Interior Department oil and gas management found to be at high risk with significant problems
As my colleague Cai Steger blogged last week, the Government Accountability Office (GAO) just released its annual “High Risk Report” on the federal government programs most vulnerable to fraud, waste and mismanagement or in need of reform. The GAO updates the list every two years. This year they added only one new high-risk area—the Department of Interior’s management of federal oil and gas resources. There are only 30 federal programs on the list.
In summary, the GAO found that the Department of the Interior (DOI) "does not have reasonable assurance that it is collecting its share of billions of dollars of revenue from oil and gas produced on federal lands and 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. Further, Interior recently began restructuring its oil and gas program, which 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."
GAO found problems with the agencies that manage both offshore and onshore oil and gas production. Among other things, GAO found that no one knows if operators are accurately measuring and reporting the volume of oil and gas produced from federal leases--or if taxpayers are getting the royalty payments owed to them.
Second, GAO found that there are persistent problems in hiring, training, and retaining sufficient staff. Turnover rates are incredibly high, and GAO found that the Bureau of Land Management (BLM), the agency that manages onshore leases, does not provide training for staff charged with reviewing and approving drilling permits. I guess I can understand why turnover might be high--today it was reported that oil and gas producers pay some of the highest salaries in the nation. For example, Devon Energy pays an average salary of $172,575. Yes, that is an average. (These companies are also reported to offer great perks. Personally, I would definitely take advantage of free yoga classes, but I might pass up the free Botox and tanning).
The GAO also found that the agencies had ignored previous GAO recommendations to remedy these risks.
All kidding aside, this is an extremely serious matter. Oil and gas production involves a lot of dangerous activity and toxic substances. There are many significant health and safety risks. BLM inspectors are responsible for ensuring safety to our public lands and wildlife habitat, but also our air and water, and the health and safety of workers and nearby communities. Keep in mind that some of these federal leases involve oil and gas beneath private property, including people's homes, playgrounds, and drinking water sources. BLM inspectors and other staff provide a very important pubilc service and should be properly trained.
Last year I blogged on new proposals from the BLM to update the rules for oil and gas leasing on public lands. We support these changes, although we think more needs to be done. But a little over a year ago I also mentioned that a report by the Western Organization of Resource Councils found that the Bureau of Land Management reduced inspection and enforcement dramatically during the years of the Bush administration. The agency issued fewer enforcement actions in 2007 than it did in 1999, inspectors spent a third less time on environmental inspections, and inspectors completed only 15 percent of the highest-priority inspections.
The GAO raises critical concerns in an industry that poses serious health and safety risks. The agency--and Congress--should ensure there is proper accounting, that taxpayers get every dollar owed to them, and that the funds are used to ensure strong regulation and enforcement of oil and gas activities.