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Differing views on BSEE performance New assessment focuses on the regulatory agency’s successes while GAO report alleges leadership deficiencies in the agency ALAN BAILEY Petroleum News
Two reports on the federal Bureau of Safety and Environmental Enforcement that have been published in March present markedly different perspectives of the federal agency that oversees regulatory compliance in offshore oil and gas activities. The National Academy of Public Administration has published the results of its assessment of the agency’s performance, having been contracted by the agency to prepare an independent report. The U.S. Government Accountability Office, Congress’ watchdog organization, has prepared a report criticizing the BSEE leadership for failing to follow through on several initiatives that the leadership had undertaken to pursue.
The academy report praises the progress that BSEE has made in building its organizational effectiveness and says that the agency should continue to operate as an independent entity. But the report also recommends some policy issues that the agency needs to address, in particular the regulatory oversight of the renewable energy program on the outer continental shelf and the issues and risks associated with the decommissioning of offshore facilities. The report also comments that the agency faces budgetary challenges because of declining revenue collections and insufficient inspection fees.
The GAO report says that BSEE has undertaken several initiatives to reform its oversight capabilities. But, because of limited efforts by the BSEE leadership to obtain input for these initiatives from the agency’s experienced regional personnel, the initiatives have not been successfully implemented, GAO says.
Established in 2011 BSEE, an agency within the Department of the Interior, was established in 2011 in the aftermath of the 2010 Deepwater Horizon disaster in the Gulf of Mexico. Until Deepwater Horizon a single agency within Interior, the Minerals Management Service, had managed and overseen outer continental shelf oil and gas activities under the terms of the Outer Continental Shelf Lands Act.
However, one of the findings from investigations into the Deepwater Horizon incident was a need to separate regulatory oversight of the oil and gas industry from the other government functions involved in the stewardship of U.S. outer continental shelf energy resources. Essentially, there appeared to be a conflict of interests between, on the one hand, the need to promote resource development on federal lands and, on the other hand, the need to ensure that resource development is conducted safely, with appropriate environmental protections.
The consequence was the splitting of the Minerals Management Service into three new agencies: the Bureau of Safety and Environmental Enforcement, the Bureau of Ocean Energy Management and the Office of Natural Resource Revenue. BSEE would provide regulatory oversight; BOEM would manage resource development; and ONRR would manage revenue collection from OCS activities.
BSEE operates from a headquarters in Washington, D.C., and three regional offices for the Gulf of Mexico, for the Pacific Ocean and for the waters offshore Alaska. The agency ensures sound practices in offshore industrial activities, to minimize risks while preventing waste and maximizing resource recovery. The agency operates an inspection program for offshore activities and ensures that operators have adequate oil spill preparedness arrangements. The agency is also responsible for ensuring that offshore operators comply with the terms of their leases and permits. The agency conducts appropriate technical and scientific research, the academy’s new report says.
Strengthened programs The academy’s report says that BSEE, since its formation, has established itself as a new federal entity and has strengthened programs for ensuring safety and protecting the environment. The agency has seen success in its inspection and permitting programs, and has enhanced its relationships with other federal agencies, the report says. The agency has addressed gaps in regulations and policy; re-aligned itself to promote consistency and transparency, both internally and externally; and nearly achieved its recruitment goals by attracting highly skilled employees. The agency has also established partnerships for promoting technical competencies, the report says.
BSEE has issued strategic and other plans to drive operational and organizational improvements. The agency has also implemented an integrated information technology and business enterprise architecture, which, coupled with training and professional development, improve the accuracy of information used within the agency and by industry, the report says.
However, especially given the multiple linkages between activities conducted by BOEM and BSEE, the report comments on the complexities and challenges involved in disentangling the two organizations from the original MMS. Commenting on the GAO’s critique of BSEE efforts at addressing its organizational issues, the academy report says that BSEE has taken steps to respond to GAO’s recommendations, with four of those recommendations already having been addressed.
Interdependence with BOEM While supporting BSEE’s continued existence as an independent entity, the report also comments that BOEM and BSEE will remain interdependent and must work together effectively. Areas of disagreement between the agencies need to be raised to senior management level for resolution. And there is scope for establishing a process for addressing these disagreements, the report says.
However, the report does recommend the transfer from BOEM to BSEE of responsibility for environmental oversight, facility inspection and regulatory enforcement for the outer continental shelf renewable energy program. The report also recommends that the Department of the Interior should continue to address issues relating to the decommissioning of offshore facilities, including taking into consideration risks associated with potential business bankruptcies.
BSEE needs to address the budgetary issues associated with the facility decommissioning program and the oversight of renewable energy programs. And the Department of the Interior, the Office of Management and Budget, and Congress need to take action to address BSEE’s current budgetary challenges, the report says.
GAO: incomplete initiatives In commenting on what it sees as leadership shortcomings in BSEE, the GAO report cites several initiatives that the leadership had promoted but failed to complete, including an inspection initiative to identify and assess high-risk production facilities, and the development of performance measures for the organization.
In the five years since BSEE embarked on its effort to implement its risk-based facility inspection initiative, that initiative has yet to succeed, the GAO report says. And regional officials with significant experience of risk-based inspection methods said that they had not been consulted over what was proposed and that the proposed risk-based model was over simplistic.
Moreover, two overlapping attempts at environmental risk reduction turned out to be fragmented and uncoordinated, the GAO says.
The GAO report also says that the BSEE management has spent three years trying to implement an enterprise risk management system for managing its organizational risks, but has yet to develop a means of addressing even its highest priority risk factors.
Communication issues According to the GAO report there are also communication issues between BSEE’s headquarters and the agency’s regional offices. The report also questions the effectiveness of BSEE’s system for reporting and responding to allegations of misconduct.
The report recommends that Interior act to establish mechanisms for BSEE management to obtain input from agency personnel and external parties in the furtherance of the agency’s objectives; to address BSEE management’s commitment to complete management initiatives in a timely manner; to address concerns over trust between BSEE headquarters and regional offices; and to increase trust in the procedures for misconduct allegations.
And the GAO questions the value of the National Academy of Public Administration’s assessment, saying the academy had been instructed to work cooperatively with BSEE leadership, to focus on the BSEE headquarters rather than the regions, and to focus on documentation rather than in-depth interviews with personnel.
Interior’s response In response to the GAO report, the Department of the Interior has challenged the report’s findings, saying, for example, that regional personnel and managers have been involved in the development of BSEE’s risk-based inspection model. Implementation of the enterprise risk management program is on target, scheduled to complete its first full cycle in March 2017. BSEE has been conducting a program of employee engagement, and the procedures for dealing with alleged misconduct are effective, Interior said.
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