After spill, offshore enforcement remains murky

WASHINGTON – Nearly three years after the Deepwater Horizon disaster, the government agency that oversees offshore energy development still uses an opaque and unwieldy enforcement process that appears to give companies more leverage than the regulators policing them.

The system is drawing fresh criticism in the wake of last month’s fatal fire at a Gulf of Mexico production platform that killed three workers and injured others.

Government watchdogs, environmentalists and worker advocates say the Bureau of Safety and Environmental Enforcement isn’t doing enough to advance new safety rules or enforce the ones already on the books.

Visible and aggressive enforcement is necessary to deter unsafe operators, said Bob Deans, an associate director at the Natural Resources Defense Council.

“Unless and until the authorities demonstrate that they’re willing to take decisive action, there are unfortunately companies that are going to cut corners, that are going to skirt the rules, that are going to put their workers and our resources at needless risk,” Deans said. “We can’t take the risk out of this; it’s an inherently dangerous activity. But we have to do it in the safest possible way.”

Despite broad changes designed to boost safety since the 2010 Gulf oil spill, the offshore enforcement process hasn’t gotten a major rewrite. It’s happening much the same way it did before the Deepwater Horizon disaster, with inspectors conducting mostly scheduled reviews of offshore platforms and drilling rigs and issuing “incidents of non-compliance” for violations they document while at the sites.

Those citations begin a long process that can lead to civil penalties. But it rarely goes that far.

‘Rule-breaking pays’

Under the regulatory agency’s long-standing approach, companies have at least four chances to appeal the citations and any proposed penalties.

And while many notices involve relatively minor, low-risk violations and aren’t referred for civil penalties, a company that takes every chance it has to challenge the agency can evade a fine for at least 270 days. A bureau spokesman said it usually takes four to 11 months for a civil penalty to be paid and a case closed.

Few violations actually result in civil penalties. For instance, while bureau inspectors cited 2,745 violations by offshore operators during fiscal 2012, companies were forced to pay $1.8 million in civil penalties in 28 cases during that same time frame.

Matt Dundas, acting campaign director with the conservation group Oceana, noted that in 2009, just 87 of the 2,298 citations were referred to the civil penalty process.

The end result was “$2.6 million in fines, or less than it cost to operate the Deepwater Horizon rig for three days,” Dundas said. “It is easy to see why violations are so frequent. As long as rule-breaking pays, new safety regulations cannot protect us from a spill.”

The bureau had cited Houston-based Black Elk Energy, which owned the platform where the fatal fire erupted Nov. 16, for 315 violations in the past two years. Regulators ordered the company to pay a $307,000 fine in connection with one of those violations – failure to test a safety valve every six months as mandated. When it finally was tested, the valve was found to be leaking excessively, and the company took another 117 days to fix the problem.

Civil penalties are capped at $40,000 per incident per day, which critics consider a slap on the wrist for companies that spend up to $1 million daily just to rent a drilling rig. The safety bureau can raise the cap to keep up with inflation every three years, but bigger increases would require congressional action.

Like previous regulators, safety bureau Director James Watson said he wants the cap raised so civil penalties carry more weight.

“We continue to call on Congress to raise the cap on civil penalties so that the fines are a more effective tool,” he said.

‘Curtain of secrecy’

Only one company has ever been kicked out of the Gulf of Mexico. Houston-based BT Operating Co. was barred for 10 years beginning in June 2008, after it racked up violations, failed to submit a requested “performance improvement plan” to regulators and didn’t have enough money to decommission its old facilities.

The agency last month warned Black Elk that if it doesn’t improve the safety of its operations and come up with a comprehensive improvement plan by Dec. 15, it could be kicked out of the Gulf, too.

Watson emphasized that the current enforcement process doesn’t let companies stall on fixing problems. Once a citation has been issued, companies generally have 14 days to certify that they have corrected the problem even if they appeal.

That’s tougher than at the Occupational Safety and Health Administration, where years can pass while a matter is pending and companies aren’t obligated to fix the underlying hazard.

“The (citation) process … requires companies to take immediate action to correct the violation, or in cases where there are systematic problems, requires companies to develop a comprehensive correction plan,” Watson said.

The safety bureau is evaluating whether it should change its enforcement system.

Lawmakers also are looking into the issue. Rep. Ed Markey, D-Mass., the ranking member on the House Natural Resources Committee, said he has directed his staff to “look into the offshore drilling violations and enforcement structure and process.”

Most offshore enforcement happens out of the limelight. Incidents of non-compliance aren’t routinely made public and generally aren’t accessible at the safety bureau’s website. While a broad list of citations by category is available quarterly, the information doesn’t name individual companies. The most recent listing online now is from March.

“The public is entitled to understand when a company is violating the law and what action is being taken to correct that,” Deans said. “We can’t have an effective enforcement process behind a curtain of secrecy.”

Publicize violations

Rena Steinzor, a University of Maryland law professor with expertise in public health and environmental regulation, said public enforcement records would encourage good behavior.

“The whole system is based on deterrent,” Steinzor said. “If you don’t publicize (enforcement), if you don’t make it systematic, they think they’re never going to hear from you.”

Some other federal agencies do a better job. The Mine Safety and Health Administration – working to clear a backlog of 17,000 enforcement appeals – makes its records available online. Visitors to the agency’s website can search by mine operator or name and view inspections, accidents and penalties.

The Environmental Protection Agency enforces pollution mandates vigorously and makes them public, said former administrator William Reilly.

“I see no reason not to publicize these violations,” said Reilly, who led a presidential commission that investigated the Deepwater Horizon disaster.

‘Out of public view’

Plenty of agencies, though, keep enforcement information out of view, said Scott Amey, general counsel with the Project on Government Oversight.

“Government agencies don’t readily make them available,” Amey said. “I’m not so sure the government sees the benefit in releasing such information, and the corporations . . . are extremely happy to keep them out of public view.”

Safety Bureau spokesman David Smith said it’s working to make compliance information more accessible.

Watson said some technical barriers impede conversion of paper citations into an electronic public database, but also suggested evaluation of companies’ safety records should be more holistic than drawing conclusions from citations alone.

“I’m a little concerned that someone would measure risk or performance or draw conclusions if all they have” is the citations, Watson said. “To me, that’s just a (single) piece of information.”