Minerals Management Service-Corporate Code of Conduct

History

The Bureau of Ocean Energy Management, Regulation and Enforcement formally known as the Minerals Management Service (MMS), is an agency within the United States Department of the Interior (DOI) that is headquartered in Washington, DC and is responsible for managing the ocean energy and mineral resources on the Outer Continental Shelf. The MMS oversees two operations, namely Offshore Energy and Minerals Management (OEMM) and Minerals Revenue Management (MRM). In 1982, Congress passed the Federal Oil and Gas Royalty Management Act. In response to the creation of the new legislation, then Secretary of the Interior James Watt created the MMS as the federal bureau responsible for managing the collection of revenue generated from programs including: oil and gas, coal, metals, potash, and renewable energy resources, as well as oversight of energy companies to ensure they are following the regulations of protecting the safety of their workers, as well as the environment. The MMS collects approximately $13 billion annually making it one of largest revenue sources for the Federal Government.

The jurisdiction of MMS is limited generally to a region of the Outer Continental Shelf (OCS) that starts three miles from the coast and extends up to 200 nautical miles from the cost. There are two laws that establish this range: the United Nations Convention on the Law of the Sea (UNCLOS) Treaty and the Outer Continental Shelf Lands Act of 1953.

The UNCLOS Treaty is an international agreement that defines the Exclusive Economic Zone (EEZ), being a country’s sea zone territory that extends out to 200 nautical miles from its coast thus establishing a nation’s coastal rights over the exploration and usage of marine resources.
Although the United States never ratified UNCLOS, it is a signatory to the treaty and therefore it must adhere to the spirit of the agreement. As such the jurisdiction of the United States, including MMS is limited to the parameters set forth in the treaty.
The Outer Continental Shelf Lands Act of 1953 establishes the boundary between state and federal control over coastal waters. States are given control of the submerged lands that extend up to three miles from their coastline. The federal government controls of all areas that extend beyond the three mile point to the end of the EEZ zone.
On May 19, 2010, Secretary of the Interior Ken Salazar, signed a Secretarial Order that resulted in the restructuring of MMS in response to ongoing accusations of conflict of interest in the organization that regulates and oversees offshore energy operations. The newly structured MMS will have three divisions: the Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement, and the Office of Natural Resource Revenue.
The changes Salazar announced are the latest in a series of reforms to MMS that began in January 2009. Those reforms include: the establishment of new ethics standards; termination of the controversial royalty-in-kind program; balancing of the agency’s mandate to include offshore wind and renewable energy production; implementing recommendations of the Inspector General and independent reviewers; directing an independent Marine Board review of MMS’s inspection program for offshore facilities; cancelling proposed offshore lease sales in Bristol Bay and the Arctic Ocean; and establishing a clear, orderly, and science-based process for determining which areas on the Outer Continental Shelf may be appropriate for oil and gas development.
Code of Conduct Policy
The purpose of the MMS Interim Policy Document (IPD) for “Integrity and Code of Conduct for Science, Scientific Assessment, and Other Similar Technical Activities” was created to provide guidelines ensuring accuracy and integrity in all scientific activities conducted in the department. Essentially, the policy would establish a code of scientific conduct, ethical standards for all employees who conduct or supervise scientific activities, or who compile and translate scientific information into formats used by the departmental management. It would establish a process for dealing with alleged violations of the scientific conduct code, such as conflict of interest or scientific misconduct. Scientific misconduct is defined as ‘fabrication, falsification, or plagiarism in proposing, performing, or reviewing research, or in reporting research result’[i].

All MMS personnel ‘decision makers, employees, and external participants must comply with the Federal statutes, Executive Orders, Presidential Memoranda, Office of Government Ethics and Office of Personnel Management regulations and DOI regulations and policies’ indentified in the code of conduct.

Misconduct Behavior

As a result of April 20, 2010 disaster on the Deepwater Horizon operated by BP the Mineral Management Service has come under heavy fire for mismanagement, questionable conduct and cozy relationships with industry officials. Through shocking revelations and investigation conducted by the Office of the Inspector General exposed the ongoing failures of the MMS, which is riddled with illegal drug use, bribery and falsification of inspection reports. The IG report cited ethical lapses, specifically within the MMS Lake Charles, LA district that took place prior to 2007[ii]. It should be noted that the conduct highlighted in the IG report is dated, but only exemplifies that there was much needed change to the ethical culture of the MMS agency. The report highlights some of the following reprehensible activities engaged by MMS inspectors. Those being illegal drug use, inappropriate use of government e-mail and falsification of inspection forms. According to one confidential source, who claimed that an MMS inspector was a known drug user, that used both cocaine and crystal meth. This allegation was later confirmed by the MMS inspector, who claimed that he never used drugs during working hours but admitted that might have been under the influence of drugs on occasion while at work due to the prior night’s usage. Another instance related to the discovery of pornographic, as well as other inappropriate material received or forwarded from MMS government e-mail accounts[iii].

The major offense was the discovery of the falsification of inspection reports. Federal investigators found that oil company employees filled in maintenance test documents with pencil and the MMS inspectors would finalize the reports by tracing over the content in ink. In response to the IG report, Center for Biological Diversity Executive Director Kieran Suckling stated “MMS safety inspectors taking drugs on oil platform is bad enough, but falsifying reports and allowing the industry to ghostwrite their inspections is completely outrageous”[iv].

Though one point echoed through the IG report was the fact that former MMS employees are currently working in the oil industry gives them the ability to directly influence policies that would create a favorable outcome to the offshore drilling and energy industry. Acting IG Mary Kendall wrote to Interior Secretary Ken Salazar that of “greatest concern” to her “is the environment in which these inspectors operate, particularly the ease with which they move between industry and government”. That the fraternization discovered involving individuals that worked for either the government or industry was often due to them knowing one another since childhood[v].

One of the most troubling facts regarding the MMS agency is there extensive history of suppressing science and underestimating environmental impacts, so to secure the necessary approvals of oil industry projects. The MMS’s gross negligence of not performing environment impact assessments, and manipulating scientific results all in the name of catering to the private interests that they are suppose to be regulating [vi].

Recommendations

The purpose of the reorganization of the MMS, that divided up the former agencies responsibilities and functions into three new offices; the Office of Natural Resources Revenue (ONRR), the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE) was to resolve conflicting issues among the divisions of resource management, safety and environmental oversight, and revenue collections all functions performed by the MMS.
The creation of the Investigation and Review Unit within the Department of the Interior allows for prompt and decisive action related to misconduct or unethical behavior, as well as assisting in the overseeing and reviewing the new bureaus regulatory and enforcement programs[vii]. In addition to the formation of the IRU unit a new policy was established regarding the ‘Interference with the Performance of Official Duties and Potential Conflicts of Interest’. The new standards in the policy related to (1) reporting harassment, intimidation, or improper influence by industry personnel with regarding to performing your official duties; (2) the reporting of potential conflict of interest; (3) the avoidance of the loss of impartiality and (4) mandatory recusal of employees due to potential conflict of interest, including a two year prohibition on agency employees from performing any governmental function relating to a former employer or employee[viii].
Another genuine improvement that would facilitate progressive development would be the implementation of a program structure for training and professional development, management support and enforcement. The programs would build stronger representation at all levels, therefore improving intra-agency communication, as well as promoting consistency and efficiency, along with providing inspectors better front line support. In addition, compiling a comprehensive and current policy and industry practices handbook designed to assist inspectors perform their inspections, as well as identify critical operational practices. Evaluate the advantages of conducting two team inspections, as well as benefits of obtaining electronic access to real time data systems on offshore platforms, such as surveillance cameras, monitoring systems, and other automated controls as part of their oversight support.
As for the training and professional area develop bureau wide accreditation programs for inspections, consider partnering with national training centers to help design an oil and gas inspection certification course relevant to offshore inspections. Ensure that a standardize training program includes all pertinent regulations, policies and procedures and that annual training seminars provide inspectors with up-to-date industry developments. Develop an individual development plan for inspectors designed to achieve career advancement strategies. Such strategic planning would promote sound succession planning and foster employee satisfaction.
The changes concerning management support should ensure that managers and inspectors have proper training with emphasis on a strong safety culture. Together with the enhancement of clear rules of engagement for operations that are transparent to all parties, including agencies and industry personnel would further improve the technological infrastructure thus vastly improving the safety and enforcement programs.
The recommendations surrounding the regulatory and civil enforcement system should focus on reevaluating the full range of enforcement measures, including civil penalties, lease suspensions and cancellations to determine whether the actions deter violations. Additionally, evaluate the civil penalty process to determine if legislative or rulemaking is deemed sufficient in regards to tying penalties to violations. Furthermore review the use of shut-in authority to ensure it is an appropriate and effective measure. On top of the suggested changes the following enhancements should be explored working in cooperation with Congress, if necessary to establish a whistleblower protection for individuals employed in the private sector of the oil and gas industry who disclosed safety or environmental violations. As well as, changing the approval process related to authorizing whether or not an offshore platform is returned back online by limiting who has approval say-so, as well as creating a system for tracking approvals and restricting access to only those individuals who have approval authority.
In conclusion, it is critically important that the addressed points continue in the efforts towards reform to help restore public trust and restore credibility within the agency to be able to regulate and oversee the oil and gas industry.
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[i] Oynes, Chris Associate Director for Offshore Energy and Minerals Management Subject: Offshore Minerals Management –Integrity and Code of Conduct for Science, Scientific Assessment, and Other Similar Technical Activities IPD No: 2010-01

[ii] Eilperin, Juliet and Higham, Scott Washington Post : How MMS’s partnership with industry led to failure (August 24, 2010)

[iii] Kendall, Mary L. Acting Inspector General for the DOI Subject: Investigative Report- Island Operating Company (May 24, 2010)

[iv]Williams, Jean Environmental Policy Examiner See http://www.examiner.com/environmental-policy-in-national/mms-ethics-violations-included-drugs-bribery-and-cheating

[v]Kendall, Mary L. Acting Inspector General for the DOI See http://oversight.house.gov/images/stories/Hearings/Committee_on_Oversight/2010/072210_MMS_Reorganization/TESTIMONY-Kendall.pdf

[vi] See http://www.ucsusa.org/scientific_integrity/abuses_of_science/mms-badscience.html

[vii] Kendall, Mary L. Acting Inspector General for the DOI See http://oversight.house.gov/images/stories/Hearings/Committee_on_Oversight/2010/072210_MMS_Reorganization/TESTIMONY-Kendall.pdf

[viii] OCS Safety Oversight Board’s Implementation Report to the Secretary of the Interior Ken Salazar ( Report Date September 4, 2010) See http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=43676