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GAO faults BSEE restructuring Says regulatory agency has not addressed oversight deficiencies for OCS oil & gas operations, continues to use outdated procedures ALAN BAILEY Petroleum News
Congressional watchdog agency, the Government Accountability Office, has published a report criticizing the Bureau of Safety and Environmental Enforcement for failing to address long-standing oil industry oversight deficiencies following the agency’s formation in 2011. BSEE, an agency within the U.S. Department of the Interior, is responsible for regulatory oversight and enforcement for oil and gas industry operations on the U.S. outer continental shelf. Interior formed the agency in the aftermath of the Deepwater Horizon disaster in the Gulf of Mexico, to separate regulatory enforcement from oil and gas lease management within Interior, and hence to avoid potential conflicts between the priorities for offshore resource development and the priorities of safety and environmental protection.
But the GAO says that BSEE has made only limited progress in improving its investigative capabilities and continues to use policies and procedures which predate Deepwater Horizon.
The GAO report recommends that BSEE complete an update of its policies and procedures; conduct a risk analysis of its region-based reporting structure; and develop procedures for its enforcement actions.
Agency restructuring The GAO particularly questions BSEE restructuring that began in February 2015, in which the agency reversed a policy of having region-based environmental compliance staff report their findings directly to the headquarters-based division chief rather than to local regional management. While the purpose of the original central reporting was to ensure that environmental issues receive appropriate consideration within the bureau as a whole, following the re-structuring staff will send their reports to their regional directors. BSEE has not provided an explanation for this aspect of its re-structuring, GAO says.
“Without assessing the risk of reversing this reporting structure, it is not clear that BSEE will have reasonable assurance that environmental issues are receiving the appropriate weight and consideration as called for by post-Deepwater Horizon incident investigations,” the GAO report says.
Moreover, BSEE’s restructuring has made limited progress in improving its enforcement capabilities, GAO says. Despite having a goal of developing procedures and criteria for enforcement actions such as warnings and fines, these procedures and criteria have not emerged from the restructuring process. That comes despite the fact that the agency’s restructuring plans state that a lack of enforcement criteria leads to inconsistent actions and to uncertainty for oil and gas operators regarding oversight approaches and expectations, GAO says.
Reform not completed The GAO report describes efforts by BSEE in 2012 and 2013 to reform its oversight capabilities and strengthen its regulatory authority, but says that the agency had not taken action as a result of these efforts. And the agency’s restructuring of its investigative, environmental compliance and enforcement capabilities, initiated in October 2013, remain ongoing, the report says. Meantime, accidents such as an explosion on a Gulf of Mexico production platform in November 2012 and the grounding of Shell’s mobile offshore drilling unit Kulluk in December 2012 have illustrated the continuing importance of offshore oil industry oversight.
However, staffing shortfalls in BSEE have resulted in a failure to meet goals for monitoring operator compliance with environmental standards, the GAO report says.
Outdated policies BSEE’s continuing restructuring has made little progress in enhancing the agency’s investigative capabilities, with the agency continuing to use policies and guidance pre-dating the Deepwater Horizon incident. Many environmental oversight practices remain undocumented and are, instead, part of the institutional knowledge of environmental oversight staff, the GAO report says. There are inconsistencies in the extent to which different types of incidents are investigated. And, although there is a plan to increase the level of scrutiny of minor incidents, as a means of gaining a more complete understanding of OCS incidents as a whole, disagreements between headquarters and regional offices over severity threshold definitions have delayed implementation of this initiative, the report says.
A proposed procedure for mandating performance improvement plans for low-performing operators has not been completed. And although, as its most severe enforcement penalty, BSEE can ban a low-performing entity from operating on the outer continental shelf, the agency has not developed procedures, including specific criteria, for taking this form of enforcement action. Nor does the agency have a mechanism to ensure that it reviews its maximum financial penalty for violations - the Outer Continental Shelf Land Act requires a review every three years, the GAO report says.
Moreover, the agency does not have the means to analyze data relating to OCS incidents. Apparently, outdated policies assign the responsibility for collecting and analyzing incident and investigative information to a board within BSEE’s predecessor agency that no longer exists, and BSEE does not have a central database for the national analysis of trends in incidents and investigative findings.
BSEE’s Investigations and Review Unit provides oversight of the agency’s operations. But a lack of an electronic case management system for this unit makes it difficult to determine the extent to which the unit has enhanced BSEE’s investigative capabilities, the GAO report says. And there is confusion regarding the unit’s role, with an industry perception that the unit has functioned primarily as a law enforcement program, the report says.
Interior’s response In response to GAO’s critique, the Department of the Interior has said that the formation of the BSEE in the aftermath of the Deepwater Horizon disaster has addressed issues relating to conflicting responsibilities within BSEE’s predecessor agency, the Minerals Management Service. Interior says that BSEE’s current re-alignment is building on recommendations from reviews of what happened during the Deepwater Horizon incident. The BSEE re-alignment is following a national program management model whereby BSEE headquarters establishes program direction while field offices carry out the program. While this change from a largely decentralized field operation to a program directed from the center involves a significant cultural shift, the national program will enable BSEE to better resolve the deficiencies in the agency’s oversight capabilities that the GAO has identified, Interior said.
Interior also cited success that BSEE has experienced in its regulatory enforcement efforts, including $40 million in fines levied in three cases involving violations of the Outer Continental Shelf Lands Act and the Clean Water Act. In addition, BSEE investigations of three other cases have resulted in criminal prosecutions by the Department of Justice, Interior said. And BSEE anticipates finalizing new enforcement policies and procedures during financial year 2016, Interior said.
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