Oil spill commission backs using fines for coastal restoration


WASHINGTON – The National Oil Spill Commission released a 377-page report of findings and recommendations today based on its six-month probe of the Deepwater Horizon oil disaster, recommending a sweeping agenda of industry and government reforms to make safety paramount in future deepwater drilling operations.

The commission report supports directing 80 percent of civil and criminal penalties under the Clean Water Act to coastal restoration in the Gulf and raising the current $75 million cap on liability for economic damages resulting from a spill – a limit that BP early on indicated wouldn’t limit its payments in this case.

Both measures would require congressional action. Sen. Mary Landrieu, D-La., in the Senate, and Rep. Steve Scalise, R-Jefferson, in the House, have bills that would require that at least 80 percent of the penalty money go to Gulf Coast restoration restoration efforts.

The commission also wants offshore operators to develop a “safety case” model like that used by the industry in the North Sea, which “requires all offshore companies to demonstrate that they have thoroughly evaluated all the risks associated with drilling a particular well or other operation, and are prepared to address any or all risks pertaining to that well or operation.”

The theory here is that deepwater drilling is so technologically advanced and ever-changing that explicit government rule-making cannot, by itself, keep pace with the demands of truly safe operations.

The commission also calls for the creation of an industry “safety institute” – modeled on the the Institute of Nuclear Power Operation, created by the nuclear industry in the aftermath of the Three Mile Island accident – to develop, set and enforce safety standards for the industry.

In the wake of the accident, the Minerals Management Service, the Interior Department agency responsible for regulating offshore drilling, was widely assailed for not being up the to the job, and the commission calls for improving government’s regulatory capacity, increasing financial support and training for the Bureau of Ocean Energy Management, the successor agency to MMS.

The commission calls for creating an independent safety agency within the Department of Interior to oversee all aspects of offshore drilling safety, and calls on President Barack Obama to to “seek significantly increased funding for the key regulatory agencies that oversee oil spill response and planning,” including the Interior Department, the Coast Guard and the National Oceanic and Atmospheric Administration – which it wants to have a greater role in decision-making early on in the oil and gas leasing process.

“The government must establish an independent agency responsible for regulating all aspects of offshore drilling safety to make the U.S. the international leader on this issue, ” said commission co-chairman Bob Graham, the former Democratic Florida governor and senator.

“The Deepwater Horizon disaster did not have to happen; it was both foreseeable and preventable,” said Graham.

“For the last 20 years we have seen a rapid movement of the oil and gas industry to deeper and deeper and riskier and riskier waters of the Gulf of Mexico,” said Graham, who said both industry and government were “lulled” into a sense that nothing could go wrong, a complacence that masked the increasingly risky operations being undertaken in the Gulf.

“On April 20, after a long series of rolls of the dice, our luck ran out,” said Graham, who said the Deepwater Horizon well represented the fatal intersection of an especially “high-risk, high-pressure” well, and an operator, in BP, “with one of the worst safety records” in the industry.

“Theses reforms are a national priority, and must be treated as such by the administration, the Congress, and the industry,” said his co-chair, former EPA Administrator William Reilly, a Republican.

The Commission last week issued the chapter of its report on the causes of the April 20 blowout of the Macondo well, which led to the worst oil spill in U.S. history.

Today, Reilly restated the commission’s conclusion: “Our investigation shows that a series of specific and preventable human and engineering failures were the immediate cause of the disaster. But, in fact, this disaster was the almost inevitable result of years of industry and government complacency and lack of attention to safety. This was indisputably the case with BP, Transocean and Halliburton, as well as with the government agency charged with regulating offshore drilling – the Minerals Management Service.”

“As drilling pushed into even deeper and riskier waters where more of America’s oil lies, only systemic reforms of both government and industry will prevent a similar, future disaster.”

BP issued a statement saying that the company “has cooperated fully with the Presidential Commission. Given the emerging consensus that the Deepwater Horizon accident was the result of multiple causes involving multiple parties, we support the Commission’s efforts to strengthen industry-wide safety practices. We are committed to working with government officials and other operators and contractors to identify and implement operational and regulatory changes that will enhance safety practices throughout the oil and gas industry.”

Reilly said at least 80 percent of the BP fines should be devoted to coastal and wetlands restoration in the Gulf.

“We know what needs to be done; now for the first time in my career as a conservationist, we have the prospect of serious money to do what needs to be done.”

On the Obama administration’s moratorium on all deepwater drilling, which extended into October, Reilly said that both he and Graham believed “the moratorium was excessive and lasted too long.”

Reilly said they thought that other operators in the Gulf, with exemplary safety records, who were inspected after the disaster and found to be fully compliant with all existing regulations, should have been able to to back to work.

Reilly said the commission as a whole had not taken a position on the moratorium.

Reilly and Graham will testify before Senate and House committees Jan. 26 on their recommendations.

Asked which proposals they considered their legislative priorities, the co-chairs turned to Commissioner Frances Beinecke, president of the Natural Resources Defense Council, who said the top three priorities were increasing resources for regulatory oversight, directing the penalty money to Gulf Coast restoration, and increasing the liability cap, though the commission did not recommend a specific figure.

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