The Senate Energy and Natural Resources Committee is expected to mark up four bills aimed at cracking down on the federal agency responsible for the safety inspections and enforcement of regulations governing the oil and natural gas industry, as well as the operators of the oil and natural gas rigs and platforms in the offshore.

The measures cover a range of issues — from restructuring the former Minerals Management Services (MMS) to toughening requirements for exploration plans, expanding civil and criminal penalties for violators of agency safety rules, and making it a felony for agency employees to accept high-value gifts from the oil and gas industry.

Committee Chairman Jeff Bingaman (D-NM) hopes to mark up the bills next Wednesday, said Bingaman spokesman Bill Wicker. “It’s my understanding that the bills will be considered individually in the committee,” he said, but he added that they could be bundled together on the Senate floor.

One of the bills (S. 3516), sponsored by Bingaman, would restructure the former MMS in much the same way that Interior Secretary Ken Salazar has proposed (see related story). It proposes that Interior establish “not more than two bureaus” to carry out the leasing, permitting and safety and environmental regulatory functions. A separate office would be established to carry out royalty and revenue management functions (see NGI, May 24). The directors of the bureaus/office would be appointed by the president “by and with the advice and consent of the Senate.”

The measure would bar producers from bidding on future leases if they have failed to meet the “due diligence, safety or environmental requirements” on other leases; are the responsible party for a vessel or facility that leaks oil; and have failed to provide “compensation for removal costs and damages.”

In addition, it will require producers to be far more detailed in exploration plans that they submit to Interior. They would be required to provide a complete description and schedule of exploration activities; description of the equipment to be used for the exploration activities; description of the drilling unit; statement of the design and condition of major safety-related pieces of equipment; description of any new technology to be used; statement demonstrating that the equipment to be used meets the best available technology requirements; a map showing the location of each well to be drilled; a scenario for the potential blowout of the well involving the highest potential volumes of liquid hydrocarbons; a complete description of a response plan to control a blowout and manage the accompanying discharge of hydrocarbons; technology and the time line for regaining control of a well; and the strategy, organization and resources necessary to avoid harming environment and human health from hydrocarbons.

For leases issued after March 17 of this year, the legislation generally would give Interior 90 days to approve a submitted exploration plan. But the secretary could be allowed as much as 180 additional days if needed in certain cases. For leases issued on or before March 17, the bill said Interior, “with the consent of the holder of the lease, may extend the deadline applicable to the lease for such additional time as the secretary determines is necessary to complete any environmental, safety or other reviews.” Interior could not issue issue a drilling permit to a producer until a full engineering review of the well system is completed.

The bill also would give the National Transportation Safety Board, acting at the request of Interior, the authority to conduct an independent investigation of any accident occurring on federal offshore waters.

And it authorizes the collection of nonrefundable inspection fees from offshore producers to fully fund well-trained inspectors. Companies that violate any provision in the legislation would face civil penalties of up to $75,000 for each day that the violation continues. Penalties for criminal violations would rise to $10 million under the legislation. The penalty amounts would be adjusted annually to reflect inflation.

By no later than May 1, 2011, and every five years afterwards, Interior would be required to review minimum bond amounts for mineral leases. And not later than one year after enactment of the bill, Interior is required to carry out a review of and report on royalty and rental rates in offshore oil and gas leases. A more comprehensive review of all aspects of the federal offshore oil and gas fiscal system, in conjunction with the Department of Treasury, would be conducted two years after enactment of the bill.

Sen. Robert Menendez (D-NJ), an opponent of offshore drilling, has proposed legislation that would make it a felony for any employee of the MMS or its successor agency to knowingly accept high-value gifts from the oil and natural gas industry or any other industry covered under the term “mineral mining,” including transmission lines, pipelines and utility corridors.

The legislation (S. 3431) calls for violators to be fined or imprisoned for not more than two years, or both. It makes an exception for small gifts, allowing an employee to accept a single unsolicited gift of $20 or less and an aggregate amount of $50 for the entire year.

The legislation is in response to a May report by Interior Acting Inspector General Mary L. Kendall, which found serious “ethical lapses” at the agency. Kendall initiated an investigation in late 2008 after the U.S. Attorney’s Office in New Orleans received an anonymous letter alleging that “a number” of unnamed MMS employees in the Lake Charles, LA, district office had accepted gifts from oil and gas producer representatives. The letter was turned over to Interior’s IG Office.

The Menendez bill also would require employees of the successor agency of MMS to divest any stock or any other interests that they own in a company that is involved in the business of mineral mining while they are employed at the agency. And it would bar agency workers from having outside employment with an oil and gas company or other “mineral mining” companies while they are employed at the agency.

The legislation, “Stop Cozy Relationships with Big Oil Act of 2010,” would prohibit an employee from working with a “mineral mining” company for two years after leaving the agency. This is an attempt to close the revolving door between the agency and the oil and gas industry.

Moreover, “any officer, employee or agent of the Minerals Management Service (or a successor agency) that knowingly and willfully makes any materially false, fictitious or fraudulent statement or representation in the conduct of activities relating to oil and gas regulation shall be fined…imprisoned [for] not more than 15 years, or both,” the measure said.

According to the bill, the filing requirements of the Ethics in Government Act of 1978, which was passed in the wake of Watergate, will apply to any agency employee in a position classified at or above GS-13 of the Executive Schedule.

Legislation proposed by Sen. Scott Brown (R-MA) would require oil companies to have peer-reviewed response plans completed before leases are issued, and it would require the federal government to form a team of experts to respond to oil leaks in the future.

A measure offered by Sen. Mark Udall (D-CO) calls for the Department of Energy to refocus the aim of an existing program on research into technologies to improve well safety and accident prevention.

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