By Ann Rascalli

In the wake of the massive BP oil spill near the Gulf Coast, the Obama Administration has announced it will seek to divide the troubled Minerals Management Service into two organizations in hopes of eliminating what many view as conflicting missions.

Interior Secretary Ken Salazar said he planned to split the section that ensures energy companies comply with federal safety and environmental laws from the operations segment that reaps billions in drilling royalties every year. He said the move was designed to guarantee “there is no conflict, real or perceived, with respect to those functions.”

Persistent problems have plagued the 1,700-person agency, which has come under fire for ethical lapses and most recently for accelerating permit approvals and incorporating industry practices in the regulations. Salazar’s new move is the latest in his campaign to reform the MMS since he became Secretary of the Interior. Just days after taking office, he asked the Justice Department to investigate allegations of wrongdoing and traveled to the agency’s office in Lakewood to to announce plans to raise the ethics standards for the entire Interior Department. The Lakewood (Colorado) office was ground-zero for a scandal that forced some personnel to resign after it was learned they had been in bed, literally, with industry representatives.

The move to split the agency into two comes on the heels of new polling that shows Americans are far less supportive of offshore drilling since the BP spill.

How the re-structuring of the agency will impact stakeholders is not clear because several details have yet to be resolved.

The New York Times reports that some environmental activists, former Interior officials and Republicans on Capitol Hill said bolder steps will be needed to ensure that the agency that brings in $13 billion to federal coffers — more than any agency other than the Internal Revenue Service — will oversee drilling operations in a fair and impartial manner.

“My question is whether what he’s [Salazar's] setting out to accomplish will accomplish what he wants to do,” said Bracewell & Guiliani counsel Michael Olsen, who worked on offshore oil issues as Interior’s deputy assistant secretary for land and minerals management under George W. Bush.

Salazar’s new move is the latest in his campaign to reform the MMS since he became Secretary of the Interior. Just days after taking office, he asked the Justice Department to investigate allegations of wrongdoing and traveled to the agency’s office in Lakewood to to announce plans to raise the ethics standards for the entire Interior Department.

The gulf oil spill has raised new questions regarding the agency’s role in regulating companies involved with the disaster.

Frank Patton, an MMS manager who oversees drilling permits, was questioned  by federal officials at a Tuesday hearing in Kenner, La, about the Deepwater Horizon accident. He indicated that the agency had not detected any major problems with the project in the weeks before the explosion.

But he conceded that the rig had not been required to prove that the “shear ram” in the rig’s blowout preventer — the device designed to cut through the oil pipe in case of an emergency — would slice the particular pipe used by the Deepwater Horizon.

“Why did we approve the application?” said Jason Mathews, an MMS official investigating the blast. “That is one thing I do not look for in my application, in my approval process,” Patton answered.