Responding to calls for greater regulation in the offshore, Interior Secretary Ken Salazar last Tuesday announced plans to split the Minerals Management Service (MMS) into two independent entities, with one enforcing safety and environmental matters and the other handling 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. He did not indicate how quickly the restructuring of the agency would occur. Nor does he believe he will need congressional authority to reshape MMS, an agency spokesman said.

Salazar’s action came three weeks after the Deepwater Horizon rig exploded and sunk off the coast of Louisiana (see NGI, May 3). The subsea well continues to spew about 210,000 gallons a day, which could reach the shores of Gulf Coast states. It has raised questions by some Capitol Hill lawmakers as to whether the MMS, which oversees offshore oil and gas activity, has been too lax with producers.

The Obama administration will forward to Congress a bill calling for an additional $29 million for inspections, enforcement, studies and other activities on the offshore, according to Interior. This would include $20 million for expanded inspections of platforms, engineering studies and enforcement of safety regulations for other offshore platforms; $7 million for a broad evaluation of policies, procedures and actions that may be needed in light of the Deepwater Horizon disaster on April 20; and $2 million for Interior’s Fish and Wildlife Service, U.S. Geological Survey or others to conduct environmental studies. The additional funding will require congressional authorization. MMS’ budget for inspections for fiscal year 2010 is $23 million.

Moreover, the Obama proposal will call on Congress to lengthen the mandated deadline (to 90 days from 30 days) for MMS to act on offshore exploration plans that oil and natural gas producer submit, giving the agency more time to complete environmental and safety reviews.

In addition to restructuring the MMS, the Obama administration has requested that the National Academy of Engineering to conduct an independent, technical investigation to determine the root causes of the Deepwater Horizon accident.

Since the accident, Interior has placed a freeze on applications for permits to drill while it completes a 30-day review of safety processes. It also began inspections of all deepwater operations in the Gulf, finding incidents of noncompliance on two rigs. The violations have since been corrected, the department said.

It established an Outer Continental Shelf (OCS) Safety Oversight Board within Interior with top officials to strengthen OCS safety and overall management, regulation and oversight of OCS operations, according to Interior. And it has begun a joint investigation with the U.S. Coast Guard to determine what caused the Deepwater Horizon blowout and explosion.

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