Factors in the Matrix That Caused the BP Gulf Disaster: The Failure of

Regulatory Oversight

Matthew Rosenberg

External Influences on Regulation

According to the Center for Responsive Politics, the oil industry spent $175,189,824 on lobbying in 2009, with the 4 largest contributors comprising:

1. Exxon Mobil- $27,430,0002. Chevron Corp- $20,815,0003. ConocoPhillips- $18,069,8584. BP- $15,990,000

According to The Washington Post, 3 of every 4 lobbyists for the oil/gas industry has worked for the Federal government, including 18 former members of Congress and more than a dozen former MMS employees.

Regulation of Offshore Drilling 1953- Outer Continental Shelf Lands Act

(OCSLA)

1969- National Environmental Policy Act (NEPA)

1982- Federal Oil and Gas Royalty Management Act

1990- Oil Pollution Act of 1990

The Minerals Management Service

January 1982- Created to expand drilling on the OCS, and to reform royalty collection

Dual Mandate: Regulatory Oversight- Environmental and Safety

Revenue Collection and Leasing- Area-Wide Sales

Other agencies have lesser roles in regulation: U.S. Coast Guard, EPA, and NOAA

Safety Regulations: Initially: Onus on the Regulator

Technical Requirements Announced and Unannounced Inspections

Later: Onus on the Regulated 2005 MMS Regulation:

“The lessee or operator is in the best position to determine the environmental effects of its proposed activity based on whether the operation is routine or non-routine.”

Activities of the Federal government impeded the ability of the MMS to adopt new practices Budget Shortfalls Obstruction

Consequences Lack of Expertise Within the Agency

No certification of inspectors Failed to conduct research regarding the

implications of catastrophic spills

Emphasis of Revenue over Regulation Culture of accepting gifts from corporations at

Denver and Louisiana offices

Problems With the Structure of Inspections

According to the Outer Continental Shelf Safety Oversight Board, the MMS lacks “a formal, bureau-wide compilation of rules,

regulations, policies, or practices pertinent to inspections, nor does it have a comprehensive handbook addressing inspector roles and responsibilities.”

Single inspectors are utilized, rather than teams

Lack of communication between regional offices led to inconsistencies in policy

Failures: The Macondo Well

No environmental impact statement (EIS) or “worst case analysis”

BP’s Oil Spill Response Plan approved by the MMS was not specific to the Macondo Well

No site-specific review, and the requirement for an EIS was exempted from the Gulf of Mexico under the OCSLA

Lessons1. The separation of financial and regulatory goals is

vital to preventing conflicts of interest within agencies

2. More oversight is required of regulatory agencies to ensure that they are operating in accordance with their mandates

3. Cross-agency collaboration may help to fill the kinds of gaps in organizational expertise which hamstrung the MMS

4. The impact of political pressures on the conduct of government must be reduced

Considerations Is the United States government the ideal

entity to regulate deepwater drilling? If not, who might be better positioned?

Are there other incentives that motivate corporate compliance with regulation beyond the bottom line?

Was it the weakness of legislation or enforcement which led to the observed breakdowns, or was it some combination of both?

Regulatory Oversight Works Cited

"Congress Allows Offshore Oil Drilling Ban to Expire." Environment News Service, 30 Sept. 2008. Web. 13 Feb. 2011. <http://www.ens-newswire.com/ens/sep2008/2008-09-30-091.asp>

Eggen, Dan, and Kimberly Kindy. "Three of Every Four Oil and Gas Lobbyists Worked for Federal Government." Washington Post - Politics, National, World & D.C. Area News and Headlines - Washingtonpost.com. The Washington Post, 22 July 2010. Web. 12 Feb. 2011. <http://www.washingtonpost.com/wp-dyn/content/article/2010/07/21/AR2010072106468.html>

Eilperin, Juliet. "U.S. Oil Drilling Regulator Ignored Experts' Red Flags on Environmental Risks."Washington Post - Politics, National, World & D.C. Area News and Headlines - Washingtonpost.com. The Washington Post, 25 May 2010. Web. 12 Feb. 2011. <http://www.washingtonpost.com/wp-dyn/content/article/2010/05/24/AR2010052401974.html>

Field, Abigail. "Federal Agency Sued for Lax Oversight Prior to BP Deepwater Horizon Spill - DailyFinance." Legal Briefing, 19 May 2010. Web. 20 Feb. 2011. <http://www.dailyfinance.com/story/legal-briefing-federal-agency-sued-for-lax-oversight-in-bp-spil/19483114/>

Fuelfix, 4 Nov. 2010. Image. 20 Feb. 2011. <http://fuelfix.com/files/2010/11/salazar_bromwich_rig_tour1.jpg>Graves, Lucia. "Judge Who Lifted Moratorium Tied To Offshore Drilling Companies." Breaking News and Opinion on The Huffington Post.

The Huffington Post, 22 June 2010. Web. 12 Feb. 2011. <http://www.huffingtonpost.com/2010/06/22/judge-who-lifted-moratori_n_621501.html>

"Gulf Oil Rig Plagued by Problems, Probe Finds - CBS News." Breaking News Headlines: Business, Entertainment & World News - CBS News. 12 May 2010. Web. 21 Feb. 2011. <http://www.cbsnews.com/stories/2010/05/12/national/main6476337.shtml>

"Lobbying Spending Data." Open Secrets. Center for Responsive Politics, 28 Jan. 2011. Web. 19 Feb. 2011. <http://www.opensecrets.org/lobby/indusclient.php?lname=E01&year=2010>

Lyall, Sarah. "In BP’s Record, a History of Boldness and Costly Blunders." The New York Times. 12 July 2010. Web. 21 Feb. 2011. <http://www.nytimes.com/2010/07/13/business/energy-environment/13bprisk.html?pagewanted=1&_r=2&dbk>

Minerals-Management-Service. The Green Market, 4 June 2010. Image. 20 Feb. 2011. <http://1.bp.blogspot.com/_gNQRb61OvwE/TAkLGm4_uyI/AAAAAAAABkw/laIPqMbADG8/s1600/minerals-management-service.jpg>

National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. "Chapter 2." U.S. Department of the Interior, 11 Jan. 2011. Web. 13 Feb. 2011. <https://s3.amazonaws.com/pdf_final/3_OSC_CH_2.pdf>

National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. "Chapter 3." U.S. Department of the Interior, 11 Jan. 2011. Web. 13 Feb. 2011. <https://s3.amazonaws.com/pdf_final/4_OSC_CH_3.pdf>

"Oil Companies and Regulators." Political Humor. About.com, 2010. Image. 20 Feb. 2011. <http://0.tqn.com/d/politicalhumor/1/0/3/U/3/Regulators-Oil-Companies.jpg>

"Oil Pollution Act Overview | Emergency Management | US EPA." US Environmental Protection Agency, 28 Jan. 2011. Web. 20 Feb. 2011. <http://www.epa.gov/oem/content/lawsregs/opaover.htm>

Pharmalot, 21 Oct. 2009. Image. 20 Feb. 2011. <http://www.pharmalot.com/wp-content/uploads/2009/10/lobbying.jpg>President Signs Energy Policy Act. White House Archives, 8 Aug. 2005. Image. 20 Feb. 2011. <

http://georgewbush-whitehouse.archives.gov/news/releases/2005/08/images/20050808-6_g8o1217-515h.jpg>Straub, Noelle. "Interior Unveils Plan to Split MMS Into 3 Agencies - NYTimes.com." The New York Times, 20 May 2010. Web. 20 Feb.

2011. <http://www.nytimes.com/gwire/2010/05/20/20greenwire-interior-unveils-plan-to-split-mms-into-3-agen-72654.html>United States. Energy Information Administration. Office of Oil and Gas. Overview of U.S. Legislation and Regulations Affecting Offshore

Natural Gas and Oil Activity. By Erin Mastrangelo. U.S. Department of Energy, Sept. 2005. Web. 12 Feb. 2011. <http://www.eia.doe.gov/pub/oil_gas/natural_gas/feature_articles/2005/offshore/offshore.pdf>