Offshore Drilling Regulator Under Scrutiny After Spill

Critics of the Minerals Management Service — the federal agency that regulates offshore drilling and collects revenues from it — have long said it was too cozy with the oil industry, but those were problems of little interest to Congress until the catastrophic blowout in the Gulf of Mexico.

In the month since the blowout started gushing oil into the Gulf, Congress has held many long hours of hearings asking what went wrong, as has the MMS itself in hearings with the Coast Guard.

One focus of attention has been what's called the blowout preventer stack, the 300-ton assembly of emergency valves that should have severed and closed the well pipe. Crew members from the drilling rig have said they tried to activate it, but it didn't work.

'No Enforcement'

A small detail from the MMS hearing with the Coast Guard didn't get much attention. MMS could have required drilling companies to fit their blowout preventers with backup activating systems, but it chose not to.

"I think it was around 2001, there were some draft rules concerning secondary control systems for BOP stacks, and those rules were then sent up to headquarters to continue through the process," Michael Saucier, the agency's regional director in New Orleans, said at the hearing earlier this month.

But what came back from headquarters were not rules, he said, just notices that "highly encouraged" companies to use the backup systems.

"There is no enforcement on it," he said.

That episode neatly sums up the agency's relationship with the industry it regulates.

It also shows the agency's internal conflict — enforcing safety and environmental regulations while also promoting offshore drilling and collecting royalties on the oil. The Obama administration this week proposed to deal with the internal conflict by eliminating MMS and replacing it with two bureaus and a revenue collection office.

Jeff Ruch, director of Public Employees for Environmental Responsibility, a group that works with government whistleblowers, says the political pressure for energy independence has undermined MMS as it's currently structured.

"The way that was translated in the chain of command of this agency was, 'Move the leases,' " Ruch said. "And if somebody had a problem, they became a problem."

Lack Of Attention

In fact, until the blowout, neither the House nor the Senate had really debated the safety issues of offshore drilling for at least 15 years.

Since then, Congress hasn't been talking about shutting off wells but about keeping them open to produce oil and generate royalties — about $18 billion in fiscal 2008.

But MMS has a history of problems collecting that money: It drafted offshore leases incorrectly in the late 1990s. Congressional auditors say those errors cost the government as much as $53 billion in revenues.

A few years later, one of the royalty offices developed a long-running relationship of sex, drugs and contracts with the representatives of four oil and gas companies.

In September 2008, a House committee hauled in MMS' boss, Interior Secretary Dirk Kempthorne. The agency had disciplined the MMS employees who were involved. But Kempthorne said Interior wouldn't punish the companies — it would give them ethics training.

That was too much for Democratic Rep. George Miller of California.

"They know what ethical behavior is," Miller said at the time. "They just apparently have chosen not to participate in it."

But again the main goal was to keep the money coming in.

"Roads are built with these revenues. And jobs are created with these revenues," Sen. Mary Landrieu (D-LA) said at a hearing in 2008. "So leaving something on the table or underneath the water, just because we don't want to spend the time to figure out how to do it better, is not what this senator would suggest."

What lawmakers suggest now is going to have more to do with enforcing safety and environmental regulations. But down the road, there will still be the allure of the offshore oil and those royalty dollars.

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