DOI's in-house watchdog studying MMS operating gaps

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, June 18 -- The US Department of the Interior’s inspector general’s office is identifying gaps, weaknesses, and opportunities for improvement at the Minerals Management Service, a US House subcommittee was told.

Investigators are concentrating on the MMS’s permitting process, inspections and enforcement programs, environment and safety regulations, and regulations covering post-incident reviews and inspections, acting DOI Insp. Gen. Mary L. Kendall told the House Natural Resources Committee’s Energy and Mineral Resources Subcommittee.

“MMS has five brief paragraphs of regulation to cover post-incident investigation,” Kendall said during the subcommittee’s June 17 hearing on the DOI agency’s reorganization and reforms, and its response to the Apr. 20 well blowout and subsequent oil spill in the Gulf of Mexico.

“As a result, in conducting the investigation into the Deepwater Horizon disaster, MMS is bound by [US] Coast Guard regulations, which are comprehensive, but in my view, completely backwards, gathering evidence via public hearing, rather than developing evidence to culminate in a public forum,” Kendall said.

The agency relies heavily on the oil and gas industry to accurately report on operations, production, and royalties, she said. It has what she considered a dearth of regulations—four brief, general subsections—governing its inspection program, although MMS inspectors are guided by instructions in a handbook on potential incidents of noncompliance.

Inspectors’ challenges
“Anecdotally, we have also learned that MMS inspectors, at least in the Gulf of Mexico region, operate relatively independently, with little direction as to what must be inspected, or how,” Kendall said. She noted that MMS has about 60 inspectors for the gulf region to cover nearly 4,000 facilities vs. the 10 inspectors for 23 facilities on the Pacific Coast.

MMS also has difficulty recruiting inspectors because it offers significantly lower salaries than the oil and gas industry, she told the subcommittee. “When they can be recruited, inspectors for MMS receive primarily on-the-job training,” Kendall said. Also, she noted, the MMS Offshore Inspector Training program guidance and instructions, developed during 1984-91, are outdated. During investigative efforts, she said, indications were that “inspector training and training programs have not kept pace with the technological advancements occurring within the industry.”

Kendall recommended that as part of any reorganization, MMS should consider formalizing and updating its inspector training program and periodically review it to ensure that inspectors receive proper and current training to keep pace with technological advancements and procedural changes.

Two other witnesses acknowledged large gaps can develop between MMS inspectors and rig operators’ expertise. “We have found persistent problems at MMS in recruiting qualified personnel,” said Frank Rusco, natural resources and environment director at the Government Accountability Office. DOI generally has had trouble keeping abreast of technology and keeping enough qualified employees on hand, he added. “It is something that it must address in MMS’s reorganization if it expects it to be effective,” he said.

The agency’s acting director, Robert V. Abbey, said that there are several investigations under way to determine what resources MMS employees used in review spill response plans which offshore producers submitted when they applied for drilling permits. “The first and foremost effort we are applying is to prevent future spills and anything like this ever happening again,” he said. “The inspections which the secretary ordered are examining whether there’s the right kind of equipment and people who are sufficiently trained to use it on the rigs that are out there.”

Enforcement questions
Kendall said the IG’s office also has have questions about MMS’s enforcement programs. “In the royalties arena, we have been told repeatedly that, historically, the Office of Enforcement takes action to encourage compliance rather than take a stronger deterrent approach,” she said. “During the past year however, we have been told that the [enforcement office] may be taking a more aggressive approach. In the operations and safety arena, we question whether the civil penalty regulations are tied appropriately to the seriousness of the violation and the threat to human safety, property and the environment. Again, the regulations are sparse.”

Her final point was that MMS’s greatest reform and reorganization challenges lie within its own culture and its relationship to the industry it regulates. Noting that the inspector general’s office has issued several reports criticizing inappropriate behavior and conduct by some MMS employees, Kendall went on: “That conduct was, for the most part, enabled by industry.”

Kendall noted that US Sec. of the Interior Ken Salazar and the MMS have both acted to address the misconduct of MMS employees, have implemented and reinforced a new ethics policy, and have indicated some additional steps they intend to take to address some of the conflicts unique to MMS, given its closeness to and reliance upon industry. “But how do we address the conduct of industry representatives?” she asked, adding, “Perhaps it is time to impose some ethics requirements on companies doing business with the government.”

US Rep. Jim Costa (D-Calif.), the subcommittee’s chairman, noted in his opening statement that the subcommittee and full committee has held many hearings since MMS was established about its operations. “We are trying to strike a proper balance between an agency which does no regulation at all and one which regulates so heavily that operators absolve themselves of responsibility and expect the government to do everything,” he said.

“My assessment, 59 days into this explosion that took place, is that as we look back on comparable incidents, the complacency and overconfidence that existed there were the cause of this accident too—complacency because so many other wells had been drilled safely around the world, and overconfidence in redundant systems that failed,” Costa said, adding, “We must remind ourselves that we’re all human, and that complacency and overconfidence happen. But we should prevent this from happening again in the future.”

Other witnesses scheduled to testify included Erik Milto, upstream and industry group operations director at the American Petroleum Institute; Alan Spackman, vice-president for offshore technical and regulatory affairs at the International Association of Drilling Contractors; Steve Mailey, operations manager for independent Badger Oil Corp.; Danielle Brian, executive director of the Project on Government Oversight; Christopher Mann, a senior officer at the Pew Environment Group; and Kenneth Abbott, a former contractor on the BP Atlantis.

Contact Nick Snow at nicks@pennwell.com.

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