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Oil spill panel calls for sweeping changes

The presidential commission investigating the Deepwater Horizon spill in the Gulf of Mexico wants more funding for oversight, allocation of penalty payments to gulf restoration, and a lifting of the $75-million liability cap on oil firms.

January 11, 2011|Neela Banerjee, Washington Bureau

Reporting from Washington — The presidential panel investigating the Deepwater Horizon spill in the Gulf of Mexico wants more funding for oversight, allocation of penalty payments to gulf restoration, and a lifting of the $75-million liability cap on oil firms.

The presidential commission investigating the Gulf of Mexico oil spill called on Congress, the Obama administration and the oil and gas sector Tuesday to make sweeping changes based on practices in other industries and petroleum-producing countries to avert a repeat of the deadly Deepwater Horizon offshore disaster.

The scope of the panel's recommendations stems in part from a conclusion it voiced earlier that "systemic failure" and a "culture of complacency" among the oil industry and government regulators contributed heavily to the April 20 blowout of the well — not just the actions of BP, Transocean and Halliburton, the three major companies working on the rig.

But the prospects for fundamental change are murky. The recommendations, several of which require congressional approval, come as anti-regulatory fervor is gripping Congress, particularly the Republican-controlled House of Representatives.

Industry groups want lawmakers to roll back many environmental and safety regulations. Oil industry advocates and their legislative allies have focused on speeding up the permitting of new deep-water wells, a priority that could conflict with increased regulation and oversight.

Commission Co-Chairman Bob Graham, a former Democratic senator from Florida, said he thought the enormity of the disaster would foster consensus.

"I believe that this issue and the searing impact that the Deepwater Horizon has had on the conscience of Americans is such that it will override an ideological preference for less government," he said at a news conference. "What makes that level of optimism credible is that members of Congress understand that this isn't just a typical example of a private enterprise that the government is regulating. This is land that the government and the people of the United States own."

The seven-member commission unanimously asked Congress to allocate funding to the Interior Department to beef up oversight of offshore oil drilling and production, and to assure that 80% of the penalties to be paid in the disaster go to restoration of the Gulf of Mexico. Most controversially for many in Congress, the commission recommended lifting the $75-million liability cap on oil firms for economic damages caused by spills.

The Obama administration has already recommended lifting the cap and disbursing penalty payments to the gulf. The oil industry backs the allocation of more money to the Interior Department.

"While we have already taken significant action, the commission's recommendations will help inform the work that remains to be done," White House Press Secretary Robert Gibbs said in an e-mailed statement. "The mistakes and oversights by industry as well as government must not be repeated."

The commission did not recommend a specific liability cap, saying Congress should decide that. Disputes over lifting of the cap, which some say would drive out small, independent companies, stalled spill-related legislation in the last Congress. But a senior Senate staff member said bipartisan discussions underway in that chamber could resolve the issue and get the legislation moving.

House Republican leaders, however, expressed concern that some of the report's recommendations could slow offshore oil and gas production. Commission members are expected to testify on the report before Senate and House committees Jan. 26.

"Rather than clearly identifying the root cause of this unprecedented disaster, the commission's report is limited to general assertions about the enforcement agencies and industry as a whole," Rep. Fred Upton (R-Mich.), chairman of the powerful House Energy and Commerce Committee, said in a statement. "Neither this nor any investigation should be used as political justification for a predetermined agenda to limit affordable energy options for America."

The commission recommended establishing a division within Interior to focus exclusively on offshore safety issues, funded by fees paid by industry and headed by a scientist or engineer serving a fixed term to protect the post from political pressure. It also called for Interior to adopt an approach known as safety case, used in Britain and other countries, which requires companies to develop worst-case scenarios and remedies for each well, including prevention and resolution plans. The department is considering such a move.

The commission recommended greater participation by the U.S. Geological Survey and the National Oceanic and Atmospheric Administration, because "science has been virtually shut out" of offshore drilling decisions, Graham said.

neela.banerjee@latimes.com

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