In announcing his bill to reform the Department of the Interior’s Minerals Management Service (MMS), Rep. Darrell Issa made a point that is worth highlighting (see also: E&E Daily), whether one agrees with the particulars of his proposal or not. Interior has never made the protection of the people’s revenue interests in land management a priority. Given that this inattention has spanned administrations, as Rep. Issa notes, the problem is an institutional one, which will not disappear even if MMS manages to fix the litany of serious systems, regulatory and personnel problems identified by Interior’s Inspector General and the GAO. Unfortunately, Rep. Issa’s proposal, as well as those of Rep. Nick Rahall and Senator Jeff Bingaman, misses the mark.
As a retired MMS employee blogging for The Washington Post correctly noted, MMS’ organizational problem is its two very different and conflicting programmatic missions. Offshore Energy and Minerals Management (OEMM) is responsible for the leasing, development and environmental protection of the outer continental shelf. MMS’ Minerals Revenue Management (MRM) is responsible for assuring that energy companies operating on onshore, offshore and Indian leases pay what they owe. Akin to the IRS, MRM is a collection, auditing, disbursement and revenue enforcement agency.
Royalty management as the bane of energy development is a staple argument of MMS’ “industry partners." Not all “incentives” are publicly labeled as such. It is also no longer safe to assume that royalties are among OEMM’s primary concerns or, for that matter, the concern of the MMS directorship, its mineral revenue lawyers or the Office of the Secretary when they are wearing their development hats. Both purposeful non-enforcement and simple neglect evidence the mission conflict noted by the WaPo blogger.
It is not yet clear what attention MRM will receive from Secretary Salazar and his new MMS Director. What is clear is that revenue protection is not one of the priorities listed by the Secretary as the drivers for the Department’s strategic plan.
Given the substantial increase in the offshore acreage available for leasing and the addition of leasing of renewable resources, OEMM’s mission and workload will expand. The importance to Interior — and the nation — of the success of OEMM’s renewable energy initiative will necessarily require greater leadership focus by the MMS Director, leaving less in time and attention to MRM.
These questions about MRM’s fate are not intended to denigrate the actions Secretary Salazar has taken in relation to the royalty program. He acted swiftly, as did his predecessor, to strengthen employment ethics and more recently to terminate MRM’s “royalty-in-kind” program. However, these actions were primarily motivated by the scandal over MRM employees literally being “in bed with industry.” If it is accepted, as the Inspector General concluded, that this scandal was confined to a handful of bureaucrats, it can be concluded by process of elimination that the equally serious and more widespread operational problems at MRM are the result of gross mismanagement; a lack of sustained leadership attention and focus.
MRM’s need for separate leadership, in fact, is compounded by
Secretary Salazar’s priorities and actions. The termination of the
royalty-in-kind program will increase the workload of other offices, as
will renewable energy leasing. Renewable energy leasing also
introduces learning curve issues for all MRM functions. The difficulties MRM has had with determining the revenues owed under geothermal leases are not comforting.
Mr. Issa’s proposal at least attempts to provide separate and independent leadership to the task of energy revenue protection. He misses the mark, however, by proposing to make the whole of MMS an agency separate from Interior, thus continuing the mission conflict between MRM and OEMM. Moreover, however appealing a divorce from Interior may seem, the complications attendant to such a move would delay MRM’s efforts to dig itself out of its current operational holes.
If Mr. Issa’s bill is too hot, Mr. Rahall’s is too cold. Mr. Rahall proposes to carve out the auditing and compliance functions from MRM and delegate them to the Inspector General. This would of course neuter the Inspector General’s ability to provide independent oversight of these functions; such oversight being the very purpose of inspectors general. The proposal also underestimates the interrelationship between MRM’s auditing/compliance functions and its regulatory, enforcement, financial and appeals functions. It creates more administrative complications than it resolves. Like Mr. Issa’s proposal, it does not resolve the leadership problem created by mission conflict.
All the Senate Energy Committee proposes is to make the MMS Director a confirmable position, which, however important, is not a guarantee of reform or excellence (see e.g., Steve Griles).
Separate and independent MRM leadership within Interior — a “Bureau of Revenue Protection” — would not produce the same degree of administrative disturbance as Mr. Rahall’s and Mr. Issa’s proposals, particularly at a time when Interior is still transitioning from the change in administration. Mission independence of a new bureau could be strengthened by incorporating features of the Inspector General Act, such as separate legal counsel and public audit and investigation reports. Consideration might also be given to changing the internal reporting structure, e.g., the new bureau’s director might report to the Deputy Secretary as does the special trustee. To guard against events like the 1998-99 offshore lease fiasco, a new “revenue cop” bureau could be charged with reviewing all financial documents generated by other Interior agencies (e.g., OEMM, Bureau of Land Management) solely to assure revenue protection.
And, oh yes, by all means make the new bureau’s director a confirmable position.
This post was written by a friend of POGO. The ideas expressed don't represent an official POGO position, but we think they merit particular consideration.