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May 11, 2010 3:36 PM by Melissa Canone

Proposal: Split Agency That Oversees Offshore Drilling

WASHINGTON (AP) - 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.
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.

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