Regulatory reliance on industry, recruitment troubles, and lax enforcement have long plagued the Minerals Management Service, but according to congressional testimony given by the Interior Department's inspector general, Mary Kendall, the agency's problems are bigger than that. [PDF]
"The greatest challenge in reorganizing and reforming MMS lies with the culture -- both within MMS and within industry," Kendall told the House Natural Resources Committee in little-noticed comments last Thursday.
Regulations are lacking and are "heavily reliant on industry to document and accurately report on operations, production and royalties," Kendall said.
A recent example of that? BP's letter to Sen. Chuck Grassley, R-Iowa, in which the company said that it was "not aware of any MMS practice" [PDF] to demand compliance with a law requiring oil companies to provide proof that blowout preventers' shear rams could function effectively. (Shear rams are used to stop a blowout by closing off a pipe by cutting through it. But as a great investigation in this morning's New York Times shows, not only did the shear rams fail on the Deepwater Horizon, but they've frequently failed in other blowouts too. The Times cites an industry study showing that in the case of deep-water wells, the shear rams failed nearly half the time. What's more, as the Times notes, MMS failed too: The agency did not require testing on the shear ram or other key safety equipment.)
The training programs for MMS inspectors are "considerably out of date," and "have not kept pace with the technological advancements occurring within the industry," Kendall said.
In the Gulf of Mexico region, there may not be enough inspectors to begin with. According to Kendall, MMS has about 60 inspectors to cover 4,000 facilities, while the Pacific Coast has 10 for 23 facilities. (It's worth mentioning too, that the frequency of inspections of key safety equipment such as blowout preventers was halved more than a decade ago.)
And when those inspectors discovered violations, enforcement was weak. As we've reported, oil and gas companies have for years paid MMS a pittance in fines for safety violations. Since 1998, the biggest fine an oil company has paid to the agency was $810,000--small potatoes compared with the millions paid to other agencies, and smaller yet compared with industry profits. Here's what Kendall had to say on this issue:
In the operations and safety arena, we question whether the civil penalty regulations are tied appropriately to the seriousness of the violation and the threat to human safety, property and the environment.
Kendall also said that MMS's past ethical problems were "enabled by industry," and suggested imposing ethics requirements on companies doing business with the government to combat the problem.
The Obama administration recently announced that it is splitting up MMS, so that the agency will no longer be both collecting royalties for drilling and regulating the industry. The administration has named a former Justice Department inspector general to oversee MMS and the reorganization.
