Last week, as BP’s oil well off the Louisiana Coast continued to leak up to 19,000 daily gallons of oil, Elizabeth Birnbaum, the director of the Minerals Management Service (MMS), quietly resigned from her post . Tellingly, the Obama administration was rather silent regarding her resignation. It reveals an inconvenient truth: the federal government deserves much blame when it comes to the handling of the environmental disaster in the Gulf of Mexico.
Recently, the MMS has been something of a contradiction. It’s responsible for regulating offshore drilling, which means it must also promote environmental safety standards. At the same time, the MMS is charged with leasing contracts for offshore drilling — and collecting a hefty paycheck from each successful deal. That means big money for the federal government – aside from the Internal Revenue Service (IRS), the MMS raises more revenue for the U.S. Treasury than any other agency.
And where there’s money, there’s influence. Indeed, over 100 regulatory standards for offshore drilling were written directly by the American Petroleum Industry (API) and then adopted by the MMS. For a while, it seemed that everyone got their cut: the oil companies regulated themselves and achieved record profits, and the federal government made money. But all of this came at a now-obvious environmental cost.
So it’s not surprising that Obama has been very hush-hush when it comes to Birnbaum’s resignation and his administration’s recent plans to separate the regulatory and revenue-making bodies of the MMS. These are all important changes, but they draw attention to the federal government’s irresponsible regulatory practices. Obama wants to keep the attention on BP instead.
The truth is that the federal government was caught with its pants down, revealing just how influential the API has been. Not only has it achieved influence through its lobbying power, but it has also literally written many of its own rules. What’s worse, because the federal government doesn’t possess the technical know-how to take over the attempts to stop the oil spill, it’s forced to content itself with BP’s lackluster efforts instead. The result is that BP can afford to take its merry time in cleaning up its own mess because it holds all the cards — or at least the ones that matter.
This has been the government’s business-as-usual routine for years — adopting theatrically harsh rhetoric publicly while letting oil companies call the shots behind the scenes. To use a courtroom analogy, if you think of the federal government as the prosecution and BP as the defendant, it’s as if the prosecution let the defendant hire the prosecuting attorney.
We’ve seen the consequences of this sort of deference to private interests before. Recall that the recent financial crisis highlighted how Wall Street companies had lobbied to achieve weaker financial regulation for years. These companies profited, acquired more lobbying power and hired the world’s brightest economic minds to scout out any regulatory loopholes. Back then, the regulatory failures resulted in the worst economic downturn since the Great Depression. Today, the result of the exact same types of mistakes is the worst oil spill in history.
This begs the question of whether the oil spill is really an environmental disaster rather than a political one. While lax environmental regulation didn’t directly cause the oil spill, it decreased the federal government’s leverage and left Obama to fight the problem with only harsh, but cheap, talk. To be fair, this is a problem that the president largely inherited from his predecessor. But his administration made the political decision to support offshore drilling instead of tightening environmental regulations. And while Obama is now forced to retract, albeit reluctantly, support for deep offshore drilling, the real damage is already done.
A few weeks ago, Congress passed financial reform to prevent another economic collapse. Today, it’s time to pass regulatory reform for offshore drilling to prevent this disaster from ever reoccurring. And as voters from a community known for its environmental advocacy and stewardship, we Ann Arborites should do more than just refraining from filling up at a BP gas station.
As the midterm elections near, we should monitor that our representatives don’t let this crisis pass without supporting regulatory reform. If they do, a phone call might be in order. Since many of our representatives are facing tough re-election bids, they may just listen to what we have to say. In the end, we have a responsibility to let our government know that there are consequences when you’re caught with your hands in the oil jar.
Tommaso Pavone can be reached at tpavone@umich.edu.