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Feds announce new agency to police offshore oil drilling

WASHINGTON — As senators grilled oil company executives and experts about the Deepwater Horizon oil spill in the Gulf of Mexico, the Obama administration moved Tuesday to reorganize the troubled federal agency that oversees offshore drilling.

In an effort to end what critics consider a too cozy relationship between the oil industry and regulators, Interior Secretary Ken Salazar said the Minerals Management Service will be split in two, dividing its leasing-royalty collection function from its safety and environment enforcement responsibilities.

The move came three weeks after the Deepwater Horizon oil platform in the Gulf of Mexico exploded in a fireball, killing 11 workers and releasing a massive oil spill which could eventually rival the biggest in U.S. history.

Salazar provided few specifics about how MMS will be reorganized except to say a new office with about 300 people will be created to handle enforcement of safety and environmental regulations.

"This is a first step," Salazar said.

The agency is now responsible for leasing tracks on the outer continental shelf and collecting royalties on the oil and natural gas they produce. At the same time, MMS has broad enforcement powers.

Salazar said while the oil industry will continue to play a role in writing safety and environment regulations, that "doesn't mean oil and gas companies should be in the drivers seat...That is a government function."

Nearly 100 of the agency's existing regulations came directly from an industry group, the American Petroleum Institute.

The announcement was hailed by a wide range of government watchdog groups as long overdue.

“Putting one agency in charge of enforcing safety regulations and collecting billions of dollars in oil and gas royalties was asking for trouble," said Francesca Grifo, director of the Union of Concerned Scientists' Scientific Integrity Program. "Separating these functions would benefit all parties involved -- the Department of Interior, the American public, and the oil companies that must rebuild public trust."

On Capitol Hill, lawmakers said human error, technological failure and a breakdown in the federal regulatory system contributed to the spill, which continues to grow and threaten the Gulf Coast.

Two separate Senate committee zeroed in on what caused the Deepwater Horizon accident and who would be responsible for its cleanup.

"We are prepared to clean up and deal with anything that gets on shore and we're prepared to deal with the economic impact," said Lamar McKay of BP America, the company that owned the well and had leased the drilling rig.

The chairman of the Senate Energy and Natural Resources Committee, Sen. Jeff Bingaman, D-N.M., said it was not enough to label the spill an "unpredictable and unforeseeable" event.

"If this is like other catastrophic failures of technological systems in modern history whether it was the sinking of the Titanic, Three Mile Island or the loss of the Challenger, we will likely discover that there was a cascade of failures: technical, human and regulatory," Bingaman said.

Exasperated, the top Republican on the committee, Sen. Lisa Murkowski, R-Alaska, warned the companies there would be “plenty of time to try to figure out who is to blame, who is at fault as we go on.”

Their negligence, though, could harm future offshore drilling in U.S waters and have an impact on the country’s energy policy, Murkowski said, including Shell Oil’s effort this summer to begin exploratory offshore drilling offshore of Alaska in the Arctic Ocean.

“I would suggest to all three of you that we are all in this together,” she said. “Not only will BP not be out there, the Transoceans won’t be there to drill and the Halliburtons won’t be there to provide the cementing.”

The White House has stopped any new offshore drilling until the Interior Department completes a safety review, due May 28. Shell has until May 18 to submit to the MMS additional information about the safety of its Arctic program; until then, they will not be allowed to move forward during the summer season.

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