Department of the Interior (DOI)
Reorganization of Ocean Energy Programs
Curry L. Hagerty
Specialist in Energy and Natural Resources Policy
July 11, 2012
Congressional Research Service
7-5700
www.crs.gov
R42599
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Department of the Interior (DOI) Reorganization of Ocean Energy Programs
Summary
On June 28, 2012, the Department of the Interior (DOI) submitted to Congress the Proposed Final
Five-Year Outer Continental Shelf Leasing Program for 2012-2017, a forward-looking schedule
for ocean energy development mandated by the Outer Continental Shelf Lands Act (OCSLA, 43
U.S.C. 1331). This DOI submission to Congress marks the first substantive demonstration of the
department’s new institutional structure since the Obama Administration overhauled the
regulatory framework for managing ocean energy resources in 2010.
DOI institutional reforms, among other responses to the Gulf of Mexico oil spill of 2010, were
aimed at correcting perceived shortcomings within DOI by strengthening federal regulatory
policies toward drilling safety and environmental protection. The reforms within DOI took effect
on October 1, 2012, creating three DOI agencies:
(1) Office of Natural Resources Revenue (ONRR, pronounced “
Honor”), tasked with managing
revenue owed to the government for the use of the public domain for energy and mineral
development.
(2) Bureau of Ocean Energy Management (BOEM, rhymes with “
Rome”), tasked with offshore
leasing administration and environmental and economic analysis.
(3) Bureau of Safety and Environmental Enforcement (BSEE, pronounced “
Bessy”), tasked with
oversight and enforcement for field operations, inspections, workforce safety, and
decommissioning.
Because ONRR, BOEM, and BSEE were not created by statute, statutory changes were not
needed as part of the DOI reorganization. Legislative action during the first session of the 112th
Congress included House and Senate hearings, first to oversee DOI permitting for offshore
drilling operations and then to examine proposed legislation aimed at codifying agency
reorganization (H.R. 3404, S. 917). H.R. 3404 was ordered to be reported by the House
Committee Natural Resources on November 17, 2011. The Senate Committee on Energy and
Natural Resources held hearings on S. 917 (S.Hrg. 112–51). No further legislative action on these
bills has been scheduled.
Stakeholders (energy companies, developers, and state officials engaged in coastal and marine
development) expressed uncertainty prior to the 2010 reorganization about whether, during the
transition to the new system, DOI permitting for offshore operations would stay on track or be
disrupted. Major disruptions stemming from the reorganization have not materialized, but some
uncertainty about the workings of the new agencies remains a concern for some stakeholders in
the aftermath of the reorganization. The Government Accountability Office (GAO) has
undertaken a study to measure DOI performance since the 2010 reorganization and is expected to
provide a report to Congress in 2013.
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Department of the Interior (DOI) Reorganization of Ocean Energy Programs
Contents
Introduction...................................................................................................................................... 1
Policy Review: DOI Reorganization of 2010 .................................................................................. 2
Questions and Answers.................................................................................................................... 3
What Prompted the Reorganization?......................................................................................... 3
What Regulatory Structure Existed Prior to the Reorganization? ............................................. 3
What Is the Role of the Office of Natural Resources Revenue (ONRR)?................................. 4
What Is the Role of the Bureau of Safety and Environmental Enforcement (BSEE)?.............. 5
What Is the Role of the Bureau of Ocean Energy Management (BOEM)?............................... 6
What Appears to Have Changed as a Result of the Reorganization? ........................................ 7
The Role of Congress ...................................................................................................................... 8
What Legislative Action Accompanied the Reorganization? .................................................... 8
What Concerns, If Any, Are Associated with the Reorganization? ........................................... 9
How Can Congress Measure Agency Performance Since the Reorganization?...................... 10
Contacts
Author Contact Information........................................................................................................... 10
Congressional Research Service
Department of the Interior (DOI) Reorganization of Ocean Energy Programs
Introduction
The Department of the Interior (DOI) manages ocean energy and mineral resources, including oil,
natural gas, wind, and geothermal resources.1 Federally regulated offshore oil and gas projects
currently account for 26% of the nation’s domestic oil production and about 16% of domestic
natural gas production. In addition to generating these domestic energy supplies, federally
regulated offshore energy projects account for significant public receipts, including
approximately $6.5 billion in 2011.2
The institutional framework within DOI for regulating offshore drilling projects changed in many
ways after the April 20, 2010, explosion and fire on the
Deepwater Horizon drilling rig in the
Gulf of Mexico.3 At the time of the spill, the lead agency within DOI responsible for regulating
offshore drilling was the Minerals Management Service (MMS). The national response to the
spill drew attention to risks that accompany deepwater drilling and prompted scrutiny of federal
regulators charged with enforcing requirements for operational safety. As the
Deepwater Horizon events unfolded during the summer of 2010, some Members of Congress questioned whether
perceived shortcomings in regulating drilling operations might have played a role in the
catastrophe.
Prompted by increased public interest and questions from Members of Congress, Interior
Secretary Ken Salazar expressed the view that the regulatory structure (among other factors) was
a weakness in the offshore program, and Administration officials moved swiftly to dismantle
MMS. Secretary Salazar claimed that numerous structural and substantive reforms would be
necessary to improve energy operations, worker safety, and environmental protection in U.S.
waters. From May 2010 through October 2011, such reforms started to take effect, changing DOI
regulatory policies that had been in place since 1982 and replacing them with new policies toward
regulating offshore energy activities.4
By June 28, 2012, when DOI submitted to Congress the Proposed Final Five-Year Leasing
Program for 2012-2017 (a forward-looking schedule for ocean energy development mandated by
the OCSLA), the submission marked the first substantive demonstration of the department’s new
institutional structure since the Obama Administration overhauled the regulatory framework.
1 Numerous statutes and regulations govern activities in U.S. waters, a federal area covering 1.7 billion acres beyond
state waters. The statutory basis for DOI managing ocean energy resources is mostly derived from the Outer
Continental Shelf Lands Act (OCSLA, 43 U.S.C. 1331, et. seq.) and the Energy Policy Act of 2005 (P.L. 109-58).
2 Statistics about annual energy supplies and annual receipts from bonus bids, rentals, and royalties are published
through numerous sources. The statistics in this report are derived from the Office of Natural Resources Revenue
within DOI, at http://www.ONRR.gov.
3 The
Deepwater Horizon events resulted in 11 worker fatalities, a massive oil release, and a national response effort in
the Gulf of Mexico led by the federal government. Based on estimates from the U.S. Geological Survey, the oil spill
was the largest in U.S. waters.
476
Federal Register 64432 (October 18, 2011). Bureau of Safety and Environmental Enforcement, 30 CFR Chapter II;
Bureau of Ocean Energy Management, 30 CFR Chapter V. This rule took effect October 1, 2011.
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Department of the Interior (DOI) Reorganization of Ocean Energy Programs
Policy Review: DOI Reorganization of 2010
As a part of its response to the Gulf oil spill of 2010, the Department of the Interior initially
ordered an internal investigation into the cause of the spill.5 In the course of the investigation,
Secretary Salazar announced, among other findings, that the regulatory structure underpinning
MMS management was inadequate. This was not the first time MMS management had been
called into question. Prior to the
Deepwater Horizon events, allegations of mismanagement had
prompted lawmakers to look into the strengths and weaknesses of MMS performance on
numerous occasions.6
Less than a month after the accident that caused the spill, Secretary Salazar abolished MMS and
established a new organizational structure.7 This administrative action (removing MMS and re-
delegating its functions to new agencies) marked the start of the reorganization that would result
in a new regulatory structure for the offshore energy program, composed of three agencies, with
regulatory responsibilities being divided (or shared in some cases) across the new bureaucracy.
Changing the name of the lead agency and separating MMS responsibilities between new
agencies was accomplished by shifting some MMS responsibilities to the newly created Office of
Natural Resources Revenue (ONRR) and other MMS responsibilities to a transitional agency
called the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).
ONRR was charged with managing revenues from all DOI programs (onshore, offshore, and on
Indian lands). BOEMRE responsibilities included both operational oversight (field inspections
and workforce safety) and leasing administration (planning for five-year program goals,
conducting lease sales, and environmental and economic analysis required by the National
Environmental Policy Act).8
A second and final secretarial directive marked the completion of the reorganization—BOEMRE
was phased out and replaced by the institutional structure currently in place.9 Specifically, on
October 1, 2011, BOEMRE was replaced by two new agencies: the Bureau of Ocean Energy
Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE).10
BOEM is currently responsible for planning and managing lease sales and conducting related
environmental and economic assessments, such as evaluating potential ocean energy resources
and addressing NEPA requirements. BSEE is currently responsible for regulating operations such
as permitting for drilling and decommissioning, equipment and facility inspections, and
workforce safety.
5 DOI,
Increased Safety Measures for Energy Development on the Outer Continental Shelf; Executive Summary, May
27, 2010.
6 Investigations of the past focused on MMS revenue management functions and involved auditing MMS records
related to receipts and disbursements. See U.S. Government Accountability Office,
The Federal System for Collecting
Oil and Gas Revenues Needs Comprehensive Reassessment, GAO-08-691, September 2008. See also DOI, Office of
Inspector General,
Investigative Report: MMS Oil Marketing Group—Lakewood, Washington, DC, August 19, 2008. In
2009, new ethics standards and the elimination of the Royalty-in-Kind Program were changes that stemmed from a
series of internal investigations.
7 DOI Secretarial Order No. 3299, May 19, 2010.
8 National Environmental Policy Act (NEPA, 42 U.S.C. 4321).
9 DOI Secretarial Order No. 3302, June 18, 2010.
10 DOI Fact Sheet: BSEE and BOEM, at http://www.boem.gov.
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Secretary Salazar and others had expressed the goal of achieving a swift transition and having the
new structure in place as quickly as possible.11 By October 1, 2011, after less than a two-year
transitional period, the new federal agencies responsible for offshore energy resources began
functioning through an administrative order establishing the new regulatory system.12
Questions and Answers
What Prompted the Reorganization?
The reorganization was prompted by widespread questions about the adequacy of federal
regulation of offshore drilling after the April 20, 2010,
Deepwater Horizon oil spill. Because the
Minerals Management Service (MMS) within the Department of the Interior (DOI) was the lead
agency responsible for permitting offshore oil and gas drilling, public attention turned to MMS
performance related to safety and enforcement. As the events of the
Deepwater Horizon unfolded,
public focus on MMS performance intensified. Some in Congress raised concerns about
perceived shortcomings and conflicts of interest that had been examined in the past with respect
to previously identified management challenges within MMS.
Secretary Salazar ordered the administrative reorganization to address these perceived conflicts.
As part of this reorganization, MMS responsibilities were separated and re-delegated to three new
agencies, signaling a break from past regulatory practices perceived by some, but not all, as being
too lax. By separating and re-assigning MMS responsibilities, Secretary Salazar’s actions were
intended to eliminate competing interests within MMS that the Secretary stated interfered with
properly regulating offshore projects.
What Regulatory Structure Existed Prior to the Reorganization?
Prior to April 2010, offshore energy projects were regulated by the Minerals Management Service
(MMS), an agency within DOI. MMS was formed in 1982 by administrative order to regulate
offshore energy development that had previously been among the responsibilities of the
Conservation Division of the U.S. Geological Survey.13 After 1982, three main responsibilities
were delegated to MMS: regulating offshore energy operations, administering leases, and
managing receipts and disbursements from all energy projects regulated by DOI (onshore,
offshore, and on Indian lands). In 2010, MMS was made up of about 1,700 employees in 20
locations across the country.14
Secretary Salazar’s comments at the time he directed the 2010 dissolution of MMS draw a
distinction between the structure in place from 1982 through 2010 (the former MMS) and the
structure currently in place: “The Minerals Management Service had three distinct and conflicting
missions that—for the benefit of effective enforcement, energy development, and revenue
11 U.S. Department of the Interior, “Secretary Salazar Divides MMS Missions,” transcript of videotaped announcement,
May 19, 2010, available at http://www.doi.gov/news/video/Secretary-Salazar-Divides-MMS-Missions.cfm.
12 76
Federal Register 64432 (October 18, 2011). This rule took effect October 1, 2011.
13 DOI Secretarial Order No. 3071, January 19, 1982. As part of separating offshore and onshore regulatory authority,
offshore areas were removed from the responsibility of the U.S. Geological Survey and delegated to MMS.
14 DOI,
Minerals Management Overview, 2009. See http://www.boemre.gov/jobs/Assets/PDF/MMSOverview.pdf.
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collection—must be divided.”15 DOI responsibilities for regulating offshore energy projects have
been characterized many times over the years, usually highlighting both enforcement objectives
(as the custodian of the public domain) and offshore energy and public revenue objectives (as the
administrator for offshore energy production).16 From this perspective, various regulatory
functions can be seen as distinct and conflicting. Many, but not all, observers have expressed
agreement that discretionary decision-making under the old framework (consisting of one agency,
MMS) might have led to management issues such as favoring one DOI function over another.17
What Is the Role of the Office of Natural Resources Revenue
(ONRR)?
The Office of Natural Resources Revenue (ONRR, pronounced “
Honor”) became a new agency
on October 1, 2010. ONRR is responsible for managing public revenues from federally regulated
energy projects, including projects that are onshore, offshore, and on Indian lands. These
responsibilities were previously performed by MMS. ONRR collects revenues accounting for
approximately $10 billion in annual receipts and disburses revenues to numerous accounts,
including accounts within five federal agencies, the U.S. Treasury, and 38 states.18
Revenue from federal offshore energy projects accounts for a significant portion of the total
revenues managed by ONRR. Receipts from offshore projects accounted for approximately $6.5
billion in 2011. In the course of collecting payments from leaseholders (mostly energy companies
and developers), ONRR administers payment schedules associated with more than 7,000 offshore
energy and mineral leases. (Among a total of more than 62,000 federal leases, the majority are
administered by the Bureau of Land Management.) Furthermore, ONRR disburses public revenue
by allocating sums, as determined by federal statute, to numerous federal and state accounts,
including the Land and Water Conservation Fund,19 the Historic Preservation Fund,20 various
state accounts,21 and the General Treasury.
15 U.S. Department of the Interior, “Secretary Salazar Divides MMS Missions,” transcript of videotaped announcement,
May 19, 2010, available at http://www.doi.gov/news/video/Secretary-Salazar-Divides-MMS-Missions.cfm.
16 DOI’s mission statement is posted at http://www.doi.gov as follows: Protecting America’s great outdoors and
powering our future, the U.S. Department of the Interior protects America’s natural resources and heritage, honors our
cultures and tribal communities, and supplies the energy to power our future.
17 GAO has summarized its recent work in this area in
Oil and Gas Management: Past Work Offers Insights to
Consider in Restructuring Interior’s Oversight, GAO-10-888T, July 22, 2010.
18 See all disbursements at http://www.onrr.gov/stats.
19 For the Land and Water Conservation Fund (P.L. 88-578, 16 U.S.C. §§460l-4, et seq.), up to $900 million annually.
See CRS Report RL33531,
Land and Water Conservation Fund: Overview, Funding History, and Issues, by Carol
Hardy Vincent.
20 National Historic Preservation Act (P.L. 89-665, 16 U.S.C. §§470, et seq.) This fund is authorized to receive $150
million annually from receipts derived from offshore leases. Expenditures require an annual appropriation.
21 Numerous payments are made to states: OCSLA Amendments of 1985 (P.L. 99-272) allocates 27% of receipts from
certain areas as permanently appropriated to the states; Gulf of Mexico Energy Security Act (GOMESA) of 2006, P.L.
109-432) allocates 12.5% of receipts from specified federal oil and gas leases off the coasts of selected Gulf states is
permanently appropriated to the National Park Service to be used consistent with the stateside program under the
LWCF act. Furthermore under GOMESA 37.5% of receipts from specified federal oil and gas leases go to Alabama,
Louisiana, Mississippi, and Texas. Lastly, the Energy Policy Act of 2005 (P.L. 109-58, §384) through the Coastal
Impact Assistance Program (CIAP) allocated to certain states $250 million of annual spending for FY2007-FY2010.
Distributions into the CIAP account ended in FY2010; however, program activities such as grant awards and
monitoring are expected to continue for several years.
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ONRR Mission Statement
To ensure the full and fair return to the American people of federal and Indian royalties and other monies owed for
the utilization of public resources in the production of conventional and renewable energy and mineral resources.
The following are selected examples of ONRR responsibilities:
• Collecting receipts from companies paying on obligations such as bonus bids,
rent, royalties, and fees; maintaining account databases for payment schedules
and other records; verifying accounts; and distributing receipts as directed by
statute.
• Auditing accounts according to government auditing standards.
• Enforcing revenue obligations by issuing penalties for late payments, and
resolving payment disputes.
ONRR has offices in Colorado, Texas, Oklahoma, and New Mexico, and a headquarters office in
Washington, DC.
What Is the Role of the Bureau of Safety and Environmental
Enforcement (BSEE)?
The Bureau of Safety and Environmental Enforcement (BSEE, pronounced “
Bessy”) was
established on October 1, 2011, partly replacing the Bureau of Ocean Energy Management,
Regulation and Enforcement (BOEMRE). BSEE is mainly responsible for operational safety and
workforce training. Regulatory functions delegated to BSEE include permitting drilling,
construction, and decommissioning activities; inspecting equipment and facilities; developing and
enforcing safety regulations and standards; reviewing oil spill response plans; and operating a
national training center for federal inspectors.
BSEE Mission Statement
BSEE works to promote safety, protect the environment, and conserve resources through vigorous regulatory
oversight and enforcement.
Selected examples of BSEE responsibilities include the following:
• Establishing a National Training Center designed to keep federal inspectors
current on new technologies and processes.
• Implementing new safety standards for offshore oil and gas facilities, particularly
focusing on deepwater operations.
• Overseeing worker safety to address risks associated with human exposure to
ocean conditions such as high winds, ice, fog, and extreme temperatures.
BSEE has offices (co-located with BOEM) in Anchorage, AK; New Orleans, LA; and Camarilla,
CA; and a headquarters office in Washington, DC. BSEE offices near federally regulated ocean
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energy facilities provide regulatory support for offshore operations such as geological and
geophysical analysis of ocean energy resources prior to exploration and development.
What Is the Role of the Bureau of Ocean Energy Management
(BOEM)?
The Bureau of Ocean Energy Management (BOEM, pronounced “
Bome,” rhymes with
Rome)
was established on October 1, 2011, to partly replace the Bureau of Ocean Energy Management,
Regulation and Enforcement (BOEMRE). BOEM is responsible for the offshore leasing process,
which means managing leases from the time the government conveys leases through the public
lease sale process until the leases are relinquished back to the government. BOEM performs the
following activities: developing a five-year program of proposed lease sales;22 qualifying bidders
prior to a lease sale;23 conducting public lease sales;24 issuing leases to winning bidders; and
record-keeping associated with changes in the status of a lease due to new circumstances such as
new ownership.25 Throughout these regulatory actions, BOEM provides environmental analysis
consistent with the requirements of the National Environmental Policy Act (NEPA).26
Selected examples of BOEM responsibilities include the following:
• Conducting Gulf of Mexico lease sales in December 201127 and June 2012.28
• Submitting to Congress on June 28, 2012, the Five-Year Outer Continental Shelf
Oil and Gas Leasing Program (2012-2017) outlining a proposal for ocean energy
development during the five-year period from 2012 through 2017.29
• Planning offshore wind projects through a program entitled
Smart from the Start,
with permitting and operations anticipated to begin by 2013.
BOEM Mission Statement
BOEM manages the development of the nation’s offshore resources in an environmentally and economically
responsible way.
22 The five-year program is mandated by the OCSLA to be “a schedule of proposed lease sales indicating, as precisely
as possible, the size, timing, and location of leasing activity which ... will best meet national energy needs.” 43 U.S.C.
§1344(a).
23 This involves reviewing leaseholder qualifications such as a company’s technical capacity for ocean drilling and a
company’s financial capacity for meeting the potential costs of an oil spill. The statutory basis for most oil spill-related
responsibilities is derived from the Oil Pollution Act (33 U.S.C §2701).
24 The lease sale process is a public event, open to all companies deemed eligible for owning offshore leases.
25 After a lease sale, the status of a lease can change. Private transactions play a role in determining how and when a
lease might be assigned or reassigned prior to expiring and being relinquished back to the government.
26 National Environmental Policy Act (NEPA, 42 U.S.C. 4321).
27 76
Federal Register 70473 (November 14, 2011). Western Planning Area Oil and Gas Lease Sale 218 held
December 14, 2011, offered 21 million acres for lease and drew about $325 million in bids.
28 77
Federal Register 29683 (May 18, 2012). Central Planning Area Oil and Gas Lease Sale 216/22 held June 20,
2012, offered million acres for lease and drew about $1.7 billion in bids, making it the fourth highest sale in the history
of the Gulf of Mexico.
29 The previous five-year program expired on June 30, 2012. The program proposed on June 28, 2012, is expected to
take effect by August 2012.
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BOEM has offices (co-located with BSEE) in Anchorage, AK; New Orleans, LA; and Camarilla,
CA; and a headquarters office in Washington, DC. BOEM regional offices provide support for
state and local consultations about leasing obligations and a local repository for public records
about development rights for specific leased tracts (similar to a county land register).
What Appears to Have Changed as a Result of the Reorganization?
Institutional changes stemming from the reorganization include new directors being named for
each of the three new agencies.30 Also, each agency now maintains a separate budget and a
separate congressional affairs office. Further changes are indicated by each agency adopting a
distinct mission statement.
Changes stemming from the reorganization are still evolving. Some changes in agency workflow
are apparent in the way monthly offshore oil and gas production reporting is currently
accomplished compared to the way it was done prior to the reorganization. Specifically, ONRR
and BSEE administrative procedures differ from MMS procedures in place prior to the
reorganization. Prior to the reorganization, all production reporting was the responsibility of
MMS. Under the MMS system, operators provided reports about production from offshore oil
and gas projects to MMS and all the administrative functions related to production reports were
handled within MMS. Since the reorganization, operators report production volumes to ONRR.
ONRR provides BSEE with monthly production updates. BSEE is responsible for verifying the
production volumes reported to ONRR. The BSEE verification process involves field work and
local monitoring that results in BSEE publishing offshore oil and gas production volumes on the
BSEE website.31 As part of the reorganization, steps for cross-checking production volume
reporting were added to the previous system for reporting—BSEE field data are now correlated
with ONRR accounting data. This change is aimed at improving the accuracy of DOI reports and
building greater confidence in DOI systems for reporting in general.
Not all agency tasks were targeted for change as part of the reorganization. For example, agency
workflow associated with managing leased tracts (mapping the location of leased tracts, issuing
owner and operator bonds, and administrative responsibilities related to recordkeeping) appear
largely unchanged as a result of the 2010 institutional reforms. Arguably, regulatory policies on
administering ownership records for leases (issuing new leases and approving assignments for
existing leases) have not been affected by the reorganization. In 2011, performing a long-standing
process for conveying leases after a sale, BOEM issued 181 new leases and reported no
difference in the process before and after the reorganization.32 BOEM continued a long-standing
process for reviewing leaseholder applications for assigning ownership interests in existing
leases; in 2011 BOEM approved 789 lease assignments and reported no difference in the process
30 MMS Director Elizabeth Birnbaum resigned in May 2010, and by June 2010, Michael R. Bromwich was appointed
as the Director of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). Currently three
directors are in place: BOEM Director Tommy Beaudreau; BSEE Director James Watson; and ONRR Director
Gregory J. Gould.
31 BSEE production statistics form the basis of information available to the public, including Members of Congress,
developers, energy analysts, and others. ONRR can obtain BSEE production data for its compliance review activities
and audits.
32 This information reflects BOEM public notices issued for Lease Sale 218 on December 14, 2011, and Lease Sale
216/22 on June 20, 2012.
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before and after the reorganization.33 Continuity with respect to these policies (administration of
new and existing leases) can be a significant component of the leasing process from the
perspective of companies making operational and financial decisions about an ocean energy
project. Continuity (or disruptions) in agency workflow involving new and existing leases can be
a pivotal factor for making decisions related to financing a project, ordering equipment, and
hiring a workforce.
The Role of Congress
In 2010, just as in 1982 when MMS was established administratively, Secretary Salazar ordered
MMS abolished and replaced by new agencies without congressional action.34
In the absence of organic legislation (ONRR, BSEE, and BOEM were not created in statute),
decisions to delegate or re-delegate MMS responsibilities within DOI require no congressional
action. Arguably, any number of administrative decisions could lead to further delegations of DOI
agency responsibilities, all potentially unfolding outside of the legislative process. At issue for
Congress is whether, absent legislative action, administrative directives are the best mechanism
for resolving perceived management issues within DOI offshore programs. If Congress
determines that such administrative changes are not the best course, the question remains what
legislative action, if any, provides a better alternative?
What Legislative Action Accompanied the Reorganization?
Congress mainly addressed DOI structural organization as part of enacting DOI appropriations
measures.35 Starting in the 111th Congress, prompted partly by Secretary Salazar’s requests that
the administration’s structural changes be codified into law, some Members of Congress
examined legislative proposals for a new regulatory framework within DOI as part of a broad
legislative response to the
Deepwater Horizon spill.36 Other than DOI appropriations acts funding
new DOI agencies, no legislation has been enacted to facilitate the reorganization.
During the first session of the 112th Congress, the House Committee on Natural Resources and
the Senate Committee on Energy and Natural Resources held hearings addressing the 2010
reorganization.37 During these hearings, lawmakers questioned Interior Secretary Ken Salazar and
33 According to BOEM Congressional Affairs Office, BOEM approved the following lease assignments during 2011:
285 applications for assignments involving 100% ownership interest in a lease and 504 applications for assignments
involving less than 100% ownership interest in a lease.
34 The 1982 and 2010 administrative reorganizations within DOI were carried out under authority that component
entities could be re-delegated by the Secretary of the Interior. See CRS Report R41485,
Reorganization of the Minerals
Management Service in the Aftermath of the Deepwater Horizon Oil Spill, by Henry B. Hogue.
35 P.L. 111-212 (July 29, 2010) and P.L. 111-322 (December 22, 2010). For a further discussion of DOI appropriations
related to the 2010 reorganization, see CRS Report R41258,
Interior, Environment, and Related Agencies: FY2011
Appropriations, coordinated by Carol Hardy Vincent, and CRS Report R41896,
Interior, Environment, and Related
Agencies: FY2012 Appropriations, coordinated by Carol Hardy Vincent.
36 Bills regarding reorganization introduced in the 111th Congress included S. 3516, H.R. 3404, H.R. 3534 and H.R.
3736.
37 Hearings in the House included an oversight hearing on July 15, 2011, “Offshore Energy: Interior Department’s
Plans for Offshore Energy, Revenue, and Safety Reorganization,” and a legislative hearing on September 15, 2011,
“Hearing on Discussion Draft to Reorganize the Interior Department’s Offshore Energy Agencies,” Subcommittee on
(continued...)
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BOEMRE Director Michael Bromwich about institutional changes underway within DOI. At
issue for Congress was whether legislative proposals (H.R. 3404 and S. 917) were aligned with
changes already being adopted as part of the DOI reorganization. With one exception with respect
to the draft House proposal, legislative and administrative mechanisms for institutional reform
were perceived by most observers as taking similar approaches to DOI management issues, with
all approaches involving separating agency functions and strengthening federal requirements for
worker safety and deepwater drilling. The exception noted during the September 2011 hearing on
the draft House proposal focused on a provision aimed at establishing a new DOI Under
Secretary for Energy, Lands, and Minerals. This provision marked a departure from the
institutional structure implemented by DOI administrative reforms. Explaining the underlying
purpose of the House language, Chairman Hastings noted that a new Under Secretary of Energy,
Lands, and Minerals was needed to “elevate the issue of DOI energy production within the
federal bureaucracy.”38 H.R. 3404 was ordered to be reported by the Committee on Natural
Resources on November 17, 2011, and included a provision establishing a new DOI Under
Secretary for Energy, Lands, and Minerals.
To date no further legislative action on DOI reorganization is scheduled, and it remains to be seen
whether further legislative action might occur during the 112th Congress.
What Concerns, If Any, Are Associated with the Reorganization?
Prior to the reorganization taking effect, a concern expressed by some observers (Members of
Congress, state and federal regulators, companies, and citizen organizations) was that separating
agency functions might result in negative outcomes such as delays or disruptions in permitting or
other services due to uncertainty associated with the new system. Major delays in permitting
associated with the reorganization did not materialize, but some uncertainty about the overall
workings of each agency remains as a concern to some stakeholders in the aftermath of the
reorganization.
Given that the reorganization overlapped with other developments (investigations into the cause
of the Gulf oil spill of 2010, and multiple state and federal initiatives toward coastal and ocean
areas) unfolding at the same time, it is possible that concern associated with the reorganization
might be part of a general sense of uncertainty surrounding regulated offshore operations in the
wake of the spill.39 For example, policies toward deepwater drilling and worker safety have been
in transition since 2010, beginning at roughly the same time the reorganization was announced.
Uncertainty stems from questions about potential policy shifts in these areas, including: What
new oversight and enforcement requirements might be anticipated for preventing oil spills in
deepwater areas? What regulatory policies can leaseholders expect with respect to workforce
safety? As these federal policies toward offshore energy development continue to evolve, the
(...continued)
Energy and Mineral Resources. A Senate hearing before the Senate Committee on Energy and Natural Resources
focused on four bills (S. 516, S. 843, S. 916, and S. 917) with S. 917 addressing the reorganization. See S. Hrg. 112–51.
38 Excerpts from the exchange between Chairman Hastings and DOI witness Michael Bromwich are part of a press
release issued by the House Committee on Natural Resources.
39 Specific reforms include enhanced drilling safety measures such as requiring operators to demonstrate that they are
prepared to deal with the potential for a blowout and worst-case discharge (NTL-06). Enhanced worker safety
regulations are referred to as the new Workplace Safety Rule and Safety and Environmental Management System
(SEMS). 76
Federal Register 56683 (September 14, 2011).
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Department of the Interior (DOI) Reorganization of Ocean Energy Programs
context for offshore regulatory policy is perceived by many as less than settled. Against this
backdrop, an unsettled regulatory context, questions remain about the way ONRR, BOEM, and
BSEE might perform future regulatory tasks.
How Can Congress Measure Agency Performance Since the
Reorganization?
The U.S. Government Accountability Office (GAO) analyzes federal agency performance for
Congress. As part of its “High Risk” series, GAO is studying DOI agency performance to provide
Congress with information about DOI performance in the aftermath of the 2010 reorganization.40
GAO listed DOI offshore energy programs as part of the “High Risk” series based on an
assessment that the combination of regulatory changes in the aftermath of the
Deepwater Horizon events and institutional changes associated with the 2010 reorganization warranted a close study
of DOI performance. According to Comptroller General Gene L. Dodaro’s testimony before the
House Committee on Oversight and Government Reform on February 17, 2011, a GAO report
analyzing the strengths and weaknesses of DOI offshore oil and gas programs is scheduled for
publication in 2013.41 It is anticipated that the forthcoming GAO report will comment on effects
of the 2010 DOI reorganization. It is difficult to forecast how GAO might review the 2010
reorganization because relatively little time has unfolded since all three agencies (ONRR, BOEM
and BSEE) have been up and running.
Author Contact Information
Curry L. Hagerty
Specialist in Energy and Natural Resources Policy
chagerty@crs.loc.gov, 7-7738
40 GAO-11-394, 2011 High-Risk Series. GAO is studying DOI management in five areas: (1) reorganization, (2)
balancing responsibilities, (3) human capital, (4) revenue collection, and (5) development of existing leases.
41 GAO-11-394, 2011 High-Risk Series. In 2011, GAO detailed 30 high-risk areas and added a new high-risk area—
Interior’s Management of Federal Oil and Gas Resources. Gene L. Dodaro, U.S. Comptroller General, testified before
the House Committee on Oversight and Government Reform, February 17, 2011; Committee on Appropriations,
Subcommittee on Interior, Hearing March 17, 2011. GAO offers information on the High Risk series at
http://www.gao.gov/highrisk/.
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