Disaster in the Gulf: Politics, Ethics and the Impact on Federal Agencies

By on May 1, 2010 in Current Events with 0 Comments

Old news has a way of coming back into the forefront as events unfold.

For example, the Minerals Management Service made headlines around the country some time back for the party culture that apparently prevailed as agency employees were allegedly cavorting with representatives from the industry they were regulating.

In September 2008, the New York Times published an article that summarizes the issue: Sex, Drug Use and Graft Cited in Interior Department. The agency’s inspector general called the agency "A culture of ethical failure" in the Minerals Management Service and cited about a dozen current and former employees of the Minerals Management Service, which collects about $10 billion in royalties annually and is one of the government’s largest sources of revenue other than taxes. According to the New York Times article: "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 event led to an overhaul of the agency’s ethics program.

Now, the agency is back in the news in a story that is going to get much more attention than the "ethical failure" cited by the agency’s IG. It doesn’t take considerable thought to connect an agency’s mission failure with a lack of ethics.

According to the agency’s website: "The Minerals Management Service is the Federal agency that manages the nation’s natural gas, oil and other mineral resources on the outer continental shelf (OCS). The agency also collects, accounts for and disburses an average of $13.7 billion per year in revenues from Federal offshore mineral leases and from onshore mineral leases on Federal and American Indian lands."

With the explosion of an oil rig in the Gulf of Mexico, and an environmental disaster that may exceed the oil spill from the Exxon Valdez in Alaska, the agency is in for a rough ride.

As The Wall Street Journal reported this week, the oil rig that blew up lacked an acoustic control device. While the effectiveness of the $500,000 device is debated in preventing disasters such as the one unfolding in the Gulf, the Journal points out that it is used by other oil-producing nations, including Brazil and Norway. Regulators in this country were also considering requiring it a few years ago, but after industry objections decided that the devices were expensive and needed more study. That decision was made by the Minerals Management Service.

The Department of the Interior probably won’t be giving out any more safety awards to Transocean Ltd. in the near future. That company owns the offshore oil platform that blew up and sank in the Gulf of Mexico. The photo shows the agency awarding the company with a Safety Award for Excellence for "outstanding drilling operations" and a "perfect performance period."

According to the agency’s website, a finalist for this year’s safety awards includes British Petroleum. BP is now managing a public relations disaster and spending millions of dollars to try and get the oil spill disaster under control.

And, on April 1, 2010, the administration announced its strategy calling for expanded development and production throughout the Gulf of Mexico, including the Eastern Gulf of Mexico that are currently under Congressional moratorium and closed to development.

We can also expect to see criticism of the agency for its revolving door policy.

"There’s just really no way to sugarcoat this situation," Randall Luthi said recently. He is president of the National Ocean Industries Association (NOIA). "It’s a tragic accident and it does have the potential for long-term political and policy implications." NOIA’s mission is "to secure reliable access and a favorable regulatory and economic environment for the companies that develop the nation’s valuable offshore energy resources in an environmentally responsible manner."

Mr. Luthi knows the agency well. He was the director of MMS from July 2007 through January 2009. In effect, his job at NOIA is to represent "producers of crude oil and natural gas, contractors, marine engineers, service and supply companies and others with an interest in producing energy from the nation’s outer continental shelf" after having headed the agency responsible for regulating many of the companies in NOIA. The links between the agency and industry is detailed in greater depth in a report from the Project on Government Oversight.

The current director of the agency, Elizabeth Birnbaum, assumed control of the agency on July 15, 2009. She was previously the Vice President for Government Affairs and General Counsel for American Rivers, where she directed advocacy programs for the nation’s leading river conservation organization. More recently, she was staff director for the Committee on House Administration.

There is no way to predict the impact this disaster will have on the Minerals Management Service or the Department of Interior. Politics will likely play a major role in this agency’s future and there are going to be political repercussions as elected politicians start to point the finger to assign blame (usually in the direction of someone else). There is no doubt that the lack of ethics by a "relatively small group of individuals" will reverberate throughout the agency as the investigations and political fall-out will continue long after the oil well is capped.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources.

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