Obama to sever ties between drilling cops and Big Oil

As oil continues to spew into the Gulf of Mexico, the Obama administration moves to break up the agency tasked with both collecting royalties and policing Big Oil.

J. Scott Applewhite/AP
Interior Secretary Ken Salazar announces that the Obama administration is splitting up the Interior Department agency that oversees offshore drilling in Washington on Tuesday.

Working hard to contain the political as well as the ecological damage of the Deepwater Horizon spill, the Obama administration on Tuesday vowed to shake up the Interior Department agency responsible for policing Big Oil's deepwater drilling operations along America's continental shelf.

As a number of Congressional probes into the April 20 Deepwater Horizon accident in the Gulf of Mexico got underway Tuesday, Interior Secretary Ken Salazar announced a proposal to split the Minerals Management Service (MMS) in half, separating its policing function from its royalty-collection arm. Critics say there's always been a conflict of interest in having the same agency that collects $13 billion in royalties a year be responsible for inspecting rigs, enforcing safety rules, and probing skullduggery.

IN PICTURES: Destructive oil spills

"I think what is driving a lot of moves toward tighter regulations is our trust has been violated, and when trust is breached or lost, it's hard to get it back," says Duane Gill, an oil spill disaster expert at Oklahoma State University.

Three global corporations – BP, the explorer; Transocean, the driller; and Halliburton, the concrete contractor – have begun pointing fingers at each other as lawsuits pile up and congressional investigations into the cause of the Deepwater Horizon accident get underway.

What is known is that a methane bubble burst up through the 23,000-foot pipe, creating a geyser of gas that spread across the rig and finally ignited. Hydraulic shears inside a five-story-tall blowout preventer where the drill pipe exits the earth's crust are supposed to sever and plug the pipe in the case of a blowout. They didn't.

Eleven people lost their lives in the explosion, and the crumpled "riser" pipe a mile from the Gulf's surface is now spewing at least 5,000 barrels a day of oil into the Gulf, with a total of at least 4 million gallons already escaped.

But while BP is bearing the brunt of blame, MMS, which is populated largely by former industry executives, has been criticized for failing to react to studies that showed problems with the blow-out preventers, refusing to mandate back-up systems, and downplaying the extent of other accidents in the Gulf. At issue in Tuesday's US Senate Energy and Natural Resources Committee hearing is safety testing of the shear. One former regulator testified that MMS needs more data on shear ram performance, but insisted all such rams were tested and certified every two weeks.

"Why is it that the testing always seems to pass and yet when it was needed it failed?" Sen. Robert Menendez (D) of New Jersey asked.

A long-term investigation led by Rep. Darrell Issa (R) of California into MMS has uncovered abuses dating back to the Clinton administration and which continued through the Bush and Obama White Houses. And Sen. Ben Nelson raised eyebrows this week when he brought up a series of 2008 revelations about sex and "pot parties" among MMS regulators and industry executives. Moreover, MMS collects $13 billion in lease royalties a year while amassing an increasingly spotty record on policing Big Oil on safety issues.

"While there are many outstanding questions surrounding what went wrong and what should have been done to avoid this disaster," Mr. Issa said Tuesday, "what we know for sure is that MMS is in need of a surgical overhaul and that a quick-fix, band-aid approach is wholly inadequate and will only serve to preserve a broken bureaucracy at the expense of the American people and their safety."

The Obama administration has fought back against comparisons of the Deepwater Horizon response to the hurricane Katrina disaster, where complacency that spanned local, state, and federal agencies combined to take a heavy human and political toll. But while Rep. Ed Markey (D) of Massachusetts on Tuesday pointed at lax regulation by the Bush administration, which had heavy ties to oil, it's also true that President Obama is the largest recipient of political donations from BP-associated PACs over the past 20 years.

And though the Obama administration has halted all new exploratory drilling in the Gulf, MMS has approved 26 environmental review exemptions for proposed drilling sites since the April 20 accident.

As part of the Obama administration's response to the Deepwater Horizon accident, Salazar said Tuesday he will seek an additional $29 million from Congress for stepped-up rig inspections and enforcement,

β€œThe tragedy aboard the Deepwater Horizon and the massive spill for which BP is responsible has made the importance and urgency of our reform agenda even clearer,” Salazar said Tuesday in Washington.

IN PICTURES: Destructive oil spills


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