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Interior Department Shakes Up Oil Agency in Wake of Spill

3 years ago
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The troubled federal agency responsible for overseeing the safety and management of American offshore oil drilling will be split into two separate agencies, Interior Secretary Ken Salazar announced Tuesday afternoon.

The change is a part of a series of significant reforms Salazar will make to the agency in response to ongoing criticism of its performance and to the massive British Petroleum oil spill in the Gulf of Mexico, which happened under the agency's watch.

The agency, the Minerals Management Service, has about 1,800 employees and operates out of three regional offices under the supervision of the Department of the Interior. It has long been responsible both for negotiating offshore oil leases with private oil companies and overseeing the safety operations of those same corporations.

Critics have charged the two functions present an unavoidable conflict of interest that has compromised the agency's role in regulating the same companies with which it has business relationships.

"The job of ensuring energy companies are following the law . . . is a big one, and should be independent from other missions of the agency," Salazar said Tuesday, promising that MMS would eventually be "a strong and independent organization holding energy companies accountable and in compliance with the law of the land."

Even before the Deep Water Horizon oil spill on April 20, MMS had been plagued by years of scandal, lawsuits, high turnover and accusations of mismanagement and impropriety. In particular, the relationship between MMS employees and the oil companies that they regulated came under fire on several occasions.

A 2010 report from the Government Accountability Office recounted at least nine recent lawsuits challenging MMS's decision-making process on environmental analyses, which the suits alleged often favored oil companies' interests over environmental interests.

In 2009, the GAO testified to Congress that MMS relied too heavily on self-reported data from oil companies for safety evaluations, while a 2008 MMS Inspector General's report revealed shocking details of MMS employees taking gifts, trips and drugs from industry executives.

"During the course of our investigation, we learned that some (Royalty-In-Kind) employees frequently . . . consumed alcohol at industry functions, had consumed cocaine and marijuana, and had sexual relations with oil and gas company representatives," the IG reported.

On Tuesday, Rep. Darrell Issa said that MMS has been "an agency in crisis" for more than a decade and called splitting the agency's functions "a first step."

The congressman is the top Republican on the House Oversight and Government Reform Committee and has been investigating the agency in some form for years.

"MMS is in need of a surgical overhaul and a quick-fix, Band-aid approach is wholly inadequate and will only serve to preserve a broken bureaucracy at the expense of the American people and their safety," Issa said.

Elmer Danenberger, a former employee at MMS, told a Senate committee Tuesday morning that the dual function of the agency needs Congress' attention. "I think it's something that's reasonable for your committee to look at, whether we should have a truly independent safety and pollution regulator," he said.

In addition to splitting the agency's functions, Salazar said the National Academy of Engineering will conduct an independent investigation into the Deep Water Horizon accident and oil spill. He has previously announced that the Interior Department and MMS would launch an investigation, and said that an outside review is now called for.

Beyond that, Salazar said the Obama administration will double federal funding for oversight and safety for offshore drilling. Last year, Salazar assigned a full-time ethics lawyer to MMS and promised Congress that the agency would live by new ethical guidelines to improve the reliability of the agency's oversight function for oil companies.

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