Air Date: Week of January 14, 2011

Almost nine months after the Deepwater Horizon oil rig exploded off the coast of Louisiana, Congress has yet to pass legislation to reform industry regulations. (The Coast Guard)

Now that the commission charged with investigating how to avoid another BP oil spill has released its findings, all eyes are on Congress. But, as Washington Correspondent Mitra Taj reports, previous oil spill bills failed last year when the oil was still gushing in the Gulf, and passage in the new, more conservative Congress, will be difficult. Host Bruce Gellerman and Senior Correspondent Jeff Young discuss the report’s recommendations for coastal restoration and the possibility of Cuba drilling near Florida waters.

Transcript

GELELRMAN: From the Jennifer and Ted Stanley Studios in Somerville Massachusetts, it’s Living on Earth. I’m Bruce Gellerman. Big Oil needs Big Changes, or else expect more big problems like the BP disaster in the Gulf of Mexico. That’s the warning from the presidential commission on the Deepwater Horizon oil spill.

The commission just released its novel-length final report finding systemic safety failures by the oil drilling companies in the industry and lax oversight by federal agencies made the country’s biggest oil spill almost inevitable. Former Florida Governor and U.S. Senator Bob Graham was the commission’s co-chair.

GRAHAM: If dramatic steps are not taken, I’m afraid that at some point in the coming years another failure will occur and we will wonder why did the Congress, why did the administration, why did the industry, why did the American people allow this to occur again.

GELLERMAN: To prevent another disaster, the commission has some specific and potentially costly recommendations. Living on Earth’s Jeff Young has been looking into them, and, Jeff, what are some of the highlights?

YOUNG: One big one here is the commissioners want the oil industry to create and pay for its own safety institute. Now this is similar to what the nuclear industry did after the Three Mile Island accident.

The report says the federal government needs even more changes in oversight, even though the Interior Department already did away with the old office that had rubberstamped the BP drilling requests - the Minerals Management Service.

GELLERMAN: Oh yeah, the MMS. That was the agency that they did away with after officials were found to be literally in bed with the industry.

YOUNG: Right.

GELLERMAN: So it’s gone. Did the commission think that change wasn’t enough?

YOUNG: The commissioners feel that the system that replaced MMS still lacks sufficient independence. And the report calls for a completely new body inside the Interior Department to oversee safety and evaluate new drilling permits.

And it says the person in charge should be appointed to a term, kind of like the federal reserve chairman is, that would be to insulate safety decisions from political influence. The report also calls for more money for inspectors and a permitting process that really looks into the risks of drilling in a specific area. And commission co-chair Graham says that would take a lot more input from science.

GRAHAM: Our investigation has also demonstrated that science has not been given a sufficient seat at the table. Actually, I think that is a considerable understatement. It has been virtually shut out.

GELLERMAN: Jeff, I know you have been investigating what these changes might mean on ground for the Gulf coast and I want to talk to you about that, but first let’s get some reaction to the commissions recommendations from Capitol Hill. The Obama administration could put some of these proposals in place on its own, however, the major ones will need action by Congress. But as Living On Earth’s Washington correspondent Mitra Taj tells it, that could be tough.

TAJ: Many of the recommendations of the President’s oil spill commission are nothing new on Capitol Hill. Congressman Ed Markey of Massachusetts pushed similar reforms through the House last year in the wake of the BP oil disaster. The legislation never got anywhere in the Senate, but now, presidential report in hand, Markey says he’s going to give it another shot.

MARKEY: There were many people who argued that the legislation we passed last July happened too quickly, without a comprehensive study. Well, now the comprehensive study has been completed, and I think we have a responsibility to put on the books historic legislation so that the regulations are there that guarantee to the American people that it never happens again.

TAJ: But in this new, more fiscally conservative Congress, one of the biggest challenges will be finding enough votes to secure money to pay for some of the reforms like making sure offshore oil rigs are thoroughly inspected by trained workers. Marilyn Heimen of the Pew Environment Group.

HEIMAN: Right now there’s one inspector for every 54 rigs in the Gulf of Mexico. That’s just not enough. And so, if Congress doesn’t fund those things then we are still in the same place as we were with the Gulf spill.

TAJ: But Democrats, like Markey no longer hold the majority in the House. And a Democrat no longer holds the gavel of the Natural Resources Committee - the powerful body that has jurisdiction over offshore oil production. That chairmanship now belongs to Doc Hastings, a Republican from Washington State whose top campaign contributor in the last election was the oil and gas industry. Hastings doesn’t want to slow down drilling, but he says some kind of reform is needed.

HASTINGS: Oh, I don’t think there’s any question about that because, I think the American people would want a response, so we’ll proceed in that manner.

TAJ: Hastings says he’s open to some of the Commission’s suggestions like creating a new agency to oversee safety in offshore businesses. He says he’ll even consider boosting the budget of the Department of Interior to strengthen its regulatory capacity.

HASTINGS: The question is where does the money come from, and I would suggest that that money should come from the existing revenue stream that comes from offshore drilling. You know, those are the things that we will look at.

TAJ: The president of the lobbying group the American Petroleum Institute, Jack Gerard, says don’t look to oil and gas companies for new money. He says more taxes are a bad idea, and removing existing tax breaks for the industry could drive business to other countries.

GERARD: The public, the voting public, made very clear in November - they want their policy members focused on economic recovery and job creation. Any decisions done unilaterally by an executive branch or done by a Congress that destroys jobs and discourages economic recovery I don’t think will be well received by the public.

TAJ: That’s an argument his lobbyist will be making to members of Congress as House and Senate committees gear up to discuss the commissions recommendations in hearings later this month.

GELLERMAN: That’s Living on Earth’s Mitra Taj on Capitol Hill. Back now to LOE’s Jeff Young for more on the presidential commission’s recommendations. So Jeff, the Gulf Coast and especially Louisiana were most affected by the disaster. You spent a lot of time there reporting during the spill from that area, and you’ve been working the phones this week - what are you hearing from your sources now?

YOUNG: The reaction is two-fold, really. There’s a lot of concern about the effects on the oil industry, which is very important to the local economy. If this new permitting process they’re talking about turns out to be very time consuming or very costly, what does that mean for drilling decisions? What does that mean for the jobs that depend on those drilling decisions?

There’s also, though, a lot of what I would call cautious optimism about these recommendations. It’s possible that this could not only make future drilling safer but could also address a chronic problem associated with drilling, and that’s the erosion of the wetlands in southern Louisiana.

GELLERMAN: What’s the oil industry have to do with erosion? And what does this report have to say about its responsibilities?

YOUNG: The report has a very thorough chapter on the need to go beyond just trying to clean up spilled oil and really get serious about restoring the coastal ecosystem. That way, you could make it more resilient so the marsh and all the life that depends on it can bounce back from this insult. Now, as many of our listeners probably know the land has basically been melting away into the Gulf for decades.

That’s partly due to the way the Mississippi River has been walled off from the wetlands, blocking the river sediment that would replenish the land. But Aaron Viles with the Gulf Restoration Network, a conservation group in New Orleans, points out that the oil industry shares a lot of the blame.

VILES: We’re losing a football field of coastal wetlands every 45 minutes. 40 to 60 percent of the reason that’s occurring is because of oil industry. They have dredged 10,000 miles of pipeline canals accessing their oil and gas fields in the marsh, and that has just sliced and diced our wetlands and put them in a state of crisis.

GELLERMAN: So what’s the commission recommending about the restoration?

YOUNG: More money, basically. The commissioners say, look, the issue has been studied sufficiently, they know what needs to be done, there just hasn’t been the money to do it. Well, now there is in the form of fines BP is going to pay. The report says 80 percent of the money BP pays for Clean Water Act violations should go straight into coastal restoration projects.

But making that happen is going to require actions by Congress. The way the law is now, that money goes into a general fund, the Oil Spill Liability Trust Fund.

GELLERMAN: How much money are we talking about?

YOUNG: Billions - maybe tens of billions. The report gives us a range of five to 21 billion dollars in possible civil fines. The range is because it depends on just what BP and the other companies end up charged with. If there is a finding of gross negligence by the companies the fines get multiplied by four. And then of course if criminal charges come, well, we’re talking about a whole other pot of money.

GELLERMAN: Hmm. Now that’s something the commission didn’t directly address but it has been on a lot of people’s minds…the possibility of BP doing the perp walk. Has this report found things that federal prosecutors might find useful?

YOUNG: It has. Even though that’s beyond the scope of what the commission was asked to do, an expert I spoke with sees ample evidence in this report to support criminal charges. And, you know, that’s the other shoe everyone’s kind of been waiting to see drop ever since the Justice Department launched its criminal investigation, very publicly, last summer.

I spoke with a law professor at the University of Michigan, David Uhlmann. Professor Uhlmann worked in the Justice Department’s environmental crimes section for 17 years. And after reading this report he says he’s very confident of criminal charges and not just against BP.

UHLMANN: BP will pay the largest fine ever imposed for any kind of corporate crime in U.S. history and it’s increasingly likely they will charge Halliburton as well. Halliburton had a whole host of issues with the cement work that it did, and that cement work has been singled out for particularly harsh criticism in the presidential commission report.

YOUNG: But you know Bruce, the funny thing is after this thing came out, even with all this swirling around these companies, their stock prices more or less held steady or went up. And the price of oil shot up that day, by two dollars a barrel.

GELLERMAN: And the higher the price of oil, the more companies will want to go into deeper waters.

YOUNG: Exactly. The economics pretty much compel the industry toward riskier drilling, including deeper water. And an interesting thing the report points out is - it’s not just U.S. deep waters. The Gulf of Mexico is shared by three countries - including Mexico and Cuba - who are looking to deeper water.

GELLERMAN: Cuba?

YOUNG: Cuba. There’s been a lot of talk about this and now it’s moving from talk to action. Kirby Jones follows this very closely. He’s a consultant who works with companies who want to do business with Cuba. He says oil exploration is imminent.

JONES: Well, it’s gone beyond a possibility and appears to be a reality this year. About a dozen countries and companies have entered into agreements to jointly explore in Cuba’s waters in the Gulf and there is a rig, deepwater rig that was constructed in China and is expected to be in Cuban waters this summer.

YOUNG: And Mr. Jones says that rig could be about 60 miles from the Florida coast.

GELLERMAN: Ooh! That’s closer than the United States permits drilling in the Gulf of Mexico now.

YOUNG: It is. It’s a profound irony that Florida has fought so hard to keep drilling away from their coast, and now Cuban drilling could be even closer to their coast.

GELLERMAN: Well, sounds like these recommendations could have impacts far beyond the Gulf of Mexico, Jeff.

YOUNG: Absolutely. You know, Alaskan communities are paying very close attention to what this might mean for industry plans to drill in Arctic waters, for example.

GELLERMAN: Living On Earth’s Jeff Young. Thanks a lot Jeff.

YOUNG: You’re welcome.

 

Links

Click here for the Oil Spill Commission's findings.

Senator Bob Menendez of New Jersey says he'll reintroduce his bill to raise the oil spill liability limit for companies.

Read Congressman Hasting's statement about the report.

To learn more about Congressman Markey's previous oil spill legislation, click here.

Republican Congressman Fred Upton, the new chair of the Energy and Commerce Committee, said he was "disappointed" in the Commission's findings.

Click here to read a statement from White House press secretary Robert Gibbs.

Web extra interview with Univ. of Michigan law professor David Uhlmann, who was formerly in charge of the environmental crimes section of the Dept. of Justice.