Drilling oversight agency gets a makeover

The Minerals Management Service, or MMS, has a new name and a new director. But, as Senator Diane Feinstein, D-CA, asked, do these and other changes at the troubled agency signal substantial reform or just a rearrangement of names?

The agency of the Department of the Interior tasked with ensuring the safety of oil drilling and mining operations, MMS is now the Bureau of Ocean Energy Management, Regulation and Enforcement. Its new director is Michael R. Bromwich, a former Inspector General for the Department of Justice.

MMS was a little known federal agency until thrust into a glaring public spotlight after the April 20 explosion of BP's Deepwater Horizon oil rig, which killed 11 workers and ruptured a well pipe that has since been spewing oil into the Gulf of Mexico.

The well is yet unplugged. Despite remediation efforts, oil slicks and plumes continue to spread, wildlife is being killed, habitats destroyed, and coastal lands in four states have been polluted.  It is the largest oil leak disaster in U.S. history.

A large portion of the blame for the catastrophe has fallen upon MMS.

"MMS failed in its duties," Feinstein said on Wednesday, at a hearing of a Senate Appropriations subcommittee. "MMS did not have a plan to respond to the disaster."

MMS also failed prior to the event, Feinstein said, noting that the agency allowed BP to avoid an Environmental Impact Study for the rig.

"MMS did not, in fact, have a real inspection and compliance program," Feinstein said. "It relied on the expertise and advice of the industry on how and how much they should be inspected."

An inspection of MMS by Interior's Inspector General, begun before the Deepwater Horizon explosion and completed afterwards, found that MMS inspectors in the Lake Charles District office - the office which oversaw operations for the Deepwater Horizon - routinely accepted gifts from oil and gas production companies, including hunting and fishing trips and tickets to sporting events.

"We found a culture where the acceptance of gifts from oil and gas companies was widespread throughout that office," said Inspector General Mary Kendall in her report.

On May 27, shortly after the Inspector General's report was released, MMS Director Elizabeth Birnbaum resigned.

Feinstein, at Wednesday's hearing, described how the culture at MMS affected the Deepwater Horizon.

MMS allowed BP to run the Deepwater Horizon rig without remote shutoff capability in case the drilling rig became disabled; MMS did not have an inspector on the rig to settle the "heated argument between BP, Transocean, and Halliburton officials on how they would stop drilling and plug the well;" and MMS did not have and did not require the industry to have emergency equipment stationed in the Gulf of Mexico that could respond immediately to an emergency, Feinstein said

"For a decade or more, the cozy relationship between the oil companies and the federal agency was allowed to go unchecked, that allowed drilling permits to be issued in exchange not for safety plans, but assurances of safety from oil companies," President Obama said on June 15, when appointing Bromwich to take Birnbaum's place.

"That cannot and will not happen anymore," Obama said.

Bromwich comes to the position with an impressive reputation for investigating agencies that do not like to be investigated.

Bromwich has headed investigations of the FBI involving the handling of the bombing of Pan Am Flight 103, the Aldrich Ames espionage case and campaign finance reform, as well as probes into the conduct of the CIA and the former Immigration and Naturalization Service.

"The strongest thing the administration and Secretary Salazar have done towards reforming MMS is to appoint Bromwich," said Chip Groat, former director of the U.S. Geological Survey and current associate director of the Energy Institute at the University of Texas.

"Bromwich is not of the culture at MMS and that gives him a good chance at changing it," Groat said. "It's hard to change the way things are done at any government agency. But it is possible to do something at MMS, which is a relatively small operation."

Salazar and Bromwich appeared before the Senate subcommittee.

Sakazar pledged an independent study on how to improve offshore rig inspections. He said his department is promoting more responsible, scientifically and environmentally sound technologies and methods for oil and gas exploitation, and that he is seeking budget increases for the newly named agency to obtain more inspectors.

"It is frankly not a good thing that we have 62 inspectors essentially in charge of overseeing 4,000 production wells in the Gulf of Mexico and the Pacific and up in Alaska," Salazar said. "That will have to significantly be expanded."

Groat said that relatively low paid for skilled work led to a high turnover rate at MMS.

"Many people went to work for the oil industry," he said. "They just were not able to retain a capable work force."

As deep water drilling increased in recent years, MMS' workforce was overmatched, Groat said.

"They were not up to the complex task, and so they took their lead from the experts - that is, from the oil and gas company people," he said.

Bromwich said that kind of culture would no longer be tolerated. He is establishing an investigations and review unit that will help to expedite his oversight, enforcement and re-organization mandates.

 "In light of the response to the Deepwater Horizon disaster, the impending reorganization of Interior's offshore oil and gas management and enforcement missions and the new Bureau's mandate to implement broad reforms, it is critical that we have an internal compliance and investigations team that can act quickly and report directly to me," he said.

Salazar and Bromwich not only have their work cut out for them at the former MMS. They may soon also have lawmakers telling them what to reform and how.

A Senate bill, the "Outer Continental Shelf Reform Act of 2010," sponsored by Senators Bingaman, D-NM, and Murkowski, R-AL, received a hearing before the Senate Energy and Natural Resources Committee Thursday.

"Congress should create organizational resources and a set of principles and requirements that will have safety, environmental protection, and innovation at its core," Bingaman said in opening the hearing. "We should require that both industry and agency employees have the expertise, experience, and commitment to quality that is necessary to handle the complex issues involved."