The President is reportedly frustrated by the continuing underwater gusher in the Gulf of Mexico. Hopefully he is just as frustrated by the almost non-existent regulatory regime in the run-up to this disaster.
We’ve known about the failures of the Minerals Management Service for many years before the Obama Administration even came into power. Yet the President did not appoint anyone to run the department or an inspector general for the Interior Department, where the MMS is housed. The lack of an internal watchdog has led to lax safety requirements, missing equipment that could have stopped the Deepwater Horizon leak, and a general attitude of permissiveness with respect to regulation:
In the case of the Deepwater Horizon, which is leased by BP, the Interior Department is now under a microscope on several fronts. For one thing, the Minerals Management Service granted the rig a “categorical exclusion” from a federal law designed to protect the environment from significant spills. (The agency simply didn’t believe that such a spill was possible from that project.) And quite separately, the MMS has spent the last decade transferring most of its safety-enforcement duties to the industry, in effect allowing the drillers to police themselves. The trend has led lawmakers, in the wake of last month’s deadly accident, to accuse the agency of being too close to those it’s charged with regulating.
“Clearly, stronger, more independent oversight of oil company activities is needed,” Sen. Barbara Boxer (D-Calif.), who heads the Senate Environment Committee, said during a separate hearing on the spill Tuesday afternoon.
Sherrod Brown is right in that video above when he says that “Government rules haven’t been strict enough, just like they haven’t been strict enough on Wall Street… the oil industry had far too much influence on what they were allowed to do.” In fact, even after the Deepwater Horizon explosion, regulators waived 27 offshore drilling projects from having to undergo an environmental impact analysis.
The White House has gotten back into this game by proposing to break up the Minerals Management Service. But even that may not be enough to end the conflict of interest that goes along with regulatory capture.
Splitting the agency has the potential to help, but it doesn’t go far enough to address the agency’s main conflict of interest, said Mandy Smithberger, an investigator at the Project on Government Oversight, a nonprofit watchdog group.
“The conflict of mission at MMS is bigger than that issue,” Smithberger told me. The conflict also looms between the leasing and royalties sides, which “seems not to be addressed at all” by the proposed restructuring. To the extent that a desire to collect royalties influenced how stringent inspections were, the new separation will help, she said. But a desire to collect more royalties could also influence the decision to move along lease sales in order to boost production.
What we’re seeing is that regulatory laws from the government have a half-life: it’s only so long before industry figures out a way to basically render them useless. They do that in Republican and Democratic Administrations alike, through capturing the regulators in the agencies and using their influence to evade oversight. We simply do not have much of a track record of strong crackdowns on industry in this country, going back many years. As a result, we get catastrophes like we’re seeing in the Gulf.
UPDATE: And now we’re finding out about the leak in the blowout preventer and other equipment failures on the Deepwater Horizon rig. Three weeks after the blowout.