Sex, drugs, and industry capture

“Industry capture” refers to the frequent phenomenon in which a government agency — usually a regulatory agency — is “captured” by the very companies it is designed to regulate. It is an astonishingly normal phenomenon in American government. Presidents often appoint industry insiders to top roles within the very agencies that regulate their former (and future) employers. Even when tough laws exist, bureaucracies run by industry insiders fail to enforce those laws.

The Minerals Management Service in the U.S. Dept. of the Interior could be a poster child for “industry capture.” In 2008, The New York Times reported:

“A culture of ethical failure” pervades the agency, [the department’s inspector general Earl E.] 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.

Two other [inspector general] reports focus on “a culture of substance abuse and promiscuity” …Its employees are subject to government ethics rules, such as restrictions on taking gifts from people and companies with whom they conduct official business.

One of the reports says that the officials viewed themselves as exempt from those limits, indulging themselves in the expense-account-fueled world of oil and gas executives.

…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…

Some 19 officials — a third of the staff — took gifts from oil and gas executives, some with “prodigious frequency,” it said.

On one occasion in 2002, the report said, two of the officials who marketed taxpayers’ oil got so drunk at a daytime golfing event sponsored by Shell that they could not drive to their hotels and were put up in Shell-provided lodging. Two female employees “engaged in brief sexual relationships with industry contacts,” the reports’ cover memo said.

If ever there were a time for the Minerals Management Service to be on its best behavior, it’s in the wake of BP’s oil volcano, which threatens to destroy most life in the Gulf of Mexico and beyond.

But the MMS continues issuing waivers even after President Obama ordered a moratorium!

In the days since President Obama announced a moratorium on permits for drilling new offshore oil wells and a halt to a controversial type of environmental waiver that was given to the Deepwater Horizon rig, at least seven new permits for various types of drilling and five environmental waivers have been granted, according to records.

The records also indicate that since the April 20 explosion on the rig, federal regulators have granted at least 19 environmental waivers for gulf drilling projects and at least 17 drilling permits, most of which were for types of work like that on the Deepwater Horizon shortly before it exploded, pouring a ceaseless current of oil into the Gulf of Mexico.

Asked about the permits and waivers, officials at the Department of the Interior and the Minerals Management Service, which regulates drilling, pointed to public statements by Interior Secretary Ken Salazar, reiterating that the agency had no intention of stopping all new oil and gas production in the gulf…

Mr. Obama announced on May 14 a moratorium on drilling new wells and the granting of environmental waivers.

“It seems as if permits were too often issued based on little more than assurances of safety from the oil companies,” Mr. Obama said. “That cannot and will not happen anymore.”

“We’re also closing the loophole that has allowed some oil companies to bypass some critical environmental reviews,” he added in reference to the environmental waivers.

…these waivers have been especially troublesome to environmentalists because they were granted through a special legal provision that is supposed to be limited to projects that present minimal or no risk to the environment.

At least six of the drilling projects that have been given waivers in the past four weeks are for waters that are deeper — and therefore more difficult and dangerous — than where Deepwater Horizon was operating. While that rig, which was drilling at a depth just shy of 5,000 feet, was classified as a deep-water operation, many of the wells in the six projects are classified as “ultra” deep water, including four new wells at over 9,100 feet.

Posted by James on Monday, May 24, 2010