WASHINGTON – Government oversight of offshore drilling has been underfunded, sluggish and repeatedly undercut by oil industry campaigns to weaken proposed safety mandates, according a report released Tuesday by the presidential oil spill commission.
The commission staff said there has been a long history of lax regulation and shortcomings at the Interior Department agency that oversees offshore oil and gas production, formerly known as the Minerals Management Service.
Although the government imposed new offshore safety rules in the wake of last year’s Deepwater Horizon disaster and Interior Secretary Ken Salazar launched an overhaul of the now-renamed agency, the investigators concluded that there were still some regulatory gaps.
The report pointed to problems stemming from the dual roles of both the Coast Guard and the new Bureau of Ocean Energy Management, Regulation and Enforcement in overseeing what happens offshore.
For instance, while BOEMRE plays the lead role in regulating offshore drilling practices, the Coast Guard has responsibility for vessels, including mobile offshore drilling units.
Although the two agencies have signed agreements clarifying their overlapping jurisdiction, the paper said it remains unclear what federal agency has oversight of helicopters servicing offshore oil and gas facilities.
“The overlapping authorities of BOEMRE and the Coast Guard have encouraged industry to argue against duplication, while both agencies – underfunded and without a unique mandate – have failed to protect offshore workers,” the commission staff said.
The report also highlights potential problems in reporting of incidents that happen offshore because the government now puts the onus on oil and gas companies to disclose injuries and fatalities for both themselves and contractors.
The ocean energy bureau requires operating companies to report all fatalities and any injuries that force someone to be transferred off a facility, regardless of who employs the victim. But unlike other countries, the U.S. government does not go a step further and also request that data from contractors or subcontractors, the commission staff said.
Commission staff said that could be one reason that there are only 34 injuries reported to federal officials for every fatality in U.S. waters, compared to 545 injuries reported to authorities for every death in European waters.
As part of its final report on the Deepwater Horizon disaster, the presidential commission concluded that federal agencies tasked with policing offshore drilling have been underfunded for years.
The commission also called for more money and manpower at the ocean energy bureau.
“Strained budgets and lack of backup staff have seriously limited training and professional development in recent years,” the commission report said. “In addition, BOEMRE does not have a competitive salary scale to recruit and retain licensed and highly skilled non-managerial technical staff as its peer regulators (in other countries) do.”
BOEMRE Director Michael Bromwich is trying to bridge the gap with a combination of salary enhancements and bonuses. The ocean energy bureau also is working to develop a student loan repayment program that could repay up to $60,000 in student loans and funding for continuing education for people who agree to work for the agency.
The funding problem was particularly acute in the late 1990s, as government funding dropped and energy companies moved into ever-deeper waters in pursuit of oil. The push to deep water “strained” the MMS’ already tight resources, the commission staff concluded, because the agency needed trained engineers and scientists to complete technical reviews of companies’ drilling plans.
Although MMS proposed raising rental rates on some deep-water leases as a way to raise money, the commission staff said “industry successfully lobbied its supporters in the Gulf Coast congressional delegations to prevent any increase.”
The report also documents bids by offshore drilling representatives to stave off or chip away at proposals to stiffen offshore oil and gas regulation.
For instance, in 1998, an industry trade group known as the Offshore Operators Committee successfully fought a proposal by MMS to boost incident reporting requirements. After industry leaders opposed the plan as duplicative, a voluntary reporting system was implemented.
Five years later, during the Bush administration, the MMS tried again and proposed a new data collection rule that would have required reporting of unintentional gas releases. According to the commission report, offshore operators “vehemently objected” and argued the plan was too burdensome.
“The MMS held firm, only to be overruled by the White House Office of Management and Budget,” commission staff said.
The final reporting rule issued in 2006 was scaled back and only required gas releases to be disclosed when they resulted in a system failure, such as an equipment shut-in – less information than regulators in the Norway and the United Kingdom were getting.
Commission staff said relatively weak reporting of injuries offshore allowed industry representatives in 2006 to assert that the “rate of incidents has significantly decreased” while lobbying against a proposal to force oil companies to document their safety and environmental risk management plans.
“Having made sure the government did not have access to the best and most complete information as to what was going on offshore, the industry group then used lack of information to argue that it was getting safer out there,” commission staff said.
The presidential commission investigating last year’s oil spill issued its final report on the Deepwater Horizon disaster on Jan. 11 and concluded that the lethal blowout of BP’s Macondo well was evidence of “systemic” failures.
But the commission staff is continuing to release reports on issues that were studied by the panel during the commission’s six-month probe of the spill.
Jennifer A. Dlouhy can be reached at 202-263-6400 or at the e-mail address jdlouhy@hearstdc.com
