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Big National Problem: When Oversight Agencies Become To Cozy aka Captured by the Entities They are Supposed to Regulate

May 30, 2010

Our view on the BP oil spill: Gulf pays price for laxity at minerals oversight agency

USA TODAY by Patrick Semansky, AP – May 25, 2010

“This is a sad but familiar story. Nearly every recent national debacle has featured what’s known as “regulatory capture” — agencies that become too cozy with industries they’re supposed to oversee.”

Before BP’s disastrous oil spill, the last time the obscure federal Minerals Management Service made news was in 2008, when investigators uncovered old-fashioned sleaze at an MMS office in Denver. Workers there accepted football tickets, golf games and ski outings from energy companies. They partied with oil and gas representatives, drank their booze, took illegal drugs and even had sexual relations with some. 

The scandal gave new meaning to the old expression about regulators being “in bed with the industry,” but the juicy details obscured deeper problems within the agency, which, as part of the Interior Department, is supposed to regulate and oversee oil drilling. Instead, the agency ceded much of its role to the very companies it was supposed to watch. Now, the nation — the Gulf Coast in particular — is paying the price.

This is a sad but familiar story. Nearly every recent national debacle has featured what’s known as “regulatory capture” — agencies that become too cozy with industries they’re supposed to oversee.


The financial meltdown? Regulators twiddled while banks developed products so complex the government didn’t know how to police them. Toyota‘s sticky gas pedals? Regulators let the automaker downplay the issue for years — until the deaths of a California family in a runaway Lexus forced them to act. Tainted food from abroad? Holes in oversight of imports. Lax airline inspections? George W. Bush‘s aviation administrator saw the companies she regulated as “customers.”

We could go on, but you get the idea. In drilling regulation, the lax culture goes back years. MMS was charged with both collecting royalties from oil production and enforcing safety rules that might impede oil production. It was a conflict from the get-go.

During the Bush and Obama administrations, MMS repeatedly tossed aside warnings from government scientists about environmental risks of drilling, pushing instead to approve energy exploration quickly. Beyond that, regulators relied on the industry’s word that accidents and environmental damage were unlikely, that the industry had backup systems if an accident occurred and that, if all else failed, the industry could contain the damage.

The catastrophic April 20 explosion of BP’s Deepwater Horizon drilling rig put the lie to all these assumptions. Regulatory lapses, failures of imagination and complacency have put BP in the position of a fire department trying to build trucks on the way to a five-alarm blaze.

It’s unclear how much fault lies with the Obama administration, which inherited the lax and conflicted MMS and is moving to separate its missions. Even so, the Deepwater drilling permit was approved last May, on the watch of President Obama and his Interior secretary, Ken Salazar. And it was Obama who, on March 31, moved to allow more offshore drilling in areas previously off limits.

Such a policy still makes sense as a way to reduce America’s disastrous dependence on foreign oil while it develops alternative energy sources. Before more exploration begins, though, the nation has to be assured that drilling is safe and overseen by a real watchdog, not a trusting friend to the oil industry.


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