In response to the Gulf of Mexico disaster, the federal agency that oversees offshore drilling will be split into three divisions to separate its energy development, enforcement and revenue collecting functions.
The three jobs currently performed by the Minerals Management Service, which collects $13 billion in revenue every year, "are conflicting missions and must be separated," Interior Secretary Ken Salazar said today.
Salazar signed a secretarial order today reassigning the responsibilities of MMS to a new Bureau of Ocean Energy Management, Bureau of Safety and Environmental Enforcement, and Office of Natural Resources Revenue.
Within 30 days, additional details of the plan and a schedule for implementing the changes will be developed by Interior officials in consultation with members of Congress and the White House Office of Management and Budget.
Noting that former Interior Secretary James Watt created MMS by secretarial order in 1982, Salazar said he also will be working with members of Congress to draft legislation that would establish the agencies by law.
The ocean energy bureau will be responsible for conventional and renewable offshore energy development, including resource evaluation, planning and leasing. About 700 of the current 1,700 MMS employees will shift to this agency, Salazar said.
The safety and enforcement bureau, with roughly 300 employees, will carry out oversight, inspections, safety and environmental protection in all offshore energy activities. "This will be the police of offshore oil and gas operations," Salazar said. "We will make sure that we are holding energy companies accountable for their responsibilities."
Both bureaus will be led by a director and supervised by the Interior assistant secretary for land and minerals management, Wilma Lewis.
The third office, with about 700 employees, will be housed in a different Interior division that handles budget matters. It will handle both onshore and offshore royalty and revenue functions, including the collection and distribution of revenue, auditing and compliance, and asset management. It will be headed by a director and supervised by the Interior assistant secretary for policy, management and budget, Rhea Suh.
Salazar said the reorganization is "not the first nor the last reform" of MMS. Questions on how the divisions will be funded and exactly how many employees they will have remain to be answered, he said. "We want to get it done right."
Salazar said over the next month he will visit MMS employees in Denver, New Orleans and Virginia to discuss the reorganization.
Saying that part of the reason he hired current MMS Director Liz Burnbaum is because she has "no connection to industry," Salazar said it remains to be seen what her role under the restructuring will be.
"We will need three very strong people to run these three agencies," Salazar said. "She is certainly a very strong person, and we will see how she fits in."
House Natural Resources Chairman Nick Rahall (D-W.Va.) said his panel will delve into the restructuring next week.
"The secretary has proposed a bold initiative to shake up a badly troubled agency by separating its three basic missions," Rahall said. "While I commend him, the devil is in the details, and that is part of what we will be examining next week when Secretary Salazar appears before my committee."
Senate Interior Appropriations Chairwoman Dianne Feinstein (D-Calif.) has said her subcommittee will hold a hearing on the proposal in the next few weeks.
"I've always looked at MMS as a relatively weak agency with not much by way of enforcement teeth," Feinstein said last week. "I think if separation develops a set of enforcement teeth and independence -- now we know what is out there, in terms of catastrophe, and we have to respond and see that it never, ever happens again."
MMS collects billions of dollars of royalties from offshore drilling each year, but it also writes regulations that govern the industry.
The agency has faced intense scrutiny in light of the April 20 explosion at the Deepwater Horizon rig that let oil start gushing into the Gulf of Mexico. President Obama has said MMS has been too cozy with the industry, and critics say oil and gas companies have too much say over the federal regulations.
MMS was engulfed by a sex, drugs and illegal gifts scandal and has been subject to a series of reports by government watchdog agencies saying it does not accurately collect royalties and urging reforms.
Salazar has long contemplated reorganizing the energy agencies he oversees. Last May, the secretary said he was considering reorganizing MMS and the Bureau of Land Management, which is in charge of drilling on land (E&ENews PM, May 13, 2009).
Click here to read the secretarial order.