Offshore drilling regulation overhaul appears out of reach


Efforts to negotiate a comprehensive overhaul of federal offshore drilling regulations have collapsed, but there’s still a chance for a more limited bill that increases oil spill liability limits.

Under discussion is a plan that would allow oil companies to create a unified oil spill liability fund, a measure that could win support from opponents of the unlimited cap sought by some senators. Among them is Sen. Mary Landrieu, D-La., who contends an unlimited cap could force smaller offshore oil exploration companies out of business.

Landrieu has also been seeking agreement on a measure that would direct 80 percent of oil spill fines paid by BP to coastal restoration efforts. Her staff said the senator is trying to negotiate a fair allotment of money, which can generate well over $1 billion so that the most affected states, led by Louisiana, get the bulk of the benefits.

While it’s not certain a negotiated bill could make it through the Senate in the final weeks of the lame-duck session, it’s clear that the comprehensive bill, which passed the House of Representatives in July, or anything resembling it, is dead for 2010 and even less likely to pass next year when the GOP takes control of the House.

The Consolidated Land, Energy, and Aquatic Resources legislation, passed 209-193 in the House, would set new standards for blowout preventers, the safety devices that have become a focus of investigation in the BP Deepwater Horizon rig explosion, and would have barred companies with bad safety records from applying for new drilling permits — a provision aimed solely at BP.

The bill would also increase fines for violations of federal regulations, established new ethics rules for federal regulators and repeal a 2005 energy law that allowed companies, including BP in the case of its doomed Macondo well, to be exempted from environmental assessments.

Landrieu said the bill being discussed in Senate negotiations is a much more “narrow bill.” That’s good news for oil industry officials who argued that the House bill would further damage an industry still reeling from tighter regulations since the massive April 20 blowout and subsequent oil spill.

“We’re still battling to get our arms around the new process of permitting, and we don’t need legislation that is going to further complicate things,” said Chris John, president of the Louisiana Mid-Continent Oil and Gas Association.

Environmental groups are furious the Senate will likely adjourn for the year without taking up comprehensive reform.

“Seven months after the BP drilling disaster, it’s outrageous that the Senate has failed to address drilling in the Gulf,” said Aaron Viles of the Gulf Restoration Network. “The clear message is that Washington, D.C., has no problem with the Gulf remaining the nation’s energy sacrifice zone.”

The Senate hasn’t even managed to pass a bill, approved 420-1 in the House during the summer, which would have given the national oil spill commission subpoena power — something panel staff said hindered its operations.

“Every day that Senate Republicans block subpoena power for the independent commission is another day BP, Halliburton and Transocean can duck and dodge the panel’s hardest questions,” said Rep. Ed Markey, D-Mass.

Louisiana lawmakers, however, see the failure of the House bill to advance in the Senate as a positive.

“While the BP oil spill and its aftermath may be out of the attention of national media and Washington, Louisianans still need an immediate end to the de facto moratorium and coastal restoration relief,” said Sen. David Vitter, R-La. “The delegation needs to refocus and push for a more tailored bill that addresses these two specific areas.”

Added Rep. Steve Scalise, R-Jefferson, “Instead of passing bad legislation that makes it harder for Louisiana companies to drill safely for oil, Congress should work to pass the Gulf Coast Restoration Act, which will immediately help us restore our coast by ensuring that the BP fines go directly back to the states impacted by the spill.”

On Monday, a group of Gulf Coast House members met with Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, asking him to end what they call a continuing de facto moratorium on new drilling permits, despite the early ending of the Obama administration’s six-month moratorium on Oct. 12.

“American energy producers remain committed to safety, but have still not received clear guidelines on the new regulations,” said Rep. Charles Boustany, R-Lafayette, after the meeting.

A coalition of environmental groups said in a memorandum released Tuesday that the BP disaster demonstrated that regulation of the oil and gas industry was too lenient.

“For example, current law gives permit examiners just 30 days to approve or deny an exploration plan,” the memo from groups such as the Sierra Club and National Resources Defense Council said. “This deadline prevents adequate review and adds to the pressure to approve exploration activities.”

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

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