Interior proposes bifurcation of MMS's safety, leasing duties

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, May 11 -- US Department of the Interior Secretary Ken Salazar proposed dividing the US Minerals Management Service and separating its environmental and safety regulations enforcement from its leasing and royalties collection operations.

“The job of ensuring energy companies are following the law and protecting the safety of their workers and the environment is a big one, and should be independent from other missions of the agency,” he told reporters at Interior’s headquarters on May 11. “We will responsibly and thoughtfully move to establish independence for this critical mission so that the American people know they have a strong and independent organization holding energy companies accountable and in compliance with the law of the land.”

Salazar said the new safety and environment office would have 300 employees, including inspectors and administrators. “How we specifically do it will need to be determined. It won’t be easy,” he said. “It may require a new assistant secretary for safety and the environment.” MMS’s fiscal 2010 budget for inspections is $23 million, he noted.

Salazar said MMS brings the federal treasury $13 billion/year, which is an important part of its mission. “Separate and apart should be its environmental and safety function to assure there’s no conflict, and to make sure that operations are being conducted properly,” he maintained.

He said he would determine prompt administrative steps to begin the process and consult with members of Congress such as US House Natural Resources Committee Chairman Nick J. Rahall (D-W.Va.) and Senate Energy and Natural Resources Committee member Ronald L. Wyden (D-Ore.) who have proposed making MMS a more independent agency with a Senate-confirmed director.

Longer evaluation
Salazar also noted that the Obama administration is preparing oil spill response legislation that will include a proposal to eliminate a congressionally mandated 30-day deadline for MMS to act on exploration plans submitted by oil and gas producers. “That’s not enough time,” he said. “MMS should have 90 days to complete environmental and safety reviews, as needed. It also would supplement preparation of an environmental impact statement as a 5-year Outer Continental Shelf leasing program is developed and a second EIS for each lease sale.”

Salazar’s proposal drew some immediate responses. US Rep. Doc Hastings (R-Wash.), the House Natural Resources Committee’s ranking minority member, said it deserves consideration. “My first reaction is that such a division of duties would have benefits if it can be done right,” he said, adding, “A thoughtful look needs to be taken at how to make certain that American-made energy production can be the safest in the world. Our economy, millions of jobs, and our national security depend on the right answers.”

US Rep. Edward J. Markey, who chairs the Energy Independence and Global Warming Select Committee, said, “Secretary Salazar is continuing to positively reform the Interior Department to ensure the protection of both the environment and American taxpayer. Splitting MMS into independent safety and leasing divisions will provide the additional oversight of offshore oil and gas activities our country needs.”

US Rep. Lois Capps (D-Calif.), a Natural Resources committee member, said she welcomed Salazar’s announcement as an effort to address some conflicts at the agency responsible for managing federal offshore resources. “We have long needed more transparency and accountability at MMS. Today’s announcement, however, does not diminish the need for a ‘blue-ribbon’ commission to investigate the causes, response, and impacts of the BP oil spill,” she said.

The American Petroleum Institute issued a statement saying that it remains committed to working with Salazar in achieving safe, technologically sound, and environmentally responsible offshore oil and gas operations. “We have a strong record of working cooperatively with the government to promote safe offshore operations, while maintaining a strong offshore leasing program,” it continued. “Both are vitally important to producing the oil and gas American consumers need, and providing the energy and jobs crucial to the economy of the gulf region and the nation, so we look forward to learning the details of the proposal.”

Other actions
Salazar said the Obama administration also would seek another $29 million from Congress for inspections, enforcement, studies, and other activities at DOI. This would include $20 million for increased inspection of other offshore platforms, engineering studies, and safety regulation enforcement. Another $7 million would be used for more comprehensive evaluations of policies, procedures, and actions which may be needed in the wake of the Apr. 20 rig accident and subsequent crude oil spill in the g, and $2 million would go to the US Fish and Wildlife Service, US Geological Survey, or others to conduct general environmental studies.

The secretary also announced that the administration would ask the National Academy of Engineering to conduct an independent, technical investigation to determine the root causes of the explosion and fire at the Deepwater Horizon semisubmersible drilling rig so that steps can be taken to address mechanical failures underlying the accident. He emphasized that the independent NAE analysis and technical investigation will complement—but not replace—the joint investigation which the US Coast Guard and MMS are conducting under their respective government investigative authorities.

Salazar also disputed allegations that MMS has not aggressively enforced existing regulations. “It’s an enforcer,” he declared. “It has been issuing violation notices, as many as 2,000 over recent time. There will be additional and more robust inspections. We also will learn a lot from reviews which are taking place to make sure this problem we are facing now does not occur again.”

The new structure will give the federal government a more independent offshore oil and gas safety operation, he indicated. “The industry has significant knowledge, and we will listen to its suggestions. But developing the regulations will be the government’s responsibility, and we’ll look at it with a fresh pair of eyes,” he said.

DOI officials from several other agencies have been working hard alongside those from MMS since the Apr. 20 rig explosion and fire and subsequent spill, Salazar said. “We’re going to get through this,” he maintained. “I’m confident this issue is one where we’ll learn more about the OCS and its oil and gas resources, and that we’ll also move forward on developing the more comprehensive energy strategy this administration is committed to.”

Contact Nick Snow at nicks@pennwell.com.



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