Shuffling Chairs on the Oil Rig

In response to BP’s (BP) ongoing oil disaster in the Gulf of Mexico, Interior Secretrary Ken Salazar announced plans today to split the dreaded and loathesome Minerals Management Service into two separate agencies — one to supervise offshore drilling rigs and one to collect the billions of dollars in royalties on the oil and gas pumped in public waters.

It’s fine that the Obama administration wants to carry out radical surgery on an agency that is notorious for incompetence, cronyism, scandals, cover-ups and supine subservience to the oil industry. Who wouldn’t want to carve the place up?

The problem is that MMS — and Interior itself — has a long history of criminal incompetence at BOTH supervising deep-water drilling and collecting the money. Splitting its core incompetencies into two separate agencies won’t necessarily solve that problem.

The Project on Government Oversight, which uncovered massive scandals on royalty collections back in the 1990s and has stayed on the case every since, warns today that the proposed split won’t in itself resolve the inherent conflicts of interest at MMS.

“It’s important to note that the place where there’s been the most potential for financial corruption–royalty management–will not be separated from the leasing function.”

POGO asks whether the new regulatory agency will have the authority to enforce its findings — something that hasn’t been the case with the Defense Contracting Audit Agency? Will it have its own legal counsel, or will it have to rely on Interior’s legal counsel, which has stymied enforcement countless times in the past.

We shall see. The Obama adminstration actually seems to believe in government, which the Bush administration did not. But turning Interior into a true steward of the nation’s oil and gas resources will require more than redrawing boxes on an organizational chart.

• Become A Funded Futures Trader