	Technical Expertise

Agencies should have sufficient staff with the technical expertise to  oversee the activities under their authority. Oil and gas production  methods on federal lands and waters have become increasingly  sophisticated over the past decade. In a March 2010 review, we found that Interior had challenges  in hiring, training, and retaining staff in critical oil and gas oversight roles,  leading to questions about the technical capacity of Interior staff  overseeing oil and gas activities. Interior’s challenges in hiring and retaining  staff stem, in part, from competition with the oil and gas industry, which  generally pays significantly more than the federal government. Moreover,  key technical positions responsible for oversight of oil and gas activities  have experienced high turnover rates, which, according to Interior  officials, impede these employees’ capacity to oversee oil and gas  activities. Ability to Perform Reviews and Require that Findings Be Addressed

An effective oversight program should include a component for systematic  inspections and reviews, whose findings should be documented and  subsequently addressed. In several recent reviews, we found that Interior  had been unable to complete its necessary reviews, including both  environmental and oil and gas production verification inspections and  certain offshore environmental analyses. More recently, in March 2010, we reported that Interior  had only been able to complete approximately one-third of the required  onshore oil and gas production verification inspections, raising concerns  about the accuracy of the oil and gas volumes reported to MRM. In another March 2010 report, we found that MMS faces challenges in the  Alaska Outer Continental Shelf (OCS) Region in conducting reviews of oil  and gas development under the National Environmental Protection Act  (NEPA), which requires MMS to evaluate the likely environmental effects  of proposed actions, including oil and gas development. Although Interior  policy directed its agencies to prepare handbooks providing guidance on  how to implement NEPA, we found that MMS lacked such a handbook. It also left unclear MMS’s policy on what constitutes a  significant environmental impact as well as its procedures for conducting  and documenting NEPA-required analyses to address environmental and  cultural sensitivities, which have often been the topic of litigation over  Alaskan offshore oil and gas development. Just this year, Secretary Salazar directed Interior to conduct  studies examining these issues. In our March  2010 report, we determined that in some instances Interior is uncertain  about its legal authority for undertaking necessary enforcement actions  and may be using its enforcement authority inconsistently. Specifically, we found that some  Interior staff were not issuing incidents of non-compliance—a type of  enforcement action—when they identified certain measurement devices  during the course of their inspections, as they believe the current  measurement regulations were out of date. In preliminary results from our ongoing work on public challenges to  BLM’s federal oil and gas lease sale decisions in the four Mountain West  states responsible for most onshore federal oil and gas development, we  found the extent to which BLM made publicly available information  related to public protests filed during the leasing process varied by state  and was generally limited in scope. We also found that stakeholders— nongovernmental organizations representing environmental, recreational,  and hunting interests that filed protests to BLM lease offerings—wanted  additional time to participate in the leasing process and more information  from BLM about its leasing decisions. Our past work, as well as that of Interior’s OIG, has  identified several instances where Interior staff had inappropriate  relationships with oil and gas industry personnel, raising questions about  whether Interior’s oversight efforts were sufficient. In August 2008, Interior’s OIG reported on inappropriate  relationships between staff working in Interior’s RIK program and the oil  and gas industry. Most recently, in May 2010,  the OIG reported on inappropriate relationships between Interior’s  offshore inspection staff and certain oil and gas companies operating in  the Gulf of Mexico. As the Secretary and Congress consider what fundamental changes are  needed in how Interior structures its oversight of oil and gas programs, we  believe that our and others’ past work provides a strong rationale for  broad reform of the agency’s oil and gas oversight functions—at MMS to  be sure, but also across other parts of Interior, including those responsible  for oversight of onshore areas. 2, 2009).
Why GAO Did This Study

The catastrophic oil spill in the Gulf of Mexico has drawn national attention to the exploration and production of oil and gas from leases on federal lands and waters. The Department of the Interior's Bureau of Land Management (BLM) oversees onshore oil and gas activities, the Minerals Management Service's (MMS) Offshore Energy and Minerals Management oversees offshore oil and gas activities, and MMS's Minerals Revenue Management collects revenues from oil and gas produced. Interior's oil and gas oversight has long been the subject of audits and investigations by GAO, Interior's Office of Inspector General (OIG), and others. In response to the recent oil spill, the Secretary of the Interior has proposed reorganizing MMS. Over the past 5 years, GAO has issued numerous recommendations to the Secretary of the Interior to improve the agency's management of oil and gas resources--most recently resulting in two reports in March 2010. Overall, GAO's work in this area can be useful in evaluating key aspects of the Secretary's plans to reorganize MMS. In particular, GAO's findings and recommendations can provide guidance on how to achieve effective oversight of federal oil and gas management by improving (1) technical expertise in the agency, (2) performance of analyses and reviews, (3) enforcement of laws and regulations, (4) public access to information, and (5) the degree of independence in the agency.

What GAO Found

Technical Expertise. Oil and gas production methods on federal lands and waters have become increasingly sophisticated over the past decade. GAO found in a March 2010 report that Interior had challenges in hiring, training, and retaining key staff, leading to questions about the technical capacity of Interior staff overseeing oil and gas activities. Interior's challenges partly stem from competition with the oil and gas industry, which can pay staff higher salaries. Moreover, key technical positions responsible for oversight of oil and gas activities have experienced high turnover rates, which, according to Interior officials, impede their capacity to oversee oil and gas activities. Ability to perform reviews and require that findings be addressed. In several recent reports, GAO found that Interior was unable to complete necessary reviews, including environmental and oil and gas production verification inspections, and had an ill-defined process for conducting certain offshore environmental analyses. For example, GAO reported in March 2010 that MMS faced challenges in Alaska conducting required environmental reviews, because although Interior policy directed MMS to prepare a handbook providing guidance on how to conduct these reviews, MMS lacked such a handbook. This lack of guidance also left unclear MMS's policy on what constitutes a significant environmental impact. Enforcement Authority. In a March 2010 review, GAO determined that in some instances, Interior was uncertain about its legal authority for undertaking potential necessary enforcement actions, and that Interior may be inconsistently using its enforcement authority. For example, staff from one BLM office told us that they were not issuing enforcement actions for unauthorized devices intended to modify gas flow upstream of the measurement meter--which may result in inaccurate measurement of gas production volumes. These staff explained that this was due to measurement regulations that were out of date. Public Access. In its preliminary results from ongoing work on public challenges to BLM's federal onshore oil and gas lease sale decisions in the four Mountain West states responsible for most federal oil and gas development, GAO found state-by-state variation in what protest-related information was made publicly available across BLM state offices. GAO also found that stakeholders, including industry groups and nongovernmental organizations representing environmental, recreational, and hunting interests, expressed frustration with the transparency and timeliness of the information. Independence. During GAO's work in 2009 and in Interior OIG reports in 2008 and 2010, several instances were identified where Interior staff had inappropriate relationships with oil and gas industry personnel, raising questions about whether Interior's oversight efforts were sufficient. The OIG found numerous instances of inappropriate contact between industry and Interior staff, including staff receipt of gifts.