Salazar plan would abolish Minerals Management Service, divide it into 3 parts

more images

more images

more images

more images

more images

more images

more images

more images

more images

more images

Salazar: Abolish energy agency, divide in 3 parts

WASHINGTON — The Obama administration moved on Wednesday to abolish the beleaguered agency that oversees offshore drilling and replace it with three separate entities.

The plan by Interior Secretary Ken Salazar would eliminate the Minerals Management Service and replace it with two bureaus and a revenue collection office. The name Minerals Management Service would no longer exist, a spokeswoman said.

Members of Congress and President Barack Obama have criticized what they call the cozy relationship between regulators and oil companies and have vowed to reform MMS, which both regulates the industry and collects billions in royalties from it.

The latest plan is the second proposed restructuring of the drilling agency since the massive oil spill in the Gulf of Mexico last month. Salazar last week proposed splitting the agency in two. On Wednesday he said the agency’s three main functions should be split up to avoid what he called “real or perceived” conflicts of interests.

The Bureau of Safety and Environmental Enforcement would inspect oil rigs and enforce safety regulations. The Bureau of Ocean Energy Management would oversee leasing and development of offshore drilling. And the Office of Natural Resources Revenue would collect billions of dollars in royalties for onshore and offshore drilling.

“These three missions — energy development, enforcement and revenue collection — are conflicting missions and must be separated,” Salazar said at a news conference.

Employees of the minerals agency “deserve an organizational structure that fits the mission that they are asked to carry out,” Salazar said. Under the proposed restructuring, employees would get greater clarity for their roles and responsibilities, strengthening oversight of companies that develop oil, natural gas and other resources, he said.

The enforcement and energy bureaus would report to an assistant Interior secretary for land and minerals management, while the revenue office would report to a policy, management and budget official, Salazar said.

It was not clear how much of the proposed restructuring would need congressional approval. Salazar and other officials said the administration would work with Congress to complete the reforms.

Former Interior Secretary James Watt created the Minerals Management Service by secretarial order in 1982, consolidating several functions that had been performed by the U.S. Geological Survey, the Bureau of Land Management and the Bureau of Indian Affairs.

Salazar said it was important for Congress to set the direction for the minerals agency, the way it has with other Interior agencies such as the Fish and Wildlife Service and National Park Service.

“This is an agency that has a responsibility of protecting American taxpayers and generates $13 billion a year in revenue. And it also has the responsibility of protecting the resources of the Outer Continental Shelf. It needs to be a much more robust organization,” Salazar said.

The 1,700-employee agency collects and distributes more than $13 billion per year in revenues from federal leases for offshore and onshore drilling. It also sells leases for drilling operations and enforces laws and regulations that apply to drilling.

Critics have long said the agency’s roles conflict, leading to accusations 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 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. She did not attend Salazar’s news conference Wednesday or a similar event last week when he proposed splitting the minerals agency in two.

Still, Salazar expressed confidence in Birnbaum, saying she has “brought in a fresh perspective” to the director’s job. Unlike many of her predecessors she did not work in the oil and gas industry before joining the government.

Rep. Nick Rahall, D-W.Va., chairman of the House Natural Resources Committee, called Salazar’s proposal “a bold initiative to shake up a badly troubled agency by separating its three basic missions.”

Rahall said he wanted to know more details and would examine the proposal more closely when Salazar appears before his committee on May 26.

While just 28-year-old, the minerals agency has long been plagued by charges of corruption and conflict of interest.

An internal investigation in 2008 described a “culture of substance abuse and promiscuity” by agency workers. 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.