by Eric Martin
Government should just get out of the way of big business, de-regulate, allow self-regulation, lax oversight, ignore capture, etc.:
Federal regulators responsible for oversight of drilling in the Gulf of Mexico allowed industry officials several years ago to fill in their own inspection reports in pencil — and then turned them over to the regulators, who traced over them in pen before submitting the reports to the agency, according to an inspector general’s report to be released this week.
The report, which describes inappropriate behavior by the staff at the Minerals Management Service from 2005 to 2007, also found that inspectors had accepted meals, tickets to sporting events and gifts from at least one oil company while they were overseeing the industry.
Although there is no evidence that those events played a role in the Deepwater Horizon oil spill, the report offers further evidence of what many critics of the Minerals Management Service have described as a culture of lax oversight and cozy ties to industry.
The report includes other examples of troubling behavior discovered by investigators.
In mid-2008, a minerals agency employee conducted four inspections on drilling platforms when he was also negotiating a job with the drilling company, a cover letter to the report said.
And an inspector from the Lake Charles office admitted to investigators that he had used crystal methamphetamine, an illegal drug. Investigators said they believe the inspector may have been under the influence of the drug during an inspection.
The report was provided to The New York Times by a person familiar with the investigation who is not authorized to speak to reporters. Previous inspector general investigations of the minerals agency have focused on inappropriate behavior by the royalty-collection staff in the agency’s Denver office.
The new report describes similar activities and improper relationships with industry representatives in the leasing and inspections staff in an agency gulf region office in Louisiana.
The report found that employees from the Lake Charles office had repeatedly accepted gifts, including hunting and fishing trips from the Island Operating Company, an oil and gas company working on oil platforms regulated by the Interior Department.
Taking such gifts “appears to have been a generally accepted practice,” said the report, written by department’s acting inspector general, Mary L. Kendall.
This latest report is consistent with prior reports investigating the same agency - though perhaps less salacious in certain respects. As I'm sure many recall, this article from 2008 details other, more lurid abuses:
As Congress prepares to debate expansion of drilling in taxpayer-owned coastal waters, the Interior Department agency that collects oil and gas royalties has been caught up in a wide-ranging ethics scandal — including allegations of financial self-dealing, accepting gifts from energy companies, cocaine use and sexual misconduct.
In three reports delivered to Congress on Wednesday, the department’s inspector general, Earl E. Devaney, found wrongdoing by a dozen current and former employees of the Minerals Management Service, which collects about $10 billion in royalties annually and is one of the government’s largest sources of revenue other than taxes.
“A culture of ethical failure” pervades the agency, Mr. Devaney wrote in a cover memo.
The reports portray a dysfunctional organization that has been riddled with conflicts of interest, unprofessional behavior and a free-for-all atmosphere for much of the Bush administration’s watch. [...]
The investigations are the latest installment in a series of scathing inquiries into the program’s management and competence in recent years. While previous reports have focused on problems the agency had in collecting millions of dollars owed to the Treasury, and hinted at personal misconduct, the new reports go far beyond any previous study in revealing serious concerns with the integrity and behavior of the agency’s officials.
In one of the new reports, investigators concluded that Ms. Denett worked with two aides to steer a lucrative consulting contract to one of the aides after he retired, violating competitive procurement rules.
Two other reports focus on “a culture of substance abuse and promiscuity” in the service’s royalty-in-kind program. That part of the agency collects about $4 billion a year in oil and gas rather than cash royalties. [...]
...Senator Bill Nelson, Democrat of Florida, suggested that Congress should not lift its ban on offshore drilling — a hot-button issue in his state — because of the problems identified.
The report says that eight officials in the royalty program accepted gifts from energy companies whose value exceeded limits set by ethics rules — including golf, ski and paintball outings; meals and drinks; and tickets to a Toby Keith concert, a Houston Texans football game and a Colorado Rockies baseball game.
The investigation also concluded that several of the officials “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives.”
The investigation separately found that the program’s manager mixed official and personal business. In sometimes lurid detail, the report also accuses him of having intimate relations with two subordinates, one of whom regularly sold him cocaine.
A free-for-all of libertines and libertarians.
So again, you seem to be ascribing to deregulation what in fact was a highly regulated industry with large amounts of regulatory capture. Deregulation and regulatory capture are not the same problem and they don't have similar solutions.
Posted by: Sebastian | May 25, 2010 at 11:19 AM
Where in the post does Eric ascribe the oil spill to deregulation?
"Government should just get out of the way of big business, de-regulate, allow self-regulation, lax oversight, ignore capture"
I took this to be a snarky iteration of what Eric sees as the Conservative platform. His implication is that if the level of regulation is so inadequate that we got a horrific oil spill, why on earth would we listen to a party which a) proposes that there be less and laxer regulation and b) listen to a party which controlled the presidency between 2001 and 2008, and chose to do nothing but enable the excesses which led to this spill? NB I'm sure Democrats are a part of the problem.
Now, we've waltzed this rumba before (on the topic of the Health Insurance bill) about whether the problem is too little regulation (sort of the stock ObWi position) or too-much-because-it-causes-capture (Sebastian's position as I remember it).
Sebastin, can you please propose your solutions?
Posted by: Julian | May 25, 2010 at 11:44 AM
"Now, we've waltzed this rumba before . . ."
You can rumba to 3/4 time? On the other hand, it could be a useful metaphor for the difficulties here.
Posted by: Chris J | May 25, 2010 at 11:57 AM
So again, you seem to be ascribing to deregulation what in fact was a highly regulated industry with large amounts of regulatory capture. Deregulation and regulatory capture are not the same problem and they don't have similar solutions.
Hmmm.
Maybe that's why I listed "capture" too?
I mean, Seb, it's right there in my opening paragraph. I thought that was rather blatant, a list of all of the conservative myopia on the relationship of business to society, and controls placed by the latter on the former.
The GOP cares little for capture (it's generally a feature, not a bug), pushes for deregulation and self regulation (which render capture a quaint throwback when industry had to even bother), etc.
And, in actuality, there are some solutions that are shared. One of those being shifting rhetoric and public perception of regulation and the wisdom of leaving business alone to do as it pleases.
Get past the shrug your shoulders response to capture, de-regulation and self-regulation.
Posted by: Eric Martin | May 25, 2010 at 12:00 PM
Adding only that the last GOP President aided and abetted capture with a vengeance by appointing industry bigs to major industry oversight positions, in addition to gutting the investigative/enforcement/oversight budgets/agencies.
Posted by: Eric Martin | May 25, 2010 at 12:03 PM
Maybe you just spend so much time being snarky that I have no idea when you're serious.
Posted by: Sebastian | May 25, 2010 at 12:07 PM
Meaning that caused you to not read the word "capture"?
Posted by: Eric Martin | May 25, 2010 at 12:09 PM
Here's some non-snark.
Capture, deregulation, whatever. You say po-tay-to, I say po-tah-to.
The name for what is going on is we are getting screwed.
We damned well better find a way to institute an effective regulation regime, for minerals and extraction as well as other industries, because if government doesn't get it done, folks will begin doing it for themselves.
And that will not be a pretty sight.
Posted by: russell | May 25, 2010 at 12:29 PM
Uh, Eric, I did read the word "capture", and I think Sebastian may have too, and, whether he did or not, Sebastian's comment makes sense in that light.
Regulatory capture is a persistent disease of regulatory regimes and agencies - and I say that as a supporter of the regulatory regimes and agencies. It's a problem under both liberal and conservative administrations. Republican officialdom may wink at it more, while Democratic leadership may (one can hope at least) be more concerned about it, but that difference does not make regulatory capture part and parcel with deregulation.
The approaches to try to deal with regulatory capture are also a different question.
All of which is exactly what Sebastian said, only longer. Please stop sparking at each other and start listening to each other. What would hilzoy think?
Posted by: Alex Russell | May 25, 2010 at 12:41 PM
AR: Capture is a problem under each. Bush was an extreme example of facilitating capture. But then, a political movement that touts self-regulation and de-regulation will have little concern for capture, right?
I mean, what's the objection - an industry that shouldn't be regulated at all has too much influence over the regulators that shouldn't be there in the first place?
Thus, my indictment of a broad array of GOP policies and philosophical positions, that all end up at the same endpoint.
Posted by: Eric Martin | May 25, 2010 at 12:46 PM
Deregulation and regulatory capture are not the same problem and they don't have similar solutions.
The approaches to try to deal with regulatory capture are also a different question.
As the old Jewish guys I grew up around in NY would say: "Nu?"
You can rumba to 3/4 time?
The deeper Cuban cats will tell you that it's all 3/4.
Posted by: russell | May 25, 2010 at 12:48 PM
Yes, Eric, but let's be fair here, for God's sake.
Corruption from the top down (the White House
intimidating Federal regulators into ignoring regulation and running the government like a business (wine, women, blow, and song for the regulators too, not just the customers) is equaled by the corrupt influence of the Sierra Club, the Wilderness Society, those without health insurance, and the rest of the elite liberal intelligentsia.
What about the following cases of undue influence:
A. A woman in Georgia who no insurance carrier will cover because of pre-existing MS and other health problems offering to pleasure any Georgian politician or health insurance commissioner who will agree to a high-risk insurance pool in her state despite it being funded by a Kenyan in Washington D.C. The great thing about southern politicans, however, is that they accept the pleasuring and still remain true to their ideology and still won't do anything about her insurance problem. Now THAT's incorruptible.
B. Democratic after Democratic Interior and EPA Cabinet secretaries going to mollusk conventions where they are pleasured in back rooms by highly paid quahogs and have been witnessed accepting raw fish from directly from the bills of lobbyist pelicans. I once saw a table full of environmentalists at a high-class restaurant sharing a platter of pristine non-oiled oysters and clams from the Gulf, who had offered themselves up as bribes to keep the ocean clean.
C. The entire Udall family has been on camping trips ..... in the forest .... with below legal-age tree-huggers. What about that?
D. The Mafia used to get around regulation (justifiably, mind you) by appealing to police commissioners and law enforcement via the old regulatory capture technique of the dead prostitute in the regulators' bed. Ya gotta do what ya gotta do.
By the way, this comment has nothing to do with Sebastian.
It has to do with the fact that Sebastian has no influence in the Republican Party, which has been captured by corrupt, ignorant, damaging, anti-American scum.
Not that the Democratic Party is much better.
Here's the funny thing about the Republican Party, however. Their moral wing wants to outlaw prostitution. Their business wing needs a thriving prostitution trade to do business and capture the regulators, when they aren't servicing the customers.
The prostitutes don't know whether they are coming or going.
Posted by: John Thullen | May 25, 2010 at 12:49 PM
Other than your "indictment of a broad array of GOP policies and philosophical positions", what policies, rules, etc. should be in place to combat or weigh against the creep of regulatory capture, which is a problem whether or not the people you're indicting are in power?
Which is the question that, in fairness, I think Sebastian was referring to when he wrote that the two things don't have similar solutions.
Posted by: Alex Russell | May 25, 2010 at 12:51 PM
On a more basic level, why haven't any of these fnckers been prosecuted??!!??
Please tell us that at least they've been fired and,if applicable, lost their government pensions.
Please?
Posted by: efgoldman | May 25, 2010 at 12:52 PM
Deregulation and regulatory capture are not the same problem and they don't have similar solutions.
Im not sure about the second part of that sentence; at least, in a general sense, the solutions would seem to be 'create effective regulatory frameworks/agencies insulated from capture'.
Also, I don't see how to interpret this as not negative for deregulation of the industry either- not that it *is* deregulated, but that some groups on the right frequently call for deregulation & that the lack of limits imposed by regulatory capture reveal that industries often favor solutions that impose a burden on the public. As at the current leak in the Gulf, we see industry foregoing reasonable safety precautions with the aid of a compliant regulator- and no reason to think that the lack of such a regulator would've caused them to act in a more reasonable manner.
Posted by: Carleton Wu | May 25, 2010 at 12:55 PM
@ Thullen
The prostitutes don't know whether they are coming or going.
Well, they should at least know whether the customers are...
Another superb comment.
Posted by: efgoldman | May 25, 2010 at 12:56 PM
what policies, rules, etc. should be in place to combat or weigh against the creep of regulatory capture
I would start with "if you are caught literally in bed with someone you are supposed to be regulating with a mirror and a couple of lines of blow, you're fired".
And then take it from there.
Sound good?
Posted by: russell | May 25, 2010 at 01:14 PM
As I said, we need to change the rhetoric and the general perception of regulation in order to create an environment where public expectations/demands are greater/better placed.
We also need to take more discretion away from regulators, and instill more compulsory, statutory regulations.
Next, empower real, toothy enforcement, as well as overseers and ombudsman that can monitor the regulators themselves to ensure that they're doing their jobs.
In order to achieve the foregoing, however, we will likely need to elect more and better Democrats seeing as how the GOP views capture as a feature, not a bug, and will do its best to sabotage regulatory frameworks put in place by others since they think de-regulation and self-regulation are better in just about every scenario.
It's going to be a hell of a battle, and the odds aren't good, but thems the stakes.
Posted by: Eric Martin | May 25, 2010 at 01:33 PM
Hang on. If deregulation means there's not regulators doing their jobs, and regulatory capture also means the regulators aren't doing their jobs, what's the difference? At least when it comes to the consequences of their inaction.
At least in the most blatant cases, like these. Subtler kinds of regulator capture where the regulators get most of their information and working time with the people who should be regulated is a somewhat different matter, but that's not what we're talking about in this case.
Posted by: Nate | May 25, 2010 at 01:55 PM
Right.
Posted by: Eric Martin | May 25, 2010 at 03:27 PM
Well, regulatory capture can have other effects than just weak regulation- favoring established players over newcomers, favoring domestic players over foreign ones, favoring specific players who provide post-regulatory jobs, etc.
To play devil's advocate, there's another way that deregulation and regulatory capture are different- in the former case, the illusion of regulation creates different expectations that can affect other things (just as a bogus medicine is not just harmful as a scam, but also bc it may forestall efforts to seek competent treatment). For example, the illusion of a competent regulatory regime for deepwater wells may have led to the capping of liability for operators. Or, more cynically, the illusion may merely have allowed for such a cap as a giveaway to the industry, with the compliant regulators serving as window dressing.
Posted by: Carleton Wu | May 25, 2010 at 03:47 PM
True also CW. But in the present example, I think the type of capture that has occurred has had the effect of eviscerating regulation, which makes the de-regulation or self-regulation routes seem like non-starters in terms of addressing the issues.
Posted by: Eric Martin | May 25, 2010 at 03:50 PM
Eric,
I agree- I think it would be hard to argue that BP would've behaved differently if they had no regulation at all instead of sham regulation.
Just wanted to say that regulatory capture is actually worse than regulation in a couple of ways; one of those things that people ought to give a crap about, but it's hard to get enough of them to care bc it can't easily be summed up in one sentence composed entirely of monosyllabic words...
Posted by: Carleton Wu | May 25, 2010 at 04:03 PM
Agreed all around.
Posted by: Eric Martin | May 25, 2010 at 04:14 PM
Carleton, I don't doubt that BP had every intention of stringently applying the best safety standards, entirely without oversight. But the Office of Mines and Minerals regulators, with their pert bottoms and large-bore nasal passages, were irresistible! It's really our fault for hiring sexy bureaucrats who like to party.
Posted by: Julian | May 25, 2010 at 04:54 PM
I direct your attention to this WaPo interview with Shell's former CEO. I find this particularly hilarious:
His solution?
In other words, government is at fault for not enough interference in the free market. The solution: more regulatory capture!
What could possibly go wrong?
Posted by: Doctor Science | May 25, 2010 at 05:47 PM
Does the head of the MMS still have her job?
Why?
This is someone who still denied that exemptions were given even when shown the documents in question. She "oversees" an agency in which the inspectors spend more time jerking off, literally, than doing anything to ensure the safety of oil drilling operations.
Is she a political appointee, or civil service? Either way, she can be moved out of her current job by an administration that actually cares about ending the party-time culture of the agency.
Given what's come out already, why has that not happened?
Posted by: Nell | May 26, 2010 at 12:25 PM
Carleton Wu: regulatory capture is actually worse than regulation [sic; 'deregulation' meant, surely?] in a couple of ways; one of those things that people ought to give a crap about, but it's hard to get enough of them to care bc it can't easily be summed up in one sentence composed entirely of monosyllabic words...
Au contraire: Oil corps bought off feds with blow, porn, tix, so well blew up, killed Gulf.
Posted by: Nell | May 26, 2010 at 12:31 PM
"I would start with "if you are caught literally in bed with someone you are supposed to be regulating with a mirror and a couple of lines of blow, you're fired".'
I'd like to point out that regulatory capture doesn't necessarily imply capture by those being regulated. Though that's *usually* the case, an agency can be captured by any group which cares strongly about the subject of the regulation. For instance, the BATF is a case study in regulatory capture by the opponents of an industry, rather than the industry itself.
Posted by: Brett Bellmore | May 26, 2010 at 09:02 PM
Please tell us that at least they've been fired and,if applicable, lost their government pensions.
The problem is that they are almost guaranteed a highly paid position at the companies they 'regulated'. Rachel Maddow mentioned one special case where one regulator (while still in office) negotiated with the regulated oil company for such a job. Mysteriously at the same time his investigations into wrongdoings etc. of said company dropped to zero.
Posted by: Hartmut | May 27, 2010 at 08:27 AM
TPM is reporting that "Elizabeth Birnbaum, head of the U.S. Minerals Management Service, the agency that oversees offshore drilling, has been fired"
Posted by: Eric Martin | May 27, 2010 at 10:45 AM
Top kill worked?
Just to keep this in a thread that isn't just about dead.
Posted by: Slartibartfast | May 27, 2010 at 10:55 AM
ok, but I'm still crossing my fingers
Posted by: Eric Martin | May 27, 2010 at 11:19 AM
Good on the admin for firing Birnbaum.
Another update; from Slarti's link:
An hour or so after that story was posted, the U.S. Geological Survey head held a press conference to announce the current official govt estimate of the flow: 12-19,000 barrels a day. And that might be low.
A rapidly evolving story, indeed.
Posted by: Nell | May 27, 2010 at 12:12 PM
The report from the combined operations center on the 'top kill' project is considerably more guarded than Adm. Allen's take, and than the LAT/Trib story:
Posted by: Nell | May 27, 2010 at 12:36 PM
Following this moment by moment is crazy-making, so out to the vegetable garden for me:
Posted by: Nell | May 27, 2010 at 12:52 PM