Lax Oil Industry Oversight? That’s an Understatement

Secretary of the Interior Ken Salazar testified on Capitol Hill yesterday before the Senate Energy and Natural Resources Committee and, among other "causes," cited a "collective responsibility" for the BP Gulf explosion and resulting oil spill disaster. Estimates vary on the quantity of oil and gas erupting from the Gulf of Mexico ocean floor at the Deepwater Horizon rig site but regardless of the source, the oil poses a huge threat to everything in its path.

Secretary Salazar promised an overhaul of federal regulations that to date, along with weak industry efforts, led to the disaster that continues to unfold. He specifically pointed to the scandal that involves regulators from Interior’s Minerals Management Service and energy industry officials. Allegations range from financial self-dealing, lavish gifts to government employees, drug use and sexual misconduct. According to a press release, proposed reforms include:

1. Independence for MMS’s Energy Inspection and Enforcement Mission

Secretary Salazar announced that he intends to restructure the Minerals Management Service (MMS) in order to establish a separate and independent safety and environmental enforcement entity. Salazar said the MMS’s inspection, investigation, and enforcement operations will be separate and independent from the agency’s leasing, revenue collection, and permitting functions. Currently, the Minerals Management Service collects energy revenues on behalf of American taxpayers and enforces laws and regulations that apply to offshore energy operators.

“The job of ensuring energy companies are following the law and protecting the safety of their workers and the environment is a big one, and should be independent from other missions of the agency,” said Salazar. “We will responsibly and thoughtfully move to establish independence and separation for this critical mission so that the American people know they have a strong and independent organization holding energy companies accountable and in compliance with the law of the land.”

2. Additional Resources for Federal Inspectors

The oil spill response legislation that the Obama Administration will submit to Congress will propose an additional $29 million for inspections, enforcement, studies and other activities. This includes approximately $20 million for increased inspections of other platforms, engineering studies, and enforcement of safety regulations for other offshore platforms, another $7 million for more comprehensive evaluations of policies, procedures and actions that may be needed in light of the Deepwater Horizon incident, and $2 million for the Fish and Wildlife Service, U.S. Geological Survey or others to conduct general environmental studies. MMS’s budget for inspections for Fiscal Year 2010 is $23 million.

3. Independent Investigation by National Academy of Engineering

At the request of the Obama Administration, the National Academy of Engineering will conduct an independent, technical investigation to determine the root causes of the Deepwater Horizon disaster so that corrective steps can be taken to address the mechanical failures underlying the accident.

The National Academy of Engineering (NAE) is a highly-regarded and respected organization affiliated with the National Academy of Sciences (NAS). Its projects, like those of the NAS, are implemented by the Academies’ operating arm, the National Research Council (NRC). Its project teams are composed of members of the NAE and other experts from academia, industry, and – when appropriate – from government. The team members are unpaid experts throughout the world with knowledge and expertise in various engineering disciplines. Similar, independent investigations have been conducted of events like the space shuttle Challenger accident. NAE and NAS analyses and technical investigations often lead to results and findings that have had enormous impact on future policy decisions.

The independent NAE analysis and technical investigation will complement — but not replace — the on-going joint investigation that the USCG and MMS are conducting under their respective governmental investigative authorities.

4. Expanded Authority to Review Exploration Plans

The Obama Administration, in the oil spill response legislation it is submitting to Congress, is proposing to eliminate a 30-day congressionally-mandated deadline for the Minerals Management Service (MMS) to act on exploration plans that oil and gas companies submit. Changing this 30-day mandatory deadline to a 90-day timeline that can be further extended to complete environmental and safety reviews, as needed, would provide MMS more time to conduct additional environmental analysis on an exploration plan.

Is this too little too late? Yesterday, the National Oceanic and Atmospheric Administration announced that it closed 46,000 square miles, or roughly 19 percent, of federal waters which among other things, means no fishing. That is a 12 percent increase in the amount of waters that had been closed in the wake of the rig explosion.

The one bright spot so far is that the oil slick has not yet reached the "loop current" which could take it to the Florida coast and eventually, up the eastern seaboard. But oil could reach Key West as early as Sunday and if and when that happens, all bets are off. Those in charge of oil development in the Gulf, from both government and industry, have been asleep at the wheel and this better be the wake-up call.