Senator Wants Attorney General To Have Power To Clean Up ‘Captive Regulators’

A Democratic senator has proposed granting the U.S. attorney general new powers to overhaul federal regulatory agencies found to have become “captive” of the industries they are intended to oversee, as was the case with the Interior Department branch which was supposed to prevent a catastrophe such as the Gulf Coast oil spill.

Sen. Sheldon Whitehouse of Rhode Island wants the attorney general to be able to act as “an ethics trusteeship or receivership” when federal regulators are found to no longer be doing their jobs effectively, and essentially come in to hire and fire personnel, put forward interim regulations and take other steps on an interim basis.

Events at the Interior Department’s Minerals Management Service (MMS) leading up to the April explosion of the BP-leased Deepwater Horizon drilling rig and subsequent massive flow of oil pollution from the sea floor demonstrate the need for the nation’s top law enforcement official to have such authority, says Whitehouse, himself a former state attorney general.

In his speech on the Senate floor, Whitehouse quotes from a Wall Street Journal article, in which a senior fellow at the libertarian Cato Institute writes, “By all accounts, MMS operated as a rubber stamp for BP. It is a striking example of regulatory capture: Agencies tasked with protecting the public interest come to identify with the regulated industry and protect its interests against that of the public. The result: Government fails to protect the public.”

For instance, Whitehouse says, MMS officials allowed BP and other big oil companies to use “cut-and-paste environmental assessments” of their drilling operations.

“BP’s Environmental Assessment listed walruses as a species of concern in the Gulf of Mexico,” the senator says. “… [T]here are not, and never have been, in the memory of man, walruses in the Gulf of Mexico. When they are writing about walruses in the Gulf of Mexico, you know 1) they are cutting and pasting out of documents in Alaska, 2) they are paying no attention to what they write because they know it doesn’t matter, and 3) they know perfectly well that MMS will never catch the fact that they’ve cut and pasted, because they’re not looking at it either.”

Whitehouse also cites the findings of a recent inspector general investigation of MMS, in which MMS staff took substantial gifts from the firms they were regulating, and in one case, a MMS worker was allowed to conduct an inspection of an oil company’s drilling platforms while also trying to negotiate a job for himself with the same corporation. MMS staff also took part in social events with regulated companies, that included sex and illegal drug use.

President Obama also described the relationship between MMS and the oil and gas industry as “too cozy,” and Obama’s interior secretary, Ken Salazar, has ordered a break-up and restructuring of the agency.

But the captive-regulator phenonemon is neither new, nor is it limited just to MMS, Whitehouse says. He says the Securities and Exchange Commission also became a “lap dog” of the financial industry, leading to the 2008 economic meltdown, and he also cites a 2004 rewrite of Mine Safety and Health Administration (MSHA) regulations which allowed conveyor belt tunnels to double as ventilation shafts, a practice that contributed to a fatal 2006 mine disaster. Whitehouse describes MSHA as a “revolving door” with industry, “staffed by people with mining companies’ interests at heart, even at the expense of worker safety.”

‘Who Knows How Far It Leads?’

“Who knows how far it leads? Think of the timber rights the taxpayer gives up every year, the grazing rights, the multi-billion dollar contracts to big government contractors, the oil and coal leases on land, the carnival of public wealth at which these big corporations feed,” the senator says.

“The vital question is this: are these assets of our nation still in the hands of servants of the nation?” he asks. “Or have the servants of the nation quietly and insidiously become the servants of the big private corporations who want to profit from that public wealth-corporations for whom every dollar of a sweet deal, every avoided expense allowed by a cozy regulator, every corner cut in safety or environmental protection, goes straight to their bottom line and right into their pockets?”

The publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.

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