Gulf oil spill: Did Big Oil run roughshod over regulators?

Why didn't the US Minerals Management Service require that Big Oil install secondary blowout preventers on oil rigs, as other countries have? Congress is investigating this and other issues.

J. Scott Applewhite/AP
Gulf oil spill: Dave Nagel, executive vice president of BP America, leaves a closed-door meeting called by House Energy and the Environment subcommittee Chairman Rep. Ed Markey (D) of Massachusetts Tuesday. Markey says, 'Boosterism breeds complacency and complacency breeds disaster.'

After the Deepwater Horizon rig explosion turned into the potential ecological and economic nightmare now known as the BP spill, the Obama administration vowed to keep "the boot on the neck" of the British oil giant, which leased the rig and managed the drilling operation.

But even as Congress considers challenging the constitutional restraints against ex post facto laws in order to raise the $75 million damage cap for oil spill disasters, evidence is mounting that, despite myriad warnings of deepwater drilling risks, US regulators, in the run-up to the BP spill, hardly kept the boot on the necks of Big Oil companies working the depths along the US continental shelf.

Quite the opposite, in many cases.

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Alleged regulatory shortfalls are now under investigation by the House Energy and Commerce Committee and the Committee on Natural Resources, which will focus both on the adequacy of BP's risk assessment as well as regulators' role, or culpability, in the disaster.

At the same time, it's not only BP and federal regulators who are forced to confront the regulations and inspection regime for rigs like the Deepwater Horizon. Potential regulatory misfires and BP's low-ball estimates of the risks of drilling at record depths also reflect a societal acceptance of the risks of drilling – an assessment that's now very much in play as BP and Washington fight to limit damages to wildlife and the Gulf Coast's economy.

Big Oil's pushback against regulation

"I'm of the opinion that boosterism breeds complacency and complacency breeds disaster," Rep. Edward Markey (D) of Massachusetts told The New York Times on Tuesday. "That, in my opinion, is what happened."

Last year, the Interior Department exempted BP from a detailed environmental analysis of its Gulf of Mexico operations, even as BP in early April stepped up efforts to lobby for more such "categorical exemptions" from federal law.

Official documents show that pushback from the oil industry resulted in easing of requirements for new technologies to prevent the kind of blowout that led to the Deepwater Horizon rig explosion and ensuing leak of at least 5,000 barrels of oil a day, and possibly much more, into the Gulf of Mexico. Pushback from BP and others against installing a new kind of acoustic blowout preventer succeeded. The Minerals Management Service declined to make them mandatory, as other oil-producing nations have.

Moreover, a safety document from the Minerals Management Service 10 years ago raised the alarm about the potential for catastrophic spills, which could be alleviated by requiring backup and secondary blowout preventers for deepwater drilling. But the MMS didn't require any such system, leaving it to oil companies to decide what was best.

Scandal at the MMS

How MMS regulates the oil industry came under intense scrutiny in 2008 by then Interior Inspector General Earl Devaney, who released a blistering account of MMS employees engaging in illegal moonlighting, drug use, and even sex with oil company representatives in a scandal over royalty payments by Big Oil.

When one female agency employee – one of the "MMS chicks," as some Shell employees knew them – insisted that romantic liaisons with a Shell employee shouldn't require that she recuse herself from dealing with the company, Mr. Devaney shot back, "Sexual relationships with prohibited sources cannot, by definition, be arms-length."

In a call for an investigation into potential regulatory laxness or missteps by MMS and the Interior Department, Sen. Bill Nelson (D) of Florida wrote this week to Interior's Acting Inspector General Mary Kendall: "I ask that you determine in your investigation the extent to which the oil and natural gas industry exercised influence in the agency's rulemaking process."

That request is made even more dramatic by the fact that BP, which has recently championed a "green" campaign, has one of Big Oil's worst US safety records. It had to pay record fines for the 2005 Texas City Refinery accident, and investigators found the company had taken shortcuts that led to a major pipeline leak in Alaska that same year. Last week, the White House canceled an event where BP was scheduled to be given a government safety award.

The company's worst-case scenario for a spill at the Deepwater Horizon site, as reported to MMS, predicted it would take 10 days to cap the well. Experts say it may now take three months.

Oil historian Tyler Priest at the University of Houston urges Americans to wait for the investigation to be resolved before placing blame on regulators. "What I do know is that the offshore regulatory program is a very good one at the MMS, and the people who work in that part of the agency are highly dedicated and competent," Mr. Priest told CNN.

Yet the problem may lie deeper than exemptions for BP and other oil companies, or even safety issues specific to the Deepwater Horizon rig itself.

Fox guarding the hen house

Because regulators need knowledge that only industries have, "the tendency is to kind of create a situation where the fox is guarding the hen house," says Duane Gill, a sociologist at Oklahoma State University and an expert on the impacts of oil spills. "Industry has a tremendous advantage as well as a tremendous amount of financial and political capital that they use to influence the regulatory process. The government has to try to balance the needs and desires of industry with those of the public, but the public can't bring the same kind of political and economic capital to bear."

Big Oil's money goes to the very top. President Obama was the top recipient of BP campaign contributions over the past 20 years, according to Politico. The White House counters that Mr. Obama did not take any PAC money during his 2008 presidential campaign and has pushed, more than any other president, for clean energy alternatives to oil. Obama is hardly alone, though. Some $2.89 million flowed into political candidacies over that same period from BP-related political action committees (PACs).

"Make no mistake: BP ranks among the most powerful corporate forces in US politics,” Dave Levinthal, spokesman for the Center for Responsive Politics, tells Politico.

Central to the BP spill aftermath is how fully future regulators rely on industry risk assessment for the new drilling depths that are now at the vanguard of exploration, says Mr. Gill.

"Where do you get your information as to potential risks? Industry has the inside information on that," he says. "We trust industry to do it right, but we should be smarter than that. Yes, we're addicted to oil, so, yeah, we're all complicit in this. But it's not quite the same complicity as the oil companies."

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