Can Environmental Rules be Secret Weapons?

by Kevin D. Freeman on August 16, 2012

I just returned from a speaking opportunity in Midland, Texas on the subject of economic warfare. Midland is in the middle of the Permian Basin, a region that is responsible for almost 20% of our nation’s “lower 48” oil production. The region is growing rapidly and expects oil output to increase by another 60% in the region between now and 2016. With nearly two million barrels per day expected (not to mention current production of 4 billion cubic feet of natural gas per day), this is a very significant region to our entire national economy. To put this in perspective, this level of production daily would be larger than (according to 2010 CIA estimates) Qatar and Libya and approaching the levels of Norway, Venezuela, and Kuwait. That level of production is even respectable compared to the UAE, Mexico, and Iraq. Growing the Permian Basin output by 60% is a game changer on many levels.

Now, consider that all of this production could be stopped by a swipe of a pen from the Department of Interior. All they would have to do is to declare the Sand Dune Lizard to be endangered. In June, after years of discussion, it was ruled that the Sand Dune Lizard was not endangered…at least for now:

Conservation deal keeps sand dune lizard off U.S. endangered list

By Jim Forsyth

SAN ANTONIO | Wed Jun 13, 2012 5:21pm EDT

SAN ANTONIO (Reuters) – U.S. officials ruled on Wednesday that a tiny lizard would be kept off the endangered species list after agreements with Texas and New Mexico landowners intended to protect its habitat and preserve oil and gas production in the region. The U.S. Fish and Wildlife ruling that the 3-inch-long (7.5-cm) dunes sagebrush lizard is not endangered ends years of effort by landowners in the region including oil companies and ranchers to keep it off the list.

Oil and gas companies said endangered species protections would eliminate drilling across the Permian Basin, which produces more than 1 million barrels of oil a day, or about 20 percent of all production in the lower 48 U.S. states . . . Owners of some 600,000 acres in Texas and New Mexico, which covers about 88 percent of the lizard’s habitat, have agreed to take steps to remove threats to the lizard by removing farm roads, water lines, roadside drainage ditches and other infrastructure items. Landowners also agreed to refrain from drilling and surveying for oil, natural gas, and other resources in some areas for the rights to drill in other parts of the region.

“An endangered species listing for this lizard would have had devastating consequences for Texas jobs and for the nation’s energy security,” U.S. Senator John Cornyn said. Cornyn, a Texas Republican, said 27,000 oilfield jobs in Texas would have been lost had the lizard been listed as endangered. A pipeline planned to bring water to drought-stricken Midland, Texas, also would have been halted, he said.

Environmental groups had mixed reactions to the decision.

“We hope the secretary and the Fish and Wildlife Service weren’t badgered into withdrawing the listing proposal by the oil and gas industry, which has declared a jihad against a 3-inch lizard,” said Mark Salvo, whose New Mexico-based Wild Earth Guardians conservation group sought to put the species on the endangered species list.

U.S. Fish and Wildlife Service Director Dan Ashe said the dunes sagebrush lizard was not in danger of extinction and not likely to become endangered in the near future, but his office would keep a close eye on its progress under the agreement.

Of course, the Department of Interior  retains the right to change its mind at any time. A stroke of the pen would cut off a potential domestic energy supply that is larger than Qatar’s or Libya 2010 production. Now, the assumption is that the decision considered all factors an impact. But, the fact that such a simple decision from an unelected bureaucracy could put America’s energy and economy at risk. Perhaps the continuing existence of a 3-inch lizard should be among our highest national priorities. Of course, estimates are that 99.9% of all species that have ever lived are now extinct. Perhaps this lizard is more important than the average. Ironically, many who would prefer to shut down oil production to save the lizard are big proponents of evolutionary theory (which argues that extinction is natural and expected) or even ending human life early based in part on economic factors.

There are no doubt committed, intelligent, and patriotic individuals on both sides of the Sand Dune Lizard battle. But there are no doubt other motives as well. Consider this from Marita Noon at

Most endangered species listings are proposed and then listed with little fanfare. The public is often totally unaware the listing is possible and the negative economic consequences on the local and national economy are not considered. But this time it was different. Armed with the history of the devastating impacts an endangered species listing can have on communities and economies—such as the spotted owl and the delta smelt—New Mexico Congressman Steve Pearce drew a line in the sand and stood up for the citizens who would be impacted most by the proposed listing of the sand dune lizard. Congressman Pearce’s efforts were augmented by Texas Congressman Mike Conaway and Texas Senator John Cornyn—each deserves plaudits from the people.

In December of 2010, the FWS announced the nomination of the sand dune lizard for listing as an endangered species—a move that was prompted by a petition filed by the Center for Biological Diversity and the Chihuahuan Desert Conservation Alliance.

Ben Shepperd, of the Permian Basin Petroleum Association, explains it this way: “The Endangered Species Act in current form is being exploited by activist groups that generate income for themselves while hiding behind a pretense of protecting the environment. Suing the U.S. Fish and Wildlife Service is a cottage industry for them. Regardless of the decision rendered in their manifold lawsuits, the groups receive legal fees—our taxpayer dollars—from the federal government.” 

The Sand Dune Lizard is by no means the only species with serious economic implications. Focus on the Delta Smelt, a tiny little fish in California has caused a man-made drought that threatened some of the best farmland in the country. According to a report in The Wall Street Journal:

September 2, 2009, 12:49 p.m. ET

California’s Man-Made Drought

The green war against San Joaquin Valley farmers.

California has a new endangered species on its hands in the San Joaquin Valley—farmers. Thanks to environmental regulations designed to protect the likes of the three-inch long delta smelt, one of America’s premier agricultural regions is suffering in a drought made worse by federal regulations.

1sanjoaquinThe state’s water emergency is unfolding thanks to the latest mishandling of the Endangered Species Act. Last December, the U.S. Fish and Wildlife Service issued what is known as a “biological opinion” imposing water reductions on the San Joaquin Valley and environs to safeguard the federally protected hypomesus transpacificus, a.k.a., the delta smelt. As a result, tens of billions of gallons of water from mountains east and north of Sacramento have been channelled away from farmers and into the ocean, leaving hundreds of thousands of acres of arable land fallow or scorched.

For this, Californians can thank the usual environmental suspects, er, lawyers. Last year’s government ruling was the result of a 2006 lawsuit filed by the Natural Resources Defense Council and other outfits objecting to increased water pumping in the smelt vicinity. In June, things got even dustier when the National Marine Fisheries Service concluded that local salmon and steelhead also needed to be defended from the valley’s water pumps. Those additional restrictions will begin to impact pumping operations next year.

The result has already been devastating for the state’s farm economy. In the inland areas affected by the court-ordered water restrictions, the jobless rate has hit 14.3%, with some farming towns like Mendota seeing unemployment numbers near 40%. Statewide, the rate reached 11.6% in July, higher than it has been in 30 years. In August, 50 mayors from the San Joaquin Valley signed a letter asking President Obama to observe the impact of the draconian water rules firsthand.

In each case, there were environmental attorneys who made a bundle in the lawsuits. Worse than the motive of money, however, is the realization that such battles in our democratic society can also be opportunities for Economic Warfare. This was made very clear recently in an exclusive interview between a Las Vegas television station and a former senior KGB official:

George Knapp — I-Team Reporter

Exclusive Interview with Former KGB Agent

(July 5) — What would it take for you to betray your country? A former   high-ranking Russian spy says, in many cases, not much.Oleg Kalugin, the one-time head of counterintelligence for the Russian KGB, told Eyewitness News that it was no problem to find Americans who were willing to sell out. Political liberals aren’t going to like what Kalugin has to say. Kalugin   supervised hundreds of spies while working for the KGB, and he spent much of his   time trying to recruit Americans to help the Russians, including some famous names. Persons with left-leaning politics were always targeted first, he said,   and Nevada is a great place for targeting future recruits.

Nikita Kruschev’s vow that “we will bury you” was no idle boast. The Russians believed they would triumph, if not through force of arms, then through any  means necessary. “We thought we could achieve this through education and also the spread of   the gospel of communism, that we shall triumph because the ideas we propagated   were simply invincible,” Kalugin said.

Kalugin’s enthusiasm for the Communist Manifesto propelled him at a young age to the pinnacle of Soviet power. He became a major general in the KGB, chief of  foreign counterintelligence, and master of a sinister cabal of spies and   saboteurs. “I specialized in active measures, disinformation, deception and recruitment,” he said. But how do you find people who might be willing to sell out their country?   Kalugin says it was easy, especially during the turbulent ’60s and ’70s, when so many young people were disillusioned with the government. “If you impress a person with your own convictions and he is soft, a liberal  or left-wing, you may get him involved,” Kalugin said. “Espionage will come   later on; you first establish a bond of friendship.”

The environmental movement was also targeted for KGB infiltration, he says, with the simple message that the best way to preserve nature was to work against the system that would exploit it for profits . . . Kalugin says he recruited dozens of big-time journalists as well as members of Congress. Among his most valuable spies was John Walker, who sold vital Navy secrets to the Russians for 18 years. But it wasn’t only leftists who became KGB assets. Kalugin says the rule was — and is — to look for people on the extremes. Kalugin says the new regime in Russia is not to be trusted, and that Americans must be on their guard.

Is this former KGB operative to be believed? It does match with other sources (including documents released after the fall of the Soviet Union) and fits within the Chinese Unrestricted Warfare context. Now, when you consider that another former KGB officer, Putin, now leads Russia, we have reason for concern. Putin certainly has a motive to halt U.S. energy development:

16 July 2012

Why Russia Hates the Global Gas Bonanza

Multiple voices out of Russia have been condemning the global shale gas movement — deriding unconventional gas as “unsafe,” “uneconomical,” and “irrelevant.” In other words, Russia is running scared, hoping that irrational lefty-green influences over western governments will subdue Gazprom’s unconventional competition, before Russia loses all of its lucrative, high-priced natural gas contracts . . .
Russia not only stands to lose its ability to extort high gas prices from its customers — it is in danger of losing many of its customers altogether. Since Russia’s government depends upon Gazprom profits to finance many of its “unofficial” expenditures, the crony-ocracy at the highest levels of Russia’s government is extremely concerned.
These thoughts were echoed in a Bloomberg News report as well:
The natural-gas boom reshaping America is rocking Russia, where state producer OAO Gazprom (GAZP) is slow to react and at risk of becoming the world’s biggest loser from the new technology to drill shale rock . . . Russia, with about $13 trillion of gas deposits, has the most at stake in the energy revolution that’s blasting shale from Pennsylvania to China in rocks impossible to drill just a decade ago. While Gazprom remains the gas biggest producer, the export monopoly is set for its toughest market since the Soviet Union’s fall in 1991 after letting rivals like Exxon Mobil Corp. (XOM) take the lead in a technology that’s eroding its sales.

Shale production allowed the U.S. to overtake Russia as the largest gas-producing nation in 2009 after explorers began employing hydraulic fracturing, a technique using pressurized water with chemicals and sand to open cracks in rock for freeing gas. The subsequent collapse in prices, which touched a 10-year low in New York in April, killed the U.S. as an export market for Shtokman and other liquefied natural gas projects. The U.S. will even become a gas exporter as early as 2015. Gazprom can’t look to Europe for relief. It supplies about 25 percent of gas demand by pipeline, though the market is shrinking as the economic crisis undermines demand. Shipments are down 14 percent this year. Nations dependent on Russian gas, such as Ukraine and Poland, are starting to assess their own shale gas potential.

The Russians are not alone in concerns that we can develop new sources of oil and gas in America. The Middle East oil producers are no doubt worried as well. As with all of Economic Warfare issues, the stakes here are extraordinarily high. What we have just demonstrated is Motive, Means, and Opportunity. We believe in protecting the environment. But, it is also clear that our system is at risk of manipulation by outside parties. As a result, we have to conclude that environmental regulations can be used as Economic Weapons. There is much, much more to this important story.

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