The federal agency responsible for regulating oil and gas extraction let oil companies like BP write their own safety regulations, ignored or downplayed the environmental threats from drilling, and issued drilling permits before fully consulting with other regulatory agencies. The Obama administration has launched an overhaul of the agency and has sent to Congress a legislative proposal to address the looming disaster in the Gulf Coast region.

The Minerals Management Service (MMS), the Department of Interior (DOI) agency responsible for regulating energy and mineral resources, has badly mismanaged the oil and gas permitting process. The agency has abdicated its responsibility for ensuring that energy extraction is done safely, according to numerous sources investigating the BP oil spill in the Gulf of Mexico.

The April 20 BP Deepwater Horizon oil rig explosion left 11 workers missing and the subsequent oil spill continues to spew thousands of gallons of oil into the Gulf. Investigations of the explosion are beginning to show that BP and its partners in the Deepwater Horizon project did not implement safe oil drilling practices that are used in other areas of the world. MMS left decisions about drilling practices to the companies rather than issuing strong regulatory requirements that may have prevented the explosion.

On May 12, the Oversight and Investigations Subcommittee of the House Committee on Energy and Commerce held a hearing to begin assessing what committee chair Rep. Henry Waxman (D-CA) called "a calamitous series of equipment and operational failures." The hearing focused on the actions by BP; Transocean Limited, the operator of the oil rig; and Halliburton, an oil services company responsible for a critical seal designed to stop the flow of oil.

The Senate's Energy and Natural Resources Committee and the Environment and Public Works Committee also held hearings on the spill in which executives associated with the Deepwater Horizon rig testified.

President Obama also named MMS as a culpable party in this disaster. On May 14, for example, after getting another briefing on the federal government's response to the spill, Obama said, "For too long, for a decade or more, there has been a cozy relationship between the oil companies and the federal agency that permits them to drill. It seems as if permits were too often issued based on little more than assurances of safety from the oil companies. That cannot and will not happen anymore."

In a scathing August 2008 report by the agency's inspector general, MMS employees were found to have accepted gifts from oil industry representatives, improperly socialized with lobbyists, engaged in unauthorized business activities, and flaunted the agency's ethical standards. The report summarized MMS's royalty-in-kind program personnel as lacking professional conduct standards and believing the rules of ethics did not apply to them.

Obama asked DOI Secretary Ken Salazar to reform MMS so that the part of the agency responsible for collecting oil and gas royalties is separated from an office with regulatory safety and enforcement. The separation is intended to reduce conflicts of interest within an agency responsible for both managing a revenue stream and developing and enforcing regulations.

On May 17, amid the criticism of MMS, associate director for offshore energy and minerals management Chris Oynes announced his retirement, effective May 31. Before being named associate director, Oynes oversaw oil and gas leasing in the Gulf of Mexico. A May 17 Washington Post article reported that Oynes had been criticized by former MMS officials as being too close to industry.

A May 13 New York Times article highlighted the importance of creating a new office with regulatory powers. According to the Times, MMS:

• Issued dozens of permits to oil companies to drill in the Gulf without the approval of the National Oceanic and Atmospheric Administration, which oversees dangers to endangered species;
• Ignored staff scientists who raised concerns about engineering and environmental impacts and threatened retaliation if the scientists continued to voice concerns;
• Gave BP and other oil companies exemptions from requirements to file environmental impact statements;
• Silenced agency scientists and changed reports that raised the specter of oil spills; and
• Issued at least five permits for new drilling projects since Salazar announced a moratorium on new permits May 5.

The article quotes one former MMS scientist as saying, "You simply are not allowed to conclude that the drilling will have an impact … If you find the risks of a spill are high or you conclude that a certain species will be affected, your report gets disappeared in a desk drawer and they find another scientist to redo it or they rewrite it for you."

Scientific integrity issues at DOI have been a concern for years. An April 29 report by the agency's inspector general found that DOI has never had a scientific integrity policy despite a mandate from 2000 to produce one. The report documents a variety of problems the agency experienced during the Bush administration. The report recommends an agency-wide policy be established and a person assigned the primary responsibility for its implementation.

The Washington Post reported that MMS liberally applied “categorical exclusions” to reduce its NEPA workload and give companies a pass on the rigors of environmental review. MMS granted such a waiver to BP’s Deepwater Horizon operation. BP had appealed to the White House Council on Environmental Quality as recently as April 9 to use categorical exemptions more broadly, according to the Post.

On May 12, the administration also put forward a legislative proposal to enhance its ability to address the Deepwater Horizon spill. According to a White House fact sheet, the proposal calls for additional funding to several agencies to pay for current expenses resulting from the spill and to monitor the impacts. It would provide additional funding for DOI to conduct additional inspections and enforcement while slowing the pace of issuing permits so that relevant issues are explored more thoroughly. The proposal also calls for additional federal support to states to supplement unemployment assistance programs to those on the Gulf Coast who lose wages as a result of the spill. Additional assistance may be provided if Congress approves provisions for additional economic development efforts within affected communities. The proposal would also raise liability caps on those held responsible for the disaster and raises the tax on oil companies to fund the federal Oil Spill Liability Trust Fund.

Members of Congress have introduced numerous bills to address some of the issues contained in Obama's more comprehensive legislative proposal. To date, there has been no progress on the bills as Congress awaits more information from different investigations into the causes of the explosion and spill.

Photo in teaser by the U.S. Coast Guard.