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article imageWill revamp of US offshore oil policing body restore confidence?

By Stephanie Dearing     Jul 1, 2010 in Environment
Washington - After investigative reports substantiated allegations of graft among other infractions that occured at one Minerals Management Service (MMS) branch charged with overseeing offshore oil leases and regulations, Ken Salazar has revamped the agency.
The news that possible corruption was rampant within the Minerals Management Services first began to surface in 2007, resurfacing in 2008.
An investigative report released in May 2010 by the MMS Office of the Inspector General confirmed the allegations. In her cover memo to Ken Salazar, head of the Department of the Interior, Mary Kendall, the Acting Inspector General said " ... While not included in our report, we discovered that the individuals involved in the fraternizing and gift exchange - both government and industry - have often known one another since childhood. Their relationships were formed well before they took their jobs with industry or government."
The investigation was prompted by allegations of corruption on the part of Minerals Management Service inspectors in the Lake Charles area. The branch is resopnsible for collecting lease payments as well as regulating offshore oil operations. "... MMS has leased areas in the Gulf of Mexico to about 130 qualified oil and gas companies such as Shell, Exxon, Chevron, British Petroleum, Apache Corporation, and Newfield Exploration Company. Approximately 4,000 offshore platform facilities are located in the Gulf of Mexico throughout four MMS districts in Louisiana – Lake Charles, Lafayette, New Orleans, and Houma – and one in Lake Jackson, Texas... The Outer Continental Shelf Act requires that MMS inspect these platforms for safety and operational compliance and, if necessary, issue violations known as incidents of non-compliance to the owners of the facilities to correct deficiencies."
But for a period of approximately ten years, Lake Charles MMS inspectors accepted bribes, engaged in illegal drug use, and negotiated future employment with unnamed oil companies while "regulating" those same companies. Only one MMS employee, Don Howard, has ever faced any criminal charges as a result. Many of the MMS employees involved in the misconduct have since left the Minerals Management Service. The only offshore oil company implicated in the allegations was the Island Operating Company.
The investigative report released earlier this year states "... Through numerous interviews, we found that a culture of accepting gifts from oil and gas companies was prevalent throughout the MMS Lake Charles office; however, when MMS supervisor Don Howard, of the New Orleans office, was investigated and later terminated in January 2007 for his gift acceptance, this behavior appears to have drastically declined.
During our investigation, two MMS employees at the Lake Charles office admitted to using illegal drugs during their employment at MMS. We also found that many of the inspectors had e-mails that contained inappropriate humor and pornography. Finally, we determined that between June and July 2008, an MMS inspector conducted four inspections on IOC platforms while in the process of negotiating and later accepting employment with the company."
The real shocker is that legal powers refused to prosecute the corruption. "... We presented our findings to the U.S Attorney’s Office for the Western District of Louisiana, which declined prosecution. We are providing a copy of this report to the MMS Director for any administrative action deemed appropriate."
Judge Feldman  who lifted the Obama administration s 6-month ban on offshore drilling  had ties to t...
Judge Feldman, who lifted the Obama administration's 6-month ban on offshore drilling, had ties to the oil and gas industry.
SkyTruth/flickr
In an article written by Ian Urbina, published in the New York Times, Urbina says some MMS employees allowed oil industry reps to fill out inspection forms. Urbina wrote "... Although there is no evidence that those events played a role in the Deepwater Horizon oil spill, the report offers further evidence of what many critics of the Minerals Management Service have described as a culture of lax oversight and cozy ties to industry."
Salazar decided to split up the Minerals Management Service into two separate branches in May. One branch will collect revenues, and the other will ensure compliance with regulations, CNN reported. Kendall testified to the committee, briefly describing problems uncovered with the Gulf of Mexico branch of MMS inspectors, noting that those inspectors were not supervised by the Department of the Interior, instead being left to their own devices, with guidance coming from a handbook. In earlier testimony, Kendall said "... I am more concerned about the environment in which these inspectors operate, and the ease with which they move between industry and government."
After hearing from the Department of the Interior in May, House Natural Resources Committee Chairman Nick J. Rahall issued a statement saying "The recent Deepwater Horizon oil rig explosion raises renewed questions about the organization and management of MMS. It has long been evident, and I have repeatedly argued - as illustrated by clear ethical conflicts between its duties to both leasing and royalty collections - that too many responsibilities and too much power reside under one roof.
Given this disaster in the Gulf, one has to ask whether leasing and safety policing are like oil and water and simply do not mix."
Trained specialists carefully clean an oiled bird at the International Bird Rescue Research Center i...
Trained specialists carefully clean an oiled bird at the International Bird Rescue Research Center in Theodore, AL
BP America
The first step taken by Salazar was to rename the agency from Minerals Management Service to "Bureau of Ocean Energy Management, Regulation, and Enforcement."
Around the same time, Michael R. Bromwich was appointed by President Obama to oversee the revamping of the troubled agency. Bromwich will "... lead the Administration’s efforts to accelerate reforms in the regulation and oversight of offshore oil drilling.
Bromwich will lead the effort to reform the Minerals Management Service (MMS), restoring integrity and rigor to the relationship between federal regulatory officials and oil companies."
Bromwich issued a press release Wednesday showing he means business. In an incident unrelated to the Gulf oil spill, Bromwich announced the MMS had fined BP $5.2 million "... for submitting “false, inaccurate, or misleading” reports for energy production that occurred on Southern Ute Indian Tribal lands in southwestern Colorado." Bromwich said “It is simply unacceptable for companies to repeatedly misreport production, particularly when it interferes with the auditing process. We are committed to collecting every dollar due from energy production that occurs on Federal and American Indian lands, and accurate reporting is crucial to that effort.”
Restoring the faith of Americans in the ability of the government to enforce existing legislation, particularly for offshore drilling activities, could help save some face for President Obama, who has been criticised for not moving quickly enough on the BP Deepwater Horizon oil spill. However, given that the Deepwater well is still still largely unchecked, Obama would be wise to realize that there is no magic elixir for restoring public confidence in the government.
More about Gulf of Mexico, Minerals management service, Offshore drilling, Bribes, Sex
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