While the Senate Energy and Natural Resources Committee Tuesday hinted strongly that the regulatory failures of Interior Department’s Minerals Management Service (MMS) were partly at fault for the spill disaster in the Gulf of Mexico (GOM), Interior Secretary Ken Salazar defended the MMS and called on Congress to move forward with “organic legislation” to split the agency in two.

“An agency the size of the Minerals Management Service [that] collects an average $13 billion a year, has responsibility for the Outer Continental Shelf [OCS] 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,” Salazar said during the Senate panel’s second hearing on the April 20 explosion and spill.

“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.

Salazar last Wednesday announced plans to split the MMS into two independent entities, with one enforcing safety and environmental matters and the other handling leasing, revenue collection and permitting functions (see Daily GPI, May 12). His action came three weeks after the Deepwater Horizon rig exploded and sunk off the coast of Louisiana (see Daily GPI, May 11).

Committee members accused MMS of being the lap dog for the oil and gas industry. While this might have been the case in the past, Salazar said the belief that this is not a regulated industry is incorrect. “This is a very highly regulated industry…There is a very robust regulatory review in place.”

However, policymakers still will need to “take a hard look” at the laws governing the exploration and development of oil and natural gas in the OCS, particularly the law that requires the MMS to act on exploration plans within 30 days, Salazar said.

Salazar agreed that the industry, MMS and Congress became lax over the years, just taking it for granted that there would be no major oil spills in the future. It’s been 40 years since a major spill off of Santa Barbara, CA.

And “collective responsibility has to be put right at the the feet” of BP, Halliburton, Transocean Ltd. and Cameron, the manufacturer of the blowout preventer, and other associated companies, Salazar said.

He made clear that BP is the responsible party. From day one, “our expectation…is that every cent that is required to make Americans whole and [the] environment whole will in fact be there.”

Salazar said President Obama plans to establish a national commission that “will look at all the facts” surrounding the explosion aboard the Deepwater Horizon rig and the resulting oil spill.

The commission will be established by an executive order, possibly as early as this week, and would explore the cause of the disaster, safety and environmental regulations that govern producers and the relationship between the MMS and oil and gas producers. Salazar said he expects a final report to the president to address a number of “safety enhancements” for the deepwater.

The White House formed national commissions on only two other occasions in recent memory — the explosion of the Space Shuttle Challenger on Jan. 28, 1986 and the Three Mile Island incident in 1979 — the site of the worst civilian nuclear accident in U.S. history.

In addition, Salazar said the MMS and the U.S. Coast Guard are conducting a joint investigation of the explosion and spill, while the inspector general of Interior is looking into whether any MMS officials or employees had a role. Salazar defended the agency, saying that while “there are some bad apples at MMS,” most of the employees are “good public servants.” A number of committees in the House and Senate also are carrying out investigations.

“Regulatory failure is one of the three interlocking failures that I believe are at the heart of this [rig explosion and spill] problem,” said Committee Chairman Jeff Bingaman (D-NM).

He noted that several areas bore close examination. For one, were the right technical standards in place to govern the drilling being undertaken by the Deepwater Horizon rig? he asked. Bingaman expressed concern about the cementing operations. “It’s possible that the extent of the cementing involved here was inadequate for this particular well.”

He further said the GOM disaster “could be a result of a limited and reactive role that MMS seems to have taken over the years toward these highly complex wells…Many MMS employees do have relevant expertise and are involved in research and key areas of well safety…They need to be more fully engaged with industry in reviewing overall design and implementation of these challenging deepwater wells.”

Bingaman further said potential regulatory failure “is exemplified by the lack of follow-through on how approved plans are implemented, including the detection and response to unusual occurrences that might warn of bigger problems.”

Salazar said BP and other companies are pursuing a number of methods to block the oil flow. “We are throwing everything at it.” In one method, they will seek to kill the well through injecting fluids and mud into the well itself through devices that are being constructed and being deployed on the ocean floor (see Daily GPI, May 18). “The mechanisms have been built out over the last several weeks. And the expectation is that this Saturday or Sunday the triggers will be pulled to try to accomplish the dynamic kill of the well,” he told the Senate panel.

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