Image: Deepwater Horizon Oil Rig on fire
AP
The Deepwater Horizon oil platform burns on April 22 shortly before sinking.
msnbc.com staff and news service reports
updated 1/11/2011 11:34:59 AM ET 2011-01-11T16:34:59

Blaming the massive BP oil spill on government and industry complacency, a White House panel on Tuesday called for a dramatic overhaul of the way the U.S. regulates offshore drilling.

"That it did happen is the result of a shared failure that was years in the making," said panel co-chair and former Florida Sen. Bob Graham.

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In its final report on the disaster, the White House oil spill commission said the U.S. government needs to expand its drilling regulations, as well as set up an independent drilling safety agency.

The seven-member panel unanimously endorsed 15 separate recommendations in the wake of the largest offshore oil spill in U.S. history. Many of the proposals would require action by Congress.

The panel recommendations include:

  • Increasing budgets and training for the federal agency that regulates offshore drilling;
  • Increasing the liability cap for damages when companies drill offshore;
  • Dedicating 80 percent of fines and penalties from the BP spill to restoration of the Gulf;
  • Lending more weight to scientific opinions by other federal scientists in decisions about drilling.

"It is our government's responsibility that exploration and extraction occur in ways that are beneficial to the country," Graham said. "Drilling offshore is a privilege to be earned, not a right to be exercised by private corporations."

If the recommendations are not carried out, "the probability of another failure will be dramatically greater," Graham said.

Environmental groups focused on the advice that 80 percent of fines and penalties from the spill should go to restoring the Gulf. "Absent congressional action, Clean Water Act fines automatically be deposited into the federal treasure," an alliance of eight groups said in a statement Tuesday.

The American Petroleum Institute criticized the panel's report for casting doubt on the entire oil industry based on a single accident.

"This does a great disservice to the thousands of men and women who work in the industry and have the highest personal and professional commitment to safety," said API Upstream Director Erik Milito.

The panel said Congress should draft legislation to create within the Interior Department an independent safety agency and a separate environmental office to evaluate the risks of oil drilling to natural resources.

U.S. regulations for offshore drilling should be at least as stringent as those in other oil-producing nations and require oil companies to adopt safety procedures common elsewhere but lacking in the Gulf, it said.

Activists welcomed the proposed tighter regulations. "These reforms are especially critical as the oil and gas industry is planning to explore in frontier areas such as the U.S. Arctic Ocean, where remoteness, extreme weather and ice conditions make cleanup extremely challenging," said Marilyn Heiman, a staffer with the Pew Environment Group.

Graham placed part of the blame on the federal government, saying the disaster "occurred, in part, because our government let it happen. Federal government oversight utterly failed to provide an acceptable level of protection."

"Our regulators were overmatched," he added. "The Department of the Interior lacked the in-house expertise to enforce existing regulations and was unable to overcome persistent industry resistance to strong, meaningful safety regulation. As Ronald Reagan put it, the key is to 'Trust but verify.' With offshore drilling we have relied too much on trust and not enough on verification."

Kendra Barkoff, a spokeswoman for Interior Secretary Ken Salazar, said that the department already has "undertaken an aggressive overhaul" to increase safety and ensure responsible oil and gas development.

"We have made significant progress over the last eight months, but these reforms must continue," Barkoff said.

The panel also called for an industry-led safety institute, similar to the one created by nuclear power producers after the 1979 Three Mile Island accident.

Oil industry representatives have warned that the nuclear industry model might not be well suited for the ultra-competitive and technologically diverse nature of offshore oil drilling.

The oil industry and government have taken numerous steps in an effort to improve safety since the BP blowout.

BP fired its executive responsible for deep-water wells like the one that blew out in the Gulf of Mexico in September. The company also created a new unit to police safety practices in all of BP's technical operations, while the federal government imposed new regulations and a moratorium on deep-water drilling. It later lifted the moratorium.

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Additionally, Bureau of Ocean Energy Management Director Michael Bromwich established an internal affairs unit to expose improper relationships between companies and regulators. He has vowed to improve inspections, and required operators to show that they are prepared for a potential blowout and massive oil spill.

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

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

Moreover, the oil sector may be able to successfully argue that stringent new rules could hurt domestic production.

The commission, which last week released a chapter from its final report, is the first government-sanctioned group to wrap up its probe of the causes of the BP accident.

Although the commission lacks the authority to establish drilling policies or punish companies, its findings could influence future court proceedings and legislative efforts.

The House Natural Resources Committee and the Senate Energy and Natural Resources Committee are both slated to hold hearings on the commission's report this month.

The full commission report is online at www.oilspillcommission.gov/

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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