However, after the initial inspection, the  Coast Guard has authorized Interior’s inspectors to conduct such safety  inspections on behalf of the Coast Guard and enforce Coast Guard  regulations applicable to those facilities as a means to avoid duplicating  functions, reduce federal costs, and increase oversight for Coast Guard  compliance without increasing the frequency of inspections. Also  in accordance with the MOU between the two agencies, Interior conducts  both “full” and “limited” inspections of fixed offshore energy facility on  behalf of the Coast Guard. Coast Guard’s Security Inspection Program Has Faced Challenges and Could Be Improved

Coast Guard OCS facility guidance provides that Coast Guard personnel  are to conduct security inspections of OCS facilities annually, but our  analysis of inspections data show that the Coast Guard has not  conducted such inspections for most of these OCS facilities. For  example, the Coast Guard conducted about one-third of the required  annual inspections of OCS facilities from 2008 through 2010 (see table  1). Further, other Coast Guard  officials stated that it is easier to arrange for security inspections of  floating OCS facilities because marine inspectors visit those facilities  more frequently for other types of inspections, such as hull or safety  inspections, whereas for fixed OCS facilities, the Coast Guard is required  to conduct an initial safety inspection of each new facility and then is  solely responsible for conducting annual security inspections of fixed  OCS facilities once a year for annual security inspections. The Coast Guard does not have procedures in place to help ensure that  its field units conduct annual security inspections of OCS facilities  annually in accordance with its guidance. For example, the Coast Guard’s  OCS facility guidance does not describe specific procedures for the way  in which Coast Guard staff should track whether annual security  inspections have been conducted. Coast Guard officials from five of the six Coast Guard field units that  conduct annual security inspections of OCS facilities told us that they do  not maintain a spreadsheet or other management tool to track whether  annual security inspections had been conducted. In our October 2011 report, we made a recommendation, among others,  that the Coast Guard develop policies and procedures to monitor and  track annual security inspections for OCS facilities to better ensure that  such inspections are consistently conducted. The Coast Guard concurred  with this recommendation and stated that it is planning to update its OCS  facility policy guidance for field units to monitor and track annual security  inspections for OCS facilities to better ensure that such inspections are  consistently conducted. In March 2010, we found  that Interior had not routinely met its oil and natural gas production  inspection goals. Specifically, we reported that Interior met its inspection  goals only once—in 2008—during fiscal years 2004 through 2008, for four  district offices we reviewed in the Gulf of Mexico and the Pacific. We  reported that this difficulty in attracting and retaining key staff contributed  to challenges in meeting its responsibilities to conduct inspections,  thereby, reducing its oversight of oil and gas development on federal  leases, potentially placing the environment at risk. Although Interior has not consistently met its internal targets for  production inspections, it has exceeded its target for Coast Guard  compliance inspections. For fiscal year 2010, Interior  reported that it more than met this goal by conducting such inspections on  169 of the 1,021 staffed, fixed offshore energy facilities—about 17  percent. Further, Interior reported that it has met internal targets for  these inspections for the previous 5 years. After the Deepwater Horizon incident in April 2010, Interior  initiated a reorganization of its bureau responsible for overseeing offshore  oil and natural gas activities. We stated  that while this reorganization may eventually lead to more effective  operations, organizational transformations are not simple endeavors. We  also expressed concern with Interior’s ability to undertake this  reorganization while meeting its oil and natural gas oversight  responsibilities. As part  of the inspections program reform, Interior plans to hire additional staff  with expertise in oil and natural gas inspections and engineering and  develop new training programs for inspectors and engineers involved in  its safety compliance and enforcement programs. As a result, Interior reported that it was difficult to determine  how many inspections would be conducted in fiscal year 2012. The Coast Guard Has Limited Authority over the Security of MODUs Registered to Foreign Countries

While the Deepwater Horizon incident was not the result of a breakdown  in security procedures or the result of a terrorist attack, the loss of the  Deepwater Horizon, a foreign-flagged MODU, and the resulting oil spill  have raised concerns about U.S. oversight over MODUs that are  registered to foreign countries. part 104, or (2) they meet production or personnel levels  specified in 33 C.F.R. Whereas the Coast Guard may physically  inspect a U.S.-flagged MODU to ensure compliance with applicable  security requirements, the Coast Guard’s oversight of foreign-flagged,  self-propelled MODUs, such as the Deepwater Horizon, is more limited. Additionally, the Coast Guard is conducting a  study designed to help determine whether additional actions could better  ensure the security of offshore energy infrastructure in the Gulf of Mexico,  including MODUs. Further, the Coast Guard has  implemented a new risk-based oversight policy for MODUs, including  foreign-flagged MODUs, to address safety and environmental protection  issues. Although this policy does not directly address security, increased  oversight resulting from this new policy could help mitigate some of the  ways in which a MODU might be at risk of a terrorist attack. GAO-10-940T.
Why GAO Did This Study

The April 2010 explosion of the Deepwater Horizon, a mobile offshore drilling unit (MODU), showed that the consequences of an incident on an offshore energy facility can be significant. A key way to ensure that offshore energy facilities are meeting applicable security, safety, and production standards is through conducting periodic inspections of the facilities. The Coast Guard and the Department of the Interior (Interior) share oversight responsibility for offshore energy facilities. The Coast Guard is to conduct security inspections of such facilities, whereas based on an agreement between the two agencies, Interior is to conduct safety compliance inspections on some offshore facilities on behalf of the Coast Guard as well as its own inspections to verify production. This testimony addresses: (1) the extent to which the Coast Guard has conducted security inspections of offshore energy facilities, and what additional actions are needed; (2) the extent to which Interior has conducted inspections of offshore energy facilities, including those on behalf of the Coast Guard, and challenges it faces in conducting such inspections; and (3) the Coast Guard's oversight authority of MODUs. This testimony is based on GAO products issued from September 2008 through October 2011.

What GAO Found

The Coast Guard conducted about one-third of its required annual security inspections of offshore energy facilities from 2008 through 2010 and does not have procedures in place to help ensure that its field units conduct such inspections in accordance with its guidance. The Coast Guard's guidance does not describe specific procedures for the way in which Coast Guard staff should track whether annual inspections have been conducted. For example, Coast Guard field unit supervisors and marine inspectors GAO interviewed from five of the six Coast Guard field units that are to conduct annual security inspections said that they do not maintain any tool to track whether such inspections had been conducted. GAO recommended in October 2011 that, among other things, the Coast Guard develop policies and procedures to monitor and track annual security inspections. The Coast Guard concurred and stated that it is planning to update its guidance for field units to address these issues. Interior's inspection program has not consistently met its internal targets for production inspections, and faces human capital and reorganization challenges, but has met its limited target for compliance inspections conducted for the Coast Guard. In March 2010, GAO found that for four district offices it reviewed, Interior only met its production inspection goals once during fiscal years 2004 through 2008. Further, GAO reported that difficulties in hiring, training, and retaining key staff had contributed to challenges in meeting its inspections goals. However, in recent years, Interior reported that it met its 10 percent target to conduct compliance inspections of staffed, fixed offshore energy facilities on behalf of the Coast Guard. In fiscal year 2010, Interior reported that it exceeded its target and conducts such inspections on 169 of the 1,021 staffed, fixed offshore energy facilities and has met this target for such inspections for the previous 5 years. In May 2010, Interior reorganized its bureau responsible for overseeing offshore energy activities. In June 2011, GAO reported that while this reorganization may eventually lead to more effective operations, GAO is concerned with Interior's ability to undertake this reorganization while meeting its oversight responsibilities. Among other things, Interior plans to hire additional staff with expertise in inspections and engineering. Amidst these changes, Interior reported that it was difficult to determine how many inspections it would conduct in fiscal year 2012. The Coast Guard has limited authority regarding the security of MODUs registered to foreign countries, such as the Deepwater Horizon. MODUs are subject to Coast Guard security regulations if (1) they are self-propelled or (2) they meet specific production or personnel levels. Whereas the Coast Guard may physically inspect a U.S.-flagged MODU to ensure compliance with applicable security requirements, the Coast Guard's oversight of foreign-flagged, self-propelled MODUs, such as the Deepwater Horizon, is more limited. The Coast Guard is conducting a study designed to help determine whether additional actions could better ensure the security of offshore energy facilities, including MODUs. Further, the Coast Guard has implemented a risk-based oversight policy for all MODUs to address safety and environmental protection issues. Although this policy does not directly address security, increased oversight resulting from this policy could help mitigate the risk of a terrorist attack to a MODU. GAO has previously recommended that the Coast Guard develop policies and procedures to monitor and track annual security inspections for offshore energy facilities and that Interior address its human capital challenges. The Coast Guard and Interior agreed.