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Wang: Close Oil-Government Ties Are Unremarkable

As investigations continue into the Gulf Coast oil spill, the oil industry’s ties with the government have come under scrutiny. Stories abound about former Congressional and agency staffers becoming industry lobbyists and about the close personal relationships that they maintain with government officials. Without minimizing the ethics issue, it is important for Congress not to turn ethics into a bogeyman that distracts from genuine structural reforms.

[IMGCAP(1)]To begin with, the fact that the government and the oil industry are closely associated is unremarkable; by law, they are joint venturers. The federal government owns and administers the Outer Continental Shelf on which the oil rigs drill. Through leases, the government collects 37.5 percent of the oil revenue. Thus, the government has a direct financial stake, not to mention secondary interests in maintaining affordable oil prices and keeping tens of thousands of workers off unemployment.

When the media run breathless stories about the supposed conflict of interest between the industry and government, the threshold question should be: Whose interest are we talking about? While it plainly serves the industry’s interest to expand offshore drilling, the government has at least a 37.5 percent interest in the same.

The second point to ponder is the “revolving door,” which has become so commonly maligned that many spurious examples of it go unchallenged. The Project on Government Oversight suggests it is improper that 18 former Members of Congress, most from energy-producing states, now lobby for the industry.

Presumably, those Members were no less vigorous in their advocacy for their constituents when they served in Congress. Yet, except for the most radical environmentalists, hardly anyone would suggest that it is somehow ethically improper for oil-producing districts to have Congressional representation. Thus, there is also nothing improper about ex-Members from those districts continuing to represent their constituents in the private sector. Domestic energy interests are an integral part of the nation’s economy and national security, and they should have a seat at the table.

Similarly, at a recent House Oversight and Government Reform hearing, POGO Executive Director Danielle Brian criticized Randall Luthi, the former director of the Minerals Management Service, which administers offshore drilling.

Luthi’s transgression was becoming president of an industry lobbying group 14 months after he left MMS. However, it is hard to say to what extent Luthi, a Bush appointee, had any outsized influence with the Obama administration. Certainly, the revolving door would not have turned in favor of a Bushie in this instance if power had changed hands to a hypothetical Gore or Nader administration.

To the extent that the current administration mostly adheres to its predecessor’s policies on certain issues (much to liberals’ dismay), this is a function of the Oval Office — not the proverbial revolving door.

If, on the other hand, POGO was suggesting that Luthi unduly benefited the industry for the purpose of currying favor and securing future employment, Brian also acknowledged the possibility that “he was always ideologically opposed to the agency’s mission.” Which brings us to the next point: What exactly was the agency’s mission, and how did it affect the regulators who worked there?

A recent Interior Department inspector general’s report found that MMS inspectors and oil industry employees were often close personal friends. As one MMS manager stated: “They grew up in the same towns. Some of these people, they’ve been friends with all their life.”

To a great extent, employment is self-selecting. It comes as no surprise that an agency focused on exploiting natural resources for productive use would be dominated by individuals sympathetic to industry. On the other hand, we would be far more concerned if regulators at the Environmental Protection Agency were close friends with industry employees.

All this is background for my main point, which is that additional ethics laws directed at offshore drilling regulators probably would have minimal impact. While the Interior IG’s report contained sensational findings about MMS inspectors accepting large gifts from oil companies, this was a violation of long-standing law. As the IG report itself noted, these problems declined after a regional director was criminally prosecuted.

At the House Oversight hearing, POGO posited that these criminal violations were evidence of the revolving-door problem. Actually, they illustrate the solution, which is more enforcement of existing ethics laws.

Congress is considering two bills, the Outer Continental Shelf Reform Act (S. 3516) and the Consolidated Land, Energy and Aquatic Resources Act (H.R. 3534), which reinforce the restructuring of MMS that the Department of Interior has already undertaken. These measures properly separate MMS’ safety and environmental inspection roles from its revenue function, and they address the actual conflict of interest that existed at MMS.

To the extent amendments to these bills also impose additional revolving-door restrictions on the Interior Department, they are tangential to the legislation and appropriately so.

Eric Wang, a political law attorney, has advised clients on all aspects of government ethics laws. E-mail him at

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