Oil spill panel calls for reforms, fees
Wednesday, January 12, 2011
The presidential oil spill commission said Tuesday that the federal government should impose higher fees on oil and gas firms to finance a more robust and independent regulatory system, recommendations that could face an uphill battle in the new, more conservative Congress.
Former senator Bob Graham (D-Fla.), co-chairman of the commission, said that the Deepwater Horizon accident was "both foreseeable and preventable," and that Congress and the administration need 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. It 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 reserves.
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 industrywide," he said.
Several influential Republicans said Tuesday they would oppose measures that could curb domestic exploration. Rep. Doc Hastings (R-Wash.), chairman of the House Committee on Natural Resources, said in an interview that any new funding for federal oversight "should come from the existing revenues that are created by offshore drilling" rather than new industry fees. Rep. Fred Upton (R-Mich.), chairman of the Energy and Commerce Committee, warned in a statement: "Neither this nor any investigation should be used as political justification for a pre-determined agenda to limit affordable energy options for America."
Sen. Mary L. Landrieu (D-La.) said "the really big takeaway" of the report was that the commission "examined a horrible incident that occurred [and] basically concluded that deepwater can be done safely."
The Obama administration has already changed the way the government oversees offshore drilling. It has created an investigations-and-review unit to probe wrongdoing within the agency as well as the petroleum industry; separated leasing revenue collection from safety, environmental and regulatory enforcement; and temporarily stopped issuing "categorical exclusions," which exempt drilling proposals from detailed environmental reviews, as it evaluates the entire procedure.
Reilly, who said this overhaul is "not enough," briefed Obama, several Cabinet secretaries and the rest of the commission members Tuesday. The president did not specify which recommendations he would adopt, Reilly said, and urged the panel members "to engage industry support for some of these recommendations."
Rep. Edward J. Markey (D-Mass.), who helped lead a probe of the BP spill on the 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.
Sen. David Vitter (R-La.) said he thought one factor would determine whether Congress passed an energy bill that could include some of these reforms: "It's really going to be the price at the pump, and that's heating up again." Any such bill, he suggested, would not curb offshore drilling.
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.
While calling for tougher government regulation, the commission also called for the oil and gas industry to establish a "self-policing" organization that would set and enforce safety standards. In addition, it endorsed a system used in the North Sea that calls on drilling companies to assess the risks involved in a particular well and tailor their operations accordingly.
University of Maryland law professor Rena Steinzor, president of the Center for Progressive Reform, said such deference to the companies would be "tragedy compounded," adding, "If there ever was an industry that didn't deserve to write its own plans, it's this one."
The panel 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 the action would be in the national interest.