The federal agency charged with overseeing the offshore oil and gas industry was ill-prepared to do its job because of a severe shortage of inspectors, a "dearth of regulations," and a "completely backwards" approach to investigating spills and accidents.
That's the summation of Mary Kendall, acting inspector general for the US Department of Interior, who testified Thursday on Capitol Hill about the regulatory capabilities of the Minerals Management Service (MMS) in the wake of the BP oil spill. Those capabilities were thin, at best, she said. Interior Secretary Ken Salazar has announced a reorganization of the MMS.
With just "five brief paragraphs" of regulations to guide it on how to conduct a post-incident investigations, the MMS has long relied on public forums held by the US Coast Guard rather than gathering its own evidence, she told a subcommittee of the House Natural Resources Committee. MMS reliance on those public hearings "rather than developing evidence to culminate in a public forum" is an approach that Ms. Kendall characterized as "completely backwards."
Assigned to identify gaps, weaknesses, and opportunities to improve the MMS, she said her office has not completed its work. However, she did identify several problems, including the following:
- The MMS has about 60 inspectors to cover nearly 4,000 offshore facilities in the Gulf of Mexico.
- MMS inspectors are underpaid, compared with similar jobs in the industry, and receive mostly on-the-job training using guidance and instructions developed between 1984 and 1991.
- Inspectors operate "relatively independently, with little direction as to what must be inspected or how." Inspectors are guided in their work simply by a handbook of "potential incidents of noncompliance," she said.
Another major focus for the inspector general's office has been MMS regulations, which Kendall said are "heavily reliant on industry to document and accurately report on operations, production, and royalties."
Looking into MMS enforcement programs, she said the agency's enforcement office "takes action to encourage compliance rather than take a stronger deterrent approach." She noted, though, that enforcement had become tougher in the past year.
Still, "we question whether the civil penalty regulations [regarding operations and safety] are tied appropriately to the seriousness of the violation and the threat to human safety, property, and the environment," Kendall said. "Again, the regulations are sparse."
Although the MMS seemed to be following proper procedure in developing its regulations, Kendall said, "the possibility for, and perception of, undue influence [by the oil industry] will likely remain" because the agency "relies heavily on the industry that it regulates in so many areas."
Kendall reserved a shot for the oil and gas industry, too. While the MMS could do much to improve its regulatory capabilities, and Interior Secretary Salazar has taken steps to deal with employees' past receipt of gifts, lunches, and other gratuities from industry representatives, "that conduct was, for the most part, enabled by industry," she said.
To remedy that, Kendall suggested to the committee, it might be time to clamp down on the oil and gas industry, not just the MMS.
"How do we address the conduct of industry representatives?" she asked. "Perhaps it is time to impose some ethics requirements on companies doing business with the government."