By Gary Gentile, with Jean Chemnick

May 14 - US Interior Secretary Ken Salazar May 13 named two of his top officials to oversee the restructuring of the Minerals Management Service, the federal agency that oversees offshore oil and gas drilling.

Salazar proposed the reforms in the wake of the explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico and the resulting oil leak. MMS has come under intense criticism in the wake of the disaster for being too lax in its enforcement of safety regulations because of its close relationship with the oil industry.

Salazar said he has directed Assistant Secretary for Policy, Management and Budget Rhea Suh and Senior Advisor Chris Henderson to oversee the plan to split the MMS into two groups, one of which will collect royalties and the other which will enforce safety and environmental regulations.

Suh oversees administrative and financial policy for Interior, including the organization of the department, its bureaus and its $12 billion annual budget.

Henderson oversees Interior's investment of more than $3 billion under the American Recovery and Reinvestment Act.

Salazar's proposal to reorganize MMS is to be discussed in congressional hearings in the coming weeks.

Congress also will consider a permanent ban on offshore drilling off the Pacific Coast as the federal government reacts to the Deepwater Horizon disaster.

Salazar, who oversees MMS, proposed splitting the agency's duties as a reaction to criticism the MMS cannot adequately regulate offshore drilling while it also issues auctions for leases and collects royalties. Some of what Salazar proposed on May 11, such as requiring the Senate to confirm nominees to head the MMS, need specific legislative changes, the department said. But Salazar also has broad authority to restructure the department sooner, without congressional approval.

Senator Dianne Feinstein, Democrat-California, said May 13 that her Appropriations Subcommittee on Interior, Environment and Related Agencies will hold a hearing soon to discuss Salazar's proposal. "I've come to realize that the Minerals Management Service is a relatively weak agency that lacks appropriate enforcement authority and has an intrinsic conflict of interest in that it collects revenue from an industry it is tasked with regulating," Feinstein said in a statement.

In a letter to Feinstein and other leaders in Congress, Salazar said his planned reorganization of MMS is designed to achieve four principles: independent safety enforcement function; full enforcement authority; priority attention to safety and environmental values; application of best technology and cutting edge science. "While we are focused on the need to maintain a relentless response to the Deepwater Horizon incident, we are also mindful that we have a responsibility to ensure that the operation and oversight of offshore operations are following the law, protecting the workers, and guarding against future incidents and spills," Salazar wrote.

Salazar proposed tough new regulations for onshore drilling in January and on May 14 a group of 60 former federal and state environmental officials urged him to implement those new rules as soon as possible.

Salazar had proposed adding new environmental reviews of all drilling permit applications on federal lands and limiting the use of "categorical exclusions," which are permit approvals that forgo an extensive analysis of environmental impact. But those rules, which were promised to be in place within weeks, have yet to be made official. A DOI spokesman did not respond to requests for comment on the reason for the delay.

Separately, six West Coast senators said they would introduce a bill to permanently ban oil and gas drilling off their shores.

They said they intend to ensure the language is included in any climate or energy bill that may come before the Senate this year.

In a news conference, Senator Barbara Boxer, Democrat-California, said that while the Department of Interior's current five-year plan would not allow leasing off the West Coast before 2017, that could change depending on who is in the White House. "There is no permanent protection for us," she said.

The senators introduced their bill the day after two of their colleagues, Senators John Kerry, a Massachusetts Democrat, and Joseph Lieberman, a Connecticut Independent, unveiled an energy and climate-change bill that would, among other things, allow states to ban offshore drilling within 75 miles of their coasts.

An effort to raise the liability cap for oil spills hit a speed bump on May 14, when Senate Republicans blocked an attempt to pass the proposal without debate.

Democratic sponsors attempted to bring a bill to raise the liability cap from $75 million to $10 billion to the floor under unanimous consent, which allows a bill to bypass the Senate's committee process.

Republicans objected, however, saying that a more than 1,000% increase of the liability limit set by the Oil Pollution Act of 1990 was not warranted, even by the current major oil spill.

Senator Lisa Murkowksi, Republican-Alaska, said she sympathizes with the bill's intention of ensuring that companies like BP, which is involved in the Gulf spill, pay their fair share for economic damages which result from catastrophic spills they cause. Still, she said such a large increase would have unintended consequences.