Minerals Management Services

MEMORANDUM

Date: October 19th, 2016

From: Nina Kouadio

To: The new director of a federal regulatory agency

Topic: Seeking Answers to MMS’s Flawed Culture

The Minerals Management Services (MMS) was created in 1982 by James G. Watt who came with the purpose to change the method by which the government managed its natural resources. To achieve its goal, the MMS model of regulation was to partner with the oil and gas companies and institutions in the industry such as the American Petroleum Institute. The MMS was required by law to meet the nation’s energy needs. The agency took the responsibility to achieve its mission by openly declaring its partnership with the industry it will also be regulating. Because of the partnership, about 78 federal regulations adopted were in fact based on the industry-generated standards.

In addition, in the quest of MMS to give oil and gas companies more locations for drills, they started to lease new territories to oil and gas companies. It did not take long for congress to react and start putting some restrictions on the attribution of new territories by MMS. However, the gulf remained the primary place for deep-water ventures winning the name of being a “national sacrifice area”. The MMS’ purpose remained the same: to maximize oil and gas production. An increase in the production meant more tax that the industry will have to pay to the agency. Nonetheless, the partnership was meant to facilitate the cooperation between the two sides of the spectrum so that regulations will be place in context and appropriate security measured will be taken when necessary. However, the situation was quite different from the expectation because the industry ended up having the leverage over its regulator. In fact, the MMS created the regulations based on the standard of the industry.

The MMS made such closed acquaintances with an industry it was originally supposed to regulate and this weakened its oversight and regulatory function. For instance, less environment assessments were conducted. MMS trusted the industry based on historical data that no major incidents had happened so far. However, the fact that the oil and gas companies where exploring new areas should have set the alarm and be a reason for more vigorous assessments and controls over the companies. Clearly, the performance-based regulation proved to be wrong when the large spills occurred in the gulf. It became obvious that the industry disregarded some major safety issues because no one was really controlling their actions. The MMS failed to navigate its twofold relationship as regulator and industry partner.