    [House Hearing, 115 Congress]
    [From the U.S. Government Publishing Office]

      EXAMINING GAO FINDINGS ON DEFICIENCIES AT THE BUREAU OF SAFETY AND
                           ENVIRONMENTAL ENFORCEMENT

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                     THE INTERIOR, ENERGY, AND ENVIRONMENT

                                     OF THE

                             COMMITTEE ON OVERSIGHT
                             AND GOVERNMENT REFORM
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 21, 2017

                                   __________

                                Serial No. 115-3

                                   __________

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                  Committee on Oversight and Government Reform

                         Jason Chaffetz, Utah, Chairman
    John J. Duncan, Jr., Tennessee       Elijah E. Cummings, Maryland,
    Darrell E. Issa, California              Ranking Minority Member
    Jim Jordan, Ohio                     Carolyn B. Maloney, New York
    Mark Sanford, South Carolina         Eleanor Holmes Norton, District of
    Justin Amash, Michigan                   Columbia
    Paul A. Gosar, Arizona               Wm. Lacy Clay, Missouri
    Scott DesJarlais, Tennessee          Stephen F. Lynch, Massachusetts
    Trey Gowdy, South Carolina           Jim Cooper, Tennessee
    Blake Farenthold, Texas              Gerald E. Connolly, Virginia
    Virginia Foxx, North Carolina        Robin L. Kelly, Illinois
    Thomas Massie, Kentucky              Brenda L. Lawrence, Michigan
    Mark Meadows, North Carolina         Bonnie Watson Coleman, New Jersey
    Ron DeSantis, Florida                Stacey E. Plaskett, Virgin Islands
    Dennis A. Ross, Florida              Val Butler Demings, Florida
    Mark Walker, North Carolina          Raja Krishnamoorthi, Illinois
    Rod Blum, Iowa                       Jamie Raskin, Maryland
    Jody B. Hice, Georgia                Peter Welch, Vermont
    Steve Russell, Oklahoma              Matt Cartwright, Pennsylvania
    Glenn Grothman, Wisconsin            Mark DeSaulnier, California
    Will Hurd, Texas                     John Sarbanes, Maryland
    Gary J. Palmer, Alabama
    James Comer, Kentucky
    Paul Mitchell, Michigan

                                     ------

                   Jonathan Skladany, Majority Staff Director
                      Rebecca Edgar, Deputy Staff Director
                        William McKenna, General Counsel
                  Melissa Beaumont, Professional Staff Member
                             Kiley Bidelman, Clerk
                     David Rapallo, Minority Staff Director

                                     ------

             Subcommittee on the Interior, Energy, and Environment

                       Blake Farenthold, Texas, Chairman
    Paul A. Gosar, Arizona, Vice Chair   Stacey E. Plaskett, Virgin Islands
    Dennis Ross, Florida                 Jamie Raskin, Maryland
    Gary J. Palmer, Alabama              (Vacancy)
    James Comer, Kentucky                (Vacancy)

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on March 21, 2017...................................     1

                                   WITNESSES

    Mr. Richard T. Cardinale, Acting Assistant Secretary for Lands
      and Mineral Management, U.S. Department of the Interior
        Oral Statement...............................................     4
        Written Statement............................................     6
    Mr. Frank Rusco, Director, Natural Resources and Environment-
      Energy Issues, Government Accountability Office
        Oral Statement...............................................    10
        Written Statement............................................    12

                                    APPENDIX

    Questions for the Record for Mr. Richard Cardinale, submitted by
      Mr. Farenthold and Ms. Plaskett................................    38
    Questions for the Record for Mr. Frank Rusco, submitted by Mr.
      Farenthold.....................................................    45

      EXAMINING GAO FINDINGS ON DEFICIENCIES AT THE BUREAU OF SAFETY AND
                           ENVIRONMENTAL ENFORCEMENT

                                  ----------

                            Tuesday, March 21, 2017

                      House of Representatives,
              Subcommittee on the Interior, Energy and
                                            Environment
                  Committee on Oversight and Government Reform,
                                                       Washington, D.C.
        The subcommittee met, pursuant to call, at 2:05 p.m., in
    Room 2154, Rayburn House Office Building, Hon. Blake Farenthold
    [chairman of the subcommittee] presiding.
        Present: Representatives Farenthold, Comer, Plaskett, and
    Raskin.
        Mr. Farenthold. The subcommittee on the Interior, Energy,
    and Environment will come to order.
        Without objection, the chair is authorized to declare a
    recess at any time.
        The chair notes the presence of our colleague--oh, we don't
    note the presence of anybody because there is not anybody else
    here--there we go.
        The chair notes the presence of our colleagues from the
    full Committee of Oversight and Government Reform. We
    appreciate your interest in the topic and welcome your
    participation today. I ask unanimous consent that all members
    of the Committee on Oversight and Government Reform be allowed
    to fully participate in today's hearing.
        Without objection, so ordered.
        Well, good afternoon. Today, our subcommittee is going to
    examine the management deficiencies that have led the
    Government Accountability Office, or GAO, to once again--and
    the Bureau of Safety and Environmental Enforcement, or BSEE as
    it's known, to its high risk list. While this report notes that
    BSEE has made an effort to resolve some of the issues
    previously outlined by GAO, there's still substantial room for
    improvement. And today we will explore the lingering issues in
    hopes that we can determine some comprehensive solutions.
        Before we got to these issues, I would like to thank the
    GAO and its staff for the hard work they've done in this issue
    area. And I'm especially glad to note that the GAO has a new
    report on the subject that it released just this morning. And I
    look forward to hearing more about that from Frank Rusco of the
    GAO appearing here today. Thank you for coming.
        I would also like to thank Mr. Richard Cardinale, the
    acting Secretary for Lands and Minerals at the Department of
    the Interior. Mr. Cardinale is a career employee who has
    extensive experience in the Office of Land and Minerals. I'm
    also thankful that he is here today as well to provide this
    perspective from the last several years and shed some light on
    what's going on at BSEE. Thank you for coming.
        Leadership seems to be a continual problem at BSEE since
    its formation after the Deepwater Horizon incident. Several
    whistleblowers, and now the GAO, have highlighted these issues.
    Data supports that GAO's conclusion as the 2016 Employee
    Viewpoint Survey found that regional personnel scored BSEE's
    leadership at 42.7 out of 100. Current acting director Margaret
    Schneider, who spent 30 years at the Environmental Protection
    Agency before joining BSEE in 2010, has been specifically
    mentioned as one of the problems.
        The GAO has found a disconnect and, more importantly, a
    distrust between BSEE headquarters and its region. BSEE
    leadership has consistently hired contractors to try to fix its
    problem rather than using its own knowledgeable and experienced
    personnel. This distrust has caused significant duplication and
    reduced the agency's efficiency. These problems are so deep
    that some regional staff were discouraged from talking with the
    GAO and some were even concerned about retaliation.
        Another problem facing BSEE is Integrity and Professional
    Responsibility Advisor, a group that exists to investigate
    allegations of misconduct and unethical behavior. This group
    follows unclear and inconsistent guidance, which appears to
    have undermined trust in its activities. Regional staff are
    concerned that this group is abusing its power and retaliating
    against employees, thereby deterring employees from speaking up
    and inhibiting agency transparency.
        These problems with leadership and trust have trickled down
    effects throughout BSEE's portfolio. The GAO found a number of
    duplicative measures that have been fruitlessly implemented,
    which have resulted in a loss of valuable time and revenue. For
    example, BSEE hired two separate contractors to conduct
    simultaneous environmental risk assessments. This,
    unfortunately, resulted in two uncoordinated reports lacking
    quality. Had the two groups communicated with one another
    during their assessments, the final reports could have been
    substantially improved. Not only is this an inefficient way to
    run an agency, it's a waste of taxpayers hard-earned dollars.
        Despite these problems, I'm hopeful Secretary Zinke will
    ride in and be able to take a good look at the Bureau staff and
    put in a leadership team at BSEE to fix the divide between
    headquarters and the region.
        I'll now recognize the ranking member, Ms. Plaskett, for
    her opening statement.
        Ms. Plaskett. Thank you so much, Chairman. And thank you,
    gentlemen, for being here this afternoon.
        Nearly 7 years ago, an explosion on Deepwater Horizon
    offshore oil rig caused 11 crewmen deaths and leaked
    approximately 4.9 million barrels of oil into the Gulf of
    Mexico. This spill caused immense environmental and economic
    damage to the Gulf region and its residents for which BP paid
    out nearly $62 billion.
        A special commission was formed to investigate the
    explosion. The Department of the Interior Inspector General
    also investigated, as did Interior's Outer Continental Shelf
    Safely Oversight Board. Each issued reports making a number of
    recommendations to Interior to ensure the safety of offshore
    rigs.
        The newly formed Bureau of Safety and Environmental
    Enforcement, or BSEE, was tasked with implementing these
    recommendations. Among other suggestions, the report
    recommended that Interior, quote, ``develop an inspection
    program with strong representation at all levels of the
    bureau,'' quote, ``identify sufficient inspection coverage,
    including reassessing the risk space and self-inspection
    approaches, and conduct advanced planning of inspections to
    allow inspectors time to prepare for each inspection and ensure
    efficient use of resources,'' end quote.
        Yet GAO, the Government Accountability Office, report
    released in 2016, 5 years after many of these recommendations
    were issued, found that BSEE continues to face deficiencies in
    its investigation, environmental compliance, safety enforcement
    capabilities, and that ``undermine its ability to effectively
    oversee offshore oil and gas development.''
        Now, a year later, GAO has issued another report indicating
    that BSEE is not doing everything it can to protect workers.
    The report found, for example, that BSEE halted pilot testing
    of risk-based inspection initiative, which was developed in
    2012, due to deficiencies that GAO attributed to mismanagement
    of initiatives from the beginning. Why? That's why we're here
    at this hearing to understand the why, what the problem is, and
    not merely just to state, for you to inform us of that, but
    also to give us recommendations to how we can help BSEE best
    carry out its mission.
        This initiative would have ensured the most dangerous rigs
    were inspected with more frequency and diligence, possibly
    saving lives. Workers lives are at risk, and BSEE must
    implement GAO's recommendations soon. The findings of the
    inspector general and Oversight Board reports point to the
    important role of the Federal Government in protecting the
    lives of offshore oil workers.
        As our new President fulfills his campaign promise to lift
    the restrictions on the production of shale, oil, natural gas,
    and clean oil, those restrictions must not be worker safety
    regulations. And government agencies like BSEE must properly
    inspect drilling sites and stringently enforce the rules. This
    is particularly important given the Interior Department's
    recent announcement that will offer 73 million acres offshore
    in the Gulf to new oil and gas developments later this year. We
    cannot afford BSEE not to do its job and ensure that American
    workers lives are safe.
        Thank you, Mr. Chairman.
        Mr. Farenthold. Thank you very much.
        We'll now recognize--first, I want to let you know that any
    member who would like to submit a written statement is welcome
    to do so in the next 5 legislative days for which I'll hold the
    record open.
        We'll now recognize our panel of witnesses. I'm pleased to
    welcome Mr. Richard Cardinale, acting Secretary for Lands and
    Mineral Management at the U.S. Department of Interior, and
    Frank Rusco from the GAO. Welcome to you both.
        Pursuant to our committee rules, all witnesses will be
    sworn in before they testify. Would you please rise and raise
    your right hands.
        Do you solemnly swear or affirm that the testimony you're
    about to give will be the truth, the whole truth, and nothing
    but the truth, so help you God?
        Thank you. Please be seated.
        Let the record reflect that both witness answered in the
    affirmative.
        In order to allow time for discussion, we'd appreciate it
    if you'd limit your testimony to around 5 minutes. Your entire
    written statement will be made part of the record. You'll see a
    timer in front of you that will count for 5 minutes. Green
    light means you're good to go; the yellow light means hurry up,
    you're about out of time; and the red light means stop.
        So I guess we'll start with Mr. Cardinale. You're
    recognized for 5 minutes.

                           WITNESS STATEMENTS

                   STATEMENT OF RICHARD T. CARDINALE

        Mr. Farenthold. You're going to need to turn on your
    microphone, please, sir, and get real close. We bought the
    budget mics in order to save the taxpayers some money.
        Mr. Cardinale. Can you here me?
        Mr. Farenthold. You're good now.
        Mr. Cardinale. Okay. Mr. Chairman and members of the of the
    subcommittee, thank you for the opportunity to discuss
    leadership and management at the Department of the Interior's
    Bureau of Safety and Environmental Enforcement. We appreciate
    the subcommittee's interest in the efficient and effective
    functioning of government and the valuable service the GAO
    provides to that end.
        My name is Richard Cardinale and I am currently the acting
    assistant Secretary for Land and Minerals Management at the
    Department, stepping into this role as chief of staff for the
    assistant Secretary's office. I have been the chief of staff to
    the assistant Secretary for Land and Minerals Management, the
    office that oversees BSEE, for the past 10-1/2 years. I was in
    my current position when the Bureau of Safety and Environmental
    Enforcement was established on October 1, 2011. We take
    seriously the insights and recommendations from the ten reports
    the GAO has issued concerning BSEE.
        BSEE has asked that the GAO consider the clarifications,
    updates, and new information the Bureau has provided in its
    response to the most recent draft report examining several of
    BSEE's programs for offshore oversight and internal management.
    We appreciate that BSEE still faces challenges internally and
    how it develops and communicates management initiatives. The
    assistant Secretary's office will continue to provide guidance
    to the Bureau to help address these challenges.
        Externally, we believe the Bureau has made great strides in
    effectively serving the American public and working
    productively with the industry that it regulates, as well as
    our many stakeholders. During the past 5-1/2 years, BSEE has
    taken many constructive steps toward creating a stable and
    mature organization, while continuing to carry out its mission-
    critical goals of promoting safety, environmental
    responsibility, and resource conservation on the Outer
    Continental Shelf.
        In 2016, the Bureau approved over 700 permits and conducted
    over 20,000 offshore inspections. The Bureau also continues to
    have an unprecedented level of engagement with industry and
    other stakeholders to address the many recommendations made as
    a result of the investigation stemming from the Deepwater
    Horizon tragedy. Those investigations produced 11 reports,
    resulting in 353 recommendations for industry, government, and
    others to improve offshore safety. Two hundred seventy five of
    the recommendations dealt with reforms to Federal oversight of
    offshore oil and gas development.
        Due in part to the Bureau's hard work, the Department has
    addressed 217, or 80 percent of these recommendations. BSEE has
    also received a combined total of 93 recommendations, 37 from
    the GAO and 56 from the Department's Office of the Inspector
    General. BSEE has been successful in closing 80 of these
    recommendations, including 29 from the GAO and 39 from the
    OIG's New Horizon report.
        BSEE has also developed major safety and regulatory reforms
    that have contributed significantly to an improved safety
    culture in the offshore environment. BSEE is a relatively new
    agency with a critically important mission. It has been the
    subject of review by both the GAO and the OIG. Throughout these
    reviews, the Bureau has demonstrated a consistent commitment to
    responding thoughtfully to recommendations and to improving
    areas where--that were underdeveloped under its predecessor
    organizations.
        In an effort to assess its progress and address these and
    other challenges, in August 2016, BSEE engaged the National
    Academy of Public Administration to conduct an independent
    evaluation of the organization. The outcome of this study was
    made publicly available last Friday, and provides tangible
    steps that BSEE can take and has taken to improve its
    oversight, management, and communication capabilities.
        I thank the subcommittee for the opportunity to testify on
    behalf of the Department, and I'll be happy to answer your
    questions.
        [Prepared statement of Mr. Cardinale follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Farenthold. Thank you very much.
        Mr. Rusco.

                        STATEMENT OF FRANK RUSCO

        Mr. Rusco. Thank you, Chairman Farenthold and Ranking
    Member Plaskett and members of the committee. I'm pleased to be
    here today to discuss our recent reports on the Bureau of
    Safety and Environmental Enforcement.
        Before I go into my formal written statement, I want to say
    that I agree with a lot of what Mr. Cardinale has just said,
    that over the years, BSEE has done a very good job of
    responding to numerous recommendations from a number of bodies,
    including GAO.
        Our most recent look at BSEE has been looking at their
    leadership initiatives and their restructuring process, and we
    have found serious deficiencies there, but that does not
    reflect a broad critique of what BSEE has been doing in the
    regions with its regional management and staff, who I think are
    doing, by and large, an excellent job. They're hampered,
    though, by leadership failures, and that's what I'm here to
    talk about today.
        In our last two reports looking at BSEE's restructuring
    efforts and its leadership effectiveness, we have found a
    longstanding deficiency in the leadership in BSEE headquarters
    that has hindered its ability to effectively and efficiently
    administer its mission. BSEE leadership's failure is primarily
    the result of its mistrust and poor communication with its
    knowledgeable regional managers and staff. Time and again, BSEE
    has chosen consultant studies and headquarters-led projects
    instead of in-house expertise and experience. This has cost the
    Bureau precious time and the taxpayer precious dollars to
    achieve very little of substance in the past 5 years.
        I have three examples from our past work that highlight
    BSEE's repeated efforts to restructure the Bureau without
    adequately obtaining input and advice from its regional
    management and staff.
        First, BSEE has taken a number of steps to strengthen the
    permitting and planning process to ensure better well-designed
    drilling practices and oil spill response capabilities. And
    Congress has appropriated additional funds to enable BSEE to
    hire more inspectors. However, while stating the Bureau's
    philosophy of creating national leadership of key BSEE
    missions, BSEE headquarters inexplicably moved its
    environmental compliance unit from a national to regional
    reporting structure and also left numerous congressionally
    funded environmental compliance positions unfilled for years,
    despite demonstrated need for these positions.
        These actions reduced the Bureau's ability to share
    expertise across offshore regions, and left the Gulf of Mexico
    region without the environmental compliance staff needed to
    perform its oversight responsibilities. Instead of acting to
    fix these deficiencies, BSEE leadership spent over $1 million
    on consultant studies to assess environmental risk, rather than
    using the in-house expertise resident in BSEE's regional
    offices.
        Second, in 2012, BSEE identified the need for performance
    measures to provide it with data, to evaluate the efficiency
    and efficacy of its programs and activities. Subsequently, BSEE
    began an initiative in 2014 to develop performance measures for
    its key programs by hiring a consultant to perform two
    sequential studies. These contracts generated 12 recommended
    performance measures, delivered in 2016, none of which were
    implemented.
        In 2016, BSEE began what they described as a multiyear
    internal effort to develop performance measures. In December
    2016, BSEE completed a report that identified 17 performance
    measures, but the Bureau has yet to finalize or implement these
    measures to inform management decisionmaking.
        What these three efforts have in common is a lack of
    implementable results and the fact that the efforts were done
    from headquarters largely without the benefit of the experience
    and talent within the BSEE regions.
        Third, starting in 2012, BSEE leadership sought to develop
    a risk-based inspection's regime, but they did so without
    appropriate input and in consultation with the regional
    managers and staff, who for many years have been involved in
    previous attempts to identify risk factors and implement risk-
    based inspection practices.
        BSEE hired outside consultants to inform their approach to
    risk-based inspections.This 3 year contract led to a risk
    assessment model and inspection protocol that BSEE tried to
    implement in a pilot in 2015. However, the pilot failed to
    identify useful risk factors, and only after these deficiencies
    were identified did BSEE begin to involve the regional managers
    and staff. Even then, instead of working with regional managers
    and staff to develop a better model, BSEE leadership decided to
    change its focus and reduce expectations for its risk-based
    inspection approach.
        BSEE's leadership, lack of trust, and communication with
    regional managers and staff again led to waste of taxpayer
    money in a still deficient risk-based inspection regime.
        I'm going to end there, and I would be happy to answer any
    of the questions you may have.
        [Prepared statement of Mr. Rusco follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Farenthold. Thank you very much.
        And I'll get started with a couple of questions. Mr.
    Cardinale, I'm kind of troubled by the number that--the
    leadership on a national level only scored a 42.7, based on
    what the people in the field actually doing the work said. I
    mean, that's an F minus. What's--what do you attribute that to
    and what's being done to fix it?
        Mr. Cardinale. We don't disagree with you on that score. I
    think part of the issue had been a lack of engagement with
    subject matter experts from the field. That, as I understand
    it, has changed. And specifically with Secretary Zinke's
    leadership, who wants to empower and engage, as he calls it,
    people on the front lines, those who are implementing policy
    decisions and carrying out operations, we are----
        Mr. Farenthold. It had to be more than, oh, heck, they just
    don't listen to me. What else have you found there?
        Mr. Cardinale. Well, I can't speak with any specificity to
    the reasons these employees gave, but I do feel that everything
    that I have seen suggests that we needed and we are now
    embarking on doing a better job of engaging employees and
    communicating with them, bringing them in early on in the
    effort. The Bureau has undertaken some leadership initiatives
    that are designed to bring people from the field into
    headquarters for detail opportunities, which we think will
    build trust and promote better communication.
        The Bureau is also in the process of developing a new
    intranet tool which is designed to post information more
    quickly and facilitate engagement sooner in the process.
        Mr. Farenthold. Mr. Rusco, did you all find anything in
    particular, besides--you pointed out the excessive use of
    outside consultants. I used to work in radio, the staff used to
    never like the consultants. But what else did you see in there
    besides the overuse of consultants? And what generated this
    lack of trust in communications?
        Mr. Rusco. Well, I think it just stems largely from just
    pure cultural differences and mistrust between the headquarters
    folks and the people in, particularly, the Gulf of Mexico. And
    the headquarters does not respect or trust them and does not
    listen to them. And when we 2 years ago started--or 2-1/2 years
    ago started doing this most recent work, we went and we said,
    well, we're going to look at your management initiatives. And
    the response was, well, you're going have to run through this
    liaison. Every piece of information you want has to be approved
    by the deputy director directly.
        Most of the things we asked for were deemed to be
    predecisional and not available to us to do our audit work. And
    these were things like years' old consultant reports.
        Whenever we went to the Gulf and did our field work and we
    talked to people, there was a minder with us that was reporting
    back to headquarters, and that really cut back on what people
    were willing to tell us. And they told us that in private,
    afterwards. But they would not speak frankly and openly.
        Mr. Farenthold. Was it a sense of a fear of retaliation and
    intimidation?
        Mr. Rusco. There was a concern about that.
        Mr. Farenthold. Because this committee is committed to
    making sure that whistleblowers have the opportunity to report
    their problems and, you know, has shown a strong support for
    things like your GAO reports and internal inspector general's--
    it's pretty clear that the policy, at least of the government,
    at least coming out of this committee, is we want to hear from
    the rank and file folks that are doing the job.
        Mr. Rusco. And I will say that, over the years, when we
    have gone into the field and talked to the people on the front
    lines, doing the work, we get straight answers, we get good
    information, and they tell us what's working and what's not.
    And that's what most of our recommendations are based on.
        Mr. Farenthold. Mr. Cardinale, I'm about out of time, but
    we're talking a lot about the issues in the Gulf of Mexico
    region. I assume that's the largest of your regions based on
    the bulk of offshore oil and gas activity.
        Mr. Cardinale. That's correct, Mr. Chairman.
        Mr. Farenthold. Can you tell me about the basic sizes of
    your different--what your different regions are and the sizes?
        Mr. Cardinale. I don't have that information available to
    me. I do know that, in terms of specific number of employees,
    the organization numbers about 880 employees. About 140 of them
    are inspectors. Its largest region is in the Gulf of Mexico.
    There's also a regional office in Camarillo, California, and
    one in Anchorage, Alaska.
        Mr. Farenthold. Do you know how many of that 800 are in
    Washington, D.C.?
        Mr. Cardinale. I don't, but I'd be happy to----
        Mr. Farenthold. If you'd give me those numbers. I'd be
    interested. Again, it seems to me if your largest region only
    has, you know, 100 plus, we may be a little top heavy there
    too. It might be something worth looking at. But I don't want
    to get that without the numbers.
        So at this point we'll go to the gentlelady from the Virgin
    Islands for her line of questioning.
        Ms. Plaskett. Thank you.
        You know, it was very interesting reading the GAO's report,
    which paints still a troubling picture at BSEE of failing to
    properly implement programs. The report points to several
    instances where BSEE's leadership failed to implement several
    key strategic initiatives to improve its internal management.
    What's particularly troubling to read is that BSEE has not been
    able to make progress on approving its offshore safety and
    environmental oversight because of these deficiencies.
        Mr. Cardinale, in your written testimony, you state that
    BSEE is now fully staffed. If that's so, when did that occur?
        Mr. Cardinale. That's occurred over the last couple of
    years. I think there are a culmination of reasons for it. BSEE
    has improved its recruitment and retention practices and has
    benefited from a full suite of tools to help recruit and retain
    employees. I think also the downturn in the market has resulted
    in the closure of a number of companies, and as a result, a
    number of employees have migrated from the private sector to
    the Federal sector.
        Ms. Plaskett. And so you're also not maybe having the high
    turnover of employees leaving that you had previously?
        Mr. Cardinale. That's correct.
        Ms. Plaskett. When you talked about the other achievements,
    you talked about retaining that technical expertise in the
    suite of availability. I know earlier you talked about the
    intranet services that you used. What are some of the other
    accomplishments that you believe BSEE has been able to
    implement?
        Mr. Cardinale. I think BSEE is working to build its
    inspection force through investigating opportunities to create
    a certification program for training its inspectors. As I
    mentioned earlier, we are trying to foster engagement with the
    field at the earliest possible opportunities, including
    bringing people in from the field to get the benefit of their
    insight and expertise in the day-to-day operations of policy
    development.
        We are also just trying to foster better communication. At
    this time, there's an offshore inspector's conference going on
    in Lafayette, Louisiana, and the acting director is there now.
    This is the perfect opportunity to interact with the people in
    the field to get their perspectives, to better understand what
    challenges they are facing, and what we can do at headquarters
    to try to help address those challenges.
        Ms. Plaskett. So you talk about this better communication.
    Is there something that is just going to be--how is this going
    to be implemented if what we understand is there's a cultural
    difference between those at headquarters and those in the
    field? If you think that--you know, and I have great confidence
    in the charisma of our new Secretary of Interior, my former
    classmate, Secretary Zinke, but how do you believe that that is
    going to be able to drive it down into the regional levels?
        Mr. Cardinale. I think the perspective of the
    administration is, in fact, to ensure that we are more
    efficient and more effective. And in order to do that, I think
    we need to engage, at the earliest possible opportunities, with
    the people that are in the field and give them the resources
    and the tools they need to do their jobs and to carry them out
    effectively.
        Ms. Plaskett. And, you know, I'm sure this is something
    that you were trying to do 3 years ago. What is going to be
    different this time? Is it because of the new tools that you
    have? I really need to understand what has dynamically changed.
        Mr. Cardinale. I think the management focus is
    fundamentally outward facing towards the field, more engagement
    with the people that are actually implementing the policies,
    and more engagement with them in the development of the
    policies.
        Ms. Plaskett. Would that also be, Mr. Rusco, implementing
    risk-based inspections? Would that be part of the policies and
    procedures?
        Mr. Rusco. I hope so. And I hope that what Mr. Cardinale
    says is correct. What we have seen is not that. We have seen
    the headquarters leadership staying in D.C., not engaging with
    the field, and not trying to learn what their business is
    about. And I think that that's----
        Ms. Plaskett. So what kind of--you know, you give very
    concrete recommendations. Do you go as far as to say how many
    times a year individuals from the headquarters should be out in
    the regional offices?
        Mr. Rusco. No, we haven't made that kind of specificity.
        Ms. Plaskett. You did talk, though, in the risk-based
    inspection. How difficult should it be for BSEE to address the
    deficiencies that the report noted?
        Mr. Rusco. It shouldn't be that difficult. The BSEE
    inspectors and the management in the Gulf has been working on
    risk factors and on various iterations of risk-based
    inspections for years, since the 1990s. For a long time, they
    didn't have enough inspectors to even do their annual
    inspections, so they didn't have extra inspectors to go around
    and make additional risk-based inspections. But now that
    they're staffed up in inspectors, they have the ability to do
    that.
        So it was puzzling to us when BSEE turned around after the
    model built by their consultant failed. Instead of fixing that
    model, they changed their focus and reduced the scope of risk-
    based inspections. We think that's a mistake.
        Ms. Plaskett. Okay. Thank you.
        I've run out of time. But, Mr. Chairman, I'm just hopeful
    that we will do an assessment of this in the months to come,
    and this will not be the only discussion we have with the
    witnesses today.
        Mr. Farenthold. All right. I see we've got Mr. Raskin here.
    We don't have anybody on our side.
        Do you have some questions you're ready to go with? If not,
    I can do my second round and come back to you.
        Mr. Raskin. Mr. Chair, if you would take your second round
    and come back to me, that would be great.
        Mr. Farenthold. All right. That will give you a little bit
    of time to get settled. I understand.
        So I'll toss this out to whichever one of you gentlemen
    wants to answer. BSEE was created in the wake of Deepwater
    Horizon to protect the Gulf from another environmental
    disaster. And risk-based inspection sounds like the way to go,
    and you have spent, in BSEE, a fair amount of money getting
    some expert input on what to do about risk based and what the
    risks are. I mean, it's a pretty highly technical field.I
    imagine you could go to the safety folks that work at various
    competing companies. I'm assuming that's how that was
    developed.
        Can you tell me a little bit about what's involved in risk-
    based inspection and why--to me, it seems like the only way to
    go. Mr. Cardinale, do you want to take a stab at that?
        Mr. Cardinale. I'll be happy to respond, Mr. Chairman.
        Mr. Farenthold. You need to turn your mic on.
        Mr. Cardinale. I'll be happy to respond, Mr. Chairman. I
    think it's important to note that the risk-based inspection
    strategy is not designed to supplant or take the place of BSEE
    statutory obligations to inspect 100 percent of facilities in
    the offshore environment. It is----
        Mr. Farenthold. But I want you to go into the ones you're
    worried about twice a year instead of once a year, I mean, just
    in broad general terms.
        Mr. Cardinale. Understood. I think that it's important to
    point out that the risk-based model that was developed, we have
    found to have been very, very accurate. Over the past 3 years,
    that model has identified the top 20 percent of high-risk
    facilities that are out in the Gulf, and those have accounted
    anywhere from 80 to 89 percent of the major incidents that have
    taken place out there.
        I think it's also important to point out that the risk-
    based inspection strategy was designed as a pilot tool, and as
    such, it is supposed to be iterative in nature.
        I recognize that when the team that identified the
    facilities in the first round put that list together, three of
    the facilities on the list were later determined to be shut in.
    Two of those were not inspected; one was because it was
    determined that even being a shut-in facility, there was merit
    to doing an inspection and gaining the information and insight
    that would come through the risk-based pilot. Subsequently,
    three additional facilities were identified, and the next phase
    of inspection is ongoing.
        Mr. Farenthold. And what about working with industry? We've
    seen a great success in OSHA through cooperative industry
    programs like VPP. Have you all--I mean, what's your
    relationship with industry? I imagine they're no more eager to
    have another problem than y'all are.
        Mr. Cardinale. I can't speak to the specific incidence of
    engagement, but I will tell you that, just generally, we view
    engagement with the industry to be of primary importance. I
    think it's critical that we get insight from industry about the
    policies that we're developing so that we can better understand
    what their challenges----
        Mr. Farenthold. Mr. Rusco, did you all look at all the
    interaction with industry?
        Mr. Rusco. Over the years, yes, we have. There is a lot of
    interaction in the inspection community between industry and
    the inspectors. We have some concerns about where that has gone
    in recent years with the addition of law enforcement
    inspections going--inspectors going along with those
    inspections. But for many years, the inspections have been
    along the lines of a safety culture perspective. So you go out,
    you have an incident, you find something, you try to figure out
    what the root cause is, you try to figure out what can we do to
    make that not happen. You communicate any serious problems to
    the industry from the regulator. And that's the way it goes. We
    are concerned about the effects of adding a law enforcement
    component to that, though.
        Mr. Farenthold. So by law enforcement, rather than working
    to fix something, you end up getting fined. Is that how that--
    I'm just trying to narrow it.
        Mr. Rusco. Yeah. So I'm sorry, I'll be more clear. After
    the Deepwater Horizon, there was this inspection unit that you
    referred to in your opening remarks that was looking for
    internal conflicts of interest between BSEE employees and the
    industry. They did not find any to speak of. So instead of
    wrapping that up and sending that component off to do nothing,
    they transformed it. Now, they have inspectors who have a law
    enforcement background, who are hired to do that first
    function, who are now taking part in regular inspections of
    offshore facilities.
        Mr. Farenthold. So it's a different--rather than a safety
    culture, it's a law enforcement culture within that.
        Mr. Rusco. When we talked to one of the inspectors in the
    Gulf, I asked him point blank, I said, what happens when you go
    out there and, you know, you're a police officer, you go out
    there and you start questioning folks? And he said they lawyer
    up. That's the opposite of a safety culture.
        Mr. Farenthold. Right. And I appreciate that.
        BSEE is a relatively new organization, relatively small
    number of employees. So I guess the same issue with these
    former law enforcement folks--and we'll put some of the
    employees in--some of whom are management employees who seem to
    have some leadership issues. What issues do you face dealing
    with employees who either aren't good at their jobs or because
    of a change within the organization--looks like you're moving
    people into things that they may not be well suited for. Do you
    have an issue with having to relocate employees? Or what do you
    do about getting rid of people whose usefulness within the
    organization is not what it used to be? What do you do with
    your problem personnel, as a short answer to that question?
        Mr. Cardinale. Well, there are established policies and
    guidelines----
        Mr. Farenthold. Is your mic on?
        Mr. Cardinale. Yes.
        Mr. Farenthold. Okay. I'm sorry. Again, we have the budget
    mics. You need to really get close.
        Mr. Cardinale. There are established policies and practices
    for dealing with employees who are not performing. Employees
    are all under annual performance plans. They're all rated and
    reviewed to ensure that they are meeting all of the critical
    elements in their performance plans. And so the established
    practice is to follow the applicable HR guidelines when an
    employee is not meeting those standards.
        Mr. Farenthold. Do you have the ability to fire somebody?
        Mr. Cardinale. I think that ability exists, but, again,
    that has to happen through a process that may----
        Mr. Farenthold. It takes how long?
        Mr. Cardinale. It can take a while. It's designed to ensure
    that employees have due process.
        Mr. Farenthold. All right. The issue is always how much
    process is due.
        Mr. Raskin, I went a little bit long, but I will be
    generous with your time as well.
        Mr. Raskin. Mr. Chairman, thank you very much.
        And welcome, gentlemen.
        I want to take this opportunity to talk about challenges
    that BSEE has had in hiring and retaining the inspectors that
    it needs to ensure worker and environmental safety. The GAO has
    shown that hiring compliance staff has been a tough spot for
    BSEE that has undermined the Bureau's performance. In February
    2016, GAO reported, quote, BSEE has not met its goals for
    monitoring operator compliance with environmental standards,
    primarily because it does not have enough staff to accomplish
    its workload. GAO identified several sources, including BSEE's
    own annual compliance activity reports, that said it needs up
    to 30 compliance staff to effectively carry out its mission.
    And you had funding for 30 positions, but GAO reported that
    BSEE left 9 critical positions open as of November 2015, even
    with the funding to fill those positions, rolling over millions
    of dollars of environmental oversight funds from year to year.
        So, Mr. Cardinale, let me ask you, why did BSEE roll over
    millions of dollars in environmental oversight funds in fiscal
    years 2013, 2014, and 2015, rather than use them to hire the
    requisite environmental compliance staff?
        Mr. Cardinale. Thank you for your question, Congressman. I
    think that BSEE has, in fact, over the last year or so, managed
    to staff up as a result of a variety of factors, anticipating
    that it would need a full complement of inspectors. I think
    they were reticent to spend money that they knew they would
    need as they staffed up.
        As a result of changes in the market, as well as BSEE's use
    of a full suite of recruitment and retention tools, I'm pleased
    to say that the compliance inspection team is now fully
    staffed.
        Mr. Raskin. Okay. Well, let me shift over to you then, Mr.
    Rusco. Do you believe that BSEE is taking the steps that are
    needed to implement the GAO's recommendation that BSEE develop
    a plan to address the inadequacy of their staff?
        Mr. Rusco. Well, we'll be following up on that. A couple of
    things have happened in the last couple of years, in general,
    in the hiring front. BSEE was able to get special authority
    through OPM to pay closer to market salaries for certain key
    staff, and that has helped them hire people.
        The specific issue with the environmental compliance staff
    and the open positions, that was entirely a leadership decision
    not to hire those. Those were not staff that you would have had
    trouble hiring in previous years. I don't know the extent to
    which those positions have been filled because we haven't
    looked at it since the 2016 report.
        Mr. Raskin. Okay. So, Mr. Cardinale, let me come back to
    you. Was that a mistake to make that strategic decision
    originally not to hire that staff? And what's the plan now for
    making sure that there is sufficient staff through hiring and
    retention activity?
        Mr. Cardinale. Congressman, I can't speak to whether or not
    it was a mistake. It does appear that, in hindsight, those
    resources could have been utilized for that purpose. I think
    the plan now is to ensure that we are, in fact, fully staffed
    and that our people on the front lines have all the resources
    they need to do their jobs.
        Mr. Raskin. Are you subject to a hiring freeze, the general
    Federal hiring freeze now?
        Mr. Cardinale. Yes.
        Mr. Raskin. So does that freeze into place those original
    erroneous decisions that were made about not hiring a full
    complement?
        Mr. Cardinale. I don't know the specifics of the impacts of
    the hiring freeze. But I would imagine that, at least for the
    time being, we would be restrained from hiring additional
    personnel.
        Mr. Raskin. Okay. Let me just quickly shift over to talk
    about the future of Interior safety and environmental regs. In
    2012, BSEE implemented a new safety regulation for offshore
    rigs, the drilling safety rule which radically overhauled what
    were the radically inadequate regs that led to the Deepwater
    Horizon explosion. The new rule required secondary blowout
    preventers to ensure that one blowout preventer would not be
    there and just not be able to do the job, so it was a backup.
    This possibly would have prevented the Deepwater Horizon
    situation.
        However, President Trump has talked about easing
    regulations on oil, gas, and coal producers. Is the drilling
    safety rule one of the regs that President Trump plans to
    repeal, and do you have anything to say about that, Mr.
    Cardinale?
        Mr. Cardinale. I am not aware of any plans currently
    underway to repeal that rule. What I will say is that worker
    safety and the protection of the offshore environment and
    conservation of the resources have been and will continue to be
    our top priority.
        Mr. Raskin. Okay. Thank you very much.
        I yield back, Mr. Chairman.
        Mr. Farenthold. Thank you very much.
        We'll now go to the gentleman from Kentucky for 5 minutes.
        Mr. Comer. Thank you, Mr. Chairman.
        My first question is for Mr. Rusco. When GAO was conducting
    its previous investigation of the BSEE, what level of
    cooperation did you all receive from the Bureau?
        Mr. Rusco. During our first investigation along this line
    of restructuring and leadership initiatives, we found a very
    unusual degree of resistance from BSEE leadership. So we were
    kept from information that would have normally been given to us
    directly. And everywhere we went to talk to people, we were
    followed by a minder who reported directly back to headquarters
    what was said in the meetings.
        Mr. Comer. What was the source of the problem?
        Mr. Rusco. The minder reported directly to the deputy
    director. I don't know that that's the source of the problem,
    but I know that's where they reported. And I know that all the
    information we got had to go through the deputy director before
    it came to us.
        Mr. Comer. Is it correct that this level of cooperation
    improved for your most recent work?
        Mr. Rusco. Yes, it did. After that report, and after we
    raised this issue with access with our congressional clients,
    and there was some discussions behind the scenes, the then
    assistant Secretary for Lands and Minerals had a conversation
    with BSEE leadership and us in the room and said there will--
    that this will not go on, and during our second investigation,
    it was much better.
        Mr. Comer. So who was it that made sure that happened?
        Mr. Rusco. That was the assistant secretary.
        Mr. Comer. Mr. Cardinale, you were chief of staff in the
    Office of the assistant Secretary for Land and Minerals,
    correct?
        Mr. Cardinale. That's correct.
        Mr. Comer. It appears your office was able to greatly
    improve cooperation with the GAO. What steps did you all take
    to make this happen?
        Mr. Cardinale. Thank you for your question, Congressman
    Comer. I think part of what happened, just generally, is
    beginning in the previous administration, and certainly
    continuing into this administration, there is a recognition
    that the work that GAO does is extremely valuable, and that it
    is important that we provide the GAO with the utmost
    cooperation in facilitating their reviews so that we can get
    the benefit of well-informed, thoughtful recommendations.
        Mr. Comer. Okay. Let me back up. The deputy director that
    you are referring to, is that Margaret Schneider?
        Mr. Rusco. Yes, that is.
        Mr. Comer. Okay. Mr. Cardinale, will the agency and BSEE
    leadership commit to giving this Congress and the GAO ready
    access to data information and staff it needs to interview to
    do its oversight work?
        Mr. Cardinale. Yes, Congressman.
        Mr. Comer. Okay. Well, thank you.
        Mr. Chairman, I yield back my time.
        Mr. Farenthold. Will the gentleman yield for just one
    second?
        Mr. Comer. Yes, sir.
        Mr. Farenthold. And, Mr. Cardinale, the minder that was
    talking to the assistant--or the deputy director, Ms.
    Schneider, what's her position now?
        Mr. Cardinale. She is currently serving as acting director.
    Like a number of senior career employees who are asked during
    the transition period, myself included, she is serving
    temporarily as the acting director.
        Mr. Farenthold. All right. Thank you very much.
        Mr. Raskin, did you have any more questions?
        Mr. Raskin. I did.
        Mr. Farenthold. You have another 5 minutes.
        Mr. Raskin. If I may. Thank you very much, Mr. Chairman.
        One general question I have is, the bottom line for most
    Americans is simply what are the chances of another Deepwater
    Horizon event? Have we been systematically reducing the
    prospects of another Deepwater Horizon?
        Mr. Cardinale. Yes, I think we have. I think the events of
    that tragedy have informed a better and more effective way of
    conducting our oversight. We've taken a hard look at some of
    the elements that led to that tragedy, and I think that we have
    done a better job.
        Mr. Raskin. And can you explain what that original
    bureaucratic resistance was to staffing up, hiring the
    requisite experts, and making the strongest approach?
        Mr. Cardinale. I think my initial response to that would be
    that we--the Bureau was, in fact, in its early days, seeking to
    develop a mission that in some areas had previously not been
    carried out by predecessor organizations. I can only speculate,
    and I wouldn't at this point speculate.
        Mr. Raskin. Okay. Let me go to another question then.
    According to the Outer Continental Shelf Lands Act, the Bureau
    of Ocean Energy Management is required to develop a 5-year oil
    and gas leasing plan. The current plan was finalized earlier
    this year by the Obama administration before leaving office,
    and it runs until 2022, and it struck a balance between the
    economic development and environmental imperatives.
        Does this administration intend to make changes to this
    plan? And if so, what would they be?
        Mr. Cardinale. At this point, I don't know the specifics,
    but I do know that the administration is, in fact, taking a
    look at the plan that was finalized at the end of the last
    administration.
        Mr. Raskin. Okay. Well, Mr. Chairman, obviously this is a
    President who said he wants to promote deregulation. What we
    don't know at this point is what specific regulatory changes
    might be forthcoming from the administration in this field and
    how they would affect the environment and affect workers. And I
    hope this subcommittee, under your leadership, will continue to
    use its oversight powers to evaluate the deregulatory actions
    in terms of their implications for the environment and for
    workers.
        With that, I yield back to you, Mr. Chair.
        Mr. Farenthold. Thank you very much.
        I just have a couple of quick questions to wrap it up. Mr.
    Rusco, after reviewing your work and hearing the testimony
    here, it appears that the leadership at BSEE has created a
    malfunctioning work environment, whether it's distrust between
    headquarters and regional personnel mismanagement, failed
    initiatives, wasted money, fear of retaliation. Would you agree
    with this characterization? And if so, what do you think--why
    do you think the environment has become so poor?
        Mr. Rusco. I do agree with that. Unfortunately, and in
    terms of the root cause, well, I think it lies squarely in the
    leadership of BSEE. I mean, I think that they created an
    environment where they did not seek the advice and counsel of
    the experts in the field, and instead they created a culture
    where there was a fear of retaliation for anyone who said
    something different than what they were trying to do. And that
    really stopped organizational change in its tracks.
        And as a result of that, we had cleared Interior from the
    high-risk list in terms of restructuring, but in this last
    year, we put them back on, and it's entirely for this
    leadership failure.
        Mr. Farenthold. And what effect do you think this
    environment and these problems are having on overall safety and
    oversight mission that BSEE has?
        Mr. Rusco. Well, I think that if BSEE, instead of spending
    3 years and a lot of money on a risk-based approach to
    inspections, had gone to the field and said, you know, you guys
    have a lot of experience in this, let's build a risk-based
    approach together, they would have had one that worked the
    first time and they'd have one right now up and running that
    worked.
        Mr. Farenthold. And have you seen any improvements in the
    work environment since the beginning of the new administration?
        Mr. Rusco. We haven't been doing any audits in there, so I
    can't----
        Mr. Farenthold. Mr. Cardinale, has anything started to
    change since the administration changed? Microphone, please.
        Mr. Cardinale. I think there's always been a strong
    commitment on the BSEE workforce, as there is with all Federal
    employees. I do think that, as Secretary Zinke assembles his
    management team, that there'll be a renewed focus on employee
    engagement and empowerment and ensuring that people on the
    front lines have the tools they need to get the job done and
    that we hear from them.
        Mr. Farenthold. All right. And, Mr. Rusco, do you believe
    leadership changes at BSEE could help address some of these
    issues?
        Mr. Rusco. Yes, I do.
        Mr. Farenthold. Anything else you think could help, that
    you haven't mentioned so far?
        Mr. Rusco. That it's not necessarily the case that every
    leader has to know everything about an organization to be an
    effective leader, but they have to want to learn. And they have
    to go out and find out what their mission is and they have to
    find out from the people who do it. So whoever takes over,
    that's what they have to do.
        Mr. Farenthold. All right. Finally, from a congressional
    standpoint, is there anything particular that you think
    Congress could or should do to improve this situation? And I'll
    let you both take a stab at that. Mr. Rusco?
        Mr. Rusco. At this point, I think the agency has the
    authority and the ability to make any changes it needs to make.
    If they don't make those changes, then I would have a different
    answer.
        Mr. Farenthold. And I'm always nervous asking somebody from
    an agency, because the answer is usually, ``give us more
    money.'' Other than money, Mr. Cardinale, what can we do for
    you?
        Mr. Cardinale. I'm in agreement with Mr. Rusco. I think
    BSEE has the authorities it needs to do its job, and I'm
    looking forward to the leadership coming in and charting the
    course ahead.
        Mr. Farenthold. All right. Great.
        Mr. Raskin, if you don't have anything else, I'd like to
    thank our witnesses for being here, and appreciate your service
    to our country.
        And with that, we are adjourned.
        [Whereupon, at 2:59 p.m., the subcommittee was adjourned.]

                                    APPENDIX

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                   Material Submitted for the Hearing Record

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