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Monday, July 29, 2013

Department of the Interior Ocean Energy Bureaus: Status of 2010 Structural Reforms and Issues for Congress

Curry L. Hagerty
Specialist in Energy and Natural Resources Policy

Federal law divides areas over which the federal government exercises energy and mineral management authority into three classes: federal onshore lands, Indian lands, and federal ocean areas, referred to as the Outer Continental Shelf (OCS). OCS areas comprise roughly 1.7 billion acres located beyond state waters and extending seaward, encompassing the 200 nautical miles of the U.S. Exclusive Economic Zone (EEZ). The Department of the Interior (DOI) reports that the federally regulated ocean energy sector currently accounts for 26% of domestic oil production and about 16% of domestic natural gas production. In addition to generating these domestic energy supplies, offshore energy projects overseen by DOI account for significant public receipts, approximately $6.9 billion in 2012.

This report describes the evolution and current status of DOI agencies responsible for managing OCS energy and mineral resources:

(1) Bureau of Safety and Environmental Enforcement (BSEE, pronounced “Bessy”), tasked with oversight and enforcement for field operations, inspections, workforce safety, and decommissioning;

(2) Bureau of Ocean Energy Management (BOEM, rhymes with “Rome”), tasked with offshore leasing administration, including developing maps, completing scientific and economic analyses, and issuing leases;

(3) 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.

As a direct result of the April 20, 2010, explosion and fire on the Deepwater Horizon drilling rig in the Gulf of Mexico, a revised regulatory framework within DOI was established by Secretarial Order No. 3299 on May 19, 2010. Because BSEE, BOEM, and ONRR were not created by statute, statutory changes were not part of this DOI reorganization. Among other legislative and regulatory activities in the aftermath of investigations of the Deepwater Horizon events, this DOI restructuring was intended to clarify and strengthen federal policies aimed at drilling safety. Legislative action during the 111
th and 112th Congresses consisted of oversight activities in both chambers and enactment of funding measures to create each agency. Many in the Administration and in Congress have expressed support for the reorganization.

During the 113
th Congress, on June 6 and 11, 2013, the House Natural Resources Committee, Subcommittee on Energy and Mineral Resources, held hearings focused on DOI restructuring, among other issues. Following those hearings, a full committee markup session was held on June 12, 2013, that included H.R. 2231, the Offshore Energy and Jobs Act, a bill addressing the structure of DOI subdivisions. On June 24, 2013, this bill was reported (as amended) by the Committee on Natural Resources (H.Rept. 113-125). On June 28, 2013, the House passed this legislation. No similar action is scheduled in the Senate.

In addition to pending legislation in the House, DOI restructuring remains part of a Government Accountability Office (GAO) study referred to as the 2013 High Risk Series (GAO-13-283). GAO is studying implications of DOI restructuring for the stated purpose of evaluating agency performance in certain areas, including revenue management. The following report, in a question and answer format, addresses frequent inquiries about the status of legislative and administrative events surrounding DOI restructuring. It will be updated as warranted

Date of Report: July 9, 2013
Number of Pages: 22
Order Number: R43137
Price: $29.95

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