Oil and Gas Management: Stronger Leadership Commitment Needed at Interior to Improve Offshore Oversight and Internal Management
Released: 2017-03-21T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: On April 20, 2010, the Deepwater Horizon drilling rig exploded in the Gulf of Mexico. The incident raised questions about Interior's oversight of offshore oil and gas activities. In response, in May 2010, Interior reorganized its offshore oil and gas management activities, and in October 2011, created BSEE to among other things, develop regulations, conduct inspections, and take enforcement actions. In February 2011, GAO added the management of federal oil and gas resources to its High-Risk List. In December 2015, BSEE issued a strategic plan outlining initiatives to improve offshore safety and environmental oversight as well as its internal management.

This report examines what efforts BSEE leadership has made in implementing key strategic initiatives to improve its (1) offshore safety and environmental oversight and (2) internal management. GAO reviewed laws, regulations, policies, and other documents related to the development of BSEE's strategic initiatives. GAO also interviewed BSEE officials.

section_title: What GAO Found
paragraphs: The Department of the Interior's (Interior) Bureau of Safety and Environmental Enforcement (BSEE) leadership has started several key strategic initiatives to improve its offshore safety and environmental oversight, but its limited efforts to obtain and incorporate input from within the bureau have hindered its progress. For example, to supplement its mandatory annual regulatory compliance inspections, in 2012, BSEE leadership began developing a risk-based inspection initiative to identify high-risk production facilities and assess their safety systems and management controls. During pilot testing in 2016, several deficiencies—including the usefulness of its facility risk-assessment model and unclear inspection protocols—caused BSEE to halt the pilot. According to bureau officials, during the development of the initiative, BSEE headquarters did not effectively obtain and incorporate input from regional personnel with long-standing experience in previous risk-based inspection efforts, who could have identified deficiencies earlier in the process. GAO previously found that when implementing large-scale management initiatives a key practice is involving employees to obtain their ideas by incorporating their feedback into new policies and procedures. Instead, BSEE leadership appears to have excluded the input of regional personnel by, for example, not incorporating input beyond the risk-assessment tool when selecting the first pilot facility, even though it was prescribed to do so in the bureau's inspection planning methodology. This undercut the pilot effort, raising questions about whether the bureau's leadership has the commitment necessary to successfully implement its risk-based program. Without higher level leadership within Interior establishing a mechanism for BSEE to obtain and incorporate input from personnel within the bureau, BSEE's risk-based inspection initiative could face continued delays.

Similarly, since 2013, BSEE leadership has started several key strategic initiatives to improve its internal management, but none have been successfully implemented, in part, because of limited leadership commitment. For example, BSEE's leadership identified the importance of developing performance measures in its 2012-2015 strategic plan. BSEE began one of three attempts to develop performance measures in July 2014 by hiring a contractor to develop measures, but the bureau terminated this contract in January 2015 after determining a need to complete its internal reorganization before developing such measures. A second effort to develop performance measures started in December 2015, using the same consultant, and yielded 12 performance measures in March 2016, but BSEE did not implement them, in part, because data did not exist to use the measures. By the time BSEE received this consultant's report, it had already begun a third effort to internally develop performance measures; as of November 2016 had identified 17 draft performance measures, but BSEE leadership missed repeated deadlines to review them. BSEE officials told GAO that after leadership approval, the bureau plans to pilot these measures and develop others. BSEE leadership has not demonstrated continuing oversight and accountability for implementing internal management initiatives, as evidenced by its limited progress implementing key strategic initiatives. Without higher-level oversight within Interior addressing leadership commitment deficiencies within BSEE, the bureau is unlikely to succeed in implementing internal management initiatives.

section_title: What GAO Recommends
paragraphs: GAO is making four recommendations, including that higher-level leadership within Interior (1) establish a mechanism for BSEE management to obtain and incorporate input from bureau personnel that can affect the bureau's ability to achieve its objectives and (2) address leadership commitment deficiencies within BSEE, including by implementing internal management initiatives and ongoing strategic initiatives in a timely manner. Interior neither agreed nor disagreed with our recommendations.

section_title: Letter
paragraphs: On April 20, 2010, the Deepwater Horizon drilling rig exploded in the Gulf  of Mexico, resulting in 11 deaths, serious injuries, and the largest marine  oil spill in the history of the United States. The Deepwater Horizon  incident raised questions about the Department of the Interior’s (Interior)  oversight of offshore oil and gas activities in the Gulf of Mexico and led to  investigations by Interior’s Office of Inspector General (IG) and Interior’s  Outer Continental Shelf (OCS) Safety Oversight Board. In response to  the Deepwater Horizon incident, Interior initiated a number of policy  reforms intended to strengthen its oversight of offshore oil and gas  production on the OCS. On May 19, 2010, Interior reorganized the  Minerals Management Service (MMS)—the agency responsible for  managing oil and gas activities in federal waters and collecting revenues  from oil and gas development on all federal lands and waters—to improve  the management, oversight, and accountability of activities on the OCS.  As an interim step, Interior restructured MMS into the Bureau of Ocean  Energy, Management, Regulation and Enforcement (BOEMRE),  responsible for offshore oil and gas management and the Office of  Natural Resources Revenue responsible for revenue collections. On  October 1, 2011, Interior completed the reorganization of MMS by  splitting BOEMRE into the Bureau of Ocean Energy Management  (BOEM), which is responsible for leasing and resource management, and  the Bureau of Safety and Environmental Enforcement (BSEE), which is  responsible for reviewing drilling permits, inspecting offshore drilling rigs  and production platforms, and developing regulations and standards for  offshore drilling.

Over the past several years, we have issued a number of reports  identifying Interior’s challenges in managing federal oil and gas  resources. The balance of our work has shown that management of  federal oil and gas resources was a high risk area and we added it to the  High Risk List in 2011. We identified challenges in Interior’s  management of oil and gas on leased federal lands and waters. We found  that Interior (1) did not have reasonable assurance that it was collecting  its share of revenue from oil and gas produced on federal lands and  waters; (2) continued to experience problems hiring, training, and  retaining sufficient staff to provide oversight and management of oil and  gas operations on federal lands and waters; and (3) was undertaking a  major challenging reorganization of its oversight of both its offshore oil  and gas management and revenue collection functions.

In February 2016, we reported that BSEE’s ongoing organizational  restructuring—which it initiated in October 2013 to develop national  programs—had not addressed long-standing deficiencies to its  investigative, environmental compliance, and enforcement capabilities.  To enhance its ability to effectively oversee offshore oil and gas  development, we recommended that the Secretary of the Interior direct  the Director of BSEE to take nine actions, including that BSEE complete  policies outlining the responsibilities of its investigative, environmental  compliance, and enforcement programs and update and develop  procedures to guide them. Interior neither agreed nor disagreed with our  recommendations. Simultaneous to our assessment of BSEE’s  organizational restructuring, bureau leadership was developing its Fiscal  Year 2016-2019 Strategic Plan, which identifies key initiatives to improve  its safety and environmental oversight as well as its internal management.  Some of these key strategic initiatives have been under way for several  years.

In light of the concerns we identified during our review of BSEE’s  organizational restructuring, we initiated this review under the authority of  the Comptroller General of the United States. This report examines  efforts BSEE leadership has made in implementing key strategic  initiatives to improve its (1) safety and environmental oversight and (2)  internal management.

To identify progress BSEE leadership has made in implementing key  strategic initiatives to improve its (1) safety and environmental oversight  and (2) internal management, we reviewed BSEE strategic planning and  budget justification documentation as well as interviewed BSEE  leadership to identify key bureau strategic initiatives. We then reviewed BSEE’s strategic initiatives and focused on those that corresponded to  our objectives and were topics that we have not reviewed in the last 2  years. For each initiative, we collected and analyzed BSEE  documentation of their purpose and history—including budget  justifications, project plans, and contracts, among others—to determine  their objectives, time frames, and status. We also interviewed BSEE  officials at headquarters responsible for bureau and program leadership  as well as officials in the regional and district offices responsible for  implementing BSEE oversight activities. For each initiative, we analyzed  any progress made and compared BSEE practices for implementing its  initiatives to bureau criteria—such as strategic plans and initiative goals— as well as Standards for Internal Control in the Federal Government.

We conducted this performance audit from March 2016 to March 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: BSEE’s mission is to promote safety, protect the environment, and  conserve resources offshore through vigorous regulatory oversight and  enforcement. BSEE’s headquarters—located in Washington, D.C., and  Sterling, Virginia—is responsible for setting national program policy to  meet the bureau’s mission. BSEE’s three regional offices—the Gulf of  Mexico regional office in New Orleans, Louisiana; the Pacific regional  office in Camarillo, California; and the Alaska regional office in  Anchorage, Alaska—are responsible for executing oversight of oil and  gas activities, such as conducting inspections of all facilities on the OCS.  The five district offices that the Gulf of Mexico regional office oversees are the Houma, Louisiana; Lake Jackson, Texas; Lafayette, Louisiana;  Lake Charles, Louisiana; and New Orleans, Louisiana district offices.

The Outer Continental Shelf Lands Act of 1953, as amended, (OCSLA)  requires Interior to inspect each offshore oil and gas facility at least once  per year. OCSLA also authorizes Interior to conduct periodic  unscheduled—unannounced—inspections of these facilities. BSEE  carries out these inspections on behalf of the Secretary throughout  America’s 1.7 billion acres of the OCS. BSEE’s Office of Offshore  Regulatory Programs is responsible for overseeing the bureau’s national  inspection program, which is carried out by the bureau’s regional offices.  During inspections, BSEE inspectors scrutinize all safety system  components designed to prevent or ameliorate blowouts, fires, spillages,  or other major accidents. Additionally, inspectors check for compliance  with current plans, lease terms, and appropriate stipulations. During  inspections, BSEE inspectors check for installation, operation, and  maintenance of all appropriate safety and antipollution devices. They  perform the inspections, in part, by using a checklist derived from  regulated safety and environmental requirements. If an inspector  identifies a regulatory violation at an offshore facility, BSEE issues a  citation to the operator known as an incident of noncompliance (INC) in  response to operator violations of safety or environmental standards. An  INC may be issued in the form of (1) a warning, (2) an order to shut down  a particular component of the facility (when it can be shut down without  affecting the overall safety of the facility or operations), or (3) an order to  shut down an entire drilling rig or production platform in cases when the  violation could result in serious consequences to the environment or  human health and safety, such as a fire or spill. Operators generally  have 20 days to correct the violation and notify Interior that the violation  was corrected.

BSEE is responsible for ensuring compliance with OCSLA and provisions  of other federal laws, including the National Environmental Policy Act  (NEPA). BSEE’s Environmental Compliance Division establishes  national strategic goals, programs, and procedures to increase the  accuracy, effectiveness, and consistency of all bureau environmental  compliance policies and initiatives. BSEE’s Office of Environmental  Compliance, located in the Gulf of Mexico regional office, is staffed by  environmental engineers, scientists, and specialists who are responsible  for BSEE’s NEPA compliance program, as well as field and office  environmental compliance verification.

We have previously reported on Interior’s challenges with managing  federal oil and gas resources. In September 2008 and July 2009, we  found shortcomings in Interior’s ability to ensure that royalty payment data  were reasonable and complete. In addition, in March 2010, we found  that Interior’s policies and practices did not provide reasonable assurance  that oil and gas produced from federal leases was being accurately  measured and that Interior experienced challenges hiring, training, and  retaining qualified staff to provide oversight and management of oil and  gas operations on federal lands and waters. Further, we have reported  that organizational transformations are not simple endeavors and require  the concentrated efforts of both leaders and employees to realize  intended synergies and accomplish new organizational goals. We were  also concerned about Interior’s ability to balance continued delivery of  services with transformational activities in view of the department’s history  of management problems and challenges in the human capital area.

In December 2015, BSEE issued its Fiscal Year 2016–2019 Strategic  Plan. BSEE’s strategic plan identifies strategic goals to improve its  operations—including safety and environmental oversight—as well as its  internal management. BSEE’s key strategic initiatives to improve safety  and environmental oversight include developing a risk-based inspections  program and promoting environmental stewardship. BSEE’s key strategic  initiatives to improve its internal management include enhancing decision  making as well as communication and transparency.

section_title: BSEE Leadership Has Started Several Initiatives to Improve the Bureau’s Safety and Environmental Oversight Capabilities but Its Actions Have Hindered Progress
paragraphs: BSEE leadership has started several initiatives to improve its safety and  environmental oversight capabilities but its limited efforts to obtain and  incorporate input from within the bureau have hindered its progress.  Since 2012, BSEE has sought to augment its annual inspection program  with a risk-based inspection program, but limited efforts to obtain and  incorporate input from experienced regional personnel have hindered  BSEE’s ability to develop and implement the risk-based program.  Additionally, in 2016, BSEE conducted an environmental stewardship  initiative comprised of two simultaneous environmental risk reduction  efforts, but these efforts were overlapping, fragmented, and  uncoordinated, which reduced the effectiveness of the initiative and  hindered the implementation of identified improvements.
subsections: section_title: Limited Efforts to Obtain and Incorporate Input from Regional Personnel Hindered the Development and Implementation of Risk-Based Inspection Initiative
paragraphs: Since it was established as a separate bureau in 2011, BSEE leadership  has continued an initiative begun by its predecessor to transition the  bureau’s inspection program to a risk-based approach. In 2012, BSEE  leadership started a new initiative that included the development of a risk  model and an approach for inspecting production facilities based on the  risk they pose. However, BSEE leadership’s limited efforts to obtain and  incorporate input from regional staff and management during  development of the program led to poor pilot results. As a result, BSEE  has changed the focus of the program and reduced expectations for its  initial approach to risk-based inspections.
subsections: section_title: BSEE Leadership Began a New Initiative to Develop a Risk-Based Inspection Program, but the Initial Approach Had Several Deficiencies
paragraphs: Interior’s efforts to conduct oversight based on risk date back to the  1990s. In 1998, MMS, BSEE’s predecessor organization, contracted for  a study from Carnegie Mellon University to develop a model to target  inspections of offshore facilities based on risk. MMS did not implement  the model at the time because it was too complex, according to BSEE  officials. In 2009, one year prior to the Deepwater Horizon incident and  the dissolution of the MMS in 2010, the Gulf of Mexico Regional Office  piloted a risk-based inspection strategy in the Houma, Louisiana and  Lake Jackson, Texas districts that regional management recommended  for immediate implementation. However, BSEE officials told us that the  2010 Deepwater Horizon incident and Interior’s 2010 Safety and  Environmental Management System (SEMS) regulation prompted the  bureau to reconsider approaches to conducting risk-based inspections.  Since 2011, when it was established as the successor to MMS, BSEE  has highlighted in every Interior budget justification for the bureau its  ongoing efforts to identify and increase oversight of the highest-risk  facilities and operators. Additionally, BSEE affirmed its intentions in its  2016-2019 Strategic Plan to develop this risk-based inspection capability  as part of its National Inspection Program.

Beginning in 2012, BSEE began an initiative to develop an approach for  conducting inspections of offshore facilities based on the level of risks  they posed. Specifically, BSEE engaged Argonne National Laboratory  (Argonne) to develop a quantitative model to serve as the foundation of  BSEE’s risk-based inspection capability. The model ranks offshore  production platforms according to five indicator factors: (1) whether the  facility is a major complex,  (2) whether the facility’s slot count is 15 or  greater, (3) the number of inspections resulting in an INC in the previous  year, (4) whether the facility experienced an incident—such as an  explosion, fire, fatality, or injury—in the previous year, and (5) whether the  facility experienced an incident in the previous 2 years. BSEE intended  to use risk-based inspections to augment the required annual inspections  by using the results of the Argonne model to identify facilities for  supplemental multi-day inspections focusing on each facility’s risk  management strategies. According to 2015 BSEE documentation on its  risk-based approach, the bureau planned to eventually shift inspection  resources from lower-risk facilities to higher-risk facilities and transition  the overall inspection program from annual compliance inspections to a  risk-based approach to more effectively use BSEE’s available inspection  resources.

However, to date, BSEE has not successfully implemented this  supplemental risk-based inspection capability in the 5 years since taking  over the initiative from MMS. BSEE leadership led the development of the  risk-based program; however, according to officials, leadership developed  the program with little input from regional personnel. Officials in the Gulf  of Mexico region with knowledge and experience conducting previous  risk-based inspection efforts told us they were not apprised of key  program products until those products were well under development and  were given little opportunity to provide comment on them. As a result,  BSEE first identified deficiencies with its risk-based program during pilot  testing in 2015, rather than working closely with experienced regional  personnel earlier in the process to obtain their input to identify potential  deficiencies and remediate them during program development. For  example, BSEE identified deficiencies in three components of its  proposed inspection program: (1) an underlying risk model for ranking all  production platforms, (2) the annual inspection planning methodology,  and (3) the facility-specific inspection protocol.

Risk Model. BSEE regional officials who have longstanding  experience evaluating offshore risk told us that the model is not  sophisticated enough to identify platforms for risk-based inspection  planning, and that they could have identified its deficiencies earlier in  the program development process. Specifically, they said that the  model does not contain sufficient information to target facilities for  additional risk-based inspections. For example, Argonne’s model does  not incorporate risk factors such as a facility’s change in ownership  status or operator bankruptcy—factors that BSEE regional officials  told us can be correlated with higher risk, as operators tend to reduce  expenditures on maintenance at these times. Additionally, the model  does not account for the severity of incidents of noncompliance—for  example, whether an incident results in shutting down a facility or a  warning—or the quantity assessed—such as whether a facility was  cited many times or once in a single inspection. Some BSEE regional  officials considered these types of operator performance and risk- related intelligence to be as, or more, important for identifying high- risk facilities than the five factors assessed by the model.

BSEE headquarters worked directly with Argonne on the risk model,  and although headquarters officials said they included regional  personnel, they did not provide us with evidence of efforts they made  to include those personnel or obtain their input on the risk model’s  initial development. BSEE headquarters officials told us that Argonne  reached out periodically to senior regional personnel, but they did not  specify when the laboratory conducted such outreach, what  contributions regional personnel made, or whether regional personnel  raised concerns during Argonne’s outreach. Conversely, BSEE  regional personnel told us that BSEE headquarters did not inform  them of the development of a risk model or ask them for input leading  up to the pilot.

Inspection Planning Methodology. In 2015, BSEE outlined an  inspection planning methodology founded on Argonne’s quantitative  risk model that describes how BSEE would target and plan  supplemental safety inspections for offshore production platforms.  BSEE’s inspection planning methodology prescribes the use of two  additional categories of information, alongside Argonne’s model, to  select production platforms for supplemental risk-based inspections.  Specifically, it states that BSEE would use the model’s ranking to  identify the 20 percent of platforms that pose the highest risk. BSEE  would then consider information on operator performance—reported  hydrocarbon releases, number of incidents of noncompliance  assessed in each category, and the quality of SEMS audit reports— and other risk-related intelligence—including proximity to shore,  production rates, and inspector assessment of overall safety—to  further narrow the selection of high-risk facilities.

BSEE planned to test its inspection planning methodology by  selecting and conducting five pilot inspections in late 2015 and early  2016. According to BSEE’s program deployment and implementation  plan, the bureau applied Argonne’s model to identify the pilot  inspections in the Lafayette district. However, although BSEE’s  inspection planning methodology prescribed the incorporation of  additional information on operator performance and other risk-related  intelligence in its selection of pilot facilities, a BSEE regional official  told us that during the Risk Based Oversight Team’s discussions,  BSEE leadership relied heavily on the risk model alone. Furthermore,  although regional personnel participated on the Risk Based Oversight  Team when it selected the pilots, a regional official told us they were  largely sidelined during the discussions. As a result, regional officials  told us the pilot selections were not among the highest risk facilities.  For example, three of the top five facilities BSEE selected were idle  and not producing and therefore were not inspected as part of the  pilot. By going against BSEE’s inspection planning methodology,  BSEE leadership appears to have excluded the input of regional  personnel, undercutting the pilot effort and raising questions about  whether the bureau’s leadership has the commitment necessary to  enable the successful implementation of its risk-based program.

Inspection Protocol. BSEE’s inspection planning methodology also  specified that the Risk-Based Oversight Team should develop an  inspection protocol in advance of conducting risk-based inspections  that is tailored to each facility and describes the roles and  responsibilities of personnel, including what components and safety  systems will be reviewed or tested. Additionally, BSEE’s program  methodology describes the protocol for deliverables and the  dissemination of the inspection results.

However, BSEE did not establish a clear pilot inspection protocol for  the inspection team and operator for the first pilot, which led to  confusion for BSEE personnel and the operator. Specifically, BSEE  officials involved in the inspection told us that headquarters did not  inform inspection team members of their responsibilities, resulting in  ineffective use of time. In turn, for the second pilot inspection, BSEE  officials told us that BSEE leadership asked regional personnel to  develop the inspection protocol. Officials told us that the second pilot  inspection was an improvement over the first because personnel were  better prepared to carry out their responsibilities. However, officials  said the inspection proved to be more time consuming than BSEE  expected, particularly when compared to the time required to conduct  a typical annual inspection. Specifically, according to one official, the  inspection team needed between 500 and 600 total work hours to  complete the pilot inspection, in part due to the time required in  developing a facility-specific protocol. For comparison, the official told  us that a typical annual inspection of a deep water platform requires  about 100 total work hours. In addition, the official told us that annual  inspections are a more comprehensive review of a facility’s safety  systems because inspectors test and validate all necessary  components, whereas a risk-based inspection considers only specific  aspects of safety performance culture. Therefore, it is not clear  whether risk-based inspections, as performed during the pilot, have  proven to be a more effective method for evaluating safety relative to  annual inspections.

Additionally, BSEE’s inspection planning methodology prescribes that  the Risk-Based Oversight Team provide final pilot reports to the  operators of the facilities at the earliest opportunity. However,  according to officials, BSEE did not provide the operator of the first  pilot facility with a report of its findings. Similarly, they said BSEE did  not provide a report to the operator of the second pilot facility, only a  verbal debrief until the operator requested a report through BSEE’s  regional office. Because BSEE did not provide formal reports to  operators included in the both pilots in a timely manner, a BSEE  debrief noted that one of the operators was confused about the final  results of the inspection. The purpose of the risk-based inspection  initiative is to provide operators with the opportunity to address issues  and improve their safety management systems, for which they need  timely access to inspection results.

BSEE headquarters led the development of the inspection planning  methodology and the facility-specific inspection protocol without  obtaining and incorporating input from regional personnel who had  knowledge and experience conducting risk-based inspection efforts.  The Gulf of Mexico region was to evaluate risk routinely when  planning inspections since at least the year 2000, because BSEE’s  inspection policy stipulates that the region is to conduct supplemental  unannounced inspections based on a quantitative and qualitative  assessment of risk. In addition, BSEE’s inspection policy states that  the bureau is to evaluate quantitative and qualitative risk assessment  criteria to determine whether a facility’s annual scheduled inspection  should be a complete inspection or an inspection of a selected sample  of safety components. Furthermore, personnel from that region  conducted a risk-based inspection pilot in 2009 in the Houma,  Louisiana, and Lake Jackson, Texas, districts that regional  management recommended for immediate implementation.  Nevertheless, regional officials who had knowledge of the 2009 pilot  said that BSEE headquarters led and developed the first facility- specific inspection protocol without their input.

According to officials, BSEE headquarters proceeded with pilot  inspections before regional personnel had the opportunity to raise  concerns about the risk model, the inspection planning methodology, and  the facility-specific inspection protocol. As a result of these deficiencies,  officials involved in the first pilot inspection described it as a failure that  produced few, if any, results. Only after the first pilot did BSEE leadership  begin to engage regional personnel and incorporate their input on the  program, according to officials. In response to the deficiencies BSEE  identified during the first two risk-based pilot inspections, in July 2016,  BSEE revised the risk-based inspection program based on a proposal  that regional personnel told us they developed, which incorporates a risk- based methodology that they had previously used in the Gulf of Mexico.  Specifically, to supplement the facility-based approach that BSEE  leadership had been developing since 2012 based on Argonne’s risk  model, BSEE regional personnel proposed reconstituting an inspection  methodology that MMS used prior to the Deepwater Horizon incident  called “blitz” inspections. Blitz inspections focus on specific facility  components—such as compressors, generators, or cranes—that the  bureau determines are high-risk based on analyses of trends in incidents.  Officials told us that they added this tier of inspections because it allowed  them to target risk across more facilities in less time than is required for  comprehensive risk-based facility inspections. Specifically, BSEE intends  for a typical round of blitz inspections to encompass approximately 50  facilities for 2 to 3 hours each. Under the initial program methodology  developed by BSEE leadership, BSEE stated that it would be able to use  the facility-based methodology as a systematic way of deciding where to  commit annual inspection resources. However, officials said the bureau  now anticipates using the risk-based methodology to target no more than  five facilities per year, instead of the more than 20 per year officials  originally estimated. Instead, BSEE’s revised program methodology will  use both blitz inspections and facility-based inspections based on  Argonne’s model. BSEE’s current plans are to conduct additional pilots  under the revised program methodology prior to implementation in fiscal  year 2017.

section_title: Limited Efforts to Obtain and Incorporate Input Hindered BSEE’s Ability to Identify and Remediate Deficiencies in Its Risk-Based Inspection Program
paragraphs: In July 2003, we found that when implementing large-scale management  initiatives, a key practice is involving employees to obtain their ideas and  gain their ownership by incorporating employee feedback into new  policies and procedures. We found that employee involvement  strengthens the process and allows them to share their experiences and  shape policies, and that in leading organizations, management and  employee representatives work collaboratively to gain ownership for  these changes. Further, management’s responsibility to develop policy  and programs in a collaborative manner is established in both BSEE’s  internal policy and federal internal control standards. BSEE’s inspection  policy states that headquarters is responsible for coordinating the  development of national inspection policy, including taking into account  region-specific circumstances. BSEE regional leadership is responsible  for administering and implementing the inspection policy; therefore,  logically, regional leadership would be a key contributor to helping  develop BSEE inspection policy. In addition, under the Standards for  Internal Control in the Federal Government, management should  internally communicate the necessary quality information to achieve its  objectives. For example, quality information is communicated down,  across, up, and around reporting lines to all levels of the entity, and  management receives such information about the entity’s operational  processes that flows up the reporting lines from personnel to help  management achieve the entity’s objectives. Therefore, systematic input  from within the entity would help it achieve its objectives.

However, BSEE management made limited efforts to obtain and  incorporate input from regional personnel in developing the three  components of the risk-based inspection program, which contributed to  deficiencies that led to an unsuccessful pilot, and ultimately, BSEE has  been unable to achieve its goal of implementing a systematic risk-based  inspection program. Without an Interior organizational unit at a higher  level than BSEE (i.e., higher level oversight independent from BSEE)  establishing a mechanism for BSEE management to obtain and  incorporate input from personnel within the bureau, BSEE’s risk-based  inspection program could experience continued delays and  implementation problems.

section_title: Coordination Problems Hindered BSEE’s Environmental Stewardship Efforts
paragraphs: BSEE leadership initiated two simultaneous Environmental Stewardship  efforts to reduce environmental risks related to U.S. offshore oil and gas  operations, but the efforts were partially overlapping, fragmented, and  uncoordinated, which reduced the value of the outputs. In 2015, BSEE  leadership sought to establish a baseline for environmental risks  associated with U.S. offshore oil and gas operations and measure the  effectiveness of its environmental protection functions and environmental  stewardship priorities to better implement BSEE’s mission. These efforts  included (1) identifying potential environmental risks associated with  offshore oil and gas operations; (2) identifying current BSEE functions  meant to regulate and manage those risks; (3) linking BSEE  environmental stewardship priorities to specific industry activities and  associated risks; and (4) identifying potential environmental stewardship  gaps where BSEE functions might not be fully addressing industry  activities with high environmental risk. These efforts were led and  coordinated by BSEE leadership in the Environmental Compliance  Division at headquarters, which BSEE created in 2015 to establish  national strategic goals and procedures for the bureau’s environmental  compliance activities.

As part of the Environmental Stewardship initiative, BSEE conducted two  environmental risk reduction efforts. Specifically, in December 2015,  BSEE headquarters engaged Argonne to conduct an Environmental Risk  Assessment, and in February 2016, established an internal  Environmental Stewardship Collaboration Core Group (Core Group)  comprised of BSEE personnel. In July 2016, both Argonne and the Core  Group produced final reports summarizing their findings. Both reports  found that some of BSEE’s activities, such as those focused on safety  oversight, were not clearly linked to environmental stewardship.  Additionally, Argonne also reported that some environmental protection  and stewardship activities are not described in sufficient detail in BSEE  regulations, policies, and interagency agreements. Argonne  recommended that BSEE clarify functions that primarily focus on safety to  explicitly identify environmental protection as an aspect of safe  operations. Likewise, the Core Group found that some programs’  relationships to environmental stewardship might not always be readily  apparent to program staff or more broadly within BSEE.

The efforts were overlapping because BSEE leadership tasked both  Argonne and the Core Group with the same five objectives to identify: (1)  linkages and gaps in BSEE’s environmental stewardship of offshore oil  and gas operations, (2) all environmental risks in offshore oil and gas  operations, (3) mitigations already in place to reduce the identified  environmental risks, (4) stewardship priorities for the Environmental  Compliance Division; and (5) opportunities for improvement of BSEE  environmental stewardship.

However, the efforts were also fragmented because BSEE leadership did  not effectively coordinate the execution of these efforts, which hindered  information sharing between Argonne and the Core Group that could  have enhanced the value of each effort’s report. Instead, both efforts  were executed simultaneously with little evidence of information sharing  or communication. For example, Argonne presented its work at the Core  Group’s initial meeting in February 2016; however, at that time, Argonne  had not yet completed the majority of its contracted tasks. BSEE officials  involved in the Core Group also told us that Argonne did not contribute to  the Core Group activities throughout the effort. According to BSEE  officials, Argonne’s findings were added to the Core Group report by  bureau leadership following the completion of the Core Group’s  assessment and without discussion or assessment by Core Group team  members. Similarly, some officials involved in the Core Group said that  BSEE headquarters did not communicate the objectives of the Argonne  effort, thereby limiting the ability of the Core Group to coordinate with  Argonne to maximize its results.

Furthermore, Argonne did not have access to bureau information and  personnel that could have enhanced its efforts. Argonne’s report stated  that BSEE regional experts had information and technical knowledge that  could be used to review their assumptions and to identify additional  industry activities for analysis. Argonne also stated that it may have over-  or underestimated potential risks, and did not determine the effectiveness  of BSEE’s environmental stewardship activities. In turn, Argonne recommended BSEE regional subject matter experts review its analysis  regarding the assumptions used in the risk evaluation and repeat the risk  characterization using parameters that regional experts determine to be  more appropriate. Because Argonne was aware of the limitations of its  assessments, Argonne recommended that BSEE regional experts redo  and validate these assessments. In addition to its report, Argonne  provided the bureau with a spreadsheet-based risk assessment tool for  BSEE to use during office verification and field monitoring. However,  given Argonne’s concern about the accuracy of its analysis, BSEE plans  to review and verify Argonne’s work.

In addition to its report, the Core Group established a bureau-wide  definition for environmental stewardship and BSEE leadership drafted  three work plans. The work plans include one plan to promote  environmental stewardship on a continuous basis,  one work plan to  redo Argonne’s analysis, and another to create a manual with  environmental compliance standard operating procedures for several of  its core functions. BSEE anticipates that this work will be ready for  management review in January 2017.

BSEE headquarters was responsible for coordinating with Argonne  officials to ensure they had access to BSEE subject matter experts during  the assessment, especially for the risk characterization and ranking task.  Because effective coordination did not occur, the resources used to do  these two simultaneous analyses were not used efficiently. BSEE’s  National Environmental Compliance Policy calls for coordination within  the bureau when developing national policies and procedures. When  BSEE initiated these efforts, bureau policy stated that communication and  coordination within the Bureau and with external stakeholders is an  essential component of success for its environmental division. In April  2016, BSEE updated its national policy but maintained an emphasis on  good coordination across the bureau. Specifically, the current policy  states that the Environmental Compliance Division collaborates within the  bureau on national efforts to develop goals and policies. Furthermore,  communication is an element of good federal internal controls. Under the  Standards for Internal Control in the Federal Government management  should internally and externally communicate the necessary quality  information to achieve the entity’s objectives. Because BSEE  management tasked both environmental risk response efforts with the  same objectives and did not effectively communicate information to  coordinate the efforts, the efforts overlapped and ultimately delivered few  results that BSEE can implement immediately. Without higher level  oversight within Interior establishing a mechanism for BSEE management  to obtain and incorporate input from personnel within the bureau and any  external parties, such as Argonne, that can affect the bureau’s ability to  achieve its objectives, BSEE’s Environmental Stewardship efforts are  likely to experience continued implementation and efficacy problems.

section_title: BSEE Leadership Has Made Limited Progress in Implementing Strategic Initiatives to Improve Its Internal Management
paragraphs: Since 2013, BSEE began four strategic initiatives to improve its internal  management, but their successful implementation has been hindered by  limited leadership commitment and not addressing factors contributing to  trust concerns. In 2013 and 2014, BSEE leadership began initiatives— development of an enterprise risk management framework and  performance measures, respectively—to improve its decision making  capabilities—but has not fully implemented them. By not fully  implementing internal management initiatives, BSEE management  demonstrates limited leadership commitment. In 2016, BSEE conducted  initiatives—an employee engagement effort and an assessment of its  Integrity and Professional Responsibility Advisor—to enhance  communication and transparency, but these do not address key factors  that contribute to long-standing trust concerns within the bureau.
subsections: section_title: BSEE Leadership Began Initiatives to Improve Bureau Internal Management Capabilities but Has Not Fully Implemented Them
paragraphs: BSEE leadership began initiatives to improve bureau internal  management capabilities but has not fully implemented them. In 2013,  BSEE began an initiative to develop an ERM framework but has not fully  implemented it as a management tool. In 2014, BSEE began an initiative  to develop performance measures for its programs but has not  implemented any measures.
subsections: section_title: BSEE Has Not Fully Implemented Its Enterprise Risk Management Framework
paragraphs: BSEE has made some progress over the past 3 years in implementing an  ERM framework but has not completed the actions necessary to fully  implement it. In 2013, BSEE began an initiative to develop and implement  an ERM framework to provide enduring management of internal and  external risks that threaten achievement of BSEE’s mission. The Office of  Management and Budget defines ERM as an effective agency-wide  approach to addressing the full spectrum of the organization’s risks by  understanding the combined impacts of risks as an interrelated portfolio,  rather than addressing risks only within silos (i.e., viewing problems in  isolation). BSEE’s Fiscal Year 2016-2019 Strategic Plan identifies the  integration of enterprise risk management into bureau-wide decision  making as a key initiative to meet BSEE’s strategic goal to enhance  decision making through the collection, management, and analysis of  high-quality information. In conjunction with a contracted ERM support  consultant, BSEE developed an iterative ERM cycle that includes six  steps: (1) establish an ERM program, (2) identify individual risks and  group them into strategic risks, (3) prioritize risks, (4) develop risk  treatments, (5) implement selected risk treatments, and (6) monitor  performance.

BSEE completed the first three of these six steps in its iterative ERM  cycle. BSEE officials told us that they had taken actions on the other  three steps. Specifically:  1.  Establish an ERM program: BSEE established an ERM charter in  2014 and drafted an ERM Handbook and Bureau Manual Chapter to  guide ERM activities in April 2016 but has not finalized or distributed  them throughout the bureau.  2.  Identify individual risks and group them into strategic risks: In 2014,  BSEE identified 12 strategic risks that cover the lifecycle of BSEE  operations.  3.  Prioritize risks: In 2014, the bureau prioritized its strategic risks,  according to BSEE ERM planning documentation. BSEE assessed  each strategic risk by evaluating the potential severity and likelihood  of a failure event occurring and ranked them based on the results.  4.  Develop risk treatments: BSEE planned to verify the prioritization of its  top several strategic risk treatments by July 2016 but did not do so.  BSEE officials told us that the bureau halted ERM implementation  while it acquired automated ERM software. However, in November  2016, BSEE determined that it would reinitiate ERM implementation  simultaneous to the implementation of software. BSEE now plans to  complete evaluation of risk treatments in March 2017.  5.  Implement selected risk treatments: BSEE planned to finalize a plan  for its prioritized risk treatments by August 2016 but did not do so  because of the aforementioned temporary halt to ERM  implementation. BSEE officials told us that the bureau has  implemented some risk treatments. BSEE now plans to finalize its risk  treatment plan in March 2017.  6.  Monitor performance: BSEE plans to begin monitoring the  performance of its risk treatments following their implementation.  BSEE intended to promulgate a monitoring plan by October 2016 but  did not do so because of the aforementioned temporary halt to ERM  implementation. BSEE now plans to complete its monitoring plan in  March 2017.

As part of its ERM initiative, BSEE is assessing the risks posed by its  relationships with other agencies. BSEE’s Fiscal Year 2016-2019  Strategic Plan identified reviewing the efficacy and implementation of  current interagency relationships as a key initiative to support its strategic  goal of maintaining productive relationships with external entities. In  2015, BSEE’s ERM support consultant assessed existing interagency  relationships by prioritizing the 35 known memorandums of agreement,  understanding, and collaboration based on the risk exposure they pose to  the bureau. Of these 35 interagency memorandums, BSEE’s consultant  determined that 11 created a significant or moderate increase in risk  exposure to the bureau. For example, the consultant determined that a  memorandum of understanding with BOEM to carry out assigned  responsibilities under the agreement between the U.S. and Mexico  concerning transboundary hydrocarbon reservoirs in the Gulf of Mexico  created the greatest risk exposure to BSEE. BSEE has developed a plan  to update one of these agreements but has not developed any specific  plans to complete revisions for the other 10.

In 2016, BSEE began developing a systematic process for lifecycle  management of interagency agreements and to improve the bureau’s  awareness of existing agreements and their implementation status,  among other things. For example, BSEE has developed four criteria for  prioritizing interagency agreements in need of update. BSEE also  identified additional interagency agreements not identified by the bureau’s  ERM consultant. BSEE planned to assess and prioritize the risks posed  by these newly discovered agreements by October 2016, but the bureau  now plans to do so in March 2017. BSEE also plans to implement a  bureau manual chapter and handbook that outlines a lifecycle interagency  agreement management process in June 2017.

section_title: BSEE Has Not Implemented Program Performance Measures
paragraphs: Since 2012, BSEE has highlighted the need to develop and implement  performance measures to inform management decision making.  Specifically, BSEE’s October 2012 Strategic Plan - Fiscal Years 2012- 2015 stated that the bureau must develop performance measures to  assess the results of its programmatic efforts as well as its ability to  reduce the risks of environmental damage and accidents. Additionally, the  October 2013 Director’s Intent message—which outlined the BSEE  Director’s multi-year priorities—reaffirmed this need, stating that BSEE  must measure to make informed management decisions and that to do so  it must set key performance targets and measures, consistent with its  strategic plan, and use them to guide its actions and decisions.

BSEE’s initiative to develop performance measures has been comprised  of three sequential efforts, none of which have resulted in the  implementation of performance measures. In July 2014, the bureau  initiated the first of three formal efforts to develop performance measures.  Specifically, BSEE contracted with a consultant to reassess its existing performance management system and update it as needed to ensure  managers can make informed data-driven decisions. However, BSEE  terminated the contract in January 2015 because, according to BSEE  officials, leadership determined that the bureau needed to complete its  ongoing internal organizational restructuring prior to developing  programmatic performance measures.

In December 2015, BSEE began its second effort, using the same  consultant under a separate contract to develop performance measures  for the national programs it established during its organizational  restructuring—investigations, environmental compliance, and  enforcement, as well as its Integrity and Professional Responsibility  Advisor (IPRA). Specifically, the contract stipulated that the consultant  analyze program objectives and components, develop potential  performance measures, identify data sources and data collection  requirements, and coordinate with BSEE officials to establish objectives  for each measure. In March 2016, the consultant delivered a report to  BSEE that identified 12 performance measures—5 for investigations, 3  for environmental compliance, 2 for enforcement, and 2 for the IPRA.  However, BSEE headquarters officials told us that they are not  implementing the measures and plans developed by the consultant due to  a variety of factors, such as data availability limitations. For example, one  proposed measure included a methodology to assess the effectiveness of  issuing civil penalties to operators for safety or environmental infractions  as a deterrent to committing future infractions. However, BSEE  headquarters officials stated that the bureau does not issue enough civil  penalties to conduct such an assessment—that is, the universe of  available data to assess is too small. BSEE headquarters officials told us  that the bureau did not implement the consultant-developed measures,  but rather that those measures are informing BSEE’s third effort to  develop performance measures.

In 2016, BSEE initiated a third effort to develop performance measures by  providing a framework for considering performance management.  Specifically, in January 2016—simultaneous to the aforementioned  consultant’s performance measure development effort—BSEE finalized a  fiscal year 2016 work plan for the implementation of a revised  performance management framework to include the identification of  performance measures to help leadership gauge progress against the  bureau’s strategic plan. BSEE headquarters officials told us that this  initiative, which is being conducted internally by BSEE personnel,  represents the beginning of a multi-year effort to implement a  performance management system. BSEE initially planned to finalize its  internally-developed list of performance measures in February 2016, but  did not meet this deadline. Additionally, BSEE headquarters officials told  us that in June 2016, the bureau narrowed the scope of the initiative from  a comprehensive set of performance measures to no more than three  performances measures per program. These officials explained that this  was a more feasible scope given the difficulties in obtaining management  commitment as well as the technical complexity of the initiative. As of  August 2016, BSEE had developed 17 draft performance measures, but  bureau leadership has repeatedly missed deadlines to review them.  BSEE headquarters officials told us that, subsequent to leadership  approval, the bureau plans to pilot these measures and develop others in  upcoming years. In December 2016, BSEE completed a fiscal year 2016  Baseline Performance Measure Report that discusses these 17 measures  and the bureau’s plans for future iterations of their development.

section_title: By Not Fully Implementing Internal Management Initiatives, BSEE Management Demonstrates Limited Leadership Commitment
paragraphs: We have previously reported on BSEE’s struggles to effectively  implement internal management initiatives. Specifically, in February 2016,  we found that since its inception in 2011, BSEE had made limited  progress in enhancing the bureau’s investigative, environmental  compliance, and enforcement capabilities. More than 2 years into its  restructuring effort—and more than 5 years after the Deepwater Horizon  incident—the bureau had not completed the underlying policies and  procedures to facilitate the implementation of its national programs for  these three capabilities. Moreover, we found that BSEE continues to face  deficiencies in each of these capabilities that undermine its ability to  effectively oversee offshore oil and gas development. As a result, among  other things, we recommended that Interior direct BSEE to complete the  policies and procedures for these three capabilities. Interior agreed that  additional reforms—such as documented policies and procedures—are  needed to address offshore oil and gas oversight deficiencies, but Interior  neither agreed nor disagreed with our recommendation.

Likewise, with regard to its ongoing strategic initiatives, more than 3 years  have passed since BSEE initiated the development of its ERM  framework, and more than 2 years have passed since BSEE prioritized  the strategic risks it faces. However, BSEE has yet to develop,  implement, and monitor risk treatments to even the highest priority risks.  Moreover, more than 4 years have passed since BSEE identified the  development and implementation of performance measures as an  organizational need. In that time, BSEE initiated several efforts to develop  and implement such measures, and although BSEE has developed  measures, it has yet to fully implement any.

In our 2013 High-Risk update, because progress had been made in one  of the three segments we identified in Interior’s Management of Federal  Oil and Gas Resources on our 2011 High-Risk List—reorganization of its  oversight of offshore oil and gas activities—we narrowed the scope of the  high-risk area to focus on the remaining two segments (revenue collection  and human capital). One of our five criteria for assessing whether an  area can be removed from our high-risk list is leadership commitment— that is, demonstrated strong commitment and top leadership support.  An example of leadership commitment is continuing oversight and  accountability. In our 2015 High-Risk update, we determined that Interior  had met our criteria for leadership commitment because Interior had  implemented a number of strategies and corrective measures to help  ensure the department collects its share of revenue from oil and gas  produced on federal lands and waters and was developing a  comprehensive approach to address its ongoing human capital  challenges. However, BSEE leadership has not demonstrated continuing  oversight and accountability for implementing internal management  initiatives, as evidenced by its limited progress implementing key strategic  initiatives as well as its inability to address long-standing oversight  deficiencies. BSEE leadership has consistently stated that it prioritized  internal management initiatives by citing their importance in strategic  plans and budget justifications. For example, BSEE’s fiscal year 2017  budget justification states that three key initiatives will inform the  implementation of the bureau’s Fiscal Year 2016-2019 Strategic Plan: (1)  refinement of a comprehensive set of output and outcome based  performance measures; (2) implementation of an ERM framework to  facilitate information sharing and identify the risk relationships among and  within programs; and (3) implementation of its national program manager  model to ensure consistency across regions. According to the budget  justification, these initiatives support both effective decision making and  assessment of BSEE’s progress in meeting its priorities. However, BSEE  leadership has not fully implemented actions to demonstrate the  commitment necessary to enable the successful implementation of such  initiatives. Without higher-level oversight within Interior addressing  leadership commitment deficiencies within BSEE—including by  implementing internal management initiatives and ongoing strategic  initiatives (e.g., ERM and performance measure initiatives)—in a timely  manner, the bureau is unlikely to succeed in implementing internal  management initiatives, including its key strategic initiatives for ERM and  performance measures, in a timely manner.

section_title: BSEE Employee Engagement Initiative and IPRA Process Assessment Have Not Addressed Factors Contributing to Long-Standing Trust Concerns between Headquarters and the Regions
paragraphs: In 2016, BSEE conducted two initiatives—one on employee engagement  and an assessment of its IPRA—to enhance communication and  transparency, but these initiatives have not achieved results or addressed  factors that contribute to trust concerns within the bureau.
subsections: section_title: BSEE Has Not Developed an Employee Engagement Strategy
paragraphs: BSEE’s Fiscal Year 2016-2019 Strategic Plan discusses improving  employee engagement—generally defined as the sense of purpose and  commitment employees feel toward their employer and its mission—to  foster a culture of collaboration within BSEE by, among other things,  enhancing trust and implementing an internal communications approach  that encourages dialogue and sets expectations for sharing accurate and  timely information. A 2015 bureau strategic planning summary document  stated that there is a lack of trust and respect between and among  headquarters, regions, and the districts. Additionally, a 2013 BSEE  internal evaluation found that some outside the bureau commented that  BSEE does not appear to trust its own personnel. We have previously  found that communication from management—as reflected by employee  responses in the Federal Employee Viewpoint Survey—is one of the six  strongest drivers of employee engagement. BSEE Federal Employee  Viewpoint Survey data for 2013, 2014, and 2015 indicate that  approximately one-third of BSEE respondents were not satisfied with  information received from management regarding organizational activities  (32.9, 31.1, and 32.9 percent, respectively). Likewise, less than half  were satisfied with information received from management regarding  organizational activities (41.7, 46.1, and 43.7 percent, respectively).

According to some BSEE officials from across the bureau, the need to  improve trust and communication are interconnected. Some senior BSEE  officials throughout the organization told us that poor communication from  headquarters has exacerbated trust issues between headquarters and  the regions (including districts) that have existed since the 2010  Deepwater Horizon incident. As previously discussed, BSEE leadership’s  safety and environmental stewardship initiatives have had limited  success, largely due to poor communication and coordination between  headquarters and the regions. BSEE officials from across the bureau told  us that the poor communication between headquarters and the regions  led to a deficit of trust vertically throughout the bureau. They also told us  that because BSEE headquarters was newly established as part of the  reorganization of MMS in 2010 following the Deepwater Horizon incident,  there were not many existing relationships between headquarters and  regional personnel. BSEE regional officials told us of specific examples in  which BSEE headquarters did not communicate certain information to the  regions, which has exacerbated the existing trust concerns, including the  following examples:

BSEE leadership reorganized its Pacific region with a structure that  does not align directly with the bureau’s national program manager  model and did not communicate the reasons why. One of the guiding  principles of BSEE’s organizational restructuring was consistency, but  limited communication regarding BSEE’s reorganization of its regions  led some to believe that BSEE headquarters was not abiding by this  principle. According to senior BSEE officials, the bureau restructured  the Pacific Region—which includes 42 permanent full time equivalent  positions—due to management problems with some personnel. They  told us that to maintain an appearance of impartiality during the  reorganization of the Pacific Region, BSEE contracted with a  consultant to recommend a new organizational structure.  In turn,  the consultant recommended changes to address a lack of leadership  and ineffective communication in the region, which BSEE officials told  us influenced the new regional structure. However, this new structure  does not include offices that correspond to the new national programs  established during BSEE’s organizational restructuring— investigations, environmental compliance, and enforcement. BSEE  leadership officials told us that the small relative size of the Pacific  Region necessitated a unique structure. Conversely, the Gulf of  Mexico region—an organization more than 10 times as large, with 454  full time equivalent positions—was restructured internally by BSEE  personnel without relying on a consultant. Additionally, the Gulf of  Mexico Region’s revised organizational structure aligns with the  national program manager model implemented at BSEE headquarters  (i.e., it has offices dedicated to the new national programs— investigations, environmental compliance, and enforcement). Some  BSEE officials told us that they were unaware of leadership’s rationale  for the differences in office structures because it was not  communicated across the bureau. In turn, this lack of communication  from headquarters led to confusion because regional personnel  viewed it as inconsistent with the Director’s Intent for the restructuring,  which contributed to trust concerns.

BSEE headquarters did not notify the Gulf of Mexico Region when it  advertised for two field-based positions located in the region to  manage its SEMS program. According to BSEE regional officials,  these positions would replicate functions that already existed in the  Gulf of Mexico Region’s Office of Safety Management. Further, the  reporting chain of these positions did not align with other actions  taken during organizational restructuring, which emphasized  consistency across the bureau. Specifically, these field-based  positions would report to headquarters rather than regional leadership  even though the Gulf of Mexico Region recently had undergone a  restructuring to ensure that regional program offices report to regional  leadership rather than headquarters. As a result, BSEE regional  officials told us that headquarters’ actions to create new positions that  would affect the region without notifying it contributed to the trust  concerns of regional personnel.

BSEE headquarters did not disseminate the final 2016 Environmental  Stewardship Collaboration Core Group report to all group members,  including representatives from the Office of Environmental  Compliance, which is BSEE’s primary organization for conducting  environmentally-focused oversight. As a result, BSEE operational  personnel who could potentially benefit from the results of the working  group were not advised of its final findings.

In February 2016, BSEE announced an initiative to assess internal  communications and develop an employee engagement strategy. The  data collection plan for this employee engagement initiative focused on  conducting outreach across the bureau to identify the means by which  BSEE personnel prefer to receive information—for example, town hall  meetings, BSEE’s website, or e-mail. BSEE conducted this outreach but  as of November 2016 had not developed an employee engagement  strategy—although its original target completion date was April 2016— and it is unclear when it will do so. In September 2016, BSEE decided to  conduct a second round of outreach across the organization by spring  2017 to review feedback from the initial outreach, discuss next steps, and  provide guidance on existing communications resources. Additionally,  based on its initial outreach efforts, BSEE identified numerous interim  projects to undertake while it develops its employee engagement  strategy: redesigning the bureau’s intranet website, updating its online  employee directory, briefing employees on employee engagement project  findings, training on BSEE’s e-mail system, building staff interaction, and  streamlining its staff onboarding process. However, BSEE headquarters  officials told us that the bureau has not identified a plan with time frames  for completion of these efforts.

BSEE employee engagement initiative documentation identifies the need  to enhance communication vertically and horizontally across the bureau,  but it is unclear whether its employee engagement initiative will address  the lack of quality information that BSEE officials told us undermines trust  across the organization or set expectations for sharing accurate and  timely information as called for by BSEE’s Fiscal Year 2016-2019  Strategic Plan. Under Standards for Internal Control in the Federal  Government, management should internally communicate the necessary  quality information to achieve the entity’s objectives. For example,  management communicates such quality information down, across, up,  and around reporting lines to all levels of the entity. However, it is unclear  whether BSEE’s employee engagement initiative will do so because the  scope of the effort has focused on means of communication rather than  quality of information. Without expanding the scope of its employee  engagement initiative to incorporate the need to communicate quality  information throughout the bureau, BSEE’s employee engagement  initiative might not address the lack of quality information being  communicated throughout the bureau that is exacerbating trust concerns.

section_title: BSEE’s IPRA Pilot Assessment Did Not Address Unclear and Conflicting Guidance
paragraphs: The bureau’s IPRA is responsible for promptly and credibly responding to  allegations or evidence of misconduct and unethical behavior by BSEE  employees and coordinating its activities with other entities, such as the  IG. Senior BSEE officials from across the bureau stated that the IPRA  function is critical to bolstering trust within the bureau because personnel  need to have a functioning mechanism to which they can report potential  misconduct by other employees. However, some BSEE officials from  across the bureau expressed concern regarding the IPRA’s process for  adjudicating allegations of misconduct. To increase transparency and  consistency in how IPRA cases are handled following the completion of  an investigation report, BSEE conducted a pilot initiative in 2016 to  assess the types of allegations of misconduct being reported to the IPRA  as well as the frequency with which the IPRA referred such allegations to  other entities. In August 2016, BSEE determined that the majority of  incoming allegations are being directed to the appropriate office for  action.

However, BSEE’s pilot initiative did not address unclear and conflicting  guidance that could undermine organizational trust in how the IPRA  addresses allegations of misconduct. Specifically, the Interior Department  Manual states that IPRA responsibilities include working with the IG on  internal matters the IPRA investigates, pursuing certain administrative  investigations with the IG’s consent and knowledge, and advising the IG  of the status and results of IPRA investigations, as requested.  Additionally, IPRA guidance stipulates that once an allegation is received,  the IPRA Board—composed of the IPRA, the head of Human Resources,  and the Deputy Director—will assess whether the allegation should be  referred to the IG or other appropriate entity, investigated by the IPRA, or  closed for no further action. Further, the IPRA told us that the IG has first  right of refusal to investigate all allegations of misconduct within the  bureau. However, the Interior Department Manual and IPRA guidance do  not specify criteria for the severity thresholds for allegations that are to be  referred to the IG. As a result, the boundaries of IPRA responsibility are  unclear.

Additionally, BSEE’s pilot initiative did not address IPRA guidance that  conflicts with the reporting chain established by the Interior Department  Manual and BSEE’s organization chart. Specifically, the Interior  Department Manual and BSEE’s organization chart indicate that the IPRA  reports to the BSEE Director. However, IPRA guidance also states that,  for cases that are not accepted by the IG, an IPRA Board composed of  the IPRA, the head of Human Resources, and the Deputy Director will  assess whether the allegation should be referred, investigated by the IPRA, or closed for no further action. BSEE officials told us that, in  practice, the IPRA makes determinations as stipulated by the IPRA  guidance. In turn, this reporting structure—in which the IPRA Board  determines how to proceed without consultation with the Director—does  not align with the Interior Department Manual and BSEE organization  chart. Some BSEE regional officials told us that the uncertainty of how the  IPRA reports allegations to the IG as well as its reporting structure led  them to question the independence of IPRA activities and expressed  concern that the IPRA could be used to retaliate against employees,  which has undermined organizational trust in its activities.

Under the federal standards of internal control, management should  design control activities to achieve objectives and respond to risks. For  example, agencies are to clearly document internal controls, and the  documentation may appear in management directives, administrative  policies, or operating manuals. While BSEE has documented its policies,  they are not clear, because (1) neither the IPRA guidance nor the Interior  Department Manual specifies criteria for the severity thresholds for  allegations that are to be referred to the IG and (2) the IPRA guidance  does not align with the Interior Department Manual and BSEE  organization chart concerning the IPRA reporting chain. Moreover,  BSEE’s IPRA pilot initiative did not address the unclear and conflicting  guidance regarding IPRA’s referral criteria and reporting chain,  respectively. Without assessing and amending its IPRA guidance to  clarify (1) the severity threshold criteria for referring allegations and (2)  the IPRA reporting chain, BSEE risks further eroding organizational trust  in the IPRA to carry out its mission to promptly and credibly respond to  allegations or evidence of misconduct by BSEE employees.

section_title: Conclusions
paragraphs: Since 2012, BSEE has begun several key strategic initiatives to improve  its safety and environmental oversight. However, the bureau has made  limited progress in implementing them. For example, BSEE’s  Environmental Stewardship Initiative encompassed two simultaneous  efforts to reduce environmental risks related to U.S. offshore oil and gas  operations, but the efforts were partially overlapping, had ineffective coordination and communication, and produced few results. Without  establishing a mechanism for BSEE management to obtain and  incorporate input from bureau personnel and any external parties, such  as Argonne, that can affect the bureau’s ability to achieve its objectives,  BSEE’s risk-based inspection program is likely to experience continued  delays and implementation problems. Likewise, since 2013 BSEE has  begun several strategic initiatives to improve its internal management but  has made limited progress in implementing them. Without a higher-level  organization within Interior addressing leadership commitment  deficiencies within BSEE, including by implementing internal  management initiatives and ongoing strategic initiatives (e.g., ERM and  performance measure initiatives) in a timely manner, the bureau is  unlikely to succeed in implementing internal management initiatives,  including its key strategic initiatives for ERM and performance measures,  in a timely manner. Additionally, BSEE documentation identifies the need  to enhance communication vertically and horizontally across the bureau,  but it is unclear whether the bureau’s employee engagement initiative will  address the lack of quality information that BSEE officials told us  undermines trust across the organization or set expectations for sharing  accurate and timely information as called for by BSEE’s Fiscal Year 2016- 2019 Strategic Plan. Without expanding the scope of its employee  engagement strategy to incorporate the need to communicate quality  information throughout the bureau, BSEE’s employee engagement  initiative might not address the lack of quality information being  communicated throughout the bureau that is exacerbating trust concerns.  Further, BSEE’s IPRA pilot initiative did not address unclear and  conflicting guidance that could undermine organizational trust in how the  IPRA addresses allegations of misconduct. Without assessing and  amending IPRA guidance to clarify (1) severity threshold criteria for  referring allegations of misconduct to the IG and (2) its reporting chain,  BSEE risks further eroding organizational trust in the IPRA to carry out its  mission to promptly and credibly respond to allegations or evidence of  misconduct by BSEE employees.

section_title: Recommendations for Executive Action
paragraphs: In this report, we are making four recommendations. We recommend that  the Secretary of the Interior direct the Assistant Secretary for Land and  Minerals Management, who oversees BSEE, take the following two  actions:

Establish a mechanism for BSEE management to obtain and  incorporate input from bureau personnel and any external parties,  such as Argonne, that can affect the bureau’s ability to achieve its  objectives.

Address leadership commitment deficiencies within BSEE, including  by implementing internal management initiatives and ongoing  strategic initiatives (e.g., ERM and performance measure initiatives) in  a timely manner.

We also recommend that the Secretary of the Interior direct the BSEE  Director take the following two actions:

To address trust concerns that exist between headquarters and the  field, BSEE should expand the scope of its employee engagement  strategy to incorporate the need to communicate quality information  throughout the bureau.

To increase organizational trust in IPRA activities, BSEE should  assess and amend IPRA guidance to clarify (1) severity threshold  criteria for referring allegations of misconduct to the IG and (2) its  reporting chain.

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Department of the Interior for  review and comment. In its written comments, reproduced in appendix I,  Interior neither agreed nor disagreed with our four recommendations.  Interior stated that the recommendations reflect ongoing BSEE  commitments and that BSEE and Interior agree with the concepts laid out  in the first three recommendations. For the fourth recommendation,  Interior stated that BSEE will examine the current guidance for the  Integrity and Professional Responsibility Advisor. However, Interior also  stated that the draft report neither fully describes the progress made  within BSEE nor fully represents the current status of the programs,  initiatives, and activities highlighted therein. Interior requested that we  consider information that it stated provides status updates and  corrections, while also laying out in more detail BSEE's continuing  commitments in these areas.  Interior also enclosed additional  documentation. We reviewed the additional information and  documentation that Interior provided and found no evidence to support  the revision of any of our findings. In turn, we disagree with Interior’s  characterization of the progress that BSEE has made and believe that  actions to implement our recommendations are necessary. Specifically:

Regarding our recommendation that Interior develop a mechanism for  BSEE management to obtain and incorporate input from bureau  personnel and any external parties that can affect the bureau’s ability  to achieve its objectives, Interior’s comments do not discuss any  specific actions taken or underway to do so. Additionally, in its  comments, Interior stated that regional personnel, such as regional  managers and district managers, were involved throughout the  development of the risk model and the pilot testing. To support this  statement, Interior provided documentation of electronic  communications from BSEE headquarters to senior regional  leadership informing them of certain aspects of the program and  meeting documents showing that certain regional officials attended  meetings regarding program development. However, instead of  demonstrating that regional managers were involved in the  development of the model and methodology, this documentation  demonstrates that regional officials raised concerns about the model  and methodology but that headquarters officials said they would not  make any changes in response to these concerns. Specifically,  Interior provided e-mails that indicate headquarters informed regional  officials of the development of the model through the Strategic Plan  Implementation Team in late 2012. However, e-mails from early 2015  indicate that regional officials were not involved in the development of  the risk model or risk-based inspection program methodology in the  intervening more than 2 years, because they had to request  information from headquarters about the underlying basis of the  model and the methodology that they were being asked to comment  on. After regional officials reviewed the methodology and the model,  they e-mailed headquarters and raised concerns with the model.   Headquarters officials replied that they validated the model and that  changing the parameters of the model would decrease its  effectiveness. Therefore, the e-mails that Interior provided support  what regional personnel told us—that their input was not incorporated  into the model and methodology prior to the first pilot. We found that  regional personnel became more involved in the risk-based inspection  initiative after the first pilot exposed deficiencies in headquarters’  approach. In its comments, Interior disagreed with our assessment of  pilot test deficiencies and stated that BSEE expected to encounter  issues while pilot testing. However, we believe that some of those  issues may have been averted had BSEE included the input of  regional officials earlier in the process. As described throughout the  report across multiple initiatives, we have concerns about the  fundamental working relationship between the region and  headquarters, which are substantiated by the e-mails that Interior  provided in response to our draft report. In turn, we continue to  believe that Interior should develop a mechanism for BSEE  management to obtain and incorporate input from bureau personnel  and any external parties that can affect the bureau’s ability to achieve  its objectives in the next risk-based inspection pilot test, which will be  conducted by a joint headquarters-regional team in March 2017.  However, as we discussed in the report, the first pilot had deficiencies  in identifying high-risk offshore facilities, so the extent to which BSEE  will be able to apply lessons learned is uncertain.

Regarding our recommendation that Interior address leadership  commitment deficiencies within BSEE, including implementing internal  management initiatives (e.g., ERM and performance measure  initiatives) in a timely manner, Interior’s comments do not discuss any  specific actions taken to meet the intent of our recommendation.  Interior states that BSEE's implementation of ERM is on target and  that BSEE has an established ERM framework, completed its risk  register, has a fully developed maturity model, has aligned enterprise  and strategic risks with its strategic plan and has linked program risks  with appropriate strategic risk categories, in addition to other activities.  Interior also stated that BSEE is on schedule to complete its first full  ERM cycle in March 2017. Additionally, Interior states that ERM is a  relatively new program directed by a fall 2016 Office of Management  and Budget Circular regarding ERM.  However, while Circular No. A- 123 was revised in July 2016 with new ERM implementation  requirements effective for fiscal year 2017, Interior’s statement is  misleading because BSEE’s efforts have been ongoing since 2013.  Additionally, Interior provided clarifications but does not dispute our  findings on its efforts to develop performance measures. Specifically,  Interior states that the November 2016 completion of a fiscal year  2016 Baseline Performance Measure Report represented the first  step of implementation of BSEE’s performance measure program and  that the bureau anticipates having an initial performance dashboard in  fiscal year 2018. By considering November 2016 as the first step  toward a performance measures program, Interior appears to  disregard BSEE’s efforts over the prior 4 years. If BSEE succeeds in  fiscal year 2018, this will be the culmination of 6 years of attempting to  develop performance measures to inform management decision  making. Therefore, we continue to believe that Interior should address  leadership commitment deficiencies within BSEE, including by  implementing internal management initiatives, such as ERM and  performance measures, in a timely manner rather than revising  initiative start dates.

Regarding our recommendation that BSEE expand the scope of its  employee engagement strategy to incorporate the need to  communicate quality information throughout the bureau, Interior  stated that BSEE is committed to enhancing communication and  collaboration among its personnel and agrees with the importance  strengthening communication between headquarters and the regions.  Interior asserts that, since receiving our draft report, BSEE has  completed assessment and analysis of employee feedback, and  developed an engagement plan. However, Interior did not provide  documentary evidence of this plan or what it entails. Moreover, in our  report we identified a long history of poor communication between  headquarters and regional officials, leading to a widespread lack of  trust across the bureau. Without providing evidence of BSEE’s  activities—and in light of the bureau’s documented struggles to  effectively implement organizational change—we cannot confirm that  any action has been taken and continue to believe that BSEE should  expand the scope of its employee engagement strategy to incorporate  the need to communicate quality information throughout the bureau.

Regarding our recommendation that BSEE assess and amend IPRA  guidance to clarify (1) severity threshold criteria for referring  allegations of misconduct to the IG and (2) its reporting chain, Interior  stated that the creation of the IPRA directly impacts trust concerns  within BSEE and that the bureau will examine current guidance for the  IPRA. However, Interior stated that contrary to our draft report, the  Interior Department Manual already includes severity threshold criteria  for referring allegations of misconduct to the IG. We believe that the  language in the Interior Department Manual, which states that  “serious allegations” and “serious complaints” should be referred to  the IG, does not provide the specificity needed to adequately define  the boundaries of IPRA responsibility. Additionally, Interior stated that  the IPRA reports to the BSEE Director, consistent with the reporting  chain established in the bureau’s organizational chart and the Interior  Department Manual. However, the BSEE Director told us that, in  practice, the IPRA often reports to the BSEE Deputy Director rather  than the Director. Moreover, our work found that the decision making  process of the IPRA Board—whereby the IPRA Board determines  how to respond to an investigation without consultation with the  Director—does not align with the IPRA’s prescribed reporting chain.   As a result, we continue to believe that BSEE should assess and  amend IPRA guidance to clarify (1) severity threshold criteria for  referring allegations of misconduct to the IG and (2) its reporting  chain.

Interior’s comments on our draft report underscore our concerns  regarding deficiencies in BSEE leadership commitment and support the  decision to incorporate the restructuring of offshore oil and gas oversight  into our High-Risk List in February 2017. Specifically:  In its comments, Interior highlighted BSEE’s decision to contract with  NAPA to evaluate the bureau—at a cost of approximately $450,000— as an example of the bureau’s commitment to maturing the  organization. However, the timing, scope, and methodology cause us  to question its value. Specifically, BSEE issued the contract five  months after we began our review, and its scope—which includes  identifying BSEE strategic and organizational initiatives and assessing  their progress—mirrors our work already underway. Further, the  contract stipulates that all work “shall be developed in a collaborative  manner with BSEE leadership, but with a focus on document review  rather than in-depth interviews with bureau personnel.” This calls into  question the independence of the NAPA evaluation. Additionally,  when we met with the NAPA team, they indicated that their  instructions were to focus on BSEE headquarters and not conduct  outreach to the bureau’s operational components in the regions. In  our experience working with BSEE, we have found extensive outreach  to the field to be essential to understanding the operations of the  bureau. As a cumulative result of these factors, it is uncertain whether  BSEE’s decision to engage in this evaluation will produce the  organizational improvement advertised by Interior.

Interior’s written comments contain factual errors that are contradicted  by the evidence we collected in our work, further heightening our  concerns regarding BSEE leadership’s commitment to taking the  steps needed to improve the bureau. For example, Interior states that  environmental risk was not a consideration in the Core Group  objectives or final report. However, the Core Group’s final report  states that the purpose of the report was “to assist in determining  current and emerging environmental risks and whether BSEE has the  best mitigation strategies in place.” Likewise, Interior states that  BSEE’s Environmental Stewardship Collaboration Core Group and  Argonne Environmental Risk Assessment were not simultaneous  efforts. On the contrary, according to its final report, the Core Group  convened from February 2016 to May 2016. The Statement of Work  for the Argonne environmental risk assessment contract was issued in  December 2015, and Argonne delivered its final report in July 2016.

Interior also provided technical comments that we incorporated into the  report, as appropriate.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of the Interior, and other interested parties. In  addition, the report is available at no charge on the GAO website at  http://gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-3841 or ruscof@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made major contributions to this report  are listed in appendix II.

section_title: Appendix I: Comments from the Department of the Interior

section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Christine Kehr, Assistant  Director; Richard Burkard; Cindy Gilbert; Alison O’Neill; Matthew D.  Tabbert; Barbara Timmerman; Kiki Theodoropoulos; and Daniel R. Will  made significant contributions to this report.

Fast facts: Effective oversight of offshore oil and gas development is critical to preventing another Deepwater Horizon-type disaster.

However, the Department of the Interior's Bureau of Safety and Environmental Enforcement has struggled to successfully implement key initiatives to improve offshore oversight. For example, a risk-based facility inspection initiative was halted due to concerns about its usefulness and unclear protocols.

This and other difficulties are largely due to insufficient coordination and leadership commitment. We recommend that Interior take steps to improve the bureau's coordination and leadership commitment.

In an earlier version, the capping stack was incorrectly referred to as a blowout preventer. A capping stack caps a well after a blowout to stop the uncontrolled flow of oil.

Question-summary annotations: questions: question: What happened to the Deepwater Horizon drilling rig?
answer: On April 20, 2010, the Deepwater Horizon drilling rig exploded in the Gulf of Mexico.
child_questions: question: How did the incident affect the Interior's oversight?
answer: The incident raised questions about Interior's oversight of offshore oil and gas activities.

question: How did Interior respond to this crisis?
answer: In response, in May 2010, Interior reorganized its offshore oil and gas management activities, and in October 2011, created BSEE to among other things, develop regulations, conduct inspections, and take enforcement actions.

question: How did GAO react to the crisis?
answer: In February 2011, GAO added the management of federal oil and gas resources to its High-Risk List.

question: How did BSEE propose improving offshore safety?
answer: In December 2015, BSEE issued a strategic plan outlining initiatives to improve offshore safety and environmental oversight as well as its internal management.