Gulf Restoration Network

A Real Solution for Fixing the MMS Blog - BPs Oil Drilling Disaster in the Gulf of Mexico Friday, 02 July 2010 09:35

Recently, the Department of Interior split what was the Minerals Management Service (MMS) into two separate agencies.  The idea behind the split is that if the regulatory and leasing/revenue producing functions of the MMS are split, the conflict of interest will be removed and the regulatory agency will be better able to do its job.  I strongly agree that: (1) the BP drilling disaster highlights the need for better regulation; and (2) the two functions of the MMS should be separated.  I equally strongly believe that leaving the agencies within the same Department will not ultimately solve the problem.  

I think we would all agree that having an agency that both raises revenue from an industry and then regulates the operations of that industry is problematic because there is an inherent conflict between the two functions.   However, separating the functions but leaving them within the Department of Interior (DOI) does not really solve the problem.  That same conflict exists when the revenue generating agency and the regulating agency exist within the same Department.  

Why?  Because the Secretary of Interior still oversees and is ultimately responsible for both functions. As a result, when the actions of the regulators interfere with the generation of revenue from the oil and gas industry, the Secretary will catch the political heat for reducing the flow of money to the federal coffers.  And, as occurred when the agency was a single entity, it is likely that when the Secretary feels that heat, he /she will put pressure on the regulatory agency to back off.  

Of course pressure from a variety of sources can always be brought to bear on a regulatory agency to loosen their oversight of an industry. However, the incentive for succumbing to calls for less regulation is greater when the Secretary of a Department’s performance is being judged, at least in part, by how much revenue he/she generates for the national coffers.

Accordingly, I believe that the public would best be served if the two functions of the former MMS were delegated to two different federal Departments.  I would propose either leaving the revenue generating function of the MMS within the DOI and moving the regulatory function to the EPA, or leaving the regulatory function in the DOI but moving the revenue generating function to the Department of Commerce.

Cynthia Sarthou is GRN's Executive Director