The Republic of T.

Black. Gay. Father. Vegetarian. Buddhist. Liberal.

Conservative & Corporate Failure in the Deepwater Disaster

The only things more astounding than conservatives’ record of failure, are their denials of "personal responsibility" for the ensuing disasters, and their attempts to blame somebody — anybody — else. Their response to the growing ecological disaster in the Gulf of Mexico is taken straight from Bart Simpson. "I didn’t do it, no one saw me do it, there’s no way you can prove anything!"

Despite their latest attempt at dodging accountability, the Deep Horizon disaster is just the latest collision of corporate failure and conservative failure — and its roots go back to the previous administration and its conservative ideology.

The attempt to label the Deep Horizon disaster "Obama’s Katrina" is underway at the same time that conservatives are telling us that the proper response is to the oil spill in the Gulf is more drilling. The best example is ex-governor Sarah Palin’s Facebook post about the oil spill.

5,000 barrels of oil are already leaking into the Gulf of Mexico every day. The massive and growing oil slick is reaching the shores of Louisiana and it’s scheduled to touch Alabama this weekend. And now the coast guard confirms that a "mobile inland drilling unit" near Morgan City, Louisiana overturned today.

This all says one thing to the former Governor of Alaska: accidents happen, but we must continue to drill.

Alaskans understand the tragedy of an oil spill, and we’ve taken steps to do all we can to prevent another Exxon tragedy, but we are still pro-development. We still believe in responsible development, which includes drilling to extract energy sources, because we know that there is an inherent link between energy and security, energy and prosperity, and energy and freedom. Production of our own resources means security for America and opportunities for American workers. We need oil, and if we don’t drill for it here, we have to purchase it from countries that not only do not like America and can use energy purchases as a weapon against us, but also do not have the oversight that America has.

In the coming days, there will be hearings to discover the cause of the explosion and the subsequent leak. Actions will be taken to increase oversight to prevent future accidents. Government can and must play an appropriate role here. If a company was lax in its prevention practices, it must be held accountable. It is inexcusable for any oil company to not invest in preventative measures. They must be held accountable or the public will forever distrust the industry.

"No human endeavor is ever without risk," Palin’s ghostwriter adds later, comparing dangerous and pointless off-shore domestic drilling to the moon landing.

For what it’s worth, Democrats are hardly immune here. Just six months ago, Louisiana Senator Mary Landrieu downplayed safety concerns about offshore drilling. At a congressional hearing, moments after BP’s Vice President of Exploration David Raney declared the company’s practices in the Gulf "both safe and protective of the environment," Landrieu sat in front of an image of a burning Australian oil rig and said, "This rig would not be allowed to operate in the United States of America."

At another hearing last month, Landrieu called the risks of offshore drilling "quite minimal." And even as the oil threatens her Louisiana’s coastline and the industries that depend on it, a statement released by Landrieu’s office says, "she also firmly believes that this accident should not be used as an excuse to abandon plans to make America more energy secure." In other words, more drilling.

But assurances that our regulations are sufficient to prevent another such catastrophe are undermined by the reality of years of conservative misrule and agency capture.

ProPublica noted that the agency charged with overseeing oil rigs was quite literally lying down on the job when it could have acted to prevent just the kind of ecological disaster we’re witnessing in the Gulf.

As The Wall Street Journal reported this morning, the oil rig lacked a device — known as an acoustic control — that would’ve served as a safeguard of last resort. While the effectiveness of the $500,000 device is debated, the Journal points out that it is used by other oil-producing nations, including Brazil and Norway. Regulators in the U.S. were also considering requiring it a few years ago, but after industry objections decided that the devices were expensive and needed more study.

So which regulator oversees rigs and made that decision? It was the Department of Interior’s Minerals Management Service, an agency that has had a spotty record over the past few years.

In 2008, we pointed out that MMS was in quite a bit of trouble for ethical violations by its officials. The scandal involved sex, drugs and (quite literally) sleeping with the very industry it was regulating.

(Sourcewatch notes that Landrieu is one of the highest recipients of oil industry money — receiving $574,005 from oil companies from 2005 – 2008 emdash; and voted in favor of big oil companies 67% of the time on oil-related legislation from 2005 – 2007. I don’t have the time or space to address it in this blog post, but I wonder how this all adds up for BP. Sure, the company will spend much more than the $500,00 it objected to paying the safety device that might have prevented all of this, but does the company’s profits between now and then add up to even more than they’ll likely pay for the clean-up? If someone’s done the math on that, I’d be interested in seeing it.)

In fact, a good bit of those industry objections came from none other than BP.

In a letter sent last year to the Department of the Interior, BP objected to what it called "extensive, prescriptive regulations" proposed in new rules to toughen safety standards. "We believe industry’s current safety and environmental statistics demonstrate that the voluntary programs continue to be very successful."

That was one in a series of clashes between the industry and federal regulators that began during the Clinton administration. In 2000, the federal agency that oversaw oil rig safety issued a safety alert that called added layers of backup "an essential component of a deepwater drilling system." The agency said operators were expected to have multiple layers of protection to prevent a spill.

But according to aides to Sen. Bill Nelson, a Florida Democrat who has followed offshore drilling issues for years, the industry aggressively lobbied against an additional layer of protection known as an "acoustic system," saying it was too costly. In a March 2003 report, the agency reversed course, and said that layer of protection was no longer needed.

"There was a big debate under the Bush administration whether or not to require additional oil drilling safeguards but [federal regulators] decided not to require any additional mandatory safeguards, believing the industry would be motivated to do it themselves," Carl Pope, Chairman of the Sierra Club told ABC News.

Yet, if BP is an example of industry being motivated to require additional safety standards, it hardly inspires hope.

In March 2005, a massive explosion ripped through a tower at BP’s refinery in Texas City, Texas, killing 15 workers and injuring 170 others. Investigators later determined that the company had ignored its own protocols on operating the tower, which was filled with gasoline, and that a warning system had been disabled.

The company pleaded guilty to federal felony charges and was fined more than $50 million by the U.S. Environmental Protection Agency.

Almost a year after the refinery explosion, technicians discovered that some 4,800 barrels of oil had spread into the Alaskan snow through a tiny hole in the company’s pipeline in Prudhoe Bay. BP had been warned to check the pipeline in 2002, but hadn’t, according to a report in Fortune. When it did inspect it, four years later, it found that a six-mile length of pipeline was corroded. The company temporarily shut down its operations in Prudhoe Bay, causing one of the largest disruptions in U.S. oil supply in recent history.

BP faced $12 million in fines for a misdemeanor violation of the federal Water Pollution Control Act. A congressional committee determined that BP had ignored opportunities to prevent the spill and that "draconian" cost-saving measures had led to shortcuts in its operation.

Other problems followed. There were more spills in Alaska. And BP was charged with manipulating the market price of propane. In that case, it settled with the U.S. Department of Justice and agreed to pay more than $300 million in fines.

Well, Sarah Palin was right about one thing: Alaskans understand oil spills, precisely because they’ve faced to many of them due to the unwillingness of an oil company follow safety requirements, and the unwillingness of a conservative-led government to hold industry accountable. According to the the New York Times, during the George W. Bush administration, MMS witheld offshore drilling data, thus hindering risk assessment of drilling in Alaska.

As the New York Times reported back in September 2008 — the tail end of the George W. Bush administration — those "industry objections" to additional layers of protection may well have been in the form of "pillow talk" between an agency in bed with the industry it was supposed to monitor. The times reported that a "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," where officials not only accepted gifts from energy companies, but "frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives."

No fewer than three reports to the Bush administration (posted here, here and here) detail the kind of behavior demonstrated by Gregory W. Smith one high ranking official the Bush administration refused to prosecute.

The other high-ranking official the Justice Department has declined to prosecute is Gregory W. Smith, the former program director of the royalty-in-kind program. Mr. Smith worked in Colorado and reported to Ms. Denett. He retired in 2007.

The report said that Mr. Smith improperly used his position with the royalty program to get an outside consulting job helping a technical services firm seek deals with oil and gas companies with which he was also conducting official business.

The report accused Mr. Smith of improperly accepting gifts from the oil and gas industry, of engaging in sex with two subordinates and of using cocaine that he purchased from his secretary or her boyfriend several times a year between 2002 and 2005. He sometimes asked for the drugs and received them in his office during work hours, the report said.

The report also said that Mr. Smith lied to investigators about these and other incidents, and that he urged the two women subordinates to mislead the investigators as well.

In discussions with investigators, the report said, Mr. Smith acknowledged buying cocaine from his secretary and having a sexual encounter with her at her home, but he denied discussing drugs at work. He also denied telling anyone to lie, saying that he only told people that “no one has a right to know what I do on my personal time.”

If thisall bears a striking resemblance to the SEC pornography scandal, which also took place on the George W. Bush administration’s watch, it’s no coincidence. It’s the same story of an government agency driven by an ideology that doesn’t even believe the agency should exist in the first place, let alone believe in the agency’s mission. It’s the story of what happened to key government agencies during the Bush era, which were remade by filling the ranks of permanent employees with appointees whose strongest credentials were their conservative beliefs, and others "burrowed in" to permanent federal positions as the Bush administration wound down.

The real MMS scandal actually isn’t the sex or the drugs, any more than the real SEC scandal the pornography. It’s the willful lack of oversight driven by a conservative ideology that believes not merely that "government doesn’t work," but truly believes that it shouldn’t work, and once in power sets to work making sure that it can’t work. The end result is setting the government up for what’s called "regulatory capture."

Of particular concern is the possibility of regulatory capture, which takes place when a regulator begins acting for the benefit of its subjects rather than in accordance with its stated mandate of minimizing systemic risk. While any agency can theoretically be captured by concentrated and powerful individuals, a breach of the “mothership” would carry far more severe repercussions than the loss of one or two “destroyers.” Of course, only the mothership can accomplish certain tasks; in the economic context, it would exist to take on challenges of a scope that smaller bodies simply cannot handle.

…Two archetypal scenarios for regulatory capture exist. The first is an underpowered, understaffed regulator working to control a wealthy, concentrated industry. In these situations, the sheer imbalance in resources means that the regulated parties can reward or punish the agency, but not vice versa. Predictably, rational bureaucrats will choose to cater their policies to the benefit of the subjects instead of suffering their wrath — recall, a regulatory job well done rarely carries any significant benefits to its engineers. The Department of Interior’s Minerals Management Service is a perfect example of a body that appears to have fallen prey to this pattern. Even a person of upstanding moral character can understand the difficulty of resisting the repeated entreaties of Exxon and the like for the sake of sticking to an unadulterated scheme of allocating oil and gas exploration rights. Someone sitting at the MMS desk may well wonder if anyone would ever notice a shift away from the prescribed approach towards one that favors the companies they deal with on a day-to-day basis. These incentives to cooperate exist even though the relationship between the regulator and the regulated parties is facially adversarial, with MMS holding rights that producers want but cannot get.

Except that I don’t see MMS as "falling victim" to "regulatory capture" but regulatory surrender, driven by an ideology that — at its most extreme — seeks to render the government unable to act in times of natural, ecological or financial disaster. That’s the "catastrophic success" of conservative failure. It makes corporate failure inevitable and perhaps even irreparable.

In the Gulf oil spill disaster, we see once again what happens when the two collide.

One Comment

  1. I am glad that BP is finally starting to get the spill under control.