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Regan Nelson’s Blog

Congress' Starvation Diet of BOEMRE

Regan Nelson

Posted March 21, 2011 in Moving Beyond Oil, Reviving the World's Oceans, U.S. Law and Policy

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As part of my blog series examining the status of offshore oil and gas management nearly one-year after the Gulf oil disaster - and paying homage to the spirited budget debates that are occurring in Congress - I wanted to focus this week on the budget of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), the national agency placed in charge of regulating offshore oil and gas drilling. 

Background:  In their final recommendations, President Obama’s independent, bipartisan Oil Spill Commission concluded “Congress needs to make funding the agencies regulating offshore oil and gas development a priority in order to ensure a safer and more environmentally responsible industry in the future”.[1]

In a section in their written report entitled “Safety Regulation on a Starvation Diet”, the Commission details the slow starvation over time of the agency that oversees drilling in our oceans.  The decline in funding began in the 1990’s, and reached rock-bottom in 1996, the same year that deepwater drilling began expansion in earnest.[2]  More recently, funding for the regulatory agency, then called the Minerals Management Service (MMS) and now BOEMRE, has hovered at just below $200 million dollars a year, less than what the agency received in 1984, before riskier and more complex deepwater drilling really took off.[3]

While the agency’s budget has remained stagnant, oil production in the Gulf rapidly expanded, growing from 275 million barrels in 1990 (4.4% generated from deepwater wells) to more than double that at 567 million barrels in 2009 (with more than 80% coming from deepwater wells).[4]  As production soared, pushing into ever deeper waters, the MMS fell further and further behind in its ability to properly monitor increasingly complex operations using constantly evolving technology and located further off-shore than ever before.  The ability of the agency to properly ensure worker safety and environmental protection was seriously compromised, and the result was the Deepwater Horizon disaster, which killed 11 workers, seriously injured 17 others and sent approximately 170 million gallons of oil into one of America’s most productive fishery and play grounds.

The graph below is taken from the Oil Spill Commission report.  The single black line shows MMS (now BOEMREs) budget.  The blues show oil production, contrasted by well-depth.

 BOEMREbudgetanddrilling.PNG

Figure 1: MMS Budget and Gulf of Mexico Crude Oil Production, 1984-2009[5]

Status:  So, how is the BOEMRE budget faring today, you ask?  Let’s take a look.

In 2010, MMS received $239 million to carry out its regulatory functions.  In September, 2010, following upon the Deepwater Horizon disaster, President Obama asked Congress for an additional $100 million dollars to to be used primarily to strengthen oversight of offshore oil and gas operations, address deficiencies in mineral revenue collection, and facilitate the reorganization of MMS into BOEMRE.[6]  But Congress only gave him $23.1 million to do this job – despite the fact that the full $100 million could have been offset by increasing the cost of inspection fees for oil and gas corporations operating offshore.

In his Fiscal Year 2012 Budget Request, President Obama is asking for a significant increase (+ $119 million) for BOEMRE over the FY2010 budget to hire 100 additional inspectors, to enhance environmental reviews, to enforce strengthened regulations, and to complete the re-organization.  While this request is a significant increase over prior years, the Administration proposes to offset nearly half of the request by an increase in offsetting collections, including by increasing the inspection fees on offshore rigs. [7]  Increasing the inspection fees on offshore rigs was another key recommendation of the National Oil Spill Commission, who said the industry fees should be increased to “provide adequate leasing capabilities and regulatory oversight for the increasingly complex energy-related activities being undertaken on the OCS”.

Table 1:  BOEMRE Budget

In millions of dollars

2010 Enacted

2011 Continuing Resolution[8]

2012 Request[9]

Change from 2010 Enacted

Total Discretionary Appropriations

$239.0

$224.2

$358.4

+ $119.3

Offsetting Collections

$166.7

$164.9

$225.1

+ $58.4

 

Conclusion:  Knowing what we know now, if we continue to allow offshore drilling in the Gulf of Mexico – or any U.S. waters – the government has a responsibility to ensure they are protecting us against a repeat of last April’s disaster. And if oil and gas corporations want the opportunity to drill, it’s only fair for them to help cover the costs of ensuring it’s done properly, their workers are protected, and surrounding ocean wildlife is safe.  But ultimately Congress holds the purse strings, and must require these powerful interests to step up so that BOEMRE can ensure the people, communities, economies and environment in the Gulf are sufficiently protected against the oil and gas industry. Whether or not we have an agency capable of properly regulating the oil and gas industry is dependent upon their decisions. 

TAKE ACTION: Tell Congress to implement the recommendations of the President’s Oil Spill Commission, including providing enough funding to prevent another Gulf oil disaster, here.

 

 


[1] Final Report, National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, p. 290 https://s3.amazonaws.com/pdf_final/DEEPWATER_ReporttothePresident_FINAL.pdf

[2] Amounts are in 2005 real dollars.

[3] Ibid, p. 72.

[4] Ibid, p. 73.

[5] Ibid, p. 73.

[6] Supplemental Budget Request, September 13, 2010.  http://www.doi.gov/budget/2011/data/pdf/BOEMRE_Budget_Amendment_09_13_10.pdf

[7] Presidents Budget Request, 2012.  BOEMRE Budget Highlights.  http://www.doi.gov/budget/2012/12Hilites/BH019.pdf

[8] P.L. 111-322

[9] FY2012 DOI Budget Justification.  http://www.doi.gov/budget/2012/data/greenbook/FY2012_BOEMRE_Greenbook.pdf

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