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To remove any hint of a conflict of interest, the US Minerals Management Service’s regulatory duties will be separated from its royalty collection.
In what the Wall Street Journal dubs “the biggest political fallout so far from the Gulf of Mexico disaster,” Interior Secretary Ken Salazar Tuesday announced that the US Minerals Management Service (MMS) would be restructured to separate its energy inspection and enforcement arm from its leasing, collection, and permitting functions.
“The tragedy aboard the Deepwater Horizon and the massive spill for which BP is responsible has made the importance and urgency of our reform even clearer,” Salazar said. “We have been – and will continue to be – aggressive in our response to BP’s spill, but we also must aggressively expand the activities, resources, and independence of federal inspectors so they can ensure that offshore oil and gas operations are following the law, protecting their workers, and guarding against the type of disaster that happened on the Deepwater Horizon.”
In addition to this move, the oil spill response legislation that the Obama Administration will submit to Congress will propose an additional US $29 million for inspection, enforcement, studies, and other activities. The administration has also requested that the National Academy of Engineering conduct an independent, technical investigation to determine the root causes of the disaster. Similar investigations have been conducted on events like the space shuttle Challenger disaster.
Finally, the Obama Administration proposes eliminating the 30-day congressionally mandated deadline for the MMS to act on exploration plans submitted by operators. The deadline will be changed to 90 days with potential for an even longer delay if justified by additional environmental or safety reviews.
These are the latest in a series of reforms to MMS that began in January 2009. Those reforms included new ethics standards, termination of the royalty-in-kind program, balancing the agency’s mandate to include wind and renewable energy production, implementing recommendations by the US Inspector General and independent reviewers, directing an independent Marine Board review of MMS’s inspection program for offshore facilities, cancelling proposed offshore lease sales in Bristol Bay and the Arctic Ocean, and establishing a process for determining which areas on the Outer Continental Shelf may be appropriate for oil and gas development.
Salazar’s response to the oil spill is to put a 30-day hold on permits to drill while it investigates the disaster, order immediate inspections of all deepwater operations in the Gulf of Mexico, issue a safety notice to all operators reminding them of their responsibilities to follow MMS regulations, establish an Outer Continental Shelf Oversight Board, and launch a joint investigation of the incident with the US Coast Guard.
In testimony in Washington earlier this week, speculation focused on the cause of the accident. Transocean’s president, Steven Newman, told senators that, despite BP’s criticism of the blowout preventer (BOP), the BOP didn’t cause the incident. Rather, he said, it was “a sudden catastrophic failure of the cement, the casing, or both.”