Oil spill highlights conflict-of-interest issue within investigation agency

Washington Post Staff Writer
Saturday, July 31, 2010; A02

David Dykes -- the federal regulator now leading his agency's investigation of the BP oil spill -- has spent five years as a senior investigator and office chief enforcing oil industry safety in the Gulf of Mexico. For much of that time, his brother was a top executive at an energy company with significant activities under Dykes's purview.

But David Dykes did not formally recuse himself from matters involving his brother's company. No rule required him to do so. Unlike many federal agencies that make employees distance themselves from matters involving friends, relatives or former bosses, the nation's chief oil regulatory agency had no such policy.

Now, in the wake of the BP disaster, Congress is pressing the agency formerly called the U.S. Minerals Management Service to clamp down on potential conflicts of interest. The case of David and Rodney Dykes highlights the challenges of the task. The oil industry of the Gulf Coast is an insular world in which rig foremen and the federal inspectors charged with regulating them sometimes work side by side, or grew up in the same towns and even homes.

Investigations into the BP spill have focused on whether MMS regulators properly oversaw the Deepwater Horizon rig or merely accepted company assurances that the rig was safe. An inspector general investigation in May showed that MMS regulators in the gulf sometimes viewed themselves more as industry friends and fishing buddies than policemen. In one office, they took free trips, sporting tickets and gifts from industry officials they were supposed to be monitoring, the investigation found.

New rules

Since June, the newly renamed Bureau of Ocean Energy Management, Regulation and Enforcement [BOEM] has worked to develop new rules that would require inspectors to recuse themselves from matters in which they have a family or other personal conflict. Michael Bromwich, the new head of BOEM, said the agency needs a strong recusal policy to assuage public concerns about closeness between regulators and industry.

"Since arriving a month ago to lead reforms at BOEM, it is clear to me that there are concerns about conflicts of interest that we must address within the agency's inspections and investigation programs. We're looking very closely at these issues, including implementing new recusal policies and taking appropriate action where necessary," Bromwich said.

Bromwich said he and Interior Secretary Ken Salazar have confidence in David Dykes's work as co-chair of a team investigating the BP spill.

Both David Dykes and his brother declined to comment. A spokesperson at the former MMS said David Dykes was never asked to review any matters involving Energy Partners, where Rodney Dykes was a senior vice president for production, or Stone Energy, a company under a tentative merger with the firm in 2006.

David Dykes, a native of Hammond, La., has worked in the gulf oil business for nearly three decades, as had Rodney Dykes. David Dykes drew the attention of MMS officials when, as a safety manager at Taylor Oil, he helped shape a model safety plan. In 1999, he joined MMS, and by 2005, he was a senior safety inspector in the Office of Safety Management. He became office chief in February 2007. David Dykes was considered a "junkyard dog" as an investigator, a former MMS manager said. His office oversaw accident investigations, issued industry safety alerts, imposed civil penalties and recommended regulation changes.

Rodney Dykes stayed on the corporate side, including a short stint with his brother at Maxus Energy. By 2001, he had joined Energy Partners Ltd., and he rose to senior vice president in 2003.

From 2006 to early 2008, Energy Partners and a company under a tentative merger agreement with it in 2006 reported 30 incidents including fires, explosions, collisions and injuries on their rigs and facilities, according to MMS records. The MMS judged 25 to be very minor or not meeting the criteria for an investigation, and did not probe further. District offices far below Dykes's investigated the other five.

In three cases where MMS inspectors found company violations and failures, MMS fined the companies an average of $18,000 for each incident.

BOEM officials said no one in Dykes's office or in lower district offices ever asked him to weigh in on cases involving his brother's business.

"David Dykes is among the many diligent, dedicated, professional public servants who works for BOEM and who is committed to ensuring the safety of offshore energy operation," said Interior Department spokeswoman Kendra Barkoff. She said David Dykes orally disclosed in 1999 that his brother worked in the oil industry but did not do so in writing because there was no policy covering such conflicts.

'Doubt in your mind'

Some argue that a formal policy is necessary because of the inevitable perception that the office policing oil rig safety could be conflicted about regulating the boss's brother.

"If the one running the show at MMS runs the office in charge of [monitoring] his own brother, it's hard to really come down on him," said Gary Arsenault, a Louisiana lawyer who has sued on behalf of workers injured at Energy Partners facilities. "There's always that doubt in your mind about how well his office can investigate."

Under the policy under consideration, BOEM employees would be required to formally step away if there was a possible conflict between job and family. A June 12 memo alerts BOEM inspectors in the Gulf to immediately notify bosses of potential conflicts.

"You must get with your supervisor and recuse yourself of any inspections of facilities/fields/rigs that currently have family members or close friends working there," the deputy regional supervisor for the gulf field operations wrote.

BOEM is now considering strengthening that directive, requiring employees to document conflicts, make formal recusal requests and avoid performing any official duties relating to family members, friends or recent former employers.

Research Editor Alice Crites contributed to this report.

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