WASHINGTON – Ties between offshore oil and gas companies and the agency that regulates them persist, nearly a year after the Obama administration announced an overhaul of ethics rules to deter such cozy relationships, documents obtained by The Associated Press show.
About 1 of every 5 employees involved in offshore inspections in the Gulf of Mexico has been recused from some duties because they could come in contact with a family member or friend working for a company they regulate.
Ten recent hires are 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.
The numbers come from recusal forms filed with the Bureau of Ocean Energy Management, Enforcement and Regulation. Roiled by a major offshore oil spill and a series of internal investigations, the agency instituted a new ethics policy last year designed 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 BOEMRE 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 data also underscore the challenges the agency faces as it works to hire more inspectors in a region where offshore drilling is part of the culture and where expertise and training is often found in the private sector.
"The conflicts of interest addressed by this policy are not crimes or badges of shame," said Bromwich in a statement provided to 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 recusals 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," said Sen. Ron Wyden, D-Ore., in an interview with AP after he had reviewed the recusals.
In the Lafayette, La., office, nearly 35 percent of inspectors have been recused 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.
Most of those recent hires came from Island Operating Co., a firm that was the focus of an April 2010 Inspector General report about the Lake Charles office, and was mentioned in another IG report focusing on the Lake Jackson, Texas office. The internal watchdog found 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 that it did on occasion take inspectors to informal lunches when they came to perform inspections. But that practice — common throughout the industry — has stopped at Island Operating Co.
The lunches, spokesman Brad Deutser said in a statement, were "done as part of our commitment to become a safer, more compliant company."
When 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," said Scott Amey of the Project on Government Oversight, 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 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 with 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 a culture where acceptance of 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," said Wyden. "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 Florida Democratic Sen. Bill Nelson. "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.
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Follow Dina Cappiello on Twitter: (at)dinacappiello
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