Offshore operators have been able to mesh with the Department of Interior’s reorganization but challenges remain in implementing new regulations, according to the Government Accountability Office (GAO).

Interior last year completed its overhaul of the former Minerals Management Service into two divisions: the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE) (see Daily GPI, Nov. 15, 2011; Sept. 19, 2011). The division, mandated by Secretary Ken Salazar, followed the April 2010 Macondo well blowout and Deepwater Horizon rig explosion in the Gulf of Mexico.

U.S. Sen. Sheldon Whitehouse (D-RI) and Rep. Nick J. Rahall (D-WV) requested a review of the progress by the two agencies to determine whether the division was working. Whitehouse chairs the Senate Environment and Public Works Committee’s Subcommittee on Oversight. Rahall, former chair of the House Natural Resources Committee, now is ranking member of the Transportation and Infrastructure Committee.

GAO analyzed data and documents to conduct the review and interviewed officials from Interior and the National Oceanic and Atmospheric Administration, Gulf of Mexico states, environmental groups and industry, said GAO’s Frank Rusco, natural resources and enviornment director (GAO-12-423). The auditors looked at how the reorganization had impacted offshore activity oversight; how key policy changes implemented since Macondo had affected environmental analyses, plan reviews and permit reviews; extent to which inspections of drilling rigs and production platforms identified violations or resulted in penalties; how stakeholder input was considered; and key challenges, if any, Interior faces.

The “ultimate effectiveness of Interior’s reorganization and recent policy changes remains uncertain,” the auditors said. “Interior has not assessed how new policy requirements, travel times to deepwater drilling rigs and the current number of inspectors affect its ability to conduct drilling inspections; as a result, it cannot be certain that its informal monthly inspection goal is appropriate for overseeing drilling activities in the Gulf of Mexico.”

Among other things the GAO questioned practices used to evaluate drilling risks, National Environmental Policy Act analyses, “institutional knowledge” and information technology systems. Rusco said there were a lot of positives as well.

Industry is becoming more comfortable with the reorganization, Rusco said in a podcast.

“After the Deepwater Horizon, initially there was a moratorium on new drilling in the Gulf of Mexico as Interior implemented these changes. And then that moratorium was lifted, and then there was a slow but gradual steady increase in oil and gas development activity in the Gulf. That’s an indication that there’s better transparency and better certainty about what the process is. Industry is figuring it out and they are able to operate in this new environment.”

Among its recommendations, GAO said Interior needs to improve the effectiveness of its inspections “through timely input of violation correction data, its capacity for categorizing oil and gas activities according to risk, and its strategic planning for information technology and workforce efforts.” GAO said in its comments on a draft of the report, “Interior generally agreed with GAO’s findings and recommendations.”

Interior provided a separate analysis of exploration and development plan and drilling permit review times, which differed from GAO’s in two ways. GAO’s analysis “included plans and permits submitted and approved within each separate time frame, while Interior’s analysis required only that the plan was submitted and approved, regardless of the time frame.

“Second, our analysis of review times included data through September 30, 2011, while Interior’s analysis included data through May 31, 2012, allowing time for Interior staff and operators to become more familiar with the increased environmental and safety requirements and new review process.”

GAO’s auditors said they thought their review was a “more conservative and accurate view of review times” but said Interior’s “is not incorrect for examining trends in review times for plans and permits. Further, Interior’s analysis provides a more current assessment of review times in the post-Deepwater Horizon incident period.

“Overall, Interior’s analyses found that review times for plans and permits has decreased since the Deepwater Horizon incident, which is consistent with the results of our work.”

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