Oil drilling (non)regulation

Every hear of the Minerals Management Service? It's the tiny government agency that is supposed to oversee offshore drilling, but really doesn't. For more than a decade, industry has ruled the roost. From the WSJ:

A Wall Street Journal examination of the MMS's track record found several instances of the agency identifying potential safety problems and then either not requiring follow-up or relying on the industry to craft a solution. In some cases, the industry didn't do its part. The Journal also found that the safety record of U.S. offshore drilling compares unfavorably, in terms of deaths and serious accidents, to other major oil-producing countries. Over the past five years, an offshore oil worker in the U.S. was more than four times as likely to be killed than a worker in European waters, and 23% more likely to sustain an injury, according to International Association of Drilling Contractors data, which is adjusted for man-hours worked.

Here's how the NYT put it:

Federal regulators warned offshore rig operators more than a decade ago that they needed to install backup systems to control the giant undersea valves known as blowout preventers, used to cut off the flow of oil from a well in an emergency. The warnings were repeated in 2004 and 2009. Yet the Minerals Management Service, the Interior Department agency charged both with regulating the oil industry and with collecting royalties from it, never took steps to comprehensively address the issue, relying instead on industry assurances that they were on top of the problem, a review of documents shows.

Perhaps the biggest outrage is that the liability for losses from the spill is capped at $75 million under legislation passed in the wake of Exxon Valdez. BP says it plans to cover all cleanup costs and economic losses. From the LAT:

But Sen. Bill Nelson (D-Fla.) is concerned that the commitment may not be airtight. Nelson, who along with other lawmakers met with Hayward on Tuesday in Washington, told reporters that the chief executive said BP was still assessing how it would handle claims beyond the $75-million limit. "When I pressed him on who was going to be liable for the economic damages -- not the cleanup damages, the economic damages -- he said that will be something we will determine in the future," Nelson told reporters. "He said that is something that we will work out, we will discuss. I don't know that he used the work negotiate, but that was the impression."