As scheduled, the National Commission on the BP Deepwater Horizon oil spill submitted its report and recommendations to President Obama on January 11, 2011. The National Commission, co-chaired by former Florida Governor and Senator Bob Graham and former Administrator of the Environmental Protection Agency William K. Reilly, was tasked with providing recommendations on how we can prevent—and mitigate the impact of—any future spills that result from offshore drilling.
In essence, the final report warns that dramatic steps are required to prevent another failure and, if that occurs, the public will wonder why Congress, the Administration, and the industry allowed this to happen again. On the other hand, the oil industry quickly struck out against the report, stating that companies with good safety records should not be subjected to costly new rules and warned that a major new set of regulations would slow production and drive up prices. Objections were also raised against the recommendation that the cur rent $75 million cap on liability for accidents be raised by an unspecified amount.
The final 380-page report includes an additional 60 pages of recommendations. The report lays most of the blame for the accident on the three companies responsible for drilling the well and concludes that there are "systemic" problems across the industry. Moreover, many commentators have declared the report as a scathing indictment of the industry in its failure to prepare adequate plans to respond to a major incident, exacerbated by federal oversight that has been grossly inadequate.
Listed below is a summary of the key findings.
- The explosive loss of the Macondo well could have been prevented.
- The immediate causes of the Macondo well blowout can be traced to a series of identifiable mistakes made by BP, Halliburton, and Transocean that reveal such syste matic failures in risk management that they place in doubt the safety culture of the entire industry.
- Deepwater energy exploration and production, particularly at the frontiers of experience, involve risks for which neither industry nor government has been adequately prepared.
- Fundamental regulatory and policy reforms are required to assure human safety and environmental protection, regulatory oversight of leasing, energy exploration, and production.
- The oil and gas industry will also need to take its own, unilateral steps to dramatically increase safety throughout the industry.
- The technology, laws and regulations, and practices for containing, responding to, and cleaning up spills lag behind the real risks associated with deepwater drilling.
- Government must close the existing gap and industry must support, rather than resist, that effort.
- Scientific understanding of environmental conditions related to deepwater drilling are inadequate.
So what does all this mean? Will the cognizant agencies implement new regulations and policies, and will Congress enact laws as a result of these recommendations? Indeed, the White House noted in a statement, "In keeping with the series of recommendations included in the commission report, our Administration has already taken important steps to implement aggressive new reforms for the offshore oil and gas industry . . . and will take the panel's additional recommendations into account as it adopts additional changes." The White House went on to say that: "The mistakes and oversights by industry as well as government must not be repeated."
To answer these questions, it must be kept in mind that the Bureau of Ocean Energy Management ("BOEM") has been busily moving forward with changes and new requirements to provide for a safer offshore regime following this incident. In addition, high levels of the Administration will most assuredly review and consider implementation of many of these recommendations. Similarly, the Coast Guard will also be reviewing this report and its recommendations in consideration of future improvements.
Looming over the horizon, however, is the release of the much anticipated results of the joint Coast Guard and BOEM investigation, which continues to develop conclusions and recommendations as they relate to the Deepwater Horizon explosion and loss of life. As of the publication of this article, the joint investigation's final hearing to review the results of the blowout preventer ("BOP") stack forensic testing had been delayed until the week of April 4. The deadline for the investigation team to submit its final report to Coast Guard Headquarters and BOEM is now July 27, 2011. Once the final report is released to the public, there will be much interest from federal agencies, the public, and Congress to compare the final report and recommendations from the National Commission and the joint investigation before determining future agency actions and legislation.
Another factor that could affect future actions will be the decisions that the Department of Justice ("DOJ") takes once it has seen a final draft of the joint investigation report. It is expected that DOJ will review the report and move forward with its grand jury investigation as it will be able to review the findings in the draft report to confirm that its prosecution theories will not conflict with the investigative findings. Based on what we know today, we would expect DOJ to start subpoenaing individuals sometime after they review the draft report and then move forward with criminal charges against the companies it decides to target sometime in the second or third quarter of 2011.
Meanwhile, the release of the final report has rekindled interest in Congress. Various Congressional hearings have already been held and others are being scheduled. A number of Senators and Representatives have indicated they intend to introduce legislation incorporating many of the National Commission's recommendations, including raising the ceiling on damages. Some have indicated that it is time to take action on the oil spill legislation that was passed by the House last year, H.R. 3534, the Consolidated Land, Energy, and Aquatic Resources Act of 2009 (the "CLEAR Act"), or provisions of the consolidated Senate oil spill version that failed to pass, S. 3663, the Clean Energy Jobs and Oil Spill Accountability Plan.
Others are taking a more neutral approach and have indicated that they would study its report and propose legislation if appropriate. The fact of the matter is that the National Commission was under a tight deadline and failed to address a number of key matters, including why workers on the rig made the decisions they made before the explosion and why the BOP failed because of uncompleted tests.
The key to what action Congress may take is the fact that the joint investigation report is not completed, and it is unclear exactly what action may be taken by DOJ. As stated during a hearing of the House Transportation and Infrastructure Subcommittee on February 11, 2011 by the Chair of the Subcommittee, Representative Frank LoBiondo (R-NJ) and Representative Don Young (R-AK), the joint report from the Coast Guard and BOEM is likely to offer differing opinions and recommendations than the National Oil Spill Commission report, and they want to be able to take into consideration all suggestions before drafting any legislation.
In conclusion, the National Commission Report is important and it should, and will, be taken into consideration by the cognizant federal agencies and Congress, but it is premature to make any final conclusions until the joint investigation's report is released and action taken by DOJ is assessed.
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