In an attempt to break up the “cozy relationship” between the Minerals Management Service (MMS) and the oil and natural gas industry, the Interior Department’s acting inspector general (IG) Thursday raised the possibility of requiring companies that do business with the federal government in the future to comply with ethics standards.

“How do we address the conduct of industry representatives? Perhaps it is time to impose some ethics requirements on companies doing business with the government,” said Acting IG Mary Kendall during a subcommittee hearing of the House Natural Resources Committee.

Past IG reports included “troubling accounts of inappropriate behavior on the part of certain MMS employees,” but Kendall added that “conduct was for the most part enabled by industry.”

The Obama administration and Capital Hill lawmakers believe that MMS has allowed industry to write the safety regulations, thus unwittingly contributing in part to the mammoth oil spill in the Gulf of Mexico (GOM).

But Kendall rejected that notion. “We also have had questions about the influence of industry on MMS in developing regulations [for the offshore]. While industry clearly has influence, MMS appears to have followed the proper legal processes in finalizing its regulations,” she told the Subcommittee on Energy and Mineral Resources.

“Because MMS relies heavily on an industry that it regulates, however, the possibility for and the perception of undue influence will remain,” she said.

“We also have questions about MMS’ enforcement programs. In the operations and safety arena, we question whether the civil penalty regulations are tied appropriately to the seriousness of the violations and the threat to human safety, property and the environment,” Kendall noted.

She further noted that more inspectors were need in the GOM. “We have been told MMS has approximately 60 inspectors for the Gulf of Mexico region to cover nearly 4,000 facilities,” Kendall said. Comparatively the Pacific region has 10 MMS inspectors for 23 facilities.

“MMS also has difficulty in recruiting inspectors due to its grade and pay structure. Industry tends to offer considerably higher wages and bonuses. [And] when they can be recruited, inspectors for MMS receive primarily on-the-job training. In any reorganization effort, MMS should consider formalizing and updating its inspector…training program and conduct periodic reviews” of the program.

Both Kendall and Frank Rusco, director of Natural Resources and Environment at the Government Accountability Office (GAO), urged Interior to be thoughtful in restructuring MMS in response to the oil spill. Interior has proposed splitting the agency into three separate bureaus (see Daily GPI, May 21).

“We do have some concerns about just the ability of Interior staff to simultaneously respond to the catastrophic oil spill in the Gulf, undergo a major structural reorganization and also work to implement the over 120 recommendations” made by GAO, the inspector general and Interior’s Royalty Policy Committee, Rusco said.

“We do feel that any reorganization should be done only after thoughtful analysis with sufficient time to consider a variety of organizational structures and in consultation with Congress,” he noted.

“It needs to be well thought out and considered before hasty action is taken,” Kendall said.

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