The Minerals Management Service (MMS) was an agency of the United States Department of the Interior that managed the nation's natural gas, oil and other mineral resources on the outer continental shelf (OCS).
Due to perceived conflict of interest and poor regulatory oversight following the Deepwater Horizon oil spill and Inspector General investigations, Secretary of the Interior Ken Salazar issued a secretarial order on May 19, 2010 splitting MMS into three new federal agencies: the Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement, and the Office of Natural Resources Revenue. MMS was temporarily renamed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) during this reorganization before being formally dissolved on October 1, 2011.
Headquartered in Washington, DC, the Agency received most of its revenue from leasing federal lands and waters to oil and natural gas companies with a profit margin of 98%. It was among the top five revenue sources to the federal government, the IRS being number one. As the MMS (before transition to BOEMRE), the Agency's signature feature according to an informational trifold was that it had "become our Nation's leader in offshore energy development and the collection of royalties on behalf of the American Public." With respect to enforcement of regulations and safety, this same publication indicated that the "MMS also funds advanced scientific studies and enforces the highest safety and environmental standards." The Agency's mission statement was put more formally in its 2010 Budget Proposal:
MMS's mission is to manage the energy and mineral resources on the Outer Continental Shelf and Federal and American Indian mineral revenues to enhance public and trust benefits, promote responsible use, and realize fair value.
|Minerals Management Service|
|Formed||January 19, 1982|
|Dissolved||October 1, 2011|
|Annual budget||US$310 million (2009)|
|Parent agency||Department of the Interior|
To ensure that all oil and gas originated on the public lands and on the Outer Continental Shelf are properly accounted for under the direction of the Secretary of the Interior, and for other purposes.
With the passage of the Energy Policy Act of 2005, MMS was given authority to develop renewable energy projects such as wave, wind and current energy on the Outer Continental Shelf. As of 2010, the Agency was composed of two operating units, the MRM and OEMM.
The Agency's offshore renewable energy program included development of renewable energy such as wind, wave, and solar.
On June 21, 2010, the Minerals Management Service was renamed the Bureau of Ocean Energy Management, Regulation and Enforcement and reorganized.
As of 2009, the Agency employed about 1,600 people, which was proposed to grow by less than one hundred in 2010.
The BOEMRE was reorganized in May 2010 under the direction of Secretary of the Interior Ken Salazar following the Deepwater Horizon disaster. The bureau is organized into these three newly created agencies:
Since the inception of the MMS, and in particular since the 1990s, the Agency has been embroiled or implicated in numerous scandals. For example, in 1990 MMS employees were linked to prostitution, and in 2008 the Department of Interior's Inspector General reported that MMS employees had participated in drug use and sexual activity with employees from the very energy firms they were to be regulating.
From the 1950s to at least 2002, drilling for oil and gas on federal lands and waters produced the second largest source of revenue for the federal government other than taxes. The Minerals Revenue Management (MRM) division of MMS was responsible for managing all royalties associated with both onshore and offshore oil and gas production from federal mineral leases. In 1997, in light of evidence that industry was getting around royalty regulations and underpaying royalties to the tune of billions of dollars, MMS proposed a more stringent rule to collect royalty payments in value (RIV), meaning in the form of cash payments from companies producing from federal leases. In response to that rule-making, industry proposed an alternative—"royalty-in-kind" (RIK) meaning in the form of actual oil or gas production. In fact, the industry opposed cash payments (RIV) and planned legal challenges to government efforts to establish regulations for fair market-based royalty payments. A pilot test of the RIK concept was conducted. The Bush administration allowed the pilot to expand to a full program, with industry support, even though the bill authorizing the program failed to pass in Congress. In FY2008, the RIK program accounted for more than 50% of the Agency's revenue collections. When MRM collected royalties-in-kind, the oil or gas received from producers was offered for sale by the U.S. Government on the open market and the proceeds from these sales were taken as revenues. The RIK program within MRM was responsible for managing these in-kind sales.
In 2003, the General Accounting Office (GAO) noted that the MMS had failed to develop "clear strategic objectives linked to statutory requirements nor collected the necessary information to effectively monitor and evaluate the Royalty-in-Kind Program". From 2003 to 2008, the GAO consistently challenged the legitimacy of the statistics published by the MMS that it used to support its claims that the RIK program was a success and justify its expansion. Deficits in accounting practices, policies and procedures, and information systems used by the MMS led to concerns that the industry was significantly underpaying on their royalty obligations. Computer systems in use by the Agency were considered to be sufficiently inadequate that a failure to report revenue or provide RIK by an industry member could not be reliably detected. For instance, the GAO estimated that underpayments amounted to ~$160 million USD in 2006. The GAO also disputed the practice of tracking oil and gas RIK deliveries on a monthly rather than daily basis, a practice used by the MMS and supported by the Department of the Interior, but potentially prone to abuse by producers. Other contributing factors to the placing the accuracy of revenue streams at risk were insufficiently trained personnel and insufficient numbers of personnel working in the RIK program and a lack of standard reporting method by industry members, leading to manual rather than computer-based processing of more than half of the data required for RIK data inputs.
Citing its scandals and the persistent incapacity of the RIK program to fulfill its statutory obligations, Interior Secretary Salazar announced in September 2009 that the RIK program would be shut down. Due to existing lease contracts with RIK provisions, the program as of 2010 is still winding down. On October 7, 2009, the U.S. House Oversight Committee reported the loss of billions in revenue resulting from MMS mismanagement and cozy relationships with industry officials. According to Darrell Issa, the top Republican on the United States House Committee on Oversight and Government Reform, there may be a conflict of interest for the Minerals Management Service to collect revenue and also oversee safety.
In September 2008, reports by the Inspector General of the Interior Department, Earl E. Devaney, were released that implicated over a dozen officials of the MMS of unethical and criminal conduct in the performance of their duties. The investigation found MMS employees had used cocaine and marijuana, and had sex with energy company representatives. MMS staff had also accepted gifts and free holidays amid "a culture of ethical failure", according to the investigation. The New York Times's summary states the investigation revealed "a dysfunctional organization that has been riddled with conflicts of interest, unprofessional behavior and a free-for-all atmosphere for much of the Bush administration's watch."
A May 2010 inspector general investigation revealed that MMS regulators in the Gulf region had allowed industry officials to fill in their own inspection reports in pencil and then turned them over to the regulators, who traced over them in pen before submitting the reports to the agency. MMS staff had routinely accepted meals, tickets to sporting events, and gifts from oil companies. Staffers also used government computers to view pornography. In 2009 the regional supervisor of the Gulf region for MMS pleaded guilty and was sentenced to a year's probation in federal court for lying about receiving gifts from an offshore drilling contractor. "This deeply disturbing report is further evidence of the cozy relationship between MMS and the oil and gas industry," Salazar said.
The Project On Government Oversight (POGO) alleges that MMS has suffered from a systemic revolving door problem between the Department of Interior and the oil and gas industries. For example, thirteen months after departing as MMS director, Bush appointee Randall Luthi became president of the National Oceans Industries Association (NOIA) whose mission is "to secure reliable access and a favorable regulatory and economic environment for the companies that develop the nation's valuable offshore energy resources in an environmentally responsible manner." Luthi succeeded Tom Fry, who was MMS director under the Clinton administration. Luthi and Fry represented precisely the industries their agency was tasked with being a watchdog over. Lower level administrators influencing MMS have also gone on to work for the companies they once regulated: In addition, Jimmy Mayberry served as Special Assistant to the Associate Director of Minerals Revenue Management (MRM), managed by MMS, from 2000 to January 2003. After he left, he created an energy consulting company that was awarded an MMS contract via a rigged bid. He was convicted along with a former MMS coworker Milton Dial who also came to work at the company. Both were found guilty of felony violation of conflict of interest law.
On May 11, 2010, in response to the Deepwater Horizon oil spill, Secretary of the Interior Ken Salazar announced that MMS would be restructured so that the safety and environmental functions are carried out by a unit with full independence from MMS in order to ensure that federal inspectors will have more tools, resources, and greater authority to enforce laws and regulations that apply to oil and gas companies operating on the Outer Continental Shelf. Another outcome of the spill was the retirement of the associate director for offshore energy and minerals management at the time of the spill, Chris Oynes.
MMS's regulatory decisions contributing to the 2010 oil spill included, in negligence, the decision that an acoustically controlled shut-off valve (BOP) would not be required as a last resort against underwater spills at the site, MMS's failure to suggest other "fail-safe" mechanisms after a 2004 report raised questions about the reliability of the electrical remote-control devices., and the fact that MMS gave permission to dozens of oil companies to drill in the Gulf of Mexico without first getting required permits from the National Oceanic and Atmospheric Administration that assess threats to endangered species and to assess the impact the drilling was likely to have on the gulf.
On May 19, 2010 Salazar announced that MMS will be broken up into three separate divisions, the Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement, and the Office of Natural Resources Revenue, which will separately oversee energy leasing, safety enforcement, and revenue collection.
S. Elizabeth (Liz) Birnbaum served as the Director of the then named Minerals Management Service from July 15, 2009 to her resignation on May 27, 2010 amidst the Deepwater Horizon oil spill. On June 15, 2010 President Obama named Michael R. Bromwich, a former federal prosecutor and inspector general for the Justice Department, to head up efforts to restructure BOEMRE. Bob Abbey, then director of the Bureau of Land Management, took over as Acting Director of BOEMRE until his replacement could be confirmed. Amidst efforts to reorganize the beleaguered agency, on June 21, 2010, Bromwich was sworn in as BOEMRE's new director, and Secretary of the Interior Ken Salazar issued a Secretarial Order that renamed the Minerals Management Service the Bureau of Ocean Energy Management, Regulation and Enforcement. Almost a year later, William K. Reilly, who co-chaired the commission charged with investigating the Horizon blowout, was quoted as saying "they changed the name, but all the people are the same" and "it's embarrassing" in reference to the current situation.
Along with lax enforcement of safety rules, the agency that regulates drilling has failed to collect billions in fees
The Akebono Maru (officially registered Akebono Maru No. 28) was a Japanese fishing trawler that capsized on 5 January 1982. The Minerals Management Service of Alaska reported she sank 50 miles north of the Adak and notes it at the top of its list of "Alaska's Ten Worst Shipping Losses
In The Last 20 Years". In total, 32 people died.Very little is known about her sinking. There are almost no English-language reports of her accident from 1982-1990. The earliest record of the ship is a New Zealand marine index of an accident that occurred on 16 February 1980, when the ship collided with a squid boat off Timaru. At the time, the ship was commissioned by Ferons Ltd.
The Akebono Maru was also the name of a Japanese oil tanker damaged on 3 June 1942, during the Battle of Midway and sunk in shallow water on 30 March 1944 off Ngeruktabel, Palau. She was re-floated in 1957, but sank under tow during a storm.
Another ship, the M/S Akebono Maru, is an LNG tanker.Bureau of Ocean Energy Management
The Bureau of Ocean Energy Management (BOEM) is an agency within the United States Department of the Interior, established in 2010 by Secretarial Order.The Outer Continental Shelf Lands Act (OCSLA) states: "...the outer Continental Shelf is a vital national resource reserve held by the Federal Government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintainence [sic] of competition and other national needs."BOEM and its sister agency, the Bureau of Safety and Environmental Enforcement are the agencies to which this responsibility is delegated. They exercise the oil, gas, and renewable energy-related management functions formerly under the purview of the Minerals Management Service (MMS). Specifically, BOEM activities involve resource evaluation, planning, and leasing.Bureau of Safety and Environmental Enforcement
The Bureau of Safety and Environmental Enforcement (BSEE "Bessie") is an agency under the United States Department of the Interior. Established in 2011, BSEE is the lead agency in charge of improving safety and ensuring environmental protection relating to the offshore energy industry, mainly natural gas and oil, on the United States Outer Continental Shelf (OCS). The agency exercises the safety and environmental enforcement functions formerly under the Minerals Management Service including the authority to inspect, investigate, summon witnesses and produce evidence, levy penalties, cancel or suspend activities, and oversee safety, response, and removal preparedness.Chris Oynes
Chris Craig Oynes (28 April 1947 – 18 October 2017) was an American lawyer and Federal government administrator.Oynes was born in Anaheim, California to Christian and Lorraine Oynes. Oynes received a BA degree in political science from California State University at Fullerton, and he received a JD degree from George Washington University.Oynes served as U.S. Minerals Management Service (MMS) associate director for offshore energy and minerals management before he retired in May 2010. Oynes, who oversaw oil and gas leasing in the Gulf of Mexico for 12 years before being promoted to MMS associate director had come under fire for being too close to the industry officials he regulated.During his tenure at the Gulf regional office in Louisiana for the MMS, Oynes played a central role in an offshore leasing foul-up that cost taxpayers an estimated $10 billion in lost revenue. The Interior Department's inspector general called the matter "a jaw-dropping example of bureaucratic bungling." Despite that, the agency's then-director, Johnnie Burton, promoted Oynes in 2007 to associate director for the offshore program.On May 24, 2010 The New York Times reported that under his watch in the Gulf, MMS regulators allowed industry officials to fill in their own inspection reports in pencil and then turned them over to the regulators, who traced over them in pen before submitting the reports to the agency. MMS staff also routinely accepted meals, tickets to sporting events and gifts from oil companies. In 2008, a report from the Interior Department's Inpector-General found that MMS employees had received improper gifts from energy industry representatives.In the wake of the Deepwater Horizon oil spill, Oynes announced that he would retire at the end of May 2010. According to the Minerals Management website, Oynes had "...more than 30 years of Federal Government experience..."Oynes died on 18 October 2017 in Baton Rouge, Louisiana.Cynthia L. Quarterman
Cynthia L. Quarterman is an American lawyer, former Director of the Minerals Management Service and Administrator of the Pipeline and Hazardous Materials Safety Administration from 2009 until her resignation on October 4, 2014.Deepwater Horizon
Deepwater Horizon was an ultra-deepwater, dynamically positioned, semi-submersible offshore drilling rig owned by Transocean. Built in 2001 in South Korea by Hyundai Heavy Industries, the rig was commissioned by R&B Falcon (a later asset of Transocean), registered in Majuro, and leased to BP from 2001 until September 2013. In September 2009, the rig drilled the deepest oil well in history at a vertical depth of 35,050 ft (10,683 m) and measured depth of 35,055 ft (10,685 m) in the Tiber Oil Field at Keathley Canyon block 102, approximately 250 miles (400 km) southeast of Houston, in 4,132 feet (1,259 m) of water.On 20 April 2010, while drilling at the Macondo Prospect, an uncontrollable blowout caused an explosion on the rig that killed 11 crewmen and ignited a fireball visible from 40 miles (64 km) away. The fire was inextinguishable and, two days later, on 22 April, the Horizon sank, leaving the well gushing at the seabed and causing the largest oil spill in U.S. waters.Dos Cuadras Offshore Oil Field
The Dos Cuadras Offshore Oil Field is a large oil and gas field underneath the Santa Barbara Channel about eight miles southeast of Santa Barbara, California. Discovered in 1968, and with a cumulative production of over 260 million barrels of oil, it is the 24th-largest oil field within California and the adjacent waters. As it is in the Pacific Ocean outside of the 3-mile tidelands limit, it is a federally leased field, regulated by the U.S. Department of the Interior rather than the California Department of Conservation. It is entirely produced from four drilling and production platforms in the channel, which as of 2009 were operated by Dos Cuadras Offshore Resources (DCOR), LLC, a private firm based in Ventura. A blowout near one of these platforms – Unocal's Platform A – was responsible for the 1969 Santa Barbara oil spill that was formative for the modern environmental movement, and spurred the passage of the National Environmental Policy Act.Macondo Prospect
The Macondo Prospect (Mississippi Canyon Block 252, abbreviated MC252) is an oil and gas prospect in the United States Exclusive Economic Zone of the Gulf of Mexico, off the coast of Louisiana. The prospect was the site of the Deepwater Horizon drilling rig explosion in April 2010 that led to a major oil spill in the region.Michael R. Bromwich
Michael R. Bromwich (born December 19, 1953) is an American litigation attorney who was designated by President Barack Obama on June 15, 2010, to be the first director of the newly created Bureau of Ocean Energy Management, Regulation and Enforcement, which replaces the Minerals Management Service in the wake of the Deepwater Horizon oil spill.Mississippi Canyon
The Mississippi Canyon is an undersea canyon, part of the Mississippi Submarine Valley in the North-central Gulf of Mexico, south of Louisiana. According to the U.S. Geological Survey GLORIA Mapping Program, it is the dominant feature of the north-central Gulf of Mexico. According to GCAGS Transactions, it has an average width of 8 kilometres (5.0 mi), and a length of 120 kilometres (75 mi). The US Minerals Management Service (MMS) applies the name Mississippi Canyon to numbered federal oil and gas lease blocks over a large offshore area centered on, but mostly outside, the submarine canyon.Office of Natural Resources Revenue
The Office of Natural Resources Revenue (ONRR) is a unit of the United States Department of the Interior, established by Secretarial Order. The new office exercises the royalty and revenue management functions formerly under the Minerals Management Service, including royalty and revenue collection, distribution, auditing and compliance, investigation and enforcement, and asset management for both onshore and offshore activities.Offshore drilling on the Atlantic coast of the United States
Offshore drilling for oil and gas on the Atlantic coast of the United States took place from 1947 to the early 1980s. Oil companies drilled five wells in Atlantic Florida state waters and 51 exploratory wells on federal leases on the outer continental shelf of the Atlantic coast. None of the wells were completed as producing wells. All the leases have now reverted to the government.
Although no oil or gas have been produced from beneath U.S. Atlantic waters, there are active offshore fields to the south in offshore Cuba and to the north in offshore Canada.
Each US state along the Atlantic coast owns as territorial waters out to three nautical miles (3.45 statute, or land miles) from the shore at mean low tide, and has jurisdiction to decide whether or not, and under what terms, to lease the territory for oil and gas. The federal government owns and controls the minerals between three and 200 nautical miles (370 km) from the shore.
In accordance with congressional restrictions and presidential orders, no federal leasing has taken place on the offshore Atlantic coast of the United States since the early 1980s. The federal government had scheduled a lease sale for offshore Virginia, to take place in 2011, and in March 2010, President Barack Obama announced his intention to open the Mid-Atlantic and South Atlantic planning areas to oil and gas exploration. However, lease sale plans were canceled in May 2010 following the Deepwater Horizon oil spill in the Gulf of Mexico. In December 2010, Interior Secretary Ken Salazar announced a ban on drilling in federal waters off the Atlantic coast through 2017.Offshore oil and gas in the United States
Offshore oil and gas in the United States provides a large portion of the nation’s oil and gas supply. Large oil and gas reservoirs are found under the sea offshore from Louisiana, Texas, California, and Alaska. Environmental concerns have prevented or restricted offshore drilling in some areas, and the issue has been hotly debated at the local and national levels.Outer Continental Shelf
The Outer Continental Shelf (OCS) is a peculiarity of the political geography of the United States. The OCS is the part of the internationally recognized continental shelf of the United States which does not fall under the jurisdictions of the individual U.S. States.Project Deep Spill
Project Deep Spill was the first intentional deepwater oil spill, in order to study how crude oil behaved in-depth. A Joint Industry Project comprising 23 oil companies and the Minerals Management Service performed a sea trial in late June 2000 in the Helland Hansen region of the Norwegian Sea. The trial made several releases of varying combinations of crude oil (750 barrels), marine diesel, methane (18 cubic metres) and nitrogen gas from the seabed at 840 metres below sea-level.Randall Luthi
Randall B. Luthi (born 1955) is an attorney and rancher from Freedom, in northwestern Lincoln County in western Wyoming, who served as a Republican in the Wyoming House of Representatives from 1995—2007. He was the Speaker for his last two-year term, 2005—2007. Prior to 2005, he had been the House Majority Leader. In Wyoming, Speakers traditionally retire from the House upon the expiration of their tenure as presiding officer. Luthi was thereafter named by Interior Secretary Dirk Kempthorne as the Director of the Minerals Management Service.Luthi formerly served in the United States Department of the Interior during the administration of Presidents Ronald W. Reagan and George Herbert Walker Bush. The first Bush transferred him to the National Oceanic and Atmospheric Administration. Since 2000, Luthi has been a partner in the Luthi and Voyles law firm in Thayne. Since 1993, he has also been a managing partner of the JE Luthi Ranch, a beef cattle operation in Lincoln County. From 1990—1993, he served in Washington, D.C., in career positions as Senior Counselor for Environmental Regulations in NOAA's Office of General Counsel. Earlier, he was an attorney in the Interior Department Office of the Solicitor from 1986—1990. In 2007, President George W. Bush named Luthi Deputy Director of the United States Fish and Wildlife Service. On July 23, 2007, the administration appointed him head of the Minerals Management Services where he remained until January, 2009.On March 1, 2010, Luthi became president of the National Ocean Industries Association (NOIA), a Washington, D.C. based political action committee representing "the companies that develop the nation’s valuable offshore energy resources." The movement of Minerals Management Service officials to NOIA has been controversial. As NOIA president, Luthi wrote to the acting director of the Minerals Management Service on June 7, 2010, advocating rapid clarification of offshore drilling rules because "it is not a time for a lengthy and undefined ban or suspension on all drilling."Luthi is considered an authority on royalties paid to the U.S. government by companies which produce energy from the public domain, both on land and water. From his legislative service, Luthi was instrumental in the formulation of state budgets which relied heavily upon royalties and severance taxes paid by energy companies operating on federal leases. He was also a legislative member of the Energy Council, an organization of legislative representatives from energy-producing states and Canadian provinces and private energy-related industries. The council meets quarterly to consider the latest developments in energy matters.Luthi formerly worked as a legislative assistant in the office of former U.S. Senator Alan K. Simpson of Cody. He provided counsel on legal and legislative issues including oil and natural gas taxation. He later transferred to the office of then U.S. Representative Richard B. Cheney of Wyoming, later Vice President of the United States.Luthi received a bachelor of science degree in law enforcement in 1979 from the University of Wyoming at Laramie. He procured his Juris Doctor law degree from UW in 1982.In June 2007, upon the death of U.S. Senator Craig Thomas, Luthi was among thirty applicants for appointment to fill the vacancy until a special election is held on November 4, 2008. Luthi was not chosen by the Republican State Central Committee as one of the three finalists to be considered for appointment by the state's governor, Democrat Dave Freudenthal. Luthi tied for fifth place on the second ballot and lost a tie-breaking vote.
In September 2008, Democratic Senator Bill Nelson of Florida called upon Luthi to resign from the Minerals Management Service because of a sex, drug, and oil scandal at the service that occurred between 2002 and 2006, before Luthi became director.Rigs-to-Reefs
Rigs-to-Reefs (RTR) is the practice of converting decommissioned offshore oil and petroleum rigs into artificial reefs. Such biotic reefs have been created from oil rigs in the United States, Brunei and Malaysia. In the United States, where the practice started and is most common, Rigs-to-Reefs is a nationwide program developed by the former Minerals Management Service (MMS), now Bureau of Safety and Environmental Enforcement (BSEE), of the U.S. Department of the Interior.
The program has been generally popular with fishermen, the oil industry, and government regulators in the Gulf of Mexico, where offshore platforms develop into coral reefs, and as of September 2012, 420 former oil platforms, about 10 percent of decommissioned platforms, have been converted to permanent reefs.Opposition in California has prevented a rigs-to-reefs program on the West Coast of the US. Similarly, environmental opposition has prevented implementation of Rigs-to-Reefs in the North Sea.S. Elizabeth Birnbaum
Susan Elizabeth "Liz" Birnbaum served as Director of the Minerals Management Service in the United States from July 15, 2009 to May 27, 2010. Birnbaum was in charge of administering "programs that ensure the effective management of renewable energy [...] and traditional energy and mineral resources on the nation's Outer Continental Shelf, including the environmentally safe exploration, development, and production of oil and natural gas, as well as the collection and distribution of revenues for minerals developed on federal and American Indian lands."Squeeze job
Squeeze job, or squeeze cementing is a term often used in the oilfield to describe the process of injecting cement slurry into a zone, generally for pressure-isolation purposes.
Agencies under the United States Department of the Interior
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