Oil and Gas Oversight Still Lacking

The Government Accountability Office, weighing in somewhat belatedly, has found the Interior Department’s oil and gas regulation and revenue-collection offices to be beset by problems and in need of a major overhaul.

The G.A.O., the investigative arm of Congress, added the former Minerals Management Service to its list of so-called high-risk programs, saying that the service is unable to account for potentially billions of dollars worth of oil and gas recovered from publicly owned lands and offshore areas. The auditors found that the agency has problems hiring, training and retaining qualified staff, lacks the technical resources to monitor drilling operations and may be losing billions of dollars a year in royalty payments owed the taxpayers.

The minerals service, long riddled with charges of corruption and incompetence, was dismantled after the Deepwater Horizon oil rig explosion and spill in the gulf last April. Interior Secretary Ken Salazar has assigned its oversight functions to a new agency dubbed the Bureau of Ocean Energy Management, Regulation and Enforcement; its revenue collection duties now reside in a separate agency, the Office of Natural Resources Revenue.

The G.A.O. auditors said those steps are needed but may not be sufficient to correct management, personnel and accounting problems dating back many years. It also warned that the reorganization will present a major challenge to the Interior Department, which is trying to simultaneously manage all of its other programs at a time when federal money is scarce.

“Interior 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,” the G.A.O. concluded.

“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,” the report said.

The Interior Department said it was well aware of the problems cited by congressional auditors and was working to correct them.

“The high-risk list released today by the Government Accountability Office reflects and underscores the importance of the aggressive and comprehensive regulatory reform efforts currently under way in the Bureau of Ocean Energy Management, Regulation and Enforcement and makes abundantly clear the critical need for resources to effectively implement those reforms,” an Interior spokeswoman said in a statement.

President Obama’s budget request for 2012, released this week, calls for a 50 percent increase in funds for the Bureau of Ocean Energy Management, to more than $350 million. Officials said the money would be used to address staffing problems and safety reviews, among other things.

The department also said that the transfer of revenue collection functions to a separate office was proceeding smoothly and was improving its ability to monitor the amounts of oil pumped from the ground and the royalty revenue due the public.

Representative Darrel Issa, Republican of California, has been critical of Interior’s minerals management program for years. He said that the G.A.O.’s designation of the office as troubled is long overdue.

“It’s better late than never,” Mr. Issa said in a statement, “but it shouldn’t have taken the worst ecological disaster in history for G.A.O. to place this program onto the high risk list.” A spokesman for Mr. Issa said it was too early to tell whether Interior’s announced reforms of the program would be adequate to correct its longstanding problems.

The oil and gas program was the only government function added to the G.A.O.’s list of high-risk areas. Two programs were removed, the Pentagon’s personnel security clearance program and the Census Bureau, which essentially has completed its 2010 data collection work.

A number of other major federal functions remain on the watch list, some of which have been there for years, including food safety, Medicare and Medicaid, financial regulation, tax collection, weapons procurement, Pentagon contract management and protection of the government’s information systems.

New York Times