Panel: More reform needed to prevent future spills

[January 11, 2011]  WASHINGTON (AP) -- A presidential panel investigating the Gulf oil spill will call for additional reforms from the oil industry, Congress and the Obama administration that it says are needed to avert another catastrophic accident offshore.

The blowout and rig explosion last April that killed 11 workers and released more than 200 million gallons of oil from the damaged well have prompted changes in the oil industry and at the agency in charge of offshore drilling. But the national oil spill commission will call for an even greater overhaul in federal regulations and industry-led oversight when it issues its final report Tuesday to President Barack Obama, said an official who was briefed on the report but not authorized to speak about it publicly.

Among the commission's recommendations: increasing budgets and training for the federal agency that regulates offshore drilling; increasing the liability cap for damages when companies drilling offshore have a spill; dedicating 80 percent of fines and penalties from the BP spill to environmental restoration in the Gulf; and lending more weight to scientific advice in government decisions about where to permit oil and gas leasing.

Many of the report's conclusions were previewed in earlier discussions by the panel, and at least one -- the suggestion that water pollution fines be used to pay for Gulf Coast restoration -- has been endorsed by the president. For that to occur, Congress would have to pass legislation.

"The improvements in the Interior Department's regulatory capability are, we believe, relatively modest," co-chairman William K. Reilly said during a meeting in early December in which the panel's staff outlined its recommended reforms. "And failure to upgrade the quality of federal regulation would be a national scandal."

The seven-member panel will recommend that Congress draft legislation to further reorganize the Interior Department, which has already adjusted its structure to separate the conflicting functions of collecting revenue from oil companies and ensuring those companies operate safely. Commissioners are also likely to recommend that companies drilling in the U.S. adopt safety procedures that are common in other countries but not required in the Gulf.

Kendra Barkoff, a spokeswoman for Interior Secretary Ken Salazar, said in a statement Monday that the department has "undertaken an aggressive overhaul" that has increased safety and ensured that oil and gas development is done responsibly.

"We have made significant progress over the last eight months, but these reforms must continue and we look forward to reviewing the commission's recommendations," Barkoff said.

On the industry side, the panel will signal its support for an industry-led safety institute, similar to the one created by the nuclear power industry after the 1979 Three Mile Island accident.

Both industry and government have taken numerous steps to improve safety since the incident.

BP's CEO in late September fired the company's executive responsible for deep-water wells like the one that blew out in the Gulf of Mexico. The company also announced a new unit to police safety practices that would have the authority to intervene in all of BP's technical operations.

Also, the federal government swiftly imposed new regulations on the offshore drilling industry following the spill and imposed a moratorium on deep-water drilling that it later lifted.

In addition to these steps, Bureau of Ocean Energy Management Director Michael Bromwich has established an internal affairs unit to expose improper relationships between companies and regulators, has vowed to improve inspections, and has issued new rules requiring operators to show that they are prepared for a potential blowout and massive oil spill.

One of the commission's recommendations could affect Bromwich's job: The panel will recommend that the head of the agency have technical expertise. Bromwich is a former prosecutor.

New drilling proposals will also have to undergo more thorough environmental reviews, as well as meet new safety standards that apply to all deep-water operations.

Still, as the commission has acknowledged, part of the problem has been that Congress and successive administrations have not provided the agency with the resources needed to carry out its mandate. That will be especially tough in a new Congress with a House dominated by Republicans keen on reducing budgets and the regulatory reach of government.

[Associated Press; By DINA CAPPIELLO and HARRY R. WEBER]

Weber reported from New Orleans. Associated Press writer Matthew Daly in Washington contributed to this report.

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