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Oil, gas regulation rife with ethical breaches, report says

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As many as one-third of all inspectors that are supposed to regulate offshore oil and gas companies were disqualified because of potential conflicts of interest, according to a new report.

As many as one-third of all inspectors that are supposed to regulate offshore oil and gas companies were disqualified because of potential conflicts of interest, according to a new report.

Dina Cappiello reports for the Associated Press that ties between companies operating in the Gulf of Mexico and the agency that regulates them remain strong more than a year after new ethics rules took effect.

She reports:

Documents obtained by The Associated Press show that about 1 of every 5 employees of 109 involved in inspections in the Gulf has been recused from some duties because of the risk of coming into contact with a family member or friend working for a company the inspector regulates. Ten people hired since mid-August 2008 were barred for two years from performing work where they could be in a position of policing their previous employer—a company or contractor operating offshore.

The close ties make it difficult to hire talented regulators, Cappiello writes, because 30 percent of the applicant pool previously held a job in the sector they're supposed to regulate.

The new ethics policy was instituted last year by the Obama administration to identify, and hopefully prevent, possible conflicts of interest. But the statistics suggest that a transition to a separation-of-church-and-state scenario may take years to accomplish.

Actual inappropriate behavior has been "limited to a few individuals," Cappiello reports, but with such close-knit relationships the potential is there.

It's a fact of life that impacts every industry: the attractive qualities that make a good regulator also make a good industry employee. The challenge, of course, is to ensure that the line between the two opposing roles is drawn boldly, then reinforced -- without overly harsh restrictions that end up taking meals out of workers' mouths.

Photo: _J_D_R_/Flickr

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Andrew Nusca

Editor Emeritus

Andrew Nusca is editor of SmartPlanet and an associate editor for ZDNet. Previously, he worked at Money, Men's Vogue and Popular Mechanics magazines. He holds degrees from the Columbia University Graduate School of Journalism and New York University. He is based in New York but resides in Philadelphia. Follow him on Twitter. Disclosure