Oil Spill Panel Unloads

The national panel charged with assessing the BP Deepwater Horizon oil spill issued its report last month, calling for widespread reforms in industry drilling standards and federal regulation of offshore exploration.

Most industry spokesmen reserved their comments, saying company officials were studying the report. Environmental organizations strongly supported the recommendations.

“Government oversight must be accompanied by the oil and gas industry’s reinvention: sweeping reforms that accomplish no less than a fundamental transformation of its safety culture, ” the report said.

The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling—the official name of the panel—compared U.S. industry standards and regulations as being too weak compared to practices developed by the UK, Norway and Canada in the wake of drilling accidents in the 1980s. The “inadequacies” of federal standards, the commission found, were evident in decisions leading to the Macondo blowout.

The report faulted the American Petroleum Institute for lobbying for inadequate regulation and diminishing research and development related to safety.

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The commission called for a separate agency within the Interior Department to oversee offshore drilling and for it to be funded by increased fees on drilling activity. And it called for Congress to dedicate 80 percent of the Clean Water Act penalties for the BP spill to long-term restoration of the Gulf of Mexico.

The emphasis on environmental versus economic restoration drew criticism from Sen. Richard Shelby, who also scored the report as being too tough on industry.

The fines that BP and others will have to pay under the Clean Water Act depends upon whether they are found to have been grossly negligent for the blowout. Based on the estimated spill size of nearly 5 million gallons, penalties would range from a maximum of between $5 billion and $21 billion.

Another recommendation of the spill panel: Congress should significantly increase the liability cap and financial responsibility requirements for offshore facilities.

By Chris McFadyen

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