Poor management of oil and gas puts Interior on troubled agency list

The Department of Interior today is being added to one exclusive Washington list that no one wants to be on.

The Government Accountability Office is so concerned with how Interior manages the nation's oil and gas resources that the watchdog has decided to add the department to a biennial "high risk" list of troubled federal programs.

The list, updated at the start of every new Congress, has been called a blueprint for the oversight of problematic agencies by some congressional leaders. It now includes 30 different areas within the federal government that GAO has identified as being at high risk due to their vulnerability to fraud, waste, abuse and mismanagement or in need of transformation to address major economic or efficiency challenges.

In adding Interior's oil and gas management program to the list today, GAO noted that the agency does not have reasonable assurance that it is collecting its share of billions of dollars of oil and gas revenues and that it continues to experience problems in hiring, training and retaining sufficient staff to provide oversight and management of oil and gas operations on federal lands and waters.

It is a problem that predates the April 2010 explosion on the Deepwater Horizon drilling rig in the Gulf of Mexico, GAO said. But that disaster served to increase attention on Interior's oversight of its oil and gas resources, including the agency's efforts to manage risk associated with oil and gas exploration and production, as well as its permitting and inspection processes to ensure operational and environmental safety, the report states.


In an attempt to address some of the issues highlighted by the spill, Interior has tried to restructure its oil and gas program. In May 2010, Interior Secretary Ken Salazar eliminated the old Minerals Management Service, transferring offshore oversight responsibilities to the new Bureau of Ocean Energy Management, Regulation and Enforcement and moving revenue collection responsibilities to a new Office of Natural Resource Revenue.

But GAO notes that such restructuring is "inherently challenging, and there are many open questions about whether Interior has the capacity to undertake this reorganization while carrying out its range of responsibilities, especially in a constrained resource environment."

Rep. Darrell Issa (R-Calif.), who leads the House Oversight and Government Reform Committee, today said the listing of Interior's oil and gas program by GAO has been a long time coming.

"In 2006, the Department of the Interior's own Inspector General Earl Devaney told the Oversight Committee that 'short of a crime, anything goes at the highest levels of the Department of the Interior,'" Issa said. "It's better late than never, but it shouldn't have taken the worst ecological disaster in history for GAO to place this program onto the high risk list."

But Interior believes its efforts to date have already had significant positive impacts.

"In the wake of the BP Deepwater Horizon oil spill, Secretary Salazar launched an aggressive reorganization ... and over the last nine months has dramatically increased safety standards and oversight of the oil and gas industry," Interior spokeswoman Kendra Barkoff said today. "Since the reorganization, the transfer of the revenue management functions of MMS have taken place as planned and without disruption, thus eliminating conflicts, mitigating the risks of organizational change and allowing greater focus on specific opportunities for improvement."

Another Interior official pointed out today that the listing by GAO only draws upon previous reviews and offers no new findings or recommendations. And at a time when Congress is contemplating deep budget cuts, the listing makes clear that Interior needs the resources to effectively implement the reforms it has started, the official said.

But after today's report, Interior will have to wait two years to see if those improvements are effective enough to warrant its removal from the high-risk list.

Such delistings are certainly possible. This year, GAO determined that enough progress had been made in two areas included in its January 2009 report to remove them from the list: the efficient processing of security clearances at the Department of Defense and management and cost control efforts at the Census Bureau.

But 29 other problem areas that appeared on the 2009 list continue to be areas of concern for GAO today.

EPA chemical reform

GAO called on U.S. EPA and Congress to update the Toxic Substances Control Act of 1976 (TSCA), which grants EPA authority to regulate all of the country's new and existing industrial chemicals.

GAO strongly implied that there is a structural flaw in how TSCA was set up. Unlike the approach taken by the European Union, which requires manufacturers to present information about chemicals, TSCA places the "burden" of obtaining information about the roughly 80,000 chemicals on the U.S. market on EPA, GAO said.

"GAO has recommended both statutory and regulatory changes to, among other things, provide EPA with additional authorities to obtain health and safety information from the chemical industry and to shift more of the burden to chemical companies for demonstrating the safety of their chemicals," GAO wrote. "Congress and EPA need to act on these important issues."

The watchdog agency did commend EPA for steps taken to expand its authority under TSCA, which is the country's only environmental law to never receive a congressional update. It noted that EPA has sought to phase out chemicals such as mercury and lead from certain products. "However," GAO added, "most such actions are in the early stages of development."

EPA has also recently taken new actions in an effort to increase chemical transparency that were not noted in GAO's report. Last week, EPA notified five companies that 14 chemicals would no longer be shielded from the public under Confidential Business Information claims. Manufacturers may file the claims to keep chemical information private when they deem it vital to their business interests (E&ENews PM, Feb. 10).

Sen. Frank Lautenberg (D-N.J.) and Reps. Henry Waxman (D-Calif.) and Bobby Rush (D-Ill.) introduced legislation last Congress to reform TSCA. Those bills included a mandate requiring manufacturers to disclose a minimum data set for every chemical they produce. They stalled in the run-up to the midterm elections, and efforts to reform TSCA do not appear likely to gain traction in the new Congress with Republican control of the House.

GAO also called for reforms to EPA's Integrated Risk Information System (IRIS). The IRIS database provides chemical information to EPA and legislators to determine whether it should establish regulatory controls on chemicals and toxic chemicals in the air, water or at hazardous waste sites.

Specifically, GAO said EPA needs to speed up reviewing a large and long-standing backlog of chemicals for inclusion in the IRIS database. In March 2008, GAO reported that the viability of IRIS was at risk because EPA was not able to complete "timely, credible chemical assessments -- including those of chemicals of greatest concern, such as formaldehyde and dioxin."

GAO did offer some praise to EPA for revising the IRIS assessment process in May 2009 under new Administrator Lisa Jackson. In particular, it commended EPA for streamlining the process by which chemical assessments were made.

"If implemented effectively, these assessment reforms represent significant improvements and will be largely responsive to GAO's 2008 recommendations," GAO said. "They will restore EPA's control of the process and increase its transparency, among other things."

Still, GAO said it remains unclear whether EPA is moving swiftly enough in evaluating its lengthy backlog of chemicals that need review. "It is too soon to determine whether the reforms will be effective," GAO said, "but EPA has made some progress in addressing its assessment backlog."

Advocates who have long called for reforming the IRIS assessment process said the GAO report highlighted the dire need for change.

"Completing a health assessment of toxic chemicals under the IRIS program has come to a complete standstill that shows no sign of moving," said David Andrews, a senior scientist at the Environmental Working Group. "This failure to complete timely health assessments of the most common chemicals comes at a huge cost to our health and environment."

Food safety, nuclear

Elsewhere in today's report, GAO notes its continued concern with the fragmented nature of federal food safety oversight.

GAO pointed out that while the Department of Agriculture and Food and Drug Administration have primary oversight in that area, more than a dozen other agencies administer various food-related laws.

GAO also notes that the Department of Energy's National Nuclear Security Administration and Office of Environmental Management have made progress addressing weaknesses in their contract and project performance but that more remains to be done.

Recent oversight work has shown that both NNSA and the Office of Environmental Management continue to struggle to develop credible and reliable cost estimates, meet cost and schedule goals on projects and overcome other related project management challenges, the report states.

"With a combined annual budget of more than $15 billion and with missions often involving complex one-of-a-kind efforts, consistent and rigorous contract and project management are critical," it says.

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