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Obama Proposing to Split Agency That Monitors Oil Drilling

Posted on 11 May 2010

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The White House said today that President Obama is proposing to split the agency that oversees offshore oil drilling into two parts, one to inspect oil rigs and enforce safety and the other to oversee leases for drilling and collect royalties.

The shift would be the first major structural change in government regulation of oil and gas operations since the destructive Gulf Coast oil spill that began on April 20. The formal announcement is expected to be made by Interior Secretary Ken Salazar at 1 p.m. Eastern time, officials said.

Mr. Salazar will propose breaking up the Minerals Management Service, which has been caught up in scandals repeatedly in recent years and has been accused of being too cozy with the industry it is supposed to regulate. Its current mission includes collecting royalties and negotiating leases while at the same time acting as a policeman, overseeing safety and environmental protection rules.

The minerals service supervises one of the federal government’s largest sources of revenue after personal and corporate income taxes. It collects an average of $13 billion a year in royalties and fees from oil and gas on public and Indian lands and offshore.

The proposal to divide the agency reflects the shift in attitude by the Obama White House since the Gulf spill began. In March, a few weeks before the drilling-rig explosion and fire that led to the spill, the president laid out plans for comprehensive energy legislation that called for new offshore drilling in the Atlantic Ocean from Delaware to central Florida. That legislation faced an uncertain path in the Senate even before the accident.

After the spill, Mr. Obama suspended his oil drilling plan, saying his administration would not approve any new offshore leases unless rigs had new safeguards.

Mr. Salazar’s announcement on Tuesday coincides with hearings about the disaster on Capitol Hill, where members of Congress are expected to grill executives of BP, the oil company responsible for the sunken rig and leaking well, as well as its chief contractors, Transocean and Halliburton.