The director of the Energy Institute at the University of Texas at Austin has resigned and one of its top faculty members has retired after an ethical breach scandalous enough to raise the perplexing question, "How could smart people do something so stupid?"Charles "Chip" Groat was the lead investigator on an Energy Institute study released in February, "Fact-Based Regulation for Environmental Protection in Shale Gas Development."The study said its researchers found no evidence of groundwater contamination from hydraulic fracturing, or fracking, of wells drilled into shale layers far underground in search of natural gas. Critics have alleged that the procedure endangers water supplies, and some have cited what they say is contamination directly linked to fracking.The institute released the report with great fanfare at academic and industry gatherings. Its assistant director gave presentations about the study in European countries that are beginning to develop shale gas drilling.Bloomberg News reported in July that Groat had been on the board of Plains Exploration & Production, a company involved in gas drilling. In that position, he was given 10,000 shares of restricted stock each year and was paid an annual fee, which was $58,500 in 2011, Bloomberg said.Groat failed to disclose that outside work to the institute, his fellow researchers or the university.In August, UT asked a panel of outside experts to investigate.The panel's scathing report, released Thursday, said that Groat's lapse is the kind of credibility-damaging mistake universities and their researchers must avoid, that UT ethics policies at the time were lax (they've since been beefed up) and that the institute's presentations about the "fact-based" study were overblown despite warnings from its own researchers.UT said Thursday that Groat has retired and that the institute's director, Raymond Orbach, has resigned. Plans for a follow-up shale gas report have been shelved until the institute names a director.It's all deeply embarrassing for UT. Strong ethics policies, rigorously enforced, do matter.