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AP IMPACT: Documents show ties between oil drilling regulators and industry persist
WASHINGTON (AP) ' Ties between offshore oil and gas companies and the agency that regulates them are so pervasive that a year after new ethics rules took effect, as many as a third of inspectors in some Gulf of Mexico offices have been disqualified to avoid potential conflicts of interest.
That makes it difficult to hire knowledgeable and independent regulators in a region where oil and gas interests are deeply intertwined in the economy and culture, and where expertise and training needed to do the job often is found in the private sector.
Documents obtained by The Associated Press show that about 1 of every 5 employees of 109 involved in inspections in the Gulf has been recused from some duties because of the risk of coming into contact with a family member or friend working for a company the inspector regulates. Ten people hired since mid-August 2008 were barred for two years from performing work where they could be in a position of policing their previous employer ' a company or contractor operating offshore.
In the Lafayette, La., office of the Bureau of Ocean Energy Management, Enforcement and Regulation nearly 35 percent of inspectors have been disqualified because a friend or relative works for a company they could interact with on the job. In Lake Charles, La., nearly 30 percent of inspectors held their last job with an oil and gas company, meaning they can't perform any duties involving their former employer for two years.
The numbers come from recusal forms under a new ethics policy instituted last year by the Obama administration to identify and prevent possible conflicts of interest before they arise.
Copies of the forms submitted by more than 100 inspectors, engineers and permit reviewers in five Gulf coast offices were obtained by the AP under the Freedom of Information Act. Personal information, such as the names of the employees, their friends and their family members, was blacked out to protect privacy. But the companies with ties to government workers were disclosed, and they represent a who's who of the offshore oil and gas industry, from majors like Chevron, Shell and BP to smaller companies such as W&T Offshore Inc., Ankor Energy LLC and Hilcorp Energy Co.
While inappropriate behavior has been limited to a few individuals so far, as both Interior Secretary Ken Salazar and Bureau of Ocean Energy Management, Enforcement and Regulation Director Michael Bromwich have stressed, the forms quantify for the first time the extent of the bonds between the industry and the agency formerly known as the Minerals Management Service.
"The conflicts of interest addressed by this policy are not crimes or badges of shame," Bromwich said in a statement provided to the AP. "The fact is that they exist because of the close-knit communities in which much offshore activity takes place; they cannot be wished away. The issue is not the conflicts themselves, which have existed for decades, but whether they are identified, addressed and managed."
However, the number of disqualifications renewed calls by lawmakers for a stronger ethics policy to be put into law, one that also holds companies accountable and cannot be changed when new leaders come in.
"Our sense is the revolving door is still swinging too widely," Sen. Ron Wyden, D-Ore., said in an interview with the AP after he had reviewed the recusals.
Most of the recent hires came from Island Operating Co., which was the focus of an April 2010 inspector general's report about the bureau's Lake Charles office, and was mentioned in another IG report focusing on the Lake Jackson, Texas, office. The internal watchdog found that employees working for Island, an offshore contractor with nearly 1,300 employees, were hosting inspectors on hunting and fishing trips.
The reaction of the manager of the Lake Charles district office at the time summed up how the agency operated: "They do this all the time."
"Obviously, we're all oil industry," Larry Williamson told the IG's office when shown pictures of one of his inspectors on the plane en route to a football game. "Almost all of our inspectors have worked for oil companies out on these same platforms. They grew up in the same towns. Some of these people, they've been friends all their life."
Island, in a statement, said it never sponsored hunting and fishing trips. Instead, its employees were hunting and fishing with people "with whom they had both personal and working relationships."
The company said it occasionally took inspectors to informal lunches when they came to perform inspections, a common practice throughout the industry that Island said it has stopped.
The lunches, spokesman Brad Deutser said in a statement, were "done as part of our commitment to become a safer, more compliant company."
Asked why the government appeared to be hiring inspectors from Island more than other companies, Deutser said it wasn't unusual to expect that a small number of employees would be recruited by the government.
"The very characteristics that attracted us to hire these professionals in the first place are the same that (the government) is looking to build its organization with," Deutser said.
Critics say nothing has changed, despite the Obama administration's efforts.
"It's nearly impossible to determine where the oil industry ends and the government's regulatory agency begins," Scott Amey of the Project on Government Oversight said after reviewing AP's data. "These new instances indicate that BOEMRE staff are connected to individuals and oil companies, which raises concerns about lax oversight and the integrity of the agency. Without enhanced enforcement authority and independent oversight of these potential conflicts, I'm uncertain that BOEMRE can assure the public that it is truly watchdogging the offshore oil industry."
Wyden has been pushing for tougher ethics rules since a 2008 inspector general's report revealed that 13 individuals in the agency's Lakewood, Colo., and Washington offices ' which had no role in Gulf of Mexico oil and gas operations ' influenced contracts, worked part-time as private oil consultants and had sexual relationships with oil company employees. Some also accepted golf and ski trips, snowboarding lessons and concert tickets from the oil companies.
That report was followed by two others that examined alleged misconduct in the Lake Jackson, Texas, and Lake Charles, La., district offices, which have jurisdiction over the Gulf of Mexico. In the case of Lake Charles, the IG found that accepting gifts from oil and gas companies was commonplace. In Lake Jackson, investigators discovered government workers tipping off companies about upcoming inspections.
"It just goes on and on and on," Wyden said. "What we would like to do is fundamentally change the culture here to reduce the kind of conflicts we are talking about." To do that, Wyden says, companies also need to be held accountable.
Others say the recusals at least are a step in the right direction.
"The bad news is the oil industry still has motive and opportunity to try to control regulators," said Sara Gonzalez-Rothi, the legislative counsel for Sen. Bill Nelson, D-Fla. "But the good news is we wouldn't even be seeing some of these potential conflicts and recusals were it not for the reforms we pushed through in the past few years."
Nelson sponsored a bill that would have barred inspectors from working for the industry for two years after leaving the agency and required them to divest themselves of energy company stocks. Similar provisions are now part of a larger offshore drilling safety bill that is stalled in the Senate.
Follow Dina Cappiello on Twitter: (at)dinacappiello