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Gulf oil spill fallout: MMS will be split into 3 agencies

WASHINGTON -- Responding to criticism that the troubled federal agency that regulates offshore drilling is too cozy with the industry it oversees, Interior Secretary Ken Salazar announced Wednesday that he'll split the Minerals Management Service into three branches.

The reorganization, which has a 30-day timetable, will create the Bureau of Ocean Energy Management to develop energy resources, including offshore renewable resources, and the Bureau of Safety and Environmental Enforcement, which will police offshore operations and protect the environment.

Most importantly, Salazar said, the existing division of the agency that oversees $13 billion in annual revenue collection will evolve into the Office of Natural Resources Revenue, move to the Interior Department's budget and management division, and be entirely separate from Interior's land and minerals division.

About 700 of the agency's 1,700 employees will move to the revenue collection division. Another 300 will be devoted to environmental safety and enforcement, and the remaining 700 will work on offshore energy leasing plans.

"The employees of the MMS deserve an organizational structure that fits the missions they are asked to carry out," Salazar said. "With this restructuring, we will bring greater clarity to the roles and responsibilities of the department while strengthening oversight of the companies that develop energy in our nation's waters."

The agency had been responsible for regulating offshore drilling as well as leasing tracts on the outer continental shelf and collecting royalties on the oil and gas they produce. It generates more revenue for the federal Treasury than any other agency does except the Internal Revenue Service.

Even as one arm of the MMS was trying to make money, however, the other was regulating an industry in which the importance of pumping oil had the potential to trump safety and environmental concerns.

Many of the changes will proceed internally, but Salazar said Tuesday in congressional testimony that he'd be suggesting new safety and environmental standards for Congress to consider. Those are expected to be outlined in a White House-ordered report, due May 28, that looks at what caused last month's BP oil well blowout.

Earlier this week, Salazar announced an overhaul of the Bureau of Land Management, which oversees onshore drilling on federal land. The revised onshore oil and gas leasing policy calls for more extensive environmental review as well as additional public involvement in determining where to drill.

Congress so far has embraced Salazar's efforts to split up the MMS but it's expected to take a close look at the fine print of his plan.

"The secretary has proposed a bold initiative to shake up a badly troubled agency by separating its three basic missions," said Rep. Nick Rahall, D-W.Va., the chairman of the House Natural Resources Committee. "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."

Rep. Darrell Issa of California, the top Republican on the House Oversight and Government Reform Committee, has long sought to see the agency's leasing and policing duties split, but he said Wednesday that he remained concerned that the changes didn't go deep enough.

The agency remains "largely unaccountable to the president, the Congress and the American people," Issa said, adding that the MMS embodies a "bureaucratic culture that doesn't see itself as accountable to taxpayers."

"The Obama administration certainly didn't create the problems at MMS, but they've persisted and gone unaddressed under their watch for nearly a year and a half," Issa said. "I don't see how a bureaucratic reshuffling or three-way split of the agency will fix the underlying problems at MMS."

Salazar didn't detail how the new Bureau of Safety and Environmental Enforcement would address a remaining criticism in offshore drilling: that the industry the MMS had been regulating has long had a heavy hand in writing safety and environmental regulations for oil companies.

MMS rules and regulations often have incorporated standards developed by the industry association, the American Petroleum Institute, which has set nearly 100 industry standards for the nation's offshore operating regulations. They range from what sorts of specifications drilling platforms must meet to withstand hurricanes to regulating the venting and flaring of natural gas on offshore rigs.

Unlike the MMS, many other highly technical federal regulatory agencies already have made a transition from broad, industry-written performance goals to narrower "prescriptive" regulations. For example, performance goals leave it to the offshore operators to prevent blowouts. Prescriptive rules detail exactly how a driller must do so, and hold them accountable if they don't.

Bill Bush, a spokesman for the American Petroleum Institute, said Wednesday that the industry's priority "is to provide safe, technologically sound and environmentally responsible offshore operations," and that the organization remained "committed to working with Secretary Salazar to achieve this goal however the organization is structured."

Many of the changes will move forward internally but Tuesday in congressional testimony, Salazar said he’ll be suggesting new safety and environmental standards for Congress to consider. Those are expected to be outlined in White House-ordered report that looks at what caused the blowout, due May 28.

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