Interior secretary to call for splitting up agency overseeing offshore drilling

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Salazar urges splitting energy agency

WASHINGTON — The Obama administration is proposing to split up an Interior Department agency that oversees offshore drilling, as part of its response to the Gulf Coast oil spill.

Interior Secretary Ken Salazar called for a plan to split the Minerals Management Service in two. One agency would be charged with inspecting oil rigs, investigating oil companies and enforcing safety regulations, while the other would oversee leases for drilling and collection of billions of dollars in royalties. That would separate the agency’s two core responsibilities, which critics say are diametrically opposed — making money off the industry, while also cracking down on it in ways that may affect the industry’s bottom line.

“The tragedy aboard the Deepwater Horizon and the massive spill for which BP is responsible has made the importance and urgency of our reform agenda even clearer,” Salazar said. Salazar said he was making the changes “so there is no conflict, real or perceived, with respect to those functions.”

He said the administration has been aggressive in its response to the Gulf Coast spill, “but we must also aggressively expand the activities, resources and independence of federal inspectors so they can ensure that offshore oil and gas operations are following the law, protecting their workers, and guarding against the type of disaster that happened on the Deepwater Horizon.”

The Minerals Management Service, an arm of the Interior Department, oversees the nation’s natural gas, oil and other mineral resources. The agency collects and distributes more than $13 billion per year in revenues from federal leases for offshore and onshore drilling. It also enforces laws and regulations that apply to drilling operations.

Some critics have said the two roles are in conflict and are one reason the agency has long been accused of being too cozy with the oil and natural gas industry. There is growing bipartisan sentiment in Congress in favor of toughening oversight of MMS. At a minimum, lawmakers want to ensure that the agency’s director is a Senate-confirmed position.

The current director, Elizabeth Birnbaum, was appointed by President Barack Obama but did not require Senate confirmation.

Salazar said it is likely that a legislative package that would include Senate confirmation of the MMS director will be submitted to Congress.

Rep. Nick Rahall, D-W.Va., chairman of the House Natural Resources Committee, hailed the proposal, which he said is long overdue.

“Given this disaster in the Gulf, one has to ask whether leasing and safety policing are like oil and water and simply do not mix,” Rahall said.

Rep. Edward Markey, D-Mass. chairman of a select committee on global warming, said Salazar’s plan “will finally end the Bush-era mantra of safety second” on drilling for oil and natural gas.

Splitting MMS into independent safety and leasing divisions will provide needed oversight of offshore oil and gas activities, Markey said.

The American Petroleum Institute, which represents the oil industry, said in a statement that it would work with Salazar to ensure safe, technologically sound and environmentally responsible offshore operations. The institute said it backed a strong offshore leasing program.

An internal investigation in 2008 described a “culture of substance abuse and promiscuity” by workers at the minerals agency. The investigation by Interior’s inspector general found workers at the MMS royalty collection office in Denver partied, had sex with and used drugs with energy company representatives. Workers also accepted gifts, ski trips and golf outings, the report by Inspector General Earl E. Devaney said.

Devaney decried “a culture of ethical failure” and an agency rife with conflicts of interest.

More than half a dozen workers out of around 50 at the Denver office were disciplined — and several were fired — because of the scandal.

Salazar said the reforms announced Tuesday are the first of several structural changes he is considering at Interior. At Obama’s request, Salazar is conducting a 30-day review of offshore drilling. He also has appointed an Outer Continental Shelf Safety Oversight Board to recommend management improvements and closer oversight of offshore drilling operations.

The MMS and U.S. Coast Guard are conducting a joint investigation of the April 20 explosion on the Deepwater Horizon rig and will file a report to Obama. The six-member panel begins two days of hearings Tuesday in Louisiana, the same day Congress begins a series of hearings on the oil rig explosion and oil spill.

Since taking office in January 2009, Salazar has pushed a series of reforms at MMS, including establishment of new ethics standards, termination of a controversial royalty-in-kind program, and increased emphasis on wind and other renewable energy sources.

He also has canceled proposed offshore lease sales in Alaska and the Arctic Ocean and established what he calls a science-based process for determining where offshore drilling is appropriate on the Outer Continental Shelf.

Last week, the Interior Department said it is indefinitely suspending public hearings on the proposed sale of oil and gas leases off the Virginia coast while it focuses on the Gulf oil spill. The department said MMS staff had focused their attention on the Gulf incident and would be unable to conduct the meetings until a later date.

On March 31, three weeks before the Gulf explosion, Obama called for new offshore drilling in the Atlantic Ocean from Delaware to central Florida, plus the northern waters of Alaska. He also said he wants Congress to lift a drilling ban in the oil-rich eastern Gulf of Mexico, 125 miles from Florida beaches.

After the oil spill, Obama promised that no new offshore oil drilling leases will be issued unless rigs have new safeguards to prevent a repeat of the explosion. He ordered Salazar to report on what new technologies are needed to tighten safeguards against oil spills from deep water drilling rigs.

On the Net:

Minerals Management Service: www.mms.gov/