From the U.S. Government Accountability Office, www.gao.gov Transcript for: Interior's Oversight of Offshore Oil and Gas Activities Description: Audio interview by GAO staff with Frank Rusco, Director, Natural Resources & Environment Related GAO Work: GAO-12-423: Oil and Gas Management: Interior's Reorganization Complete, but Challenges Remain in Implementing New Requirements Released: August 2012 [Background Music] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. It's August 2012. Following the Deepwater Horizon drilling rig explosion in 2010, the Department of the Interior initiated a number of reforms designed to improve its oversight of offshore oil and gas activities. A group led by Frank Rusco, a director in GAO's Natural Resources and Environment team recently examined these reforms. GAOs Jeremy Cluchey sat down with Frank to talk about what they found. [ Jeremy Cluchey: ] Can you talk a little bit about the reorganization that Interior undertook in the wake of the Deepwater Horizon incident? [ Frank Rusco: ] Absolutely. After the Deepwater Horizon incident that led to a huge oil spill in the Gulf, Interior recognized that it needed to focus more management attention on two key functions. And to do that, they split their oversight of oil and gas operations in the Gulf into two pieces. One, looking at environmental assessments, planning, and leasing of offshore areas for oil and gas development and the second, looking at inspecting oil and gas operations and enforcing regulations. [ Jeremy Cluchey: ] And I understand Interior has undertaken some other reforms as well, to try and improve its oversight. What are some of those? [ Frank Rusco: ] In addition to reorganizing and refocusing its efforts at oversight, it took a bottom-up look at all of its processes, the way that it issues permits, the way that it inspects, the way that it plans, and it added rigor and strength to its environmental analyses, and to its permitting and inspection process that it follows. [ Jeremy Cluchey: ] This report also identifies a number of ongoing challenges that Interior faces with these reforms. Can you talk about those? [ Frank Rusco: ] What's happened over time is as oil and gas has been developed offshore, it's moved from shallow waters very close to shore, to ever deeper and deeper wells, and using newer technologies. Now moving into deeper waters is inherently more risky and using new technologies creates uncertainties about what…what are the processes being used, and how should they be overseen and regulated. Interior has a challenge, ongoing challenge, to continue to keep up with those technological changes and anything else that's happening in industry that they need to build into their oversight and regulatory processes. [ Jeremy Cluchey: ] Your team also talked with stakeholders who had offered input to Interior on these changes as they were taking them on. What did you learn from those conversations? [ Frank Rusco: ] Well first it's important to understand, there are a lot of stakeholders for this process. A lot of folks are interested in a responsible and safe development of oil and gas in offshore waters. For example, there are environmental groups, there are other federal agencies that are involved in any environmental analyses associated with offshore oil and gas development. There's the fishing industry, there are the states that surround the Gulf that depend on the economy there, and then there's the oil and gas industry. When we talked to the other federal agencies, they felt that they had pretty good access to Interior that they were involved appropriately, generally and when we talked to some of the private interests, there was a more of a mixed response. So some of the environmental groups, for example, felt that they didn't necessarily have enough warning about what were Interior's plans for leasing in a timely fashion so that they could intervene if they wanted to or provide input into the process. And Industry has felt that they would like enhanced transparency of the regulatory process and also more certainty about what is going to be required of them so that they can make business decisions in an informed way. [ Jeremy Cluchey: ] Finally, for taxpayers interested in what the Government is doing to prevent another disaster like the Deepwater Horizon incident, what's the bottom line here? [ Frank Rusco: ] The bottom line is, with the reorganization and this bottom-up look at their processes and their regulations and their rules, I think we can be confident that there have been improvements in the safety of oil and gas operations offshore. But one thing that's important to point out, that after the Deepwater Horizon, there initially was a moratorium on new drilling in the Gulf of Mexico as Interior implemented these changes. And then the moratorium was lifted and then there has been a slow but gradual and steady increase in oil and gas development activity in the Gulf. That's an indication that there's better transparency and better certainty about what the process is. Industry is figuring it out and they are able to operate in this new environment , and so I think there's some good news on that side as well. 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