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Tuesday, November 16, 2010

Reorganization of the Minerals Management Service in the Aftermath of the Deepwater Horizon Oil Spill

Henry B. Hogue
Analyst in American National Government

On April 20, 2010, an explosion and fire occurred on the Deepwater Horizon drilling rig in the Gulf of Mexico, resulting in the largest oil spill in U.S. waters. This event drew additional attention to previously identified management challenges at the Minerals Management Service (MMS) in the Department of the Interior (DOI), the lead regulatory authority for leasing activity related to offshore oil and gas recovery. It also influenced administrative and congressional reform efforts that were already underway.

Prior to the oil spill, DOI and congressional investigations had identified a number of management shortcomings, ethical lapses among personnel, and conflicts of interest at MMS. Such concerns had been raised in oversight hearings and in reports by the DOI inspector general and the Government Accountability Office. The Obama Administration and the 111
th Congress were taking action to make changes at MMS in response to these findings prior to the oil spill.

In the aftermath of the oil spill, some observers and governmental officials raised concerns about potential conflicts among the missions that were vested in MMS. The three potentially conflicting missions of the agency, as articulated by the department, were “Outer Continental Shelf (OCS) resource management, safety and environmental oversight and enforcement, and revenue collection….” Within a month of the Deepwater Horizon incident, the Administration had initiated an administrative reorganization to address these perceived mission conflicts. As part of this reorganization, MMS was renamed the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE).

During the 111
th Congress, bills were introduced that would reorganize BOEMRE/MMS and its functions. H.R. 3534 was introduced on September 8, 2009. The bill, as amended, was passed by the House on July 30, 2010. It would, among other things, abolish MMS and establish three new units within DOI, each charged with one of the three missions identified above. S. 3516 was introduced on June 21, 2010, and it was reported by the Committee on Energy and Natural Resources on July 28, 2010. This bill, as reported, would direct the Secretary of the Interior to use administrative authority to establish three new entities within the department. Two of the new organizations would carry out OCS leasing, permitting, and safety and environmental regulatory functions. The Secretary would be directed to eliminate “to the maximum extent practicable, … any potential organizational conflicts of interest related to leasing, revenue creation, environmental protection, and safety.” The third entity would be responsible for revenue and royalty management functions. Bills introduced by the Senate minority leader (S. 3643) and the Senate majority leader (S. 3663), and subsequently placed on the Senate Legislative Calendar, also included these provisions. H.R. 3736 and H.R. 5572, each of which would also affect the organization of BOEMRE/MMS, were introduced and referred during the 111th Congress, but had not been acted upon as of November 8, 2010.

This report provides additional information on these legislative initiatives. It then provides background and context on the origins of MMS and its organization at the time of the oil spill. It discusses Secretary Kenneth L. Salazar’s use of his administrative reorganization authority to address perceived conflicts among the agency’s missions and his call for Congress to enact organic legislation. The report then identifies potential congressional options with regard to BOEMRE/MMS reorganization. The report also includes historical examples of reorganizations elsewhere in the federal government that may provide useful insights during consideration of the organizational arrangements for carrying out BOEMRE/MMS functions

Date of Report: November 10, 2010
Number of Pages: 34
Order Number: R41485
Price: $29.95

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