no one knows the impact this contamination can have if spread over hundreds of thousands of miles. Mobilize all available craft and Coast Guard and Navy vessels able to assist.
Third, compensate fisherman and related industries for their current and projected losses immediately is paramount. Failure to take care of the downstream industries affected by the Gulf could easily put a fragile economy into a tailspin of untold proportions.
Fourth, immediate steps must be taken by the operators of all similarly designed wells to ensure that they too are not at risk.
Fifth, investigate the causes of the disaster by appointing an independent group to oversee the investigation to keep the possibility of a cover up by the company or politicizing the disaster by the government to a minimum. Our nation now, more than ever, needs to solve the right problems not the perceived problems.
Sixth, remain calm about deciding on the future of offshore drilling. Our nation, as an energy consumer, can ill afford to wait three decades to approve another offshore drilling program.
A sound energy policy demands that we examine all issues and provide a framework for companies to operate. To assume that government can do this better than industry is as ill fated as thinking that government could have prevented Pearl Harbor.
Frank Ryan, CPA specializes in corporate restructuring and lectures on ethics for the national and state CPA societies. He is on the boards of a number of publicly traded company and numerous for profit and not-for-profit organizations. He can be reached at [email protected]