Regulating the Hands That Fed Him
By Mike Tanglis
At least 17 percent of the companies that have paid civil penalties to the Bureau of Safety and Environmental Enforcement (BSEE) over the past five years have contributed directly to one of the political campaigns of current BSEE Director Scott Angelle. At least five of those companies have met with Angelle since he assumed office in May 2017. These findings, among others, are the focus of our new report, Regulating the Hands That Fed Him.
Background on the BSEE
In 2010, the nation watched in horror for 87 days as more than 3 million barrels of oil spewed into the Gulf of Mexico. The spill, which became the largest oil spill in U.S. history, was the result of an explosion on the BP Deepwater Horizon oil rig in the Gulf of Mexico – which left 11 dead. The country demanded action to ensure no such disaster would ever happen again.
In response to Deepwater Horizon, President Obama promised reform. One of the many problems the Obama administration found was that the agency charged with issuing drilling permits was also in charge of industry oversight – the Department of Interior’s (DOI) Minerals Management Service. “Over the last decade,” Obama declared from the Oval Office, “this agency has become emblematic of a failed philosophy that views all regulation with hostility – a philosophy that says corporations should be allowed to play by their own rules and police themselves.”
The Obama administration split up the Minerals Management Service. The Bureau of Safety and Environmental Enforcement (BSEE) was created as a federal agency with the exclusive mission of regulating offshore drilling. According to BSEE, its mission is to protect the environment and improve safety through its oversight of the offshore energy industry.
Obama knew there needed to be a clear separation between the oil and gas industry and its regulator. Before the creation of BSEE, “industry insiders were put in charge of industry oversight. Oil companies showered regulators with gifts and favors, and were essentially allowed to conduct their own safety inspections and write their own regulations,” according to the former president.
“Build an organization that acts as the oil industry’s watchdog – not its partner.”
– President Barack Obama on the need for an agency like BSEE
[Download a PDF of the full report]
“Longtime Ally” of the Oil and Gas Industry, Scott Angelle, Appointed as BSEE Director
On May 24, 2017, after being appointed by President Trump, Scott A. Angelle began his work as BSEE director. A native of Louisiana, Angelle is described as a “longtime ally” of the offshore drilling industry. The description is well-earned. Angelle’s resume includes dramatically expanding horizontal hydrofracturing as the secretary of Natural Resources in Louisiana and, as interim lieutenant governor of Louisiana, working to end the Obama administration’s offshore drilling moratorium put in place in response to the Deepwater Horizon disaster. He also served on the board of directors of Sunoco Logistics between 2013 and 2016, for which he was paid close to a million dollars. Among other things, Sunoco controls thousands of miles of oil pipelines.
This coziness to the industry he is now tasked with regulating comes as no surprise. During his political career, which has included running for office three times, the oil and gas industry has showered Angelle with campaign contributions.
After being elected to the Louisiana Public Service Commission in 2012, Angelle unsuccessfully ran for both governor of Louisiana in 2015 and for the 3rd Congressional District in 2016. During his campaign for the state’s Third Congressional District, Angelle’s top contributing industry was oil and gas, which contributed $151,000 to his campaign, according to the Center for Responsive Politics.
“Help is on the way, help is on the way”
– Current BSEE Director Scott Angelle to Oil and Gas Executives
Companies Repeatedly Penalized by BSEE for Safety Violations Over the Past Five Years Contributed More Than $142,000 to Angelle’s Political Campaigns
According to BSEE, there were 189 civil penalties paid to BSEE from 2013 through 2017 which resulted in the payment of $16.5 million in total penalties. The penalties were paid by 54 companies.
We then compared the list of penalized companies to a list of all of the contributors to Angelle’s political campaigns. Our analysis found at least nine companies, or executives connected to the companies and their family, that have paid BSEE a civil penalty over the past five years have also contributed to one of Angelle’s campaigns.
These nine companies or associated individuals have contributed $142,750 directly to Angelle’s campaigns in the past. They have also paid more than $3.6 million to BSEE over the past five years related to 47 separate incidents.
This means that at least 17 percent of the companies penalized by BSEE over the past five years have contributed directly to one of Scott Angelle’s campaigns. These companies have been responsible for 25 percent of the incidents for which civil fines were assessed and 22 percent of the total penalties paid. [See Table 1]
Table 1 –Civil Penalties (2013-2017) of Companies That
Also Contributed to One of Scott Angelle’s Political Campaigns
|Company||Civil Penalties (2013-2017)||Total Penalty Amount Paid (2013-2017)||Angelle Campaign Contributions||Has Met with Angelle as BSEE Director|
|Freeport-McMoRan Oil & Gas||9||$346,750||$75,000|
|Stone Energy Corporation||4||$325,000||$250||YES|
|Dynamic Offshore Resources||3||$660,000||$5,000|
At least five of the nine companies from Table 1 have already met with Angelle as director, based on a review of his calendar obtained by The New York Times’ Eric Lipton.
- Arena Energy, the company with the most civil penalties over the five year period that contributed $15,000 to Angelle’s campaigns, met with him for a half hour on June 6, 2017.
- Stone Energy met with Angelle for an hour on Friday June 9, 2017. Stone paid $325,000 in BSEE civil penalties over the past five years and contributed $250 to Angelle’s campaigns.
- Hilcorp Energy met with Angelle for 45 minutes on June 20, 2017. Hilcorp paid $465,000 in BSEE civil penalties over the past five years and contributed $5,400 to Angelle’s campaigns.
- A Chevron executive met with Angelle for two hours on August 25, 2017. Chevron paid more than $840,000 in BSEE penalties over the past five years and contributed $14,000 to Angelle’s campaigns.
- Shell, a company that has paid $84,000 in penalties over the past five years and contributed $2,500 to Angelle’s campaigns, has met with him multiple times – including a two hour meeting on June 5, 2017.
Angelle’s Plans to Roll-Back Safety and Environmental Protection Regulations
Will Save the Industry $900 Million
According to the New York Times, Scott Angelle told a group of oil and gas executives in September 2017 that “help is on the way, help is on the way.” Angelle has been eager to hear advice from the industry he now regulates, encouraging executives to call him, and telling oil and gas lobbyists “to the degree this industry wants to be part of the discussion, tell me where you want me to be and we will be there.”
While Angelle has pledged to continue the agency’s focus on safety, he has also openly acknowledged that he believes the agency should try to “drive performance” in offshore drilling. This is in sharp contrast to how the BSEE’s first director, Michael Bromwich, views the agency’s mission, “BSEE’s mission is not to expand domestic production,” Bromwich recently told the Wall Street Journal. Bromwich believes that under Angelle’s leadership, BSEE has become a “cheerleader for the industry.”
The BSEE under Angelle plans to roll back or amend many of the Obama-era offshore drilling safety regulations. Proposals from BSEE under Angelle would, among other things, loosen requirements on streaming real-time safety data to the shore so regulators could spot issues faster, and remove a provision requiring that only approved third-parties inspect critical safety devices.
Many of the regulations Angelle plans to weaken were put in place to address issues found during the investigation into the Deepwater Horizon disaster.
BSEE has claimed its efforts to roll back safety regulations will save the industry more than $900 million over the next decade. These significant savings for industry may well cost it in the long run: in 2016, BP reported the Deepwater Horizon disaster had cost it $61.6 billion since 2010.
Will Scott Angelle Bite The Hands That Fed Him?
Reading the 2010 speech by President Obama in which he decried how “industry insiders” were in charge of oversight and how “oil companies showered regulators with gifts and favors,” and in turn were allowed to regulate themselves, feels a bit like an episode of the Twilight Zone given the bizarre reversal of course that appears to be taking place under Angelle’s leadership of BSEE.
The Deepwater Horizon tragedy was only eight years ago. Many have not – and will not – fully recover what they lost. The regulations put in place in response “were written with human blood,” Lillian Espinoza-Gala, an industry safety consultant and former offshore worker told the New York Times.
The BSEE’s mission statement makes no mention of increasing oil production. The name of the agency, the Bureau of Safety and Environmental Enforcement, makes the purpose of the agency quite clear. President Obama was very clear about why the agency needed to exist.
Still, Scott Angelle insists increasing oil production is part of the agency’s mission. He says he believes that the agency can promote an increase in oil production without sacrificing safety. But history tells us those two goals will often be in direct conflict.
Take for example the Deepwater Horizon disaster, the event that in large part led to the creation of the BSEE. A government report on the incident found that eleven people died in part because the operator of the well – BP – had “cut costs, reduced drilling time and increased risk,” according to the Washington Post. BP was able to increase oil production because they cut corners related to health and safety.
While a few of the companies that previously contributed to one of Angelle’s campaigns in the past paid a BSEE penalty in 2017 under his leadership, all of the incidents occurred prior to Angelle’s appointment – meaning the investigations began under the Obama administration.
Many companies penalized by BSEE are repeat offenders. Arena Offshore and Chevron U.S.A for example, paid at least one penalty in each of the five years analyzed. The two companies also contributed nearly $30,000 combined to Angelle’s political campaigns in the past.
As such, under Angelle’s leadership, BSEE will be in a situation where it must decide on whether or not to penalize, and how much to penalize, companies that have contributed money – sometimes large amounts – to one of Angelle’s campaigns.
As Director of the BSEE, Angelle should put safety and environmental protection before the financial interests of the oil and gas industry. His assurances to oil executives that “help is on the way” in terms of removing safety regulations, is less than reassuring.
[Download a PDF of the full report]