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Lawmakers assail Minerals Management Service

By Perry Bacon Jr., David A. Fahrenthold and Steven Mufson
Washington Post Staff Writer
Wednesday, May 26, 2010; 4:16 PM

Members of Congress from both parties sharply criticized the Interior Department's Minerals Management Service on Wednesday, a day after the release of a report showing that the agency's inspectors routinely took gifts such as college football tickets from the companies they were supposed to be policing.

Lawmakers unloaded about their concerns during a hearing by the House Natural Resources Committee on the oil spill in the Gulf of Mexico.

The hearing followed the release of a memorandum by another panel, the House Energy and Commerce Committee, that described an internal BP investigation into the Gulf oil spill. The internal probe points to a series of equipment failures, mistakes and missed warning signs that led to the blowout and fire on the Deepwater Horizon drilling rig, according to lawmakers briefed by the company.

BP's investigation, while incomplete, highlights a series of abnormal indicators -- about pipeline pressure and the flow of drilling fluids in the five hours before the explosion -- that should have been "warning signs" of trouble, according to the memo summarizing BP's report. In one case, BP's investigator told lawmakers that a "fundamental mistake may have been made despite" an indicator of a very large abnormality.

Among other issues, BP said it had concerns about the cementing job in the well, saying that one procedure had to be attempted nine times, which might have indicated "contamination of the cement."

"The BP investigation has also raised concerns about the maintenance history, modification, inspection, and testing of" the blowout preventer, lawmakers said.

"In addition, key questions exist about whether proper procedures were followed for critical activities throughout the day," the memorandum said. These mostly had to do with the management of drilling mud, which is used as a counterweight to oil and gas pressure pushing up from below.

On Capitol Hill, top Interior Department officials said Wednesday the Obama administration would hold federal agencies, as well as BP, accountable for any failings related to the devastating spill.

In the first of a series of oversight hearings by the House Natural Resources Committee, which has jurisdiction over offshore oil and gas drilling, lawmakers grilled Interior Secretary Ken Salazar on reports of misconduct at the Minerals Management Service (MMS), the Interior Department agency that regulates offshore drilling while also collecting revenue from it.

"This is a BP mess," Salazar said in response to questioning. But while it is important to get "the whole truth" from BP about what went wrong, he said, he has also ordered the department's inspector general to look into what the MMS did or did not do that contributed to the problem.

"Everyone needs to be held accountable, and that includes the federal government," Salazar said.

"It is time to abolish MMS and start anew with a new agency and new people," Sen. Jeanne Shaheen (D-N.H.) said in a letter Wednesday to Salazar.

"When you see a culture developing within a department, then you have a very serious problem," said Rep. Dale E. Kildee (D-Mich.). "We want to put some people in jail perhaps, but putting people in jail does not undo the damage that was done."

Salazar called the conduct described in the report "scandalous and reprehensible" but said it stemmed from incidents before his tenure. He said people had already been fired for such offenses and emphasized a "zero tolerance" policy to such violations.

"When inspectors are taking trips on company paid jets, I think that is wrong," he said, noting that a culture that allowed such behavior was "something we have worked hard to change."

He said the report "was focused in on a time where there was a relationship with the oil and gas world where essentially whatever it is that they wanted, it is what they got."

The inspector general's report released Tuesday does not directly relate to the Deepwater Horizon oil rig, which sank after an explosion April 20 and set off a massive spill in the gulf. It details misconduct in the service's Lake Charles, La., office, which oversaw a different region of the gulf, and covers the period up to 2008, before the problem well was approved.

But the report adds to a growing portrait of the Minerals Management Service as corrupted by industry: Many inspectors, the inspector general found, were already friends with industry officials. Some had worked in the oil and gas business before their stint in government and would again. One official inspected four platforms owned by one company at the same time he was negotiating for a job at that firm.

The result, the report found, was regulation that often looked less than rigorous. One confidential source, it said, told investigators that service inspectors let the oil and gas companies fill out their inspection forms -- in pencil. Then an inspector would trace over their writing in ink.

In his testimony, Salazar promised "major changes" at MMS, including a dissolution of the agency and reassignment of its functions to three new entities. In addition to the inspector general's probe, he said he has asked the National Marine Board, an arm of the National Academy of Sciences, to conduct an independent review of MMS's inspection program for offshore facilities, with results due this fall.

The MMS, which collects more than $13 billion a year from the oil and gas industry, "has three distinct and potentially conflicting missions" that should be separated, Salazar told the committee. Under a reorganization he announced last week, he said, a new Bureau of Ocean Energy Management will take responsibility for the development of conventional and renewable energy resources on the Outer Continental Shelf; a Bureau of Safety and Environmental Enforcement will oversee safety and environmental protection in all offshore energy activities; and an Office of Natural Resources Revenue will collect, manage and distribute royalties and revenue from the industry.

In prepared testimony, Mary L Kendall, Interior's acting inspector general, said investigators have found "programmatic weaknesses and egregious misconduct" in the MMS, although she said the latest findings were "arguably less egregious, and considerably less salacious," than those in a 2008 report about misconduct in the agency's "royalty-in-kind" program.

"While I neither condone nor excuse the behavior chronicled in this, our most recent report on MMS -- gift-acceptance, fraternizing with industry, pornography and other inappropriate materials on government computers, and lax handling of inspection forms -- I am more concerned about the environment in which these inspectors operate, and the ease with which they move between industry and government," Kendall said.

She said oil and gas industry representatives and MMS employees found to have been involved in fraternizing and exchanging gifts "have often known one another since childhood," forming their relationships long before they joined government or industry.

At one point in the hearing, Rep. Doug Lamborn (R-Colo.) challenged Salazar, a former senator from Colorado, about his criticism of the MMS's actions during the administration of President George W. Bush. "I don't understand why you and others keep harping on what the MMS did or didn't do in the previous administration," Lamborn told Salazar. "You've been in charge for more than a year now."

Salazar insisted that "we are talking about the here and now." He told Lamborn, "Unlike the prior administration, this is not the candy store of the oil and gas kingdom that you and others were a part of."

Staff writers Joel Achenbach and William Branigin contributed to this report.

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