Interior Starts to Clean Up Its Mess

Interior Secretary Ken Salazar today tried to clean up the gunk that has coated his agency ever since the Deepwater Horizon oil rig started spilling thousands of barrels of oil into the Gulf of Mexico three weeks ago.

Salazar announced plans to restructure his agency’s Minerals Management Service, the office that last year exempted the rig from a detailed environmental impact analysis and awarded Transocean, the rig’s owner, with a safety award. Under Salazar’s plan, the office’s inspection, investigation, and enforcement operations would be separated from its leasing, revenue collection, and permitting functions.

“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,” Salazar said.

This restructuring is a good first step, critics said, but MMS has a long history of problems that may not be fixed simply by drawing up a new organizational chart. This is the agency, you may recall, where some employees in its Denver office did drugs and had sex with oil-industry officials that they were supposed to be regulating. This also is the agency that failed to collect billions of dollars in offshore oil and gas royalties over the past decade due to “flawed data and collection practices, inadequate accountability procedures, ethical lapses, and outright corruption,” according to a report published last October by the Republican staff of the House Oversight and Government Affairs Committee.

Representative Dan Issa, the committee’s ranking Republican, said MMS needs “a surgical overhaul.”

“Hopefully, Secretary Salazar’s proposal represents a first step in what must be a comprehensive effort that will address the entirety of the bureaucratic breakdown at Interior,” Issa said.

“A quick, Band-Aid approach is wholly inadequate,” he said.

Issa introduced legislation last fall that would remove MMS from the Department of Interior and make it an independent agency.

The Project on Government Oversight also thinks Salazar’s restructuring doesn’t go far enough. It thinks the agency’s royalty oversight should be separated from its leasing activities.

This is necessary to “ensure that taxpayers’ interests are also protected in royalty collections,” said POGO executive director Danielle Brian.

MMS has been suffering from “structural schizophrenia,” said Tyson Slocum, director of the energy program at Public Citizen, a consumer advocacy organization.

“On the one hand, the agency must act as a cheerleader for oil drilling, as it’s responsible for delivering tons of cash to the U.S. treasury from lease sales and collected royalties,” Slocum said. “But on the other hand, MMS is supposed to protect the environment and workers by being a tough, independent enforcer of safety rules. This split personality causes internal problems that are not necessarily the fault of the agency’s hardworking public servants.”

Slocum suggests handing over the agency’s environmental regulatory duties to the Environmental Protection Agency and its safety oversight to the Occupational Safety and Health Administration.

Salazar noted that he started making reforms to MMS early last year. He asked for an independent review of the agency’s inspection program for offshore facilities. Since the Deepwater Horizon spill, the agency has inspected all deepwater operations in the Gulf of Mexico and has found violations on two rigs. Those have now been corrected. The agency also has frozen any new permits for offshore drilling.

Today, Salazar asked Congress for an additional $29 million for inspections of offshore facilities, increased enforcement efforts, and more engineering studies. He also asked Congress to give MMS 90 days to act on exploration plans submitted by oil and gas companies, instead of the current 30 days.

On Capitol Hill, the oil companies involved in the Deepwater Horizon disaster—British Petroleum, Transocean, and Halliburton—blamed each other for the spill. At the Department of Interior, Salazar—at least in a small way—pointed the finger at his own agency. That’s a start in making sure such a disaster never happens again.

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Kent Hoover is the Washington bureau chief for bizjournals.