Oil Spill Demonstrates Need for Effective Oversight

October 2010
Vol. 14, Issue 2
Oil Spill Demonstrates Need for Effective Oversight
I
n the wake of the Deepwater Horizon disaster, the Interior Department announced
plans to end the offshore drilling agency Minerals Management Service’s (MMS)
conflict of mission to make it more effective at overseeing development, inspections,
and royalty collections.
POGO has argued for years that MMS emphasized drilling and production and
diminished auditing and oversight functions. Numerous reports by POGO and other
government watchdogs also found that MMS was overly close to the industry that
it’s supposed to be regulating, and that in some cases MMS employees were literally
in bed with industry.
The Deepwater Horizon disaster made it clear that MMS was long overdue for reform. MMS Director Liz
Birnbaum was replaced with Michael Bromwich, a former Justice Department Inspector General who announced
shortly after his appointment that he would be working with Interior’s Inspector General to better identify
and correct problems within the agency. Interior Secretary Ken Salazar repeatedly echoed POGO’s concerns
about the revolving door between MMS and industry, and in addition to renaming the agency the Bureau
of Ocean Energy Management, Regulation, and Enforcement (BOEMRE), Director Bromwich announced new
rules that would put more restrictions between regulators and industry. The House has passed, and the
Senate is considering, legislation to reorganize the agency and slow the revolving door.
In June and July, POGO Executive Director Danielle Brian testified before both the House Natural Resources
and House Oversight and Government Reform committees about the proposed reorganization. While
supportive of the reorganization, POGO expressed concerns that the structural changes might not go far
enough to address the deep cultural problems and lack of technical expertise and training for inspectors.
POGO recommended that the government also establish training academies for inspectors and consider
raising their pay scale to create a more professionalized inspector workforce.
POGO remains concerned that BOEMRE, despite its name-change, has failed to meaningfully change in the
wake of the disaster. For example, POGO learned that in at least one instance since the Deepwater Horizon
disaster a supervisor overruled an agency inspector who wanted to stop production at a facility he believed to
be in dangerous noncompliance. The Outer Continental Shelf Safety Oversight Board found similar problems
in a report they issued in September.
The disaster in the Gulf made the MMS’s problems abundantly clear, and POGO will continue to work with
policymakers to ensure that reforms will effectively target the problems that have beleaguered this agency
for over 15 years. ■
In This Issue: 1 Oil Spill Demonstrates Need for Oversight 2 Director’s Letter 3 Private Security
Contractors in Combat Zones 3 Two New Investigators 4 Congressional Transparency Caucus
4 POGO Awards Reps. Maloney and Issa 5 A Tribute to Beth Daley 6 We Have a Deal for You!
Staff
Danielle Brian, Executive Director
Scott Amey, General Counsel
Danni Downing, Editor
Ingrid Drake, Investigator/COTS Director
Abby Evans, Development Associate
Ned Feder, M.D., Staff Scientist
Neil Gordon, Investigator
Lynn Mandell, Finance Manager
Chris Pabon, Director of Development
Bryan Rahija, Blog Editor
Keith Rutter, Director of Operations
Pam Rutter, Web Manager
Michael Smallberg, Investigator
Mandy Smithberger,
National Security Investigator
Nick Schwellenbach,
Director of Investigations
Janet Su, Fellow
Paul Thacker, Investigator
Jake Wiens, Investigator
Adam Zagorin, Journalist-in-Residence
Alex Bland, Intern
James Budnick, Intern
Richard D’Amato, Intern
Board of Directors
David Hunter, Chair
Lisa Baumgartner Bonds, Vice Chair
Dina Rasor, Treasurer
Ryan Alexander
Henry Banta
David Burnham
Michael Cavallo
Stacy Donohue
Charles Hamel
Janine Jaquet
Morton Mintz
Nithi Vivatrat
Anne Zill
Advisory Council
Anne Bartley, Philanthropist
Patricia Derian,
Former Assistant Secretary of State
Professor Myron Peretz Glazer,
Smith College
Wade Greene,
Rockefeller Family & Associates
Catherine James Paglia,
Enterprise Asset Management
Lawrence Korb,
Center for American Progress
Conrad Martin,
Fund for Constitutional Government
George Perkovich,
National Security Analyst
Vice Admiral Jack Shanahan (Ret.)
Professor Charles Tiefer,
University of Baltimore Law School
Affiliations are for identification purposes only.
2 ■ Vol. 14, Issue 2
Letter from the Executive Director
Dear Friends,
POGO’s mission is captured by four values: a more effective, accountable,
open, and ethical government. For each of the past four years, we have
focused on one of these values in our newsletters. This year we had
selected ethics—and, boy, are we glad we did.
Long-time POGO followers will be familiar with our work that began in
the early 1990s exposing the ethical—and therefore functional—failures
of the Department of the Interior’s Minerals Management Service (MMS).
Right now, I’m looking back with pride at our nearly two decades of work
exposing their inordinately close relationship with the oil and gas industry
they were charged with regulating, and frankly feeling a dose of “we told
you so!”
It has been horrifying to see that it took the environmental and
economic catastrophe plaguing the Gulf to cause the dissolution of
that fundamentally corrupted agency. The writing has been on the wall
since its creation that the culture of the agency’s management was far
from ethical.
But we hope people understand that simply renaming the agency and
breaking it up into three parts in order to remove the obvious conflicts
in its mission (both promoting drilling and regulating it) does not solve
the ethically challenged culture. POGO has begun working with MMS
inspectors who continue to be instructed by their supervisors to cover up
safety violations—and this is after the Deepwater Horizon accident.
The single most important, and single most difficult, thing Secretary
Salazar must do is to create an ethical environment in the new BOEMRE.
POGO believes the first step in accomplishing this change will be to
slam shut the revolving door between the BOEMRE and the oil and gas
industry. Legislation passed by the House and pending in the Senate will
accomplish this goal.
An ethical foundation is essential for our other objectives for government
to flourish. We are not there yet with the BOEMRE, but we hope we are
on the road to it.
All the Best,
Danielle Brian, POGO Executive Director
POGO Testifies on Use of Private Security Contractors in Combat Zones
I
n June, POGO Executive Director Danielle Brian testified before the Commission on Wartime Contracting in
Afghanistan and Iraq (Commission) to answer the question, “Are Private Security Contractors Performing Inherently
Governmental Functions?”
Our conclusion? Yes, when they are operating in a combat zone. POGO believes any operations that are critical
to the success of the U.S. government’s mission in a combat zone must be controlled by government personnel, and
only supported by contractors. When the area to be secured has not yet been
brought under the rule of law, POGO believes providing security is an inherently
In the long term, we
governmental function and should not even be supported by contractors.
The U.S. currently has approximately 30,000 private security contractor
need to restore control
(PSC) personnel operating in Afghanistan and Iraq providing what are arguably
of security operations
inherently governmental functions. Although the wild-west atmosphere with
in a combat zone to the
PSCs in Iraq and Afghanistan appears to be getting somewhat better—POGO
government, and allow
believes due to oversight by the media, the Commission, Congress, and groups
those functions to be only
like POGO—the bigger policy questions need to be resolved.
In the short term, we need to deal with the current reality and ensure
supported by contractors.
adequate oversight and accountability for contractors, which is lacking. Real
oversight requires having the resources, technical knowledge, and experience
necessary to know when a contractor is not adequately performing its mission. Another fundamental oversight tool
that is lacking is whistleblower protections for private security contractor employees. While DoD contractor employees
have such protections, State Department contractor employees do not. As a result, those employees are far less likely
to report misconduct.
In the long term, we need to restore control of security operations—meaning the planning and management of
security operations—to the government, and allow those functions to be only supported by contractors.
The Commission is due to issue a final report on its findings in 2011. In the meantime, POGO will continue to tackle
the complex issue of outsourcing inherently governmental functions. ■
POGO Announces Two New Investigators
N
ick Schwellenbach has recently rejoined POGO as our Director of Investigations. Nick will
also conduct investigations into national security-related corruption, incompetence, and
waste; transportation safety; government secrecy policies and practices; and the effectiveness
of government oversight.
Before rejoining POGO, Nick was a staff writer at the Center for Public Integrity from 2008
to 2010, where he covered congressional ethics and defense spending. He and the Center
were finalists for the 2009 Scripps Howard Raymond Clapper Washington Reporting award
for investigative work on the House Defense Appropriations Subcommittee. He also assisted in directing a Knight
Foundation-funded News21 team of eleven graduate students from around the country working on an investigative
series on transportation safety. Nick was first with POGO from 2004 through 2008.
Our other new staffer, Paul Thacker, has joined POGO as an Investigator after working for three years as an
investigator on the Senate Finance Committee for Senator Chuck Grassley of Iowa. Mr. Thacker focused most of his
energies on health care oversight.
Mr. Thacker spearheaded a multi-year investigation into Avandia, a blockbuster diabetes drug
that research suggests was linked to heart attacks. Mr. Thacker’s investigation pressured the U.S.
Food and Drug Administration to place patient safety before drug industry profits.
In 2007, Mr. Thacker helped initiate a probe of the financial ties between industry and physicians
who receive research grants from the National Institutes of Health (NIH), which resulted in many
universities tightening their policies on physician interactions with industry and caused the NIH
to introduce new conflict-of-interest policies. The investigations were also critical in helping to
pass Senator Grassley’s Physicians Payments Sunshine Act, which recently became law.
Prior to working on the Hill, Mr. Thacker spent several years as a journalist writing about science, medicine, and the
environment. His work was profiled in the award-winning PBS series “Exposé: America’s Investigative Reports.” ■
Vol. 14, Issue 2 ■
3
Congressional Transparency Caucus Shines
I
n April, Representatives Mike Quigley (D-IL) and Darrell Issa (R-CA) took
a step to shine light into the dark corners of the government by creating
the bipartisan Transparency Caucus. The Caucus, co-chaired by Quigley and
Issa and consisting of thirty-three Members with representation from both
parties, will promote legislation that requires federal information to be
freely accessible to the public, as well as advocate for new initiatives that support transparency. POGO believes the
government will run more effectively when additional information is in the hands of the public.
The launch of the Caucus included a panel discussion featuring POGO’s general counsel, Scott Amey. The discussion
was moderated by The Sunlight Foundation’s Daniel Schuman, and included Senior Research Fellow Jerry Brito from
the Mercatus Center at George Mason University and Director Patrice McDermott from OpenTheGovernment.org.
The main focus of the panelists was on the importance of providing tools to citizens that will educate them about
government operations and allow them to prevent and expose wrongdoing. Such efforts will enhance accountability,
integrity, and public trust in government activities.
Specifically, Scott detailed the lack of transparency in federal contract spending that has existed inside the
government. That mentality has resulted in restricted public access to comprehensive contract records, including
copies of contracts and contractor responsibility and performance data. Additionally, Scott discussed the downside
of concealed Congressional Research Service (CRS) reports, the Administration’s effort to legitimize the use of
the Controlled Unclassified Information designation (a quasi-classified system that prevents disclosure of agency
information), and the lack of genuine executive branch lobbying reporting.
POGO has always supported enhanced transparency, as evidenced by our continued work to make contracts, the
Federal Awardee Performance and Integrity Information System (FAPIIS), and the Department of Defense’s revolvingdoor database public. The lack of government transparency allows bad policies and programs to fester for years,
leading to waste, fraud, and abuse of taxpayer dollars. The Transparency Caucus should provide necessary leadership
to promote an openness agenda that has been missing in Congress. ■
POGO Continues Hill Oversight Training and
Recognizes Oversight Leaders in Congress
A
t the end of June, POGO handed out graduation certificates to 13 of the 382
congressional staffers who participated in the 2009-2010 season of our Congressional
Oversight Training Series (COTS). Among the seminars POGO offered this season were
topics requested by participants such as oversight of the financial sector and disaster
relief. COTS is laying low during the election season.
POGO also recognized Members who take seriously the task of oversight. POGO
presented Representatives Carolyn Maloney (D-NY) and Darrell Issa (R-CA) with its Good Government Award for
their important contributions to government oversight and their dedication to making government more effective,
accountable, open, and ethical.
Long before the Deepwater Horizon disaster, both Representatives were conducting rigorous oversight of the Minerals
Management Service (MMS) and identifying the technical and cultural weaknesses at the agency that contributed to
the Gulf Coast spill. Both of these awardees demonstrate that Members of Congress do not need to chair committees
to be formidable watchdogs for taxpayers.
Both Maloney and Issa have pushed for good-government reforms in other areas, as well. Representative Maloney’s
dedication to tracking contractor misconduct led to the creation of a centralized contractor misconduct database
similar to POGO’s database in 2008. She also cosponsored the Whistleblower Protection
Enhancement Act of 2009, which expands legal protections for people who find the
courage to speak out against corruption or fraud in their work environment.
Representative Issa has been a major advocate of more openness and accountability
in the financial sector, including helping to lead a thorough investigation into the
infamous “back-door bailout” of AIG’s counterparties, issuing a report detailing systemic
mismanagement problems in the Securities and Exchange Commission (SEC), and playing
a key role in Congress’s recent repeal of the SEC secrecy provision in the new financial
regulatory overhaul law. ■
Vol. 14, Issue 2 ■
4
A Tribute to Beth Daley
P
OGO is devastated to announce that long-time
staffer Beth Daley died in her sleep on Sunday,
August 22, 2010. Beth is survived by her sevenand-a-half year old twin girls Ginger and Traci,
of whom she was so proud, her husband Steve
Holmer, mother and father Steve and Georganna
Daley, sister and brother-in-law Gwen Daley and
Brett Best, mother-in-law Terry Holmer, and
sisters-in-law Chris Cofield and Kathy Holmer,
and a loving extended family and friends.
For ten years, Beth played a vital role at POGO.
She was our first Director of Development and
Director of Communication, and helped to build our small non-profit
into the institution it is today. Beth completed her career as the Director of Investigations.
Everything that went out the door had her imprint.
“Beth’s death is a crushing loss for the POGO family,” said POGO Executive Director Danielle
Brian. “Both as a colleague and as a friend, Beth’s fierce passion for POGO’s work inspired all
of us to demand more from ourselves. The good government community has lost a star, but
her voice will still echo down our halls, her exacting eye will be peering over our shoulders,
and her expectations of excellence will propel us to try just a little bit harder.”
One of the highlights of her career with POGO was her work to expose the oil industry’s
underpayment of oil royalties from federal and Indian lands. That work resulted in nearly half
a billion dollars being returned to the Treasury, legislation requiring more honest reporting
by the oil and gas industry, and exposing the corruption now widely recognized in the
Department of the Interior’s Minerals Management Service. She also sought to improve
nuclear security by exposing ineffective contractors, exposing the fact that U.S. nuclear
weapons labs failed 50 percent of their security tests, and revealing the conflict of interest
inherent in the Nuclear Regulatory Commission’s use of the same private security contractor
to both test and secure commercial nuclear power plants.
In addition to her passion for her investigations, Beth loved advising and advocating for
whistleblowers speaking out against waste, fraud, and abuse in the federal government. She
testified in support of protections for national security whistleblowers—legislation providing
such protections is finally pending before Congress.
The family and POGO have established the Beth Daley Memorial Impact Fund (http://pogo.ly/
daleyimpactfund) to help continue the work that Beth so loved. POGO’s goal is to have the
Fund support at least one Daley Intern each year as a living tribute to Beth’s work. Each Daley
Intern will earn up to $5,000, depending on the length of time the student is available. The
Fund will offer an opportunity to students who have a passion for government accountability
but cannot afford to accept the kind of unpaid internship so typical in Washington. ■
Vol. 14, Issue 2 ■
5
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Mission Statement
The Project On Government Oversight 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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