POGO Recommendations for Improvements to the CLEAR Act, H.R. 3534, 1to Strengthen Oversight and Accountability and End the Cozy Relationship between Interior and Industry

The Revolving Door: The
Deepwater Horizon disaster dramatically illustrates the enormity of the
risk to our safety, the environment, the economy, and the general public
interest by the capture of government agencies by private industry. The
revolving door between the oil and gas industry and its regulator is at
the rotten core of the lax oversight that led to oil spilling into the
Gulf of Mexico.2
While S. 3516, the Outer Continental Shelf Reform Act of 2010, includes
measures to slow the revolving door between the oil and gas industry
and its regulator, the House's CLEAR Act does not yet include such
measures.

POGO Recommends:

The CLEAR Act should include the Senate
language, but increase the cooling-off period to two years and add civil
and criminal penalties. Existing restrictions should be expanded and
strengthened so that all employees of the Department of the Interior
with responsibilities under the Outer Continental Shelf Lands Act - not
just the highest-ranking employees - would be banned from lobbying for
industry for two years after leaving Interior, and also from making
lobbying contact with Interior for at least one year. In addition, there
should be a two-year cooling-off period that bans former Interior
employees from employment with any party that had interests pending
before them in their previous year of civil service. The
fox-in-the-henhouse phenomenon created by the reverse revolving door can
be addressed by ensuring that Interior employees cannot oversee matters
relating to their former industry employer or client for two years.
Both civil and criminal penalties for violations should be included.3

Training Academies (Sec. 102): The CLEAR Act
authorizes the Secretary to enter into cooperative educational and
training agreements with oil and gas operators and related industries.
POGO supports improved training, but no entity or industry being
regulated should be involved in the training of the federal inspectors
who will regulate them. In any regulatory agency, inspection is a core
function of the agency, and the agency must keep organic in-house
expertise in the laws and regulations enforced. That in-house expertise
is generally embodied in the federal employees who train the inspectors.
In addition, the cooperative educational and training agreements and
the programs should be more transparent.

POGO Recommends:

• Removing "oil and gas operators and related industries" from this
  section.
• Making information about the training academies public, including
  the programs, and the individuals in charge of training. (Though POGO
  would not advocate putting the training manuals online since this might
  help industry to circumvent inspections.)

Whistleblower Protections and Incentives:
Whistleblowers are on the front lines of oversight and are the first
best defense against waste, fraud, abuse and other wrongdoing. If oil
and gas industry employees had had adequate protections against
retaliation and incentives for warning regulators, perhaps the Deepwater
Horizon disaster could have been averted. The CLEAR Act does not yet
provide for the whistleblower protections and incentives required for
adequate oversight and accountability.

POGO Recommends:

The CLEAR Act must provide oil and gas
industry employees with best-practices whistleblower protections such as
those included in the financial reform legislation for financial
industry employees, and the protections established for manufacturing
and transportation employees, Department of Defense contractors, and
others. Important disclosures to a supervisor, employer, law
enforcement, Interior and other regulators, Congress and others must be
protected. Real protections when retaliation occurs include adequate due
process rights, an administrative review at the Department of Labor,
and jury trial access. In addition, an incentive program to encourage
whistleblowers to come forward and disclose wrongdoing to the Department
of the Interior should be established. Such a program would allow for
an award to whistleblowers whose information leads to the federal
government pursuing successful sanctions on those regulated under the
OCS Act. Similar incentive programs exist at the IRS, and are included
in the financial reform legislation to encourage disclosures to the SEC
and CFTC.4

Conflicts of Interest: Investigations conducted by
the Department of the Interior's Inspector General and POGO revealed
gross misconduct at multiple Minerals Management Service (MMS) offices.
Instances of misconduct included reports of MMS personnel receiving
inappropriate gifts from industry, performing outside work that clearly
conflicted with the ethical performance of their duties, and in at least
one instance, negotiating for a job with a company that they were
inspecting. These findings are all indicative of an agency that is
inappropriately close to industry. While S. 3516, the Outer Continental
Shelf Reform Act of 2010, clarifies that gift bans and conflicts of
interest rules apply to all employees at Interior with responsibilities
under the OSC Act, the House's CLEAR Act does not yet include such
measures.

POGO Recommends:

Including the Senate language, but
including both civil and criminal penalties for violators of the gift
ban or conflicts of interest rules.

Federal Advisory Committees (Secs. 109 and 605):
The CLEAR Act rightly establishes that the OCS Safety and Environmental
Advisory Board is subject to the Federal Advisory Committee Act (FACA),
but FACA is only the floor for ethics and transparency in these bodies.
In 2004, the Government Accountability Office thoroughly examined the
FACA process and raised serious concerns about the ways agencies select
and designate members. The Government Accountability Office (GAO)
recommended greater transparency for the member selection process such
as "providing information on how the members of the committees are
identified and screened, and indicating whether the committee members
are providing independent or stakeholder advice."5 In
order to ensure that the advisory board fulfills its requirement to
provide the agency with "independent scientific and technical advice,"
strengthening language is needed. In addition, any body that includes
non-federal employees and is providing information or guidance to the
federal government should be under FACA, and then have additional
disclosure requirements and safeguards against conflicts of interest.
This is particularly important given the role in grant making given to
the Ocean, Coastal, and Great Lakes Review Panel in the bill.

POGO recommends:

• Specifying that the Ocean, Coastal, and Great Lakes Review Panel is
  subject to FACA and including the other measures below (Sec. 605(c)(2)).
• Requiring that the chairman and members of the OCS Safety and
  Environmental Advisory Board and the Ocean, Coastal and Great Lakes
  Review Panel have no financial interests in the exploration,
  development, and production of energy and mineral resources, or
  designate the board members as special government employees (SGEs),
  making them subject to conflict of interest statutes.
• Requiring that the agency make public and disclose on its website a
  list of the Advisory Board and Review Panel members with their
  designation and affiliation, the committee charter (which should be made
  public when the formation of the committee is announced), all experts
  who are consulted, and resources from board meetings (minutes,
  transcripts, and audio/video recordings), as well as the public
  nominations.

Regional Citizens' Advisory Council: The CLEAR Act
does not provide for adequate public participation in oversight of the
regional oil and gas operations and its impacts. A Regional Citizens'
Advisory Council would provide a forum for public participation to
generate recommendations for exploration, development, production,
refining, and transportation of oil and gas in the Gulf of Mexico and of
prevention, response and restoration measures related to the social,
economic and environmental impacts of an oil spill, drilling disaster or
gas release.

POGO Recommends:

The CLEAR Act should establish a Gulf of
Mexico Regional Citizens Advisory Council to increase public
participation in oversight. The Council should include representatives
of groups disproportionately impacted by risks of energy production from
each of the five Gulf States selected by their peers to conduct
citizens' oversight. The Council should be modeled after successful
citizens advisory councils in Alaska authorized in the Oil Pollution Act
of 1990 after the Exxon Valdez disaster.6

Improving Natural Gas Reporting (Sec. 314): The
CLEAR Act requires the Secretary of the Interior to provide long-overdue
reforms to ensure accurate determination and reporting of BTU values,
but more could and should be done to improve standards.

POGO Recommends:

Incorporating Rep. Carolyn Maloney's
(D-NY) Study of Ways to Improve the Accuracy of the Collection of
Federal Oil, Condensate, and Natural Gas Royalties Act of 2009 (H.R.
1462), which would require a more comprehensive assessment to ensure
that taxpayer get their fair share for natural gas royalties.

Developing Innovations and Technology and Awards for Industry
(Sec. 219): POGO supports efforts to encourage the development of oil
spill and containment and response technologies, but we're concerned
about cash-prize award programs for industry and that current
technologies are not sufficiently evaluated. The cash-prize award
program is subject to conflicts of interest and also is unnecessary. The
grants offered and the exploration requirements in the CLEAR Act
provide sufficient incentives for the development of new technology.

POGO Recommends:

• Removing the awards program (Sec. 219 (d)).
• Adding the evaluation of current technology to the grant program.

Measuring the Effectiveness of Reforms: The CLEAR
Act contains many important reforms, and yet there are not enough
measures to determine the effectiveness and impact of the reforms in the
bill.

POGO Recommends:

The bill should require a GAO evaluation
as to whether the reorganization addresses previous GAO and IG concerns,
whether the increased hiring authority for the Secretary made Interior
more effective at addressing their oversight missions, and if there has
been a sufficient reduction in the conflicts of mission and interest.

Inspector General Reports: The Inspector General
has conducted many investigations tracking the problems at the Minerals
Management Service. The public must continue to have to access to their
work to hold Interior accountable for being effective custodians of
taxpayer resources.

POGO Recommends:

The CLEAR Act should make all Interior
Inspector General reports and investigations public.

___________________________

Endnotes

1 These recommendations are based upon the
Discussion Draft of the Amendment in the Nature of a Substitute to H.R.
3534, the Consolidated Land, Energy, and Aquatic Resources Act of 2010,
dated June 22, 2010, and which was under consideration in the House
Natural Resources Committee Hearing on June 30, 2010.

2 The revolving door problem is well documented,
including in POGO's report Drilling
the Taxpayer.

3 POGO and 12 other organizations sent a
letter of support for the Wyden Revolving Door Amendment to S. 3516,
the Outer Continental Shelf Reform Act of 2010.

4 POGO can provide detailed recommendations for
best-practice legislation.

5 "Federal Advisory Committees: Additional Guidance
Could Help Agencies Better Ensure Independence and Balance," GAO, April
2004.

6 The Citizens' Advisory Commission also is
supported by the Publish What You Pay coalition, as referenced in their
recommendations on July 7, 2010.