Interior Secretary Ken Salazar last Wednesday inked 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 NGI, May 17).

The move came 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 spewing crude oil (see related story). In recent weeks Interior and MMS have come under sharp attack from Capitol Hill lawmakers for not fully enforcing the rules and regulations for offshore drilling operations. MMS has been accused of having a cozy relationship with 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 [on May 11] the secretary said MMS would be divided into two parts; this week [on May 19] 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 has not said 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 on the heels of his request last Tuesday that Congress proceed with “organic legislation” to split MMS into separate entities. 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 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 manages the nation’s natural gas, oil and other mineral resources on the OCS, as well as develops and implements plans for leasing conventional and renewable energy resources in the OCS. It is responsible for overseeing offshore energy operations and ensuring compliance with relevant laws and regulations.

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, according to Interior.

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