Oil spill panel calls for tighter federal rules, new fees for drilling

By Juliet Eilperin and David S. Hilzenrath
Washington Post Staff Writers
Tuesday, January 11, 2011; 9:16 PM

The presidential oil spill commission said Tuesday that the federal government should require tougher regulation, stiffer fines and a new industry-run safety organization, recommendations that face an uncertain future in the new Congress.

Former senator Bob Graham (D-Fla.), one of the commission's co-chairmen, said that the Deepwater Horizon accident was "both foreseeable and preventable," and that Congress and the administration needed to enact reforms in order to prevent a repeat of the massive BP oil spill in the Gulf of Mexico last year.

"I am sad to say that part of the answer is the fact that our government helped let it happen," Graham said. "Our regulators were consistently outmatched."

The panel proposed several safeguards aimed at strengthening regulators' control over the oil and gas industry, including establishing an independent safety agency within the Interior Department that would be headed by someone for a fixed term in order to insulate the appointee from political interference. Graham said such a person should have "a background of both science and management."

It also called for funding the regulatory agency that oversees offshore drilling, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), with fees from the companies who are tapping into the nation's petroleum resource.

William K. Reilly, the commission's other co-chairman, emphasized that it would be a mistake to focus just on the three companies involved in last year's accident. "The solution to the problem has to be industry-wide."

Graham, who along with Reilly will testify before both the Senate Committee on Energy and Natural Resources and the House Natural Resources Committee on Jan. 26, said he hoped the "searing impact" of the Deepwater Horizon explosion and its aftermath would "override an ideological preference for less government, less government intrusion and less government cost" that could impede legislative action.

Both Louisiana Sens. Mary Landrieu (D) and David Vitter (R) endorsed the panel's recommendation that 80 percent of the Clean Water Act fines and penalties linked to the Gulf of Mexico oil spill go to environmental restoration. Landrieu said it would give "added ammunition" to a proposal that already has White House support.

But in a sign of how the two parties remain divided on how to regulate drilling, Landrieu said the report found a path forward for deepwater drilling while Vitter criticized it for failing to do so.

"The report could have easily said 'end of deepwater drilling,' but it doesn't," Landrieu told reporters in a conference call. "I think that's the really big takeaway - that this commission, having examined a horrible incident that occurred, has basically concluded that deepwater can be done safely."

In an interview, Vitter said he was concerned the report "didn't make any statement, any observation about the gulf still almost being shut down, nine months after the fact."

He added that although he was open to creating a new safety office within Interior, and didn't object outright to the idea of imposing fees to help regulate offshore energy exploration, he lacked confidence in the administration's ability to oversee drilling operations.

"I really don't see the will and the focus to get it done," Vitter said. "I don't see any real eagerness and focus to getting activity restarted in the gulf, apart from [demanding more financial] resources."

Rep. Edward J. Markey (D-Mass.), who helped lead a probe of the BP spill on the House Energy and Commerce Committee, said Tuesday he will introduce legislation encapsulating the commission's recommendations along with some provisions that passed the House last year but failed to move in the Senate.

Commission member Frances Beinecke, who heads the environmental group Natural Resources Defense Council, noted "many of these recommendations" can be adopted by the Obama administration without congressional approval.

White House press secretary Robert Gibbs would not specify Tuesday which recommendations the president might be willing to adopt, saying only that they "will help inform the work that remains to be done." President Obama met with commission members Tuesday afternoon.

Environmental groups immediately protested that the recommendations do not go far enough, and industry groups argued that the government should stop standing in the way of offshore drilling and production.

"President Obama should stop new offshore drilling," Andrew Sharpless, chief executive of the group Oceana, said in a statement. "As long as drilling continues, independent government inspectors should be on site at all times to ensure companies are not making cost-cutting or other risky decisions that increase the risks of a spill."

But Karen Harbert of the U.S. Chamber of Commerce warned that future drilling restrictions could hamper the nation's economic recovery: "It is now time for our government to let these companies get back to work and supply our nation with needed energy, jobs and revenue. There is no valid reason to continue the delay."

Even activists pressing for greater restrictions, such as Environment America's oceans advocate Michael Gravitz, said he was worried that Congress might not feel the pressure to act now that the spill had largely dissipated. He noted in an e-mail that Senate Majority Leader Harry Reid couldn't get to 60 votes "over the summer with the smell of oil still in the air, and the Gulf senators were missing from that 60."

Commission members did offer some modest praise for the White House, which came under attack last year for not responding quickly or forcefully enough to the accident.

"Our own government, after a slow start, responded quite effectively to this spill," Reilly said. "Despite some allegations, this was not Obama's Katrina."

The commission also found the Deepwater Horizon disaster could have been much worse than it was: "At one point, industry experts feared that a significant portion of the 4.6 billion gallon oil and gas reservoir beneath the sea floor could be released into the gulf."

The panel also called for a "risk-based" regulatory approach now used by nations such as Norway and the U.K., in which companies will have to demonstrate they have fully evaluated the risks associated with a particular well rather than deepwater drilling in a general area.

Borrowing an idea from the nuclear power industry, the oil spill commission backed the creation of an industry-run organization modeled on the Institute of Nuclear Power Operations that was created after the Three-Mile Island disaster. That organization helps establish best practices and technology for reactors.

It recommended boosting the liability cap on oil spills, which is $75 million for environmental and economic damage, though the commissioners could not agree on a specific number. BP has said that it would disregard the cap.

The commission's report said that Interior should also include the National Oceanic and Atmospheric Administration in the decision-making process about where and how to conduct oil and gas leasing. If Interior officials were to reject NOAA's recommendations, they would have to say in writing why that would be in the national interest.

"Science has not been given a sufficient seat at the table," Graham said. "Actually, that is a significant understatement. It has been virtually shut out."

eilperinj@washpost.com hilzenrathd@washpost.com

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