Ex-MMS director advises oil spill commission on reforming industry oversight

Former Obama Administration Minerals Management Service Director Elizabeth Birnbaum

Former Obama Administration Minerals Management Service Director Elizabeth Birnbaum, who resigned amid criticism of the agency in the aftermath of the gulf oil spill, spoke publicly today for the first time since leaving her post in May. In testimony before the national oil spill commission, Birnbaum painted a picture of an extremely flawed agency and offered a number of recommendations for its restructuring.

Birnbaum said MMS’s review of oil spill response plans was “woefully lacking.” She also said the agency did not have sufficient resources and funding to perform adequate environmental reviews of projects or to hire enough inspectors to oversee offshore development. At the same time, Birnbaum, like many others, noted that there was a too-cozy relationship between industry and the inspectors put in charge of enforcing safety regulations.

Birnbaum’s testimony was part of a day-long meeting of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. The commission — which is co-chaired by former Sen. Bob Graham and former Environmental Protection Agency Administrator William Reilly — was established by President Obama in a May executive order. In opening remarks, Graham called the spill an “enormous and shared failure.”

The commission has been criticized by Republicans and some Democrats, who argue that the panel is too heavily weighted toward opposing offshore drilling. The criticism has focused on the inclusion of the commission of Natural Resources Defense Council President Frances Beinecke, who has supported the Obama administration’s deepwater drilling moratorium.

Though the meeting included several panels, Birnbaum’s was the most anticipated. Birnbaum testified along with two former Bush administration MMS directors: Thomas Kitsos, who served as acting MMS director from January 2001 to November 2001, and Randall Luthi, who headed the agency from July 2007 to January 2009.

Birnbaum called on the commission to make a number of recommendations as the administration moves forward with restructuring MMS. Interior Secretary Ken Salazar has already disbanded MMS and established a new agency, the Bureau of Ocean Energy Management, Regulation, and Enforcement. The bureau will oversee offshore drilling and renewable energy activities as the administration and the commission continue to determine how best to organize offshore drilling activities within the Interior Department.

Birnbaum said that the environmental review function of the Interior Department’s offshore drilling oversight should be elevated. But she stressed that it is important to maintain communication between the permitting and environmental review arms, as they go hand-in-hand. Salazar has recommended creating three separate agencies with the Interior Department to work on offshore drilling: one to deal with permitting, another that focuses on environmental review, and a third that collects revenue.

The commission should call for a “comprehensive overhaul” of offshore drilling regulations that improve communication within MMS, requires “double- and triple-checking” of drilling activities, and updates standards for environmental review, Birnbaum said. She noted that MMS was in the process of developing new safety and environmental rules and the commission should “insist that the regulations be finalized.” But new regulations should not be limited to MMS. Birnbaum also called for a “broader review of oil and gas regulations” at all relevant agencies.

To improve environmental reviews, Birnbaum advocated expanding oversight to other agencies like the National Oceanic and Atmospheric Administration. “All responsible agencies should review industry plans and reviewers must be held to higher standards,” she said.

Lastly, Birnbaum outlined the complexities involved in trying to change the culture of MMS. Because inspectors have to live on the Gulf Coast to have access to offshore rigs, Birnbaum said it is difficult to separate them from the oil industry, which maintains a massive presence in the region.

Citing a series of scathing reports that found inspectors have accepted gifts from industry, Birnbaum said, “Inspectors who accepted gifts had extensive social, community, family relationships with industry.” Even if new inspectors were hired, “those inspectors would still have to live there,” she said, highlighting the difficulty of separating MMS employees from the industry. In addition, she said, it is difficult to hire inspectors who do not have connections to the industry because “historically, people with experience working in the industry, have had the experience necessary to be inspectors.”

There are some potential solutions, including imposing penalties on industry officials who give gifts to MMS employees, but Birnbaum said the commission should go “well beyond the technical standards to review all aspects of” the industry in order to address these underlying issues.

Commission members also pushed Birnbaum on her involvement in the Obama Administration’s March decision to expand offshore drilling, a decision made before the April spill. Birnbaum said she had “extensive discussions” with administration officials on the expansion, warning them that new drilling would require additional resources to oversee environmental reviews and to hire new staff. But, she said, “In the end, I supported the administration’s decision.”

Earlier in the meeting, it came out that the administration did not work closely with two key federal bodies responsible for environmental oversight in making its decision to expand offshore drilling. White House Council on Environmental Quality Chairwoman Nancy Sutley said the council was not “specifically asked for anything” in the run-up to President Obama’s decision. National Oceanic and Atmospheric Administration Administrator Jane Lubchenco said the agency was consulted in making the decision, but “was not in a position” to offer its approval of the final plan.

The revelation appears to be in stark contrast to March remarks by President Obama announcing the new offshore drilling plan, which would have allowed drilling along the lower part of the East Coast and in parts of the Gulf of Mexico and Alaska. Obama said he had worked with members of his administration for more than a year to develop the plan. But the testimony of Sutley and Lubchenco indicates that the administration did not work closely with at least two key federal bodies responsible for the protection of the environment and the oceans — issues that have taken on new importance in the aftermath of the worst oil spill in the U.S. history.

In addition, Lubchenco said NOAA was not asked specifically if it had the resources to oversee the environmental reviews associated with additional drilling. In fact, Lubchenco said earlier at the meeting, “We are seriously hampered by lack of resources to do many of these [reviews], especially under the time frames that are required.” Under the law, there is a 30-day time frame for certain environmental reviews.

At the end of today’s meeting, the commission heard testimony from two officials with the American Petroleum Institute — the oil and gas industry’s most powerful trade group. API has authored a number of safety standards for the industry, on which MMS relied too heavily in overseeing offshore drilling, administration officials have acknowledged. John Modine, director of global industry services at API, said the industry is working to improve its safety record, but defended the current system.

“[I]t is also important to recognize the strengths of a system that has helped avoid incidents. This system – expanded and improved in many ways over the years – provides a solid foundation to build on for all who want to enhance safety,” he said.