OFFICE OF INSPECTOR GENERAU.S.DEPARTMENT OF THE INTERIOR

L

SEP 1 7 2010

Memorandum

To: Secretary Salazar

From: Mary L. Kendall ~\~ Acting Inspector b'~~~

Subject: Report of Investigation for Alleged MMS Employee Misconduct -Lake Jackson District, PI-PI-l 0-0564-1

The Office of Inspector General concluded an investigation based on allegations that inspectors with the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) in Lake Jackson, TX, engaged in unethical conduct, including misuse of helicopter support to attend lunches paid for by oil and gas companies and to view wildlife. The complainant further alleged that Lake Jackson supervisors often rescinded valid Incidents of Noncompliance (INes), or safety violations, issued to oil and gas companies.

We found no evidence to substantiate the majority of these allegations. We did, however, uncover an instance where a BOEMRE supervisor allowed a well to be put back into production after an inspector shut it down due to a safety hazard. Both the supervisor and inspector agreed that a miscommunication occurred, and the platform would be re-inspected.

During the course of our investigation, we developed new allegations that inspectors called ahead to announce inspections for certain oil and gas companies. We found that inspectors felt pressure to notify Royal Dutch Shell of inspections in advance, but preferred to do the inspections unannounced.

We are providing this report to you for whatever administrative action you deem appropriate. Please send a written response to this office within 90 days advising of the results ofyour review and actions taken. Also enclosed is an Investigative Accountability form. Please complete this form and return it with your response. Should you need additional information concerning this matter, you may contact me at 202-208-5745.

Attachment

Office of Inspector General I Washington. DC

Investigative Report

Alleged MMS Employee Misconduct – Lake Jackson District

Report Date: September 17, 2010 Date Posted to Web: September 22, 2010

This report contains information that has been redacted pursuant to 5 U.S.C. §§ 552(b)(6) and (b)(7)(C) of the Freedom of Information Act. Supporting documentation for this report may be obtained by sending a written

request to the OIG Freedom of Information Office.

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SYNOPSIS We initiated this investigation based on allegations that inspectors with the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) in Lake Jackson, TX, engaged in unethical conduct, including misuse of helicopter support to attend lunches paid for by oil and gas companies and to view wildlife. The complainant further alleged that Lake Jackson supervisors often rescinded valid Incidents of Noncompliance (INCs), or safety violations, issued to oil and gas companies. We found no evidence to substantiate the majority of these allegations. We did, however, uncover an instance where a BOEMRE supervisor allowed a well to be put back into production after an inspector shut it down due to a safety hazard. Both the supervisor and inspector agreed that a miscommunication occurred, and the platform would be re-inspected. During the course of our investigation, we developed new allegations that inspectors called ahead to announce inspections for certain oil and gas companies. We found that inspectors felt pressure to notify Royal Dutch Shell of inspections in advance, but preferred to do the inspections unannounced. We are providing a copy of this report to the Secretary of the U.S. Department of the Interior for any action deemed appropriate.

DETAILS OF INVESTIGATION We initiated this investigation on June 22, 2010, at the request of Interior Secretary Ken Salazar, based on allegations that Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) inspectors in Lake Jackson, TX, engaged in unethical conduct. A former employee in the Lake Jackson office wrote an email to the BOEMRE Ethics Officer on April 13, 2010, complaining about former coworkers. Specifically, the complainant alleged that two inspectors and a contracted helicopter pilot flew to Rockport, TX, to eat lunch paid for by oil and gas companies and took trips to chase wildlife. The complainant also alleged that the two inspectors refused to fly when the weather was questionable and played video games and watched television at the contractor’s heliport rather than return to work at the BOEMRE office. The complainant further alleged that Lake Jackson supervisors often rescinded valid Incidents of Noncompliance (INCs), or safety violations, issued to oil and gas operators. After initiating our investigation, we developed new allegations, including Lake Jackson inspectors calling ahead and announcing inspections for certain oil and gas companies and one inspector falsifying an inspection report by copying operator information rather than actually performing the inspection. Over the course of our investigation, we interviewed 21 BOEMRE employees at the Lake Jackson district, including inspectors, inspection supervisors, engineers, and administrative personnel, as well as all Era Helicopter Inc. pilots serving Lake Jackson. We also reviewed BOEMRE inspection documents and inspector emails, and we issued a subpoena to Era Helicopters, Inc. for flight logs and billing invoices.

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Lunches in Rockport, Texas We interviewed all BOEMRE inspectors in Lake Jackson regarding allegations that two inspectors and an Era pilot flew to Rockport specifically to eat lunch paid for by the Island Operating Company (IOC). All of the inspectors and pilots we interviewed stated that BOEMRE inspectors were required to travel to Rockport to review paperwork for certain inspections. Everyone we interviewed, including Era pilots, stated that the helicopter trips to Rockport were not simply for lunch. Many of the inspectors admitted that IOC bought them lunch 10 to 15 times over the course of several years in Rockport, and lunch cost around $10 per person. Some of the inspectors stated that they accepted no lunches from IOC, even though the interviews of others disputed this. Some of the inspectors believed accepting lunch onshore from IOC was permitted since Federal regulations allowed them to accept lunch offshore. A former inspector in the New Orleans and Lake Jackson districts, said he had gone to Rockport, TX, twice, and on both occasions the operator, whose name he could not recall, took the inspectors to lunch during the inspection process. He recalled that the meal cost between $8 and $12, and the lunches lasted about 45 minutes. He said that until recently, allowing the operators to buy lunch during inspections had been an accepted practice. The inspector said that the regulations at the time stated that operators had to provide lunch for BOEMRE inspectors. He did not feel that an operator providing lunch to an inspector influenced inspections in any manner. One of the accused BOEMRE inspectors stated that when he first started working for BOEMRE, he went to lunch with IOC in Rockport during an inspection. He said he tried to pay for his lunch and then realized that IOC had already paid. On the occasions he went to lunch with IOC, he said, the company representatives came to get him and others up at the Aransas County Airport, which was close to IOC’s office. He said he then reviewed the paperwork at the office and took a break for lunch. He estimated that in total, he had gone to lunch with IOC approximately 10 times, and lunch cost around $10 per person. He said he paid for his lunch on different occasions, and another inspector might have also paid for him. He said he did not believe he ever accepted over $50 a year in lunches from IOC, which is the limit per Government ethics regulations. “The only thing that I’d ever heard about ethics … since I’ve been here, is no acceptance of anything that was over $20,” he said. “That was the only thing that was ever stressed as far as ethics.” Another BOEMRE inspector in the Lake Jackson district said he flew to Rockport to meet with Production Services Network and IOC. He said the only reason he went to Rockport was to conduct an inspection and refuel the helicopter. This inspector said he and the other inspectors would go to lunch with the operators because the operators had the vehicles and the inspectors did not have alternative transportation. He said he paid for his own meals, and to his knowledge, so did the other inspectors. He said he had not heard of IOC taking inspectors or the pilots to Rockport simply for lunch. Another BOEMRE inspector in the Lake Jackson district said inspectors occasionally flew to Rockport to review operator paperwork stored there for the unmanned platforms near Rockport in the Gulf of Mexico. He said that on the occasions he was in Rockport performing an inspection, operators, including IOC, bought him lunch. He said that for the most part, he

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remained in the office, and IOC employees brought him a burger. Another accused BOEMRE inspector in the Lake Jackson district said he visited Rockport “quite a few times.” He said that BOEMRE inspectors were required to go to Rockport when they conducted inspections of unmanned platforms to review paperwork. He said he ate lunch in Rockport, and he paid for the majority of his meals. When we asked who paid for the other minority, he said, “Well, there’s been times I’ve left my billfold or something like that, and maybe one of the other guys will pick it up.” The inspector stated that IOC was a contractor for the oil and gas industry that had an office in Rockport. He admitted that he had gone to Palacios, TX, where the Wood Group, another contractor for the oil and gas industry, bought his lunch. The inspector said he did not expect oil and gas industry representatives to pay for his lunch. He said IOC only paid for his meals when he did not have any money. A pilot with Era Helicopters Inc. stated that he flew BOEMRE inspectors to Rockport, TX, where IOC kept its paperwork. He said that usually, the inspectors reviewed the paperwork before they inspected a platform. He said that he and the BOEMRE inspectors never flew to Rockport for the “heck of it.” While in Rockport inspecting Island Operating Company, he said, he and the inspectors would go to lunch, and someone from IOC would always pick up the tab. The pilot said they were always willing to split the tab, but usually someone from IOC would pay. He said this would happen about every 2 months for 3 consecutive days, as this was how long it took to review the documents prior to starting the inspection of the platforms. He said the meals cost about $10 and recalled eating at Whataburger and a Mexican restaurant. He said that for the most part, he flew to the Rockport IOC office with two inspectors. Two other inspectors would also fly to Rockport for inspections, he said, but they mostly flew with the other Era pilot. He said he believed two of the inspectors and an Era pilot would also eat lunch while at Rockport, and personnel from IOC would pay. Another pilot with Era Helicopters Inc., explained that IOC’s main office in the Texas region was in Rockport, TX. He said that when he flew the inspectors to Rockport, they reviewed paperwork at the IOC office. After he dropped off the pilots at the office, he said, he watched television. On busy days, the inspectors would do paperwork for a few hours and then go to lunch, he said. On the shorter days, the inspectors would finish up early and then immediately head offshore. He said that to his knowledge, lunch was never the “driving factor” behind the inspections. This pilot said he offered to pay for the food in Rockport, but IOC paid the bill. “It never really occurred to me there was anything wrong with it, because we get fed everyday offshore,” he said. “And we don’t see anything wrong with that, because there’s like a [Federal regulation] that covers that. We have to come offshore.” The pilot said that over 3 years, he had probably been to Rockport for lunch 10 to 15 times with different inspectors, and lunch cost approximately $4 to $6 per person. He recalled that three other IOC employees went to lunch with them in Rockport. He said two of the inspectors seemed to know the men well. The pilot said he had never seen any BOEMRE inspectors finish work early out on the rigs or platforms simply to go to lunch. “I mean, even a child would know that that was wrong,” he said. A third pilot with Era Helicopters Inc. said Era pilots had never taken Lake Jackson BOEMRE

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inspectors on any trips by helicopter specifically for lunch. “Obviously, when we’re out all day, we each [eat] lunch, wherever we might be, but to make a trip specifically for lunch? No,” he said. When he flew BOEMRE employees to IOC’s onshore facilities in Rockport, TX, to conduct work, he said, the company would take him and the BOEMRE inspectors to lunch. All of the BOEMRE inspectors in Lake Jackson had attended these lunches in Rockport with IOC, he said, and he attended approximately 10 to 15 of them over the last 2 years. He said lunch cost an average of $6 to $8 per person. The BOEMRE District Manager, Lake Jackson district, confirmed that the inspectors needed to fly to Rockport. He said all of the documentation for the unmanned platforms was maintained in Rockport or other nearby coastal cities by several contractors. When asked if inspectors used Rockport as a place to have lunch, he opined that Rockport was not a place inspectors wanted to stop by to do anything, as it was “not a tourist attraction.” The BOEMRE Supervisory Inspector, Lake Jackson district, said Rockport was a refueling area, and IOC also had an office there where BOEMRE inspectors reviewed paperwork. He acknowledged that prior to a 2010 policy change, operators were required to provide meals to BOEMRE inspectors while offshore. He said that to his knowledge, no inspectors had received gifts, meals, or anything of value in exchange for not completing inspections. The BOEMRE Lead Inspector, Lake Jackson district, said he had thought accepting lunches from operators was acceptable because operators were supposed to provide lunch to the inspectors. “We’ve always, in the past, until this latest letter that Mr. Salazar sent out, it’s been required of the lessee to provide food during performance of inspections,” he said. The lead inspector said that when he had performed inspections in Rockport, the operator had brought him a sandwich while he was reviewing paperwork. He did not recall ever going to a restaurant for lunch. He said he and other inspectors had never differentiated between performing inspection work at an onshore base versus offshore. He also said he never got the impression that certain inspectors were purposely flying out to Rockport more often for lunch. He said he would notice these trends because he assigned the inspections. Weather and Heliport Activity We questioned Lake Jackson district inspectors and Era pilots about allegations that two inspectors and an ERA pilot refused to fly when the weather was questionable. We also questioned them about allegations that these inspectors played video games and watched television at the Era heliport rather than return to work at the BOEMRE office. The majority of inspectors and pilots stated that inspectors and/or pilots only refused to fly under poor weather conditions when they feared for their safety. The majority of inspectors also stated that when the weather was questionable, some inspectors waited at the heliport in the morning for the weather to clear, as was approved by BOEMRE supervisors. These inspectors sometimes played video games and watched television while they waited for the weather report. A former inspector said the weather would affect the helicopters’ departure time or even result in cancellation of the flights. He said he did not like to stay at the heliport for more than an hour if the weather was going to be an issue. He said four inspectors liked go to the heliport and drink

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coffee, and they usually stayed for a couple of hours on days it was obvious they were not going to fly. He said the television at the hangar was always on, and the supervisor was aware of the situation. The former inspector said he had no knowledge of inspectors lingering at the heliport if they had completed their inspections early. Another inspector said some inspectors remained at the heliport waiting for weather conditions to clear, when returning to the office might have been better. He said management was aware that this was occurring, and it was up to them to address it. He said he returned to the office and waited for a call from the heliport if the wait would be in excess of 2 hours. There was a television and video game system at the heliport that inspectors, including him, used while waiting for the weather to change, he said. This inspector said that grounding flights due to weather was a tough call, but it was a decision that the Era pilots and inspectors jointly discussed. He said he was probably more of a risk taker than the other inspectors. On some occasions, he said, Era pilots did not fly due to the weather, and he believed they should have flown, but this did not make him right. He said two inspectors, whom he declined to name, seemed to use weather as an excuse not to fly. He said management was aware of this and could put a stop to it. One of the accused inspectors said Lake Jackson employees normally wanted to fly. “People don’t like to be in this office,” he said. “Most of the people in there are oilfield workers. They like to be doing stuff with their hands. If you pen them up, that’s like an animal in a cage. They don’t like it.” He said that when inspectors and pilots did not want to fly, the weather was poor and they were concerned about their safety. “The buck stops with the pilot,” he said. “The pilot, he’s the captain; he’s in charge of the ship. He’s FAA qualified, and responsible to FAA, things that are beyond my knowledge … I would not want to push him into a dangerous situation, because now I’ve – I got my pilot in something that he doesn’t want to be in.” He said that when the inspectors were at the hangar, they were normally waiting to fly, and some of the inspectors worked on paperwork. He said his supervisor had expressed to the staff that he wanted the inspectors to wait at the heliport when the weather was poor because the weather could clear up, and the driving distance to the office was 20 to 30 minutes. “So the quicker we can get off the ground and be in the ready, the better it’ll be for our inspection goals,” he said. This inspector said the hangar had a television and a video game station, and the inspectors would sometimes use them while they were waiting for the weather to clear. They did not, he said, go to the hangar specifically to recreate. Another accused inspector explained that when the inspectors had days with poor weather, they were permitted to wait at the hangar until 11 a.m. in order to see if they could fly offshore. He said inspectors would read the newspaper or watch the news while they waited at the hangar for the weather to clear. An Era pilot said, “If I didn’t want to fly, then I’ve got a really bad career manager, because I’ve picked the wrong job, so that’s a little bit on the ludicrous side. That’s why I do this job. I like flying.” The pilot said, however, that he was often conservative with his decisions to fly when the weather was questionable. “It’s not a democracy,” he said. “We go with the most

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conservative rule. So if I’m flying [with someone], and he thinks the weather’s too bad, the weather’s too bad.” The pilot said he felt that one of the BOEMRE inspectors sometimes undermined his authority in making calls on the weather. When questioned about allegations that the BOEMRE inspectors came back to the hangar early after their work and played video games and watched television, an Era pilot said he did have an XBox 360 at the hangar at one time, but none of the inspectors played it in the afternoon. “It would have been in the morning when the weather was so bad that we can wait,” he said. He said the inspectors’ supervisor, told them that when the weather was poor, he wanted them to wait at the hangar until the 10 a.m. or 11 a.m. cutoff times. Another Era pilot said that if the weather was an issue, the inspectors usually waited around the heliport to see if the weather cleared up. The inspectors usually stayed in the office and watched television and played video games and checked the radar every 15 or 30 minutes, depending on what the storms looked like, he said. According to this pilot, the inspectors did not intentionally hang out at the heliport and were only there pending a weather decision. When asked about who made the decision to fly or not fly based on weather conditions, he said that usually everybody was on the same page. He said one of the inspectors usually wanted to fly even if the conditions were close to the flight guideline restrictions. Another Era Pilot said the BOEMRE inspectors normally stayed at the hangar if the weather was questionable to wait to hear whether they could fly. “We have a TV there, and a lot of days, they’ll come down … we’re on weather hold, and we’re sitting there waiting,” he said. “Yeah, and we may throw in a movie, but we’re just passing the time.” This pilot said the inspectors did not come back to the hangar early after their inspections to watch movies or play video games. When we asked him whether Era pilots or BOEMRE inspectors refused to fly when the weather permitted, this pilot said inspectors actually pushed to fly. The lead inspector said that each morning, he called the lead pilot at Era to discuss the weather. “And if he thinks the weather conditions are [such] that we’re going to be on hold, some of the guys [may] want to go on over so they’re available if it suddenly clears; they can get on and go,” he said. “And sometimes guys or inspectors will have paperwork to do and phone calls to do, and [Incidents of Noncompliance] to follow up on, just getting things organized and coordinated and together from what they did the day before. And they need a little bit of extra time that morning, so they’ll stay here.” The lead inspector said he had never seen any BOEMRE inspectors stay at the hangar and play video games or watch television when they should have been at the office doing work. He said he tracked when flights were called off for the day and the times BOEMRE employees returned to the office, and he had not noticed any problems. He said he could tell if inspectors were wasting any time by looking at the flight logs. He said he had never seen evidence of anyone falsifying their flight times. The supervisory inspector explained that when dealing with bad weather, the Era pilots were responsible for deciding whether to fly. He said the inspectors could wait at the Era helipad until 10 a.m. on an 8-hour shift and until 11 a.m. on a 10-hour shift. The inspectors either watched

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television or read the newspaper while they waited on the pilots to determine whether they would fly, he said. The BOEMRE District Manager said that if the weather was questionable before inspectors left the Lake Jackson district office, they might stay at the office and work. He said that if the inspectors arrived at the heliport and the weather was bad, they would stay at the heliport until the cutoff point. The inspectors got to decide when they returned to the office from the heliport if the weather was an issue, he said. He acknowledged that the heliport had a television and he had seen it set to ESPN, which “seemed fairly harmless.” When questioned about allegations that his inspectors spent too much time at the heliport, the district manager said that when he first took over the Lake Jackson district, inspections were on a 25-month cycle, meaning all inspections that were supposed to be conducted each year were conducted every 25 months. “The second year I was here, all inspections were done on a 13-month cycle … I would say things have improved, that they have increased their inspections,” he said. Regarding allegations that inspectors used the weather as an excuse not to fly, the district manager said, “I find most inspectors are eager to fly and would rather not be stuck in the office and would rather not be stuck at the heliport. Most of them, their personalities are they would rather be on the move and rather be inspecting, or they usually don’t make good inspectors.” Rescinding Incidents of Non-Compliance We questioned BOEMRE Lake Jackson district inspectors and supervisors about allegations that Lake Jackson supervisors often rescinded valid INCs. The Outer Continental Shelf Lands Act requires BOEMRE to inspect these oil and gas industry platforms for safety and operational compliance and, if necessary, issue INCs to the owners of the facilities to correct deficiencies. If not fixed, an INC could result in a civil penalty and could cost oil and gas companies thousands of dollars. We reviewed the process of how INCs were rescinded in the Lake Jackson district, and during our interviews, we learned that the district manager was the only one who could make this determination. Although many of the inspectors admitted that they were not happy when their supervisor rescinded their INC, they did not believe this was done with any malice or preference for industry. Over the course of our investigation, we also learned of an incident involving ExxonMobil platform HA-004, which one of the accused inspectors examined. After receiving a telephone call from an operator, the BOEMRE Supervisory Inspector allegedly called this inspector while he was still inspecting the platform, and told him not to write an INC. Both the inspector and the supervisory inspector stated that there was a miscommunication about the criteria for the INC, and the supervisory inspector said the platform would be re-inspected to work out any discrepancies.

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The inspector said that after an INC was written, the company had 14 days to correct it or get an extension on the violation. He described the process for writing an INC and the reaction of industry personnel:

If I see something that’s about to catch fire, or if I see something that’s about to rupture, or if an event takes place while I’m there, that I see happen – a ruptured steam line, where I almost got burned – stuff like that, that’s immediate. That’s posing a threat right now. We deal with that issue right then. So we secure the facility. And then we look at our blue book, or I look at my blue book, and I look at the regs. That’s my guide, my help. And then get with the person in charge, and say, ‘Here’s the situation that we have. We have this issue outside right now in the field, and the regs say that this is in violation. Here’s the enforcement action. You’re shut in and you need to correct it.’

The inspector said that as soon as production was “shut in,” the operator representatives immediately called their supervisors, who might call the BOEMRE office and complain to “get the production back online.” He explained, “They’re here to make money. They want it flowing. So their natural, knee-jerk reaction is to call here and see if they can begin to go above me and to begin to get permission to flow. There’s production engineers, there’s management here, there’s people in region, and all of them have received phone calls at some point in time begging or whining that they got shut in.” The inspector said he wrote an average of 10 to 20 INCs per week, and he guessed that approximately fewer than 3 percent of his INCs were rescinded. He said he believed that for the most part, the rescinding process was fair at BOEMRE. He explained, “There’s always disagreements. For me to sit there, you know, I’m talking to my supervisor … somebody that’s been in the oilfield longer than I’ve been alive. So my opinion and my viewpoint may not carry the same weight as his. I’m one person. So if there’s a disagreement, there might be a disagreement over safety, but to say that someone has a motive, that’s never the case.” The inspector said he did not believe his supervisors were sympathizing with the oil and gas industry when they rescinded INCs. “I have my opinions,” he said. “They have their opinions. If there’s a disagreement, and I say, ‘Well, I think it should be INC’ed,’ and they say, ‘No,’ well [here] comes a debate. And I care, and they care. It could be interpreted as an argument. But the bottom line is that we’re still working out the facts … I can’t come up with a better process … The buck has got to stop somewhere.” Another BOEMRE inspector, Lake Jackson district, said he did believe some animosity existed between supervisors and inspectors at the Lake Jackson district due to the rescinding of INCs. “Sometimes, [inspectors] don’t like the idea that it got rescinded,” he said. This inspector said he did not believe managers were sympathizing with industry when they rescinded an INC. They simply interpret the Code of Federal Regulations differently, he said. A BOEMRE engineer, Lake Jackson district, said he did not feel any pressure from BOEMRE management not to issue INCs. “I guess, I’m to the point where when I write an INC, it means something,” he said. The engineer admitted, however, that some operator employees begged the

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inspectors not to write INCs. “You’re going to see these people out here, you can tell, I’m looking at their faces, like they are almost about to cry, because some of them are so scared about getting an INC and losing their jobs, to the point where some supervisors have told their employees offshore that, ‘If you receive an INC, you may be let go,’” he said. He later added, “But we have a job to do just like they have a job to do.”

When asked about the rescinding of INCs within his district, the District Manager said his INC and civil penalties issuance numbers were very high compared to all other BOEMRE districts. “None of those numbers could be there if we’re out there being placated or playing footsie with the industry,” he said. A former BOEMRE inspector said, however, he had concerns with how the process of rescinding INCs was handled, based on a recent situation involving another inspector. He said the other inspector was recently inspecting the Deep Atlantis platform, which the former inspector thought was operated by Exxon. He said the other inspector was going to issue a shut-in INC, which would have required the operator to shut down the well. According to the former inspector, the operator called the Lake Jackson office, and the supervisory inspector called the inspector on the structure to tell him not to write the INC. The former inspector said he had a big problem with this, and he said he found out about it because the other inspector called him at home to ask his opinion. The former inspector said that even before this incident, there were occasions when inspectors wrote INCs, and before the inspector even returned to the office, the INC was rescinded. The supervisory inspector said that he told inspectors that if they saw a threat, risk, or safety hazard, they needed to write the INC. When the inspectors returned from the field, he said, he reviewed their documentation, including their INCs. He said the INCs were then sent to a petroleum engineering technician, and within 1 or 2 weeks, the platform operator could contest the INC and request that it be rescinded. If the company made the request to rescind the INC, the supervisory inspector said, he stopped the INC and nothing was placed into the database tracking system. He stated that he would then enter the INC into a separate database and would conduct a review of whether or not the INC should be rescinded. The supervisory inspector said he would then present the information to the district manager, who would make the final decision on whether or not to rescind the INC. We asked the supervisory inspector about the incident involving the inspector and the rescinded INC. He said that on the initial inspection of well HA-004, the inspector had gone to the ExxonMobil platform and had written an INC because a wing valve did not close within the 45-second required time frame. The INC required ExxonMobil to stop production by shutting in the well, he said. The District Drilling Engineer received a request from Exxon to bring the well back online, which the supervisory inspector approved. The following Monday, the supervisory inspector said, he received a telephone call from Exxon saying the well had been shut in again. The supervisory inspector said Exxon representatives explained that the cause for the shut in was for an uncertified valve, which should not have been an issue. The supervisory inspector said Exxon omitted information about the 45-second closing time frame required. He said Exxon requested permission to bring the well back online, which he approved verbally over the telephone. When the inspectors went back to the platform again and found the well flowing, they called the supervisory inspector saying they were going to write another INC and shut in the

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well. The supervisory inspector said he told the inspector that they had already written the INC and to “leave it alone.” He said that with the original information he had received from Exxon, he did not foresee a risk with the valve, and Exxon had assured him that it had ordered a new spring for the valve and would be installing it shortly. The supervisory inspector said that he had a conversation with the district manager about the issue, and they both agreed to let the well continue production.

The supervisory inspector admitted, “A lot of times, the operators omit telling me the whole story,” and that he did not know about the 45-second closing time issue because of Exxon’s omission. He said he had plans to re-inspect the platform soon, and “hopefully I’m going to start talking to the inspectors” and find out more information in the future. When re-interviewed on this issue, the inspector said he discovered several issues with this platform, including a shutdown valve problem on a well. After the inspection, he said, he issued an INC, which shut in the facility. The inspector and two other inspectors went back to the platform a few weeks later to check on the repairs, he said, and when they arrived, they noticed that the well was still flowing and the same shutdown valve problem existed. He said he asked the operator why the well was still flowing and was told that some repairs had been made. The inspector conducted an emergency shutdown test and discovered that one of the wing valves was not closing in 45 seconds, and he told the operator he was going to issue another INC. The inspector said he called his supervisor to inform him before writing the INC, however, and the supervisor told him to write a less serious INC. He said he did as instructed and gave the INC to the ExxonMobil field superintendent. The inspector said he thought he explained himself clearly over the telephone to his supervisor about the valve issue but said he believed there was a miscommunication due to the poor reception offshore. He said that when he got back to the office, the supervisory inspector had left for the day, but he left a note saying he had misunderstood the issues involving the valve. The inspector explained, “I promise you that I think it was a misunderstanding or differences of opinion…” The inspector stated that to date, the issue had not been fixed, but the office planned to re-inspect the ExxonMobil platform later in the month. Trips to View Wildlife We questioned BOEMRE inspectors and Era pilots about the allegation that two inspectors and an Era pilot took BOEMRE inspectors on “side trips” to view wildlife and flew the helicopters low to chase wild boars. None of the inspectors or pilots recalled any instances where this behavior occurred. Many admitted to seeing wildlife from the helicopter, but both inspectors and pilots said the helicopters had GPS devices tracking their course and their elevation. When asked about allegations that he used the helicopter to chase wildlife, one of the accused inspectors said, “That has never happened. To take a side trip is insane … that’s a government waste. I would never do that.” The other inspector stated that other than looking at the wildlife from the helicopter window, he had never been a part of flying low and looking at animals or trying to rustle up wild boar by flying low.

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The Era pilot said some of the BOEMRE inspectors were into hunting and requested he fly lower. He said that as a result, he would fly a little lower but never off course or at unsafe levels. He said he could not fly below the minimum level even if he wanted to because the flights were tracked by GPS. Another Era pilot said Era pilots might point out wildlife from the helicopter, but they would not chase anything. “As we’re flying along, we may see a deer or a hog or a big alligator or whatever and [say], ‘Hey, look there, look at the size of that alligator.’ And everyone gets to look at it, and then we go on. But to specifically go say, ‘Let’s go fly over here and look for …’ No.” This pilot also defended the other Era pilot. “As far as I’m concerned, there’s no one that I can think of off the top of my head that works for Era that I would rather be working with here in Lake Jackson,” he said. “[This pilot is] young by my standards, but he’s a pretty experienced pilot, he makes good decisions, and he’s a pilot I’d let my grandkids fly with.” When questioned about the allegations, the Era pilot said, “We’ve seen boars, we’ve seen deer, we’ve seen that thing that looks like a mix between a moose and a giraffe. I’ve seen alligators. But no one’s ever gone, ‘Hey, I want to go see this.’” The pilot said Era had a policy that if he flew below 1,000 feet, he had to be at less than 100 knots. “If it takes me two hours to get somewhere instead of an hour and a half, somebody’s going to notice,” he said. The pilot said the aircraft also had a satellite tracker, so his company always knew where he was flying. He later stated, “I take my job very seriously as far as my passengers.” Calling Ahead to Operators We questioned BOEMRE inspectors about information we developed that inspectors called ahead to announce their inspections to certain oil and gas operators in the Gulf of Mexico. Most of the inspectors documented that this occurred and that the announcements were at the discretion of the inspector. We learned, however, that a policy put in place by former BOEMRE Regional Director Don Howard required that inspectors announce all inspections for Maritime Security facilities. Most of the inspectors we spoke with stated that they specifically felt pressure to call Royal Dutch Shell ahead of time. The inspectors stated that they preferred to conduct unannounced inspections. Agent’s Note: Don Howard was the subject of an investigation that resulted in a criminal conviction for 18 U.S.C. § 1001. A BOEMRE Administrative Support Assistant said some of the inspections that the BOEMRE Lake Jackson district performed were announced, where the inspector would call ahead of time to say he or she was coming to the platform or rig. She said the inspections were supposed to be unannounced, but Don Howard put out a policy that for certain platforms, inspectors would need to call out ahead of time. According to the support assistant, the morning before the inspectors left, they would announce that they would be visiting the platform or rig. She said that because Royal Dutch Shell always received advance notice, its employees had “a lot of prior notice to fix things or straighten things up that maybe somebody else might not have.” She added, “They

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could have an INC written because something wasn’t correct, but this way, it gave them time to prepare.” The support assistant provided a copy of the April 28, 2005 policy written by Howard. One of the inspectors said some of the inspections conducted by BOEMRE were announced and some were unannounced, which he preferred. He said some of the discretion for announcing an inspection was left up to the inspectors. He said some inspectors gave the companies 1 or 2 days notice. “Some companies … like I think Shell, they require you to let them know you’re coming, and they have to give you a green deck to land on their platform,” he said. “There’s never going to be a surprise with that company. Those are their rules that they made, and I don’t know why the agency hasn’t done something about that prior. But the other reason … sometimes, you got to make sure there’s going to be somebody out there to meet you to do the inspection.” One of the accused inspectors said he preferred to conduct unannounced inspections because he wanted to see how the workers operated normally. “I don’t want them to prepare a facility for me to inspect,” he explained. The supervisory inspector said Royal Dutch Shell required a call 20 minutes before the helicopter landed announcing that an inspector was coming. He said Don Howard, who was terminated in 2007, had ordered that Shell be notified and ended unannounced inspections. This directive was still in existence, he said. ExxonMobil also required a 30-minute notification before landing, he added. He said he believed calling ahead gave the operators time to fix problems. He stated, however, that the policies were adopted because of safety concerns. Certain platforms only had one helipad and several aircrafts could be trying to land, he said. Falsification of Inspection Reports We questioned one of the accused inspectors and the other inspectors about the allegation that he had copied operator information on his inspection forms rather than actually perform a full inspection. The accused inspector first denied that he did this but later admitted that on one occasion he hurt his hand and had an operator employee fill out the paperwork. The other inspectors whom we interviewed denied any knowledge of this occurring. When we first interviewed the accused inspector, he denied ever falsifying an inspection report, known by BOEMRE inspectors as “pencil whipping.” He said he had never falsified an inspection report or violated MMS policy or Federal Regulations during his 6 years as an inspector. The following day, the inspector provided a letter stating the following:

Yesterday, 7-28-2010 during my interview with the IG agents, I was accused of (pencil whipping paperwork). This really upset me. I told the agents I never had and was proud of my work. This morning unable to sleep, I remembered that when I went to MI 622 I fell going down heliport stairs and busted my leg and popped my right wrist catching myself. After paperwork was completed we began the physical part of the inspection. By this time my wrist was hurting pretty good. I asked one for the hands working with us to right [sic] down the test numbers after

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we checked the component. I was present during all this. I guess I was being stubborn in wanting to finish the inspection. I chose the wrong way to do it and I expect to be in trouble for being stubborn.

During his follow-up interview, the inspector reiterated this story, adding, “And I didn’t report the accident – that’s another broken rule.” He also informed us that the incident had occurred on an Apache platform run by IOC. He stated that his son had worked for IOC as a summer intern at one point.

DISPOSITION We are providing a copy of this report to the Secretary of the U.S. Department of the Interior for any action deemed appropriate.