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LYNN NEARY, host:

This is MORNING EDITION, from NPR News. I'm Lynn Neary.

RENEE MONTAGNE, host:

And I'm Renee Montagne.

The federal agency that regulates and collects revenues from offshore drilling is being broken into the three parts, following the catastrophic oil spill in the Gulf of Mexico. Critics have long said that the Minerals Management Service was beholden to the oil industry it's supposed to regulate. But as NPR's Peter Overby reports, that issue was of little interest to Congress.

PETER OVERBY: In the month since the blowout started gushing oil into the Gulf, Congress has held many long hours of hearings asking what went wrong - so has the Mineral Management Service 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 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.

And here's a small thing from the MMS' own hearing with the Coast Guard, something that 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. Michael Saucier, the agency's regional director in New Orleans, brought it up at the hearing.

Mr. MICHAEL SAUCIER (Regional Director, Mineral Management Service): 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.

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

Mr. SAUCIER: There is no enforcement on it.

OVERBY: 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.

Jeff Ruch is director of PEER, Public Employees for Environmental Responsibility, a group that works with government whistleblowers. He says the political pressure for energy independence has undermined MMS.

Mr. JEFF RUCH (Director, PEER): The way that was translated in the chain of command of this agency was: Move the leases. And if somebody had a problem, they became a problem.

OVERBY: In fact, up until the blowout, neither the House nor the Senate had really debated the safety issues of offshore drilling for at least 15 years. And you have to go all the way back to 1989 to find someone saying something substantive about blowout preventers: Democrat John Breaux, then a Louisiana senator, declaring that something like the 1969 Santa Barbara oil spill couldn't happen again.

Mr. JOHN BREAX (Former Democratic Senator, Louisiana): Automatic blowout preventers, which were not required in 1969, would kick in and shut the well off.

OVERBY: 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.

Some four years after that, one of the royalty offices developed a long-running relationship of sex, drugs and contracts with the representatives of four oil and gas companies. That time, a House committee hauled in MMS' boss, the Interior Secretary Dirk Kempthorne. He said MMS wouldn't punish the companies involved, but it would give them ethics training. That was just too much for Democratic Congressman George Miller of California.

Representative GEORGE MILLER (Democrat, California): They know what ethical behavior is. They just apparently have chosen not to participate in it.

OVERBY: But, again, the main goal was to keep the money coming in. Here's Democratic Senator Mary Landrieu of Louisiana in a committee hearing in 2008.

Senator MARY LANDRIEU (Democrat, Louisiana): Roads are built with these revenues, and jobs are created with these revenues. 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.

OVERBY: What lawmakers will 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.

Peter Overby, NPR News, Washington.

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