Regulatory Capture of Oil Drilling Agency Exposed In Report

Published on
by
The Huffington Post

Regulatory Capture of Oil Drilling Agency Exposed In Report

by
Dan Froomkin

In a dramatic illustration of regulatory capture, a new report from an Interior Department review board has found that poorly trained, ill-equipped and overextended federal inspectors who were supposed to be policing the nation's offshore oil and gas drilling facilities were routinely bullied by industry representatives and were often undercut by their managers when they reported safety violations. (AFP/File/Saul Loeb)

In a dramatic illustration of regulatory capture, a new report
from an Interior Department review board has found that poorly trained,
ill-equipped and overextended federal inspectors who were supposed to
be policing the nation's offshore oil and gas drilling facilities were
routinely bullied by industry representatives and were often undercut by
their managers when they reported safety violations.

The review board was appointed after a BP rig exploded in the Gulf of
Mexico in April, causing the worst accidental offshore oil spill in
history. Its report paints a devastating picture of the Minerals
Management Service, the agency now known as the Bureau of Ocean Energy
Management, Regulation and Enforcement (BOEMRE).

Rather than take issue with the report's findings, BOEMRE's new
reform-oriented director, Michael Bromwich, has responded with an implementation plan aimed at fixing the problems.

John M. Broder writes for the New York Times:

The report recommended hiring dozens of new inspectors and
giving additional training to those already on the job. It also urged a
more robust system of enforcement, including greater authority to cite
violations and impose fines....

"To a substantial degree, we fully concur with the recommendations," Mr.
Bromwich said in a telephone briefing for reporters. "Without knowing
them in advance, we're moving to implement the bulk of them."

Interior Secretary Ken Salazar said Wednesday that his department
will spend $29 million to increase the number and training of offshore
drilling inspectors, upgrade enforcement and take others steps to
improve oversight.

He told reporters he hopes to hire hundreds of new inspectors to
supplement the 60 or now responsible for about 3,500 drilling rigs and
platforms in the Gulf of Mexico. Congress recently authorized the
emergency spending.

The lack of management support for inspectors was one of the most striking findings of the report. Here's what it found:

• Most inspectors interviewed stated that industry often
exerted pressure on them to minimize reporting violations during
inspections. For example, personnel on a facility may make comments such
as "there goes my bonus," or "my wife is sick and I'll lose my job."
Inspectors also reported that if they issued INCs [Incidents of
Noncompliance], operators would sometimes call BOEMRE managers and
complain about inspector behavior. For example, one inspector, new to
the job, reported that on his first day on a platform he issued several
INCs, and the company called to complain about his "rude and
unprofessional behavior" before he returned to the office.

• During interviews, inspectors expressed the need for more effective
leadership in daily operations and for greater management support when
faced with pressure from industry....

•Operators that receive INCs may appeal to the District Manager to
have the INC rescinded. A number of inspectors felt they were not
sufficiently supported by their management and that in some cases
management would give the benefit of the doubt to industry. Inspectors
do not always have the tools necessary, such as sufficient training and
adequate equipment (e.g., laptops), to effectively support the issuance
of INCs.

•Inspectors who issue many INCs reported that they are especially
subject to industry pressure, often without sufficient management
support. A majority of the inspectors reported receiving ethics
training. However, unique circumstances exist in the GOM [Gulf of
Mexico], where many people are part of the oil and gas community and
inspectors are likely to have worked in industry and to have family
members in the business. For example, one inspector reported arriving at
a facility to find that his brother, who worked for the operator
elsewhere, had been flown to the facility to act as the compliance
officer. The inspector informed the company that he could not conduct
the inspection with his brother present. Another company representative
worked with the inspector during that day.

And while unannounced inspections are a critical element of any
serious inspection regime, they were nearly unheard of in the Gulf:

Ninety percent of inspectors responding to the survey
identified a critical need for more unannounced inspections. However,
unannounced inspections are rarely performed. In the GOM, such
inspections are limited by United States Coast Guard (USCG) security
restrictions on facilities that are required to maintain a Maritime
Security plan (MARSEC facilities). District offices are required to give
24 hours notice prior to conducting an inspection on these facilities. A
2007 GOM directive also states that a 20-minute followed by a 5-minute
notification should be given to all other facilities. A 2005 GOM
directive required only a 5-minute notification. The definition of what
constitutes an unannounced inspection and the conditions under which it
could be conducted also varied from office to office. For example, one
district office indicated that inspectors could land on some platforms
without any notification, while another district office stated that a
20-minute advance notice would be given. Others interviewed stated that
the requirements for helicopter pilots to call ahead before landing
precluded unannounced inspections. Finally, documents, including the
2007 GOM directive, indicate the existence of special notification
arrangements between BOEMRE and certain companies.

The Associated Press contributed to this report.

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