Over these last two months we have watched the unfolding disaster in the Gulf with horror. We have seen precious lives lost; hard-earned livelihoods hammered; treasured ways of life imperiled. But we have seen something else too -- something that ought to be a lasting lesson from this catastrophe: we have seen a federal agency fall captive to the industry it is supposed to regulate.
The Minerals Management Service (MMS) was entrusted with the regulation of deep sea oil drilling. Instead, as we now know, the agency became co-opted by Big Oil. The proof of this is as appalling as it is abundant: staff failing to collect millions of dollars in royalties owed to the American people; oil and gas companies allowed to revise their own multi-million-dollar leasing bids; gifts and money from oil and gas companies to agency employees with whom the Service was conducting official business; social events with industry representatives that included illegal drug use and sex; an MMS inspector conducting inspections of oil drilling platforms while negotiating a job for himself with the company that owned those platforms (and finding no violations during those inspections).
The phenomenon of "regulatory capture" is long and widely recognized. Marver Bernstein, the first Dean of Princeton's University's Woodrow Wilson School of Public and International Affairs, and a former President of Brandeis University, wrote about regulatory capture 55 years ago. He explained that a regulator tends over time to "become more concerned with the general health of the industry and tries to prevent changes which will adversely affect it." Ultimately, this leads to what he called "surrender": "the commission finally becomes a captive of the regulated groups."
Evidence that the oil and gas industry had captured MMS abounds: oil and gas company employees filled out official inspection forms in pencil for the MMS inspectors to trace over in pen; the industry cut and pasted Environmental Assessments from drilling projects in other parts of the world with no oversight from MMS (as evidenced by the inclusion of walruses - a cold water species which lives in Alaska - as a species of concern in the Gulf of Mexico); and MMS adopted wholesale a set of "best practices" for oil and gas drilling straight from the American Petroleum Institute, and then made these best practices only suggestions.
Add it all up, and there is no question MMS was a captive regulator. With millions of gallons of oil gushing into the Gulf, the price of allowing this agency to become captive is painfully evident. And unfortunately this phenomenon is not limited to MMS: during the Bush years we witnessed financial regulators turn a blind eye to dangerous practices on Wall Street, and we all paid the terrible price.
We need to root out undue corporate influence over government regulators and protect the public against "regulatory capture." We propose a simple device: to allow our top national law officer, the Attorney General of the United States, to step in and clean house whenever an agency or element of government is no longer credibly independent of the industry it is intended to regulate. Upon such a finding, the Attorney General should have the power to hire and fire and take personnel actions, establish interim regulations and procedures, audit permits and contracts to assure they were not affected by improper corporate influence, and establish an integrity plan. The Attorney General would then step back aside once independence and integrity have been restored.
The damage from the corporate takeover of the Minerals Management Service has been catastrophic. But while we work to stop the current catastrophe unfolding in the Gulf, we must also take all necessary measures to prevent future similar catastrophes. One way to do this is to never again let agencies of the government of the United States of America fall so far under the influence of the corporations they are supposed to regulate.
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