Obama administration might oppose independent offshore oil safety agency, according to draft memo


The Obama administration largely embraces the legislative priorities recommended by the Oil Spill Commission the president appointed in the wake of last year’s BP disaster, but could disagree with the group on a key regulatory proposal, according to a White House draft memo obtained this week by The Times-Picayune.

The memorandum is marked as a “pre-decisional draft” and is being circulated by White House staffers among various federal agencies. It says the administration is “concerned” about the Oil Spill Commission’s request that Congress create an offshore safety agency within the Interior Department. The concern appears to be that an independent agency would impose demands on the oil industry that run contrary to those recently devised by the new Bureau of Ocean Energy Management, Regulation and Enforcement.

In its report last month, the Oil Spill Commission praised Interior Secretary Ken Salazar’s reorganization of the old Minerals Management Service into bureaus to separately handle lease revenues, drilling safety and environmental issues, but said the new oversight structure didn’t go far enough to protect safety and environmental regulators from political and money-making pressures.

The White House memo suggests the agency proposed by the commission could work in the future, but not right now. Salazar has said publicly that he would take the recommended safety agency into consideration, but that it would take an act of Congress. But the document suggests the administration is considering opposing any legislation that could take the mantle for safety reforms away from its leaders on this issue, which are Salazar and BOEMRE Director Michael Bromwich.

“Implementing the (commission’s recommended) change now could actually be disruptive to the safety reforms being undertaken by DOI,” the memo says.

Kendra Barkoff, an Interior Department spokeswoman, responded on behalf of the Obama administration, saying it is considering input from the “commission and other independent reviews” as it works to remove conflicts from the regulatory structure.

Last month, Bromwich told reporters that it would be up to Congress to implement a more independent agency than the Bureau of Safety and Environmental Enforcement recently established by Interior.

“We are by no means foreclosing the possibility that down the road we may move to the model that the commission recommended,” Bromwich said.

The Oil Spill Commission declined comment on the memo Thursday.

Oil and gas companies have been complaining for months that they can’t get permits to drill new wells, and Bromwich has said the government is waiting for proof that operators have the capacity to respond quickly in case of subsea blowout akin to the one BP had last April. But the White House appears worried that Congress might go too far in stifling an oil and gas industry that has already been dazed by the regulatory upheaval and uncertainty since the spill.

“We are also concerned about legislative proposals that would mandate specific drilling safety or environmental performance regulatory requirements by statute due to the need to maintain flexible, performance-based and cost-effective regulatory approaches …,” the memo says.

The document also suggests that if new requirements don’t come from Salazar and Bromwich they could clash with the flexible regulatory philosophy Obama laid out last month in an executive order.

The Jan. 18 order adopts a key principle from former President Clinton’s regulatory reforms of 1993: That regulation of industry should be strong but maleable, using warnings rather than harsh business-killing penalties whenever possible and “specify(ing) performance objectives, rather than specifying the behavior or manner of compliance” that regulated businesses must follow.

The idea that Obama wants to keep oil and gas regulation looser than others is sure to surprise Louisiana political and industry leaders. They complained loudly that the president overreacted to the Deepwater Horizon incident when he banned all deepwater drilling for five months last year, and the critics still allege that he has fabricated a slowdown in new well permits.

But the Obama administration does appear to support going beyond the commission’s recommendations to crack down further on the industry in two key areas.

First, the memo calls for Congress to change the Clean Water Act to remove a reference to individual states’ power to pursue their own legal actions to collect spill fines. The document says the reference could be interpreted to limit the federal government’s ability to collect bigger fines whenever states pursue parallel actions against the polluters.

Second, the memo pushes for a change to the Outer Continental Shelf Lands Act so it will be easier for the government to prove that a criminal act caused a spill.

Currently, prosecutors have to prove “willful” misconduct led to a spill to establish criminality. The “willful” standard means a defendant knew he was breaking the law. By switching to a “knowing” standard, the government will only have to prove that the accused “had knowledge of the facts that constitute the offense and that the conduct at issue was not accidental or a mistake,” the memo says.

The rest of the administration’s legislative priorities basically echo the commission’s recommendations. The memo calls on Congress to direct a majority of fines imposed for the Deepwater Horizon spill to restoring the ecology of Gulf Coast states.

It also backs the establishment of an industry-run safety institute, the beefing up of whistleblower protections for rig workers who report unsafe practices, the repeal of caps on responsible parties’ liability and the end of royalty relief, a common practice by the old MMS of waiving fees while companies were running up their highest exploration costs.

Mark Schleifstein contributed to this report. David Hammer can be reached at dhammer@timespicayune.com or 504.826.3322.

Add comment

Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

Follow Us

© Stuart H Smith, LLC
Share This