Interior Secretary Ken Salazar Wednesday signed a secretarial order that will lead to splitting the beleaguered Minerals Management Service (MMS) into three separate entities — not into two as originally expected — to avoid future conflicts of interest between the agency and oil and natural gas producers (see Daily GPI, May 12).

The move comes one month after the BP plc-leased Deepwater Horizon rig, which the MMS regulates, exploded and sank off the coast of Louisiana, where a ruptured well is now spewing about 5,000 b/d of oil. MMS has been accused of having a cozy relationship with producers. In recent weeks Interior and MMS have come under attack from Capitol Hill lawmakers for not fully enforcing the regulation of offshore producers.

Rep. Doc Hastings of Washington, the ranking Republican on the House Natural Resources Committee, was somewhat critical of Interior’s action. “I’m ready to work with the administration to fully investigate the Gulf spill and to make the changes necessary to ensure safe, responsible drilling. However, last week the secretary said MMS would be divided into two parts; this week he divides it into three, and both times he stresses that the administration wishes to work with Congress while acting unilaterally,” he said.

“The Minerals Management Service has three distinct and conflicting missions that — for the benefit of effective enforcement, energy development and revenue collection — must be divided. The reorganization I am ordering…is the next step in our reform agenda and will enable us to carry out these three separate and equally important missions with greater effectiveness and transparency,” Salazar said.

Although Interior isn’t saying so, it appears that MMS may cease to exist as a result of the reorganization. Under Salazar’s order (3299), he has revoked the “applicable provisions” of former Interior Secretary James Watt’s 3071 order, which created the MMS in January 1982, and order 3087, which transferred royalty and mineral management functions to MMS. Salazar has asked his staff to develop a schedule for implementing the reshaping of MMS within 30 days.

The reorganization, which Salazar said he would carry out in consultation with Congress, would establish the:

Salazar’s announcement of the secretarial order came one day after he called on Congress to proceed with “organic legislation” to split MMS into separate entities (see Daily GPI, May 19). He proposed that MMS be reshaped to quell accusations that the agency’s lax regulation of the oil and gas industry was partly to blame for the oil spill in the Gulf of Mexico.

“An agency the size of the Minerals Management Service [that] collects an average $13 billion a year, has responsibility for the Outer Continental Shelf in terms of the energy production future of the United States of America should not exist by fiat of a secretarial order that was signed almost 30 years ago,” he said Tuesday during a hearing by the Senate Energy and Natural Resources Committee.

“It’s important that there be thoughtfully crafted organic legislation for the new agency to be created. I will continue to do the efforts that I can do within the authority that I have as secretary to redo the Minerals Management Service. But at the end of the day, it’s going to be important [that] Congress take up that responsibility,” he said.

MMS has managed the collection of revenues from oil and gas, coal, metals, potash and renewable energy resources. Since its creation in 1982, it has collected more than $210 billion in revenues and distributed them to states, tribes, counties and the federal treasury.

©Copyright 2010Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.