Top U.S. official pledges to reform ties to Big Oil

NEW YORK (CNNMoney.com) -- A top U.S. official pledged Tuesday to reform how the government does business with the oil industry and to hold BP accountable for the massive oil spill in the Gulf of Mexico.

Secretary of the Interior Ken Salazar, speaking before the Senate Committee on Energy and Natural Resources, outlined the steps he has taken to overhaul the Minerals Management Service, which has been criticized for having a "cozy" relationship with the oil and gas companies it's tasked with overseeing.

The MMS is the Interior Department agency responsible for managing natural resources in the deep waters of the Gulf of Mexico, known as the Outer Continental Shelf, where the nation derives nearly one third of the oil that's domestically produced.

The agency has been in the spotlight since the Deepwater Horizon, an oil rig operated by BP, exploded and sank in the Gulf last month. The disaster killed 11 people and resulted in a huge oil spill that has yet to be contained.

"It's time to drain the swamp at MMS," said Sen. Ron Wyden, D-Ore. "The agency has been in denial about safety problems for years."

In response, Salazar acknowledged that "there are some bad apples at MMS," but he argued that the agency has a "very robust regulatory mechanism in place."

"The conclusion that this is an unregulated industry is not correct," Salazar said. "But that does not mean there isn't room for improvement."

Sen. Robert Menendez, D-N.J., asked Salazar to respond to reports that MMS ignored critical findings by its own scientists and downplayed the risks of drilling in the Gulf of Mexico.

"MMS has dramatically underestimated the potential risk here," said Menendez.

Salazar said it's too soon to say what exactly went wrong and who is to blame for the disaster, but he assured Menendez that "heads will roll" if it is determined that MMS employees are at fault.

"The facts are still being investigated and developed," he said. "Those responsible will be held accountable."

Salazar had previously announced plans to separate the two departments within MMS that have duties that can be at odds. On the one hand MMS is required to enforce regulations, but it is also charged with collecting royalties from the industry, which have averaged more than $13 billion over the last 5 years. Increased regulation can often hinder production, and therefore royalties.

In addition, the government has ceased issuing permits for new drilling projects in the Gulf until a full explanation of what caused the spill can be ascertained.

In the meantime, Salazar stressed that the government's response to the spill, which is leaking about 200,000 gallons of oil per day in the waters off Louisiana, has been "relentless from day one."

The efforts to date have been the "most effective response possible in human history on this type of incident," he said, adding that Interior Department officials were on the scene one day after the rig exploded on April 20.

Deputy Interior Secretary David Hayes was dispatched to the region "without a change of underwear and without a toothbrush," according to Salazar.

Another Senate committee on Tuesday heard testimony from Admiral Thad Allen of the Coast Guard, who is the National Incident Commander in charge of the spill response, and Dr. Jane Lubchenco, administrator of the National Oceanic and Atmospheric Administration.

Admiral Allen told the Senate committee on Commerce, Science and Transportation that the spill has become more diffuse and larger than previous incidents, making the effort to protect sensitive costal environments along the Gulf more challenging.

"Now we are dealing with something that's much more complicated than any other spill we've ever been involved with," he said. "We are not dealing with a large monolithic spill now."

Lawmakers also raised questions about the possibility a portion of the spill could be caught up in the so-called loop current, which could carry oil over a broader area in the Gulf.

Lubchenco responded that "just a small tendril" of oil is near the loop current, while the bulk of it is "dozens" of miles away. She added that any oil pulled into the current would likely be "significantly diluted, weathered and degraded."

As such, that oil will probably come ashore, as it has already in some cases, in the form of "tar balls," she said. "It's not as if there's a massive amount of oil that will be washing ashore."

Lawmakers also asked the Lubchenco about a plume of oil that independent scientists have identified deep below the surface near the ruptured well.

She said researchers have found a subsurface "anomaly" that may or may not be oil. She said NOAA is studying samples of the substance and will have more information "in a few days." It is unlikely that the plume is due to the dispersants being used to break up the oil, both on the water and below the surface, she said.