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Project on Government Oversight
 

 

 

 

POGO Recommends More Oversight and Accountability in the CLEAR Act

July 12, 2010 

 

POGO Recommendations for Improvements to the CLEAR Act, H.R. 3534, 1
to Strengthen Oversight and Accountability and End the Cozy Relationship between Interior and Industry

The Revolving Door:  The Deepwater Horizon disaster dramatically illustrates the enormity of the risk to our safety, the environment, the economy, and the general public interest by the capture of government agencies by private industry. The revolving door between the oil and gas industry and its regulator is at the rotten core of the lax oversight that led to oil spilling into the Gulf of Mexico.2 While S. 3516, the Outer Continental Shelf Reform Act of 2010, includes measures to slow the revolving door between the oil and gas industry and its regulator, the House's CLEAR Act does not yet include such measures.

POGO Recommends:

The CLEAR Act should include the Senate language, but increase the cooling-off period to two years and add civil and criminal penalties. Existing restrictions should be expanded and strengthened so that all employees of the Department of the Interior with responsibilities under the Outer Continental Shelf Lands Act – not just the highest-ranking employees – would be banned from lobbying for industry for two years after leaving Interior, and also from making lobbying contact with Interior for at least one year. In addition, there should be a two-year cooling-off period that bans former Interior employees from employment with any party that had interests pending before them in their previous year of civil service. The fox-in-the-henhouse phenomenon created by the reverse revolving door can be addressed by ensuring that Interior employees cannot oversee matters relating to their former industry employer or client for two years. Both civil and criminal penalties for violations should be included.3

Training Academies (Sec. 102): The CLEAR Act authorizes the Secretary to enter into cooperative educational and training agreements with oil and gas operators and related industries. POGO supports improved training, but no entity or industry being regulated should be involved in the training of the federal inspectors who will regulate them. In any regulatory agency, inspection is a core function of the agency, and the agency must keep organic in-house expertise in the laws and regulations enforced. That in-house expertise is generally embodied in the federal employees who train the inspectors. In addition, the cooperative educational and training agreements and the programs should be more transparent.

POGO Recommends:

  • Removing "oil and gas operators and related industries" from this section.
  • Making information about the training academies public, including the programs, and the individuals in charge of training. (Though POGO would not advocate putting the training manuals online since this might help industry to circumvent inspections.)

Whistleblower Protections and Incentives:  Whistleblowers are on the front lines of oversight and are the first best defense against waste, fraud, abuse and other wrongdoing. If oil and gas industry employees had had adequate protections against retaliation and incentives for warning regulators, perhaps the Deepwater Horizon disaster could have been averted. The CLEAR Act does not yet provide for the whistleblower protections and incentives required for adequate oversight and accountability.

POGO Recommends:

The CLEAR Act must provide oil and gas industry employees with best-practices whistleblower protections such as those included in the financial reform legislation for financial industry employees, and the protections established for manufacturing and transportation employees, Department of Defense contractors, and others.  Important disclosures to a supervisor, employer, law enforcement, Interior and other regulators, Congress and others must be protected. Real protections when retaliation occurs include adequate due process rights, an administrative review at the Department of Labor, and jury trial access. In addition, an incentive program to encourage whistleblowers to come forward and disclose wrongdoing to the Department of the Interior should be established. Such a program would allow for an award to whistleblowers whose information leads to the federal government pursuing successful sanctions on those regulated under the OCS Act.  Similar incentive programs exist at the IRS, and are included in the financial reform legislation to encourage disclosures to the SEC and CFTC.4

Conflicts of Interest:  Investigations conducted by the Department of the Interior's Inspector General and POGO revealed gross misconduct at multiple Minerals Management Service (MMS) offices. Instances of misconduct included reports of MMS personnel receiving inappropriate gifts from industry, performing outside work that clearly conflicted with the ethical performance of their duties, and in at least one instance, negotiating for a job with a company that they were inspecting. These findings are all indicative of an agency that is inappropriately close to industry. While S. 3516, the Outer Continental Shelf Reform Act of 2010, clarifies that gift bans and conflicts of interest rules apply to all employees at Interior with responsibilities under the OSC Act, the House's CLEAR Act does not yet include such measures.

POGO Recommends

Including the Senate language, but including both civil and criminal penalties for violators of the gift ban or conflicts of interest rules.

Federal Advisory Committees (Secs. 109 and 605):  The CLEAR Act rightly establishes that the OCS Safety and Environmental Advisory Board is subject to the Federal Advisory Committee Act (FACA), but FACA is only the floor for ethics and transparency in these bodies. In 2004, the Government Accountability Office thoroughly examined the FACA process and raised serious concerns about the ways agencies select and designate members. The Government Accountability Office (GAO) recommended greater transparency for the member selection process such as "providing information on how the members of the committees are identified and screened, and indicating whether the committee members are providing independent or stakeholder advice."5 In order to ensure that the advisory board fulfills its requirement to provide the agency with "independent scientific and technical advice," strengthening language is needed. In addition, any body that includes non-federal employees and is providing information or guidance to the federal government should be under FACA, and then have additional disclosure requirements and safeguards against conflicts of interest. This is particularly important given the role in grant making given to the Ocean, Coastal, and Great Lakes Review Panel in the bill.

POGO recommends:

  • Specifying that the Ocean, Coastal, and Great Lakes Review Panel is subject to FACA and including the other measures below (Sec. 605(c)(2)).
  • Requiring that the chairman and members of the OCS Safety and Environmental Advisory Board and the Ocean, Coastal and Great Lakes Review Panel have no financial interests in the exploration, development, and production of energy and mineral resources, or designate the board members as special government employees (SGEs), making them subject to conflict of interest statutes.
  • Requiring that the agency make public and disclose on its website a list of the Advisory Board and Review Panel members with their designation and affiliation, the committee charter (which should be made public when the formation of the committee is announced), all experts who are consulted, and resources from board meetings (minutes, transcripts, and audio/video recordings), as well as the public nominations.

Regional Citizens' Advisory Council:  The CLEAR Act does not provide for adequate public participation in oversight of the regional oil and gas operations and its impacts. A Regional Citizens' Advisory Council would provide a forum for public participation to generate recommendations for exploration, development, production, refining, and transportation of oil and gas in the Gulf of Mexico and of prevention, response and restoration measures related to the social, economic and environmental impacts of an oil spill, drilling disaster or gas release.

POGO Recommends:

The CLEAR Act should establish a Gulf of Mexico Regional Citizens Advisory Council to increase public participation in oversight. The Council should include representatives of groups disproportionately impacted by risks of energy production from each of the five Gulf States selected by their peers to conduct citizens' oversight. The Council should be modeled after successful citizens advisory councils in Alaska authorized in the Oil Pollution Act of 1990 after the Exxon Valdez disaster.6

Improving Natural Gas Reporting (Sec. 314):  The CLEAR Act requires the Secretary of the Interior to provide long-overdue reforms to ensure accurate determination and reporting of BTU values, but more could and should be done to improve standards.

POGO Recommends:

Incorporating Rep. Carolyn Maloney's (D-NY) Study of Ways to Improve the Accuracy of the Collection of Federal Oil, Condensate, and Natural Gas Royalties Act of 2009 (H.R. 1462), which would require a more comprehensive assessment to ensure that taxpayer get their fair share for natural gas royalties.

Developing Innovations and Technology and Awards for Industry (Sec. 219): POGO supports efforts to encourage the development of oil spill and containment and response technologies, but we're concerned about cash-prize award programs for industry and that current technologies are not sufficiently evaluated. The cash-prize award program is subject to conflicts of interest and also is unnecessary. The grants offered and the exploration requirements in the CLEAR Act provide sufficient incentives for the development of new technology.

POGO Recommends:

  • Removing the awards program (Sec. 219 (d)).
  • Adding the evaluation of current technology to the grant program.

Measuring the Effectiveness of Reforms:  The CLEAR Act contains many important reforms, and yet there are not enough measures to determine the effectiveness and impact of the reforms in the bill.

POGO Recommends:

The bill should require a GAO evaluation as to whether the reorganization addresses previous GAO and IG concerns, whether the increased hiring authority for the Secretary made Interior more effective at addressing their oversight missions, and if there has been a sufficient reduction in the conflicts of mission and interest.

Inspector General Reports:  The Inspector General has conducted many investigations tracking the problems at the Minerals Management Service. The public must continue to have to access to their work to hold Interior accountable for being effective custodians of taxpayer resources.

POGO Recommends:

The CLEAR Act should make all Interior Inspector General reports and investigations public.

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Endnotes

1  These recommendations are based upon the Discussion Draft of the Amendment in the Nature of a Substitute to H.R. 3534, the Consolidated Land, Energy, and Aquatic Resources Act of 2010, dated June 22, 2010, and which was under consideration in the House Natural Resources Committee Hearing on June 30, 2010.

2  The revolving door problem is well documented, including in POGO's report Drilling the Taxpayer.

3  POGO and 12 other organizations sent a letter of support for the Wyden Revolving Door Amendment to S. 3516, the Outer Continental Shelf Reform Act of 2010.

4  POGO can provide detailed recommendations for best-practice legislation.

5  "Federal Advisory Committees: Additional Guidance Could Help Agencies Better Ensure Independence and Balance," GAO, April 2004.

6  The Citizens' Advisory Commission also is supported by the Publish What You Pay coalition, as referenced in their recommendations on July 7, 2010.


Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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