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Oil and Gas Development: Actions Needed to Improve Oversight of the Inspection and Enforcement Program

GAO-19-7 Published: Feb 14, 2019. Publicly Released: Mar 11, 2019.
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Fast Facts

Private companies operate over 140,000 oil and gas wells on federal and Indian lands. The Bureau of Land Management's (BLM) inspection program ensures that these operators are complying with laws and regulations that protect public safety and the environment. Inspectors also ensure that operators are making accurate royalty payments to the federal government.

We reviewed BLM's inspection program and found that the agency wasn't effectively allocating its workforce. BLM's 6 busiest field offices handled 58% of the inspection workload between FYs 2012-2016—but had only 44% of the inspection staff. We recommended that BLM address this issue.

 

Picture of four oil pump jacks and oil storage tanks.

Picture of four oil pump jacks and oil storage tanks.

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Highlights

What GAO Found

Based on GAO's analysis of Bureau of Land Management (BLM) data, the distribution of BLM's oil and gas Inspection and Enforcement program's workload and workforce showed an imbalance among BLM's 33 field offices in fiscal years 2012 through 2016. GAO analyzed BLM data on the overall percentage of the workload and workforce distributed at each field office (i.e., activity level) and grouped similar activity level field offices together into highest, medium and lowest activity categories. GAO found that the program distributed the majority of its workload to 6 highest activity offices and distributed the majority of the workforce to 21 medium activity offices (see fig.). Based on GAO's review of BLM documentation and interviews with agency officials, BLM took both short- and long-term actions in fiscal years 2012 through 2016 to address this imbalance, such as temporarily re-assigning inspectors from some medium activity offices to some of the highest activity offices.

Distribution of Workload and Workforce across the BLM Oil and Gas Inspection and Enforcement Program's 33 Field Offices, Fiscal Years 2012 through 2016

Distribution of Workload and Workforce across the BLM Oil and Gas Inspection and Enforcement Program's 33 Field Offices, Fiscal Years 2012 through 2016

BLM has not completed all required internal control reviews of its field offices. BLM's July 2012 oversight policy instructs its state offices to periodically conduct internal control reviews of field offices, which are to, among other things, identify staffing needs. BLM state offices completed internal control reviews at 6 of 33 field offices from 2013 through 2017, and 5 more are scheduled from 2018 through 2020. Officials from BLM state offices told GAO that some human capital and workload challenges hindered their ability to complete reviews, including long-term vacancies in some state offices positions. However, a senior BLM official said that headquarters did not consistently track and monitor the extent to which state offices completed field office internal control reviews, and headquarters officials said they were not aware that so few reviews had been completed. Under federal standards for internal control, management should design control activities to achieve objectives and respond to risks, such as by comparing actual performance to expected results and analyzing significant differences. Identifying the reasons it did not complete internal control reviews, developing and implementing a plan to address those challenges, and monitoring state offices' progress toward completing required reviews will better position BLM to ensure that its state offices are completing all required internal control reviews as called for by its July 2012 oversight policy.

Why GAO Did This Study

BLM has primary responsibility for managing oil and gas development on federal and Indian lands. To help ensure operator compliance with laws and regulations, BLM administers the Inspection and Enforcement program. Under the program, BLM inspects operators' drilling, production, and plugging activities and can issue various enforcement actions, such as monetary assessments, for violations. GAO was asked to examine key aspects of the Inspection and Enforcement program.

This report (1) describes the distribution of BLM's oil and gas Inspection and Enforcement program's workload and workforce among agency field offices for the most recent 5 years for which such data were available (fiscal years 2012 through 2016) and (2) examines the extent to which BLM conducted internal control reviews in accordance with its July 2012 oversight policy for fiscal years 2013 through 2018, the most recent period for which such data were available. GAO examined BLM policies, data, and documents; interviewed BLM headquarters, state and field office officials; visited six BLM field offices selected based on their level of resource development activity; and toured oil and gas drilling, production, and plugging sites at three of these six field offices.

Recommendations

GAO is making three recommendations to BLM, including taking actions to increase monitoring of state offices' progress toward completing internal control reviews. BLM concurred with all three recommendations.

Recommendations for Executive Action

Agency Affected Recommendation Status
Bureau of Land Management The Director of BLM should identify the reasons internal control reviews were not completed (e.g., human capital and workforce), develop and implement a plan to address those reasons, and monitor state offices' progress toward completing required reviews. (Recommendation 1)
Closed – Implemented
In June 2023, BLM issued a new oversight policy for its Oil and Gas Inspection and Enforcement program. This June 2023 policy states that it was developed in response to GAO's recommendations, replaces the prior oversight policy that required internal control reviews, and contains revised program oversight requirements that seek to identify and address workforce and training needs. GAO believes that the June 2023 policy addresses the intent of this recommendation. Documentation accompanying the June 2023 policy states that internal control reviews (a key oversight activity required under the prior, expired oversight policy) were not completed because of competing priorities and extended vacancies in multiple state offices' inspection and enforcement coordinator positions due to limited pool of qualified candidates. The June 2023 policy contains provisions that should address these challenges and increase monitoring. For example, the policy lists state offices that currently have vacant inspection and enforcement coordinator positions and identifies other BLM officials who have been delegated responsibility to fulfill the coordinator's oversight duties. In addition, the policy states that key oversight activities will be included as part of the annual performance appraisal plan for both field office supervisory petroleum engineer technicians and state inspection and enforcement coordinators. The June 2023 policy requires that state inspection and enforcement coordinators provide the results of certain oversight activities (reports and recommendations on workforce and training needs) to BLM's Headquarters Oil and Gas Compliance Specialist, which should increase BLM's monitoring of state offices progress.
Bureau of Land Management The Director of BLM should develop and document procedures for implementing internal control reviews under the July 2012 oversight policy. (Recommendation 2)
Closed – Implemented
In June 2023, BLM issued a new oversight policy for its Oil and Gas Inspection and Enforcement program. This June 2023 policy states that it was developed in response to GAO's recommendations, replaces the prior oversight policy that required internal control reviews, and contains revised program oversight requirements that seek to identify and address workforce and training needs. GAO believes that the June 2023 policy addresses the intent of this recommendation as the policy contains specific procedures and timeframes for conducting revised annual oversight activities. In August, each field office supervisory petroleum engineer technician (PET) complete specified quality assurance actions to ensure that inspections conducted by staff PETs are accurate and properly documented. If these quality assurance actions identify inspection deficiencies, supervisory PETs are to identify training needs. In October, state Inspection and Enforcement Coordinators finalizes each field offices' workforce and workload planning for the fiscal year and determine the extent to which there is an imbalance (surplus or shortage) between them. In November, state Inspection and Enforcement Coordinators prepare a training needs report that incorporates information identified by supervisory PETs and includes recommendations for meeting those needs. In addition, coordinators prepare a workforce needs report that also contains recommendations for program improvement. The coordinators will provide both reports to the Deputy State Director and the Headquarters Oil and Gas Compliance Specialist. In December, the Headquarters Oil and Gas Compliance Specialist provides a report to senior BLM leadership detailing workforce needs and recommendations to address those needs. In addition, this report should detail programmatic strengths and weaknesses to meet the agency's mission of ensuring safe and responsible development of the nation's natural resources.
Bureau of Land Management The Director of BLM should implement a risk-informed approach to scheduling and conducting internal control reviews that takes into account the risks to BLM's mission, such as those inherent in field offices' workload and workforce. (Recommendation 3)
Open
In June 2023, BLM issued a new oversight policy for its Oil and Gas Inspection and Enforcement program. This June 2023 policy states that it was developed in response to GAO's recommendations, replaces the prior oversight policy that required internal control reviews, and contains revised program oversight requirements that seek to identify and address workforce and training needs. However, GAO believes that the June 2023 policy does not address the intent of this recommendation because it does not contain a stated risk-based strategy to conduct oversight activities. For example, our 2019 report found that 58 percent of the program's workload was located at the 6 highest-activity field offices, which had 44 percent of the workforce. In contrast, the 6 lowest-activity field offices had 2 percent of the workload and 4 percent of the workforce. Under the June 2023 policy, these highest and lowest-activity field offices are required to conduct the same number and type of oversight tasks each year despite significant difference in the risk to BLM's mission. Documentation accompanying the June 2023 policy states that BLM has an inherent risk-based approach in the overall program. However, this risk-based approach is applicable to technical field inspections (e.g., drilling, abandonment, and production) and not to oversight tasks, which is the focus of our recommendation and the June 2023 policy.

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Topics

Compliance oversightEnergyEnergy marketsHuman capital managementInspectionInternal controlsMonitoringNatural gas pricesNatural resourcesOil and gasOil and gas developmentOil marketsOil pricesPrioritizingShale oil fieldsVacant positions