Bloomberg Businessweek
May 19, 2010
http://www.businessweek.com/news/2010-05-19/obama-replaces-offshore-agency-faulted-in-bp-spill-update2-.html
May 19, 2010, 3:06 PM EDT
(Updates with Salazar comment in fourth paragraph.
By Jim Efstathiou Jr.
May 19 (Bloomberg) — The Obama administration replaced the Minerals Management Service, faulted for lax regulation of offshore drilling before the BP Plc spill last month, with three offices to oversee leases, drilling safety and fee collection.
Interior Secretary Ken Salazar signed an order today creating the Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement and the Office of Natural Resources Revenue.
President Barack Obama said on May 15 that he would end the “cozy relationship” between companies that drill for oil and gas and the Minerals Management Service, part of the Interior Department. Its track record has been scrutinized since the BP well blew up on April 20, killing 11 workers and creating an oil spill that continues to spread toward Gulf Coast states from Louisiana to Florida.
“Theses three missions — energy development, enforcement and revenue collection — are conflicting missions and must be separated,” Salazar said on a conference call with reporters. “So today I’m ordering the division of MMS into three distinct entities.”
The MMS generates about $13 billion a year for the U.S. Treasury by partnering with companies such as BP and Exxon Mobil Corp. to develop oil and natural gas, trailing only the Internal Revenue Service in revenue.
“The same group of people, the same agency getting that $13 billion are also for doing everything else,” Salazar said. “It’s from my point of view an important organizational change.”
Lawmakers from both parties have questioned the MMS’s ability to enforce safety and environmental regulations at the same time it promotes energy development.
Criticism in Congress
The agency, created in 1982, is too close to the companies it regulates, said Representative Darrell Issa, a California Republican. The relationship discouraged the MMS from demanding better systems to prevent well blowouts like the one spewing an estimated 5,000 barrels of oil a day into the Gulf of Mexico, Issa said.
Lawmakers also have questioned the government’s enforcement of safety standards and regulations to ensure that companies can respond effectively after spills.
Senator Lisa Murkowski, a Republican from Alaska, said she was “stunned” to learn that chemical dispersants used to break up oil as it flows from a well weren’t tested before the BP explosion.
‘Lost Days’
“We probably lost days here,” Murkowski said at a May 11 hearing. “It’s more than just a little bit frustrating.”
Lamar McKay, chairman of BP America Inc., told a House panel today the company would use all available resources to stop the gushing well and clean up the Gulf and shoreline. Measures to stop the flow of oil so far have been only partially successful.
The new safety office will employ about 300 people, Salazar said in a statement May 11 when he announced his intention to overhaul MMS. The Interior secretary said he will seek an additional $29 million from Congress for rig inspections and enforcement, including $20 million for examination of oil- drilling platforms in U.S. coastal waters.
–Editors: Steve Geimann, Larry Liebert
To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net
To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net
Special thanks to Richard Charter