Oil Regulation or ‘Sex, Drugs, and Football’

The disaster unfolding in the Gulf of Mexico is enormous and will have an untold impact on our economy and environment. This tragedy could have been avoided. What a shame. There should be hell to pay by those charged with overseeing the oil industry.

Where were the regulators? A statement released just yesterday by the Department of Interior highlights evidence that the regulation of our oil industry in the Gulf has been quite incestuous. What’s a little incest without throwing in a healthy dose of sex, drugs, and football as well.

Wow. You can’t make this stuff up. The Project on Government Oversight addresses the issues em’bedded’ in the relationship between oil regulators and the industry in writing, MMS District Manager to IG: “Obviously, We’re All Oil Industry”:

This morning the Interior Department Inspector General’s released a report on the investigation into the Lake Charles District office of the Minerals Management Service (MMS). Ian Urbina’s New York Times story covers the essentials about how regulators did crystal meth, accepted gifts and trips from industry, and allowed industry to draft their own inspection reports in pencil.

Here at POGO, we’re referring to the report as “Interior Sex and Drugs 2.0,” though to be fair, only the Royalty-In-Kind staff in Lakewood, Colorado were literally in bed with industry. The IG only found “inappropriate humor and pornography” at Lake Charles.

A release dated yesterday from the Department of Interior highlights the nature of the relationship between regulators and the oil industry.

Of greatest concern to me is the environment in which these inspectors operate — particularly the ease with which they move between industry and government. While not included in our report, we discovered that the individuals involved in the fraternizing and gift exchange — both government and industry — have often known one another since childhood.

Their relationships were formed well before they took their jobs with industry or government. MMS relies on the ability to hire employees with industry experience. I am pleased that MMS has advised us that it will enhance ethics training specifically for its inspectors to address this unique industry/government dilemma, and will establish controls, like a two year waiting period, to minimize the potential for conflicts of interest.

In the same release but from an April 12th Department of Interior statement, we learn more salacious details:

Two employees at the Lake Charles office also admitted to using illegal drugs during their employment at MMS. We found that many of the inspectors had e-mails that contained inappropriate humor and pornography on their government computers. Finally, we determined that between June and July 2008, one MMS inspector conducted four inspections of IOC platforms while in the process of negotiating and later accepting employment with that company.

In an investigation completed March 31, 2010 (and included in yesterday’s release), we learn of more incriminating details in this incestuous relationship, including:

During our investigation, we reviewed hundreds of e-mails and financial disclosure reports from MMS employees. We also interviewed 15 MMS inspectors and supervisors. We developed confidential sources during our investigation, who provided additional information pertaining to MMS employees at the Lake Charles District Office, including acceptance of a trip to the 2005 Peach Bowl game that was paid for by an oil and gas company; illicit drug use; misuse of government computers; and inspection report falsification.

If I didn’t know the report was produced by the Department of Interior in review of the oil industry, I would have sworn these activities were highlighting the regulatory oversight of Wall Street.

Think there were kickbacks going on here as well? You think??!!

Meanwhile, the oil at the floor of the Gulf of Mexico gushes and the costs to our economy and our country escalate.

When will it all end?

LD

Please subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.  Thanks.