http://www.cnn.com/2010/POLITICS/06/17/mms.review/

By the CNN Wire Staff
June 17, 2010 1:00 p.m. EDT
Office of Inspector General seeks “gaps, weaknesses and opportunities for improvement”
(CNN) Washington — The House Subcommittee on Energy and Mineral Resources questioned high-ranking officials from government agencies, nongovernmental organizations and private companies Thursday about how to best divide up the troubled Minerals and Management Service, the government agency that oversees offshore drilling, which has come under greater scrutiny since the Deepwater Horizon incident on April 20.
Acting MMS Director Bob Abbey was one of the witnesses. He said the Gulf oil spill disaster has forced everyone involved with offshore drilling to reconsider their preparedness.

“There’s no doubt that the spill response plans that have been previously submitted by the operators in the outer continental shelf will need to be reviewed and amended based upon the lessons that we now have learned,” said Abbey. “So the lessees and the operators will be required to go back, revisit their spill response plans and to come in with something that will give not only those of us who are now working in the Minerals Management Service, but the American public, a little more confidence about their abilities to control or contain any future spills,” he said.

In May, Interior Secretary Ken Salazar unveiled plans to divide the agency’s energy development, enforcement and revenue collection divisions, saying they have “conflicting missions.”

The Interior Department’s Office of Inspector General is “presently in the process of identifying gaps, weaknesses and opportunities for improvement in MMS operations and regulations, with a focus on the permitting process, the inspections and enforcement programs, environmental and safety requirements, and the regulations governing post-incident review or investigation,” the department’s acting inspector general told the subcommittee Thursday.

Mary Kendall said any plan moving forward “needs to be well thought out and considered before hasty action is taken” to avoid “unexpected and unintended consequences” in a reorganization.

“While the Office of Inspector General has not, in the recent past, conducted any rigorous review of MMS’ governing regulations, during the course of other work that the OIG has done we have gained an understanding of some of the regulatory challenges that face MMS,” said Kendall.

Democrat Jim Costa, the subcomittee chairman, said, “When it comes to regulations, we must, I think, ask the hard questions on how we strike a proper balance between the role of government and the role of the private sector.”

In late May, MMS Director Elizabeth Birnbaum left the agency under a cloud after a series of allegations of misconduct by MMS employees. A report by the Interior Department’s inspector general revealed that federal inspectors overseeing oil drilling in the Gulf of Mexico accepted meals and tickets to sporting events from companies they monitored.
Salazar called the allegations of MMS corruption “evidence of the cozy relationship between some elements of (the agency) and the oil and gas industry.”
He pledged to follow through with the Interior Department inspector general’s recommendations, “including taking any and all appropriate personnel actions including termination, discipline and referrals of any wrongdoing for criminal prosecution.”

From: DOI_Updates [mailto:DOI_Updates@ios.doi.gov]
Sent: Monday, June 21, 2010 9:31 AM
Subject: Interior Issues Directive Strengthening Blowout Prevention Requirements for Offshore Oil and Gas Operations
                                                    
                                                                                                                                           Date: June 18, 2010

 Washington, DC – As part of Secretary of the Interior Ken Salazar’s continuing agenda to strengthen safety and oversight of offshore oil and gas operations, the Department of the Interior today issued a directive to oil and gas lessees and operators requiring them, when they file for a new drilling permit, exploration plan, or development plan, to submit information that addresses the possibility of a blowout and details steps they are taking to prevent blowouts. 

The directive reverses a policy adopted in 2003 and included in a 2008 “Notice to Lessees” under the previous Administration that exempted many offshore oil and gas operations in the Gulf of Mexico from submitting certain information – to accompany exploration or development plans – about a blowout scenario and worst-case discharge.

 “The BP oil spill has laid bare fundamental shortcomings in the oil and gas industry’s ability to prevent and stop catastrophic blowouts,” said Secretary Salazar.  “While the challenges of intervening in a catastrophic blowout are significantly greater in deepwater than in shallow water, all operators should provide basic information about potential blowouts, and steps that are being taken to reduce the possibility of a blow out.” 

Added Salazar, “this is basic information that applicants should be able to provide; it should not delay permitting of appropriate shallow water drilling.”

 The Notice to Lessees (“Blowout Scenario NTL”) requires oil and gas operators to submit information for Exploration Plans (EP), Development and Production Plans (DPP) and Development Operations Coordination Documents (DOCD) that includes:

·        An estimated flow rate, total volume, and maximum duration of the potential blowout;
·        A discussion of the potential for the well to bridge over, the likelihood for surface intervention to stop the blowout, the availability of a rig to drill a relief well, and rig package constraints;
·        Estimates of the time it would take to contract for a rig, move it onsite, and drill a relief well; and
·        A description of the assumption and calculations used to determine the volume of a worst case discharge scenario.

The Blowout Scenario NTL is the latest in a series of reforms to the oversight and management of offshore energy resources and activities, including:

·        Implementation of immediate safety requirements for offshore oil and gas operations;
·        Establishing a 6-month moratorium on deepwater drilling;
·        Appointing Michael R. Bromwich to lead reforms to oil and gas oversight and management;
·        Postponing consideration of potential exploratory drilling in the Arctic.

Secretary Salazar said that the Department of the Interior, together with the Council on Environmental Quality, is also conducting a review of the Minerals Management Service’s procedures under the National Environmental Policy Act.

On June 2, the Department of the Interior announced that offshore lessees and operators in federal waters would be required to submit additional safety and environmental information for exploration and development plans.  The Blowout Scenario NTL and NTL No. 2010-N05, Increased Safety Measures for Energy Development on the OCS formally require offshore lessees and operators to submit the additional information required.  As a result of ongoing investigations and safety and environmental reviews, Interior may issue further notices to lessees requiring additional information for exploration or development plans. 

Special thanks to Richard Charter.

June 15, 2010

Residents from around Tampa Bay listen to experts try to assess local and regional fallout from the disaster.
By Kameel Stanley, Times Staff Writer
ST. PETERSBURG – They came by the hundreds, packing the Palladium Theater until it was at capacity. Outside, dozens more waited, trying to get a seat.

The gathering felt like a college lecture or academic conference, but the audience Tuesday at the downtown facility wasn’t made up of students or industry insiders.

Instead, about 950 people from all over the Tampa Bay area came together for a community forum on one thing: the oil spill in the Gulf of Mexico.

“It hasn’t stopped,” said Brenda Archer, 58. “We want to know why.”

Archer, a high school English teacher, and her husband, David, drove from Tampa for the three-hour event, which featured three panels of experts.

The audience got an overview on how the spill happened, the media’s perspective and possible solutions.

“It’s almost hard to get your hands around it,” Archer said.

Chuanmin Hu, an oceanography professor at the University of South Florida who has helped coordinate some of the school’s research trips into the gulf, assured the audience that for the short term, at least, the oil does not appear to be a threat to this region.

But the problems aren’t over, he and other panelists said.

“We are extremely concerned about the future,” said Bill Hogarth, dean of the USF College of Marine Science. “Bottom line is, there is subsurface oil.”

The college’s next focus is to study the effects on the food chain, he said.

“This isn’t a sprint,” said fellow panelist Laurie MacDonald of Defenders of Wildlife. “This is a marathon of work that will go on for a long time.”

Even those who have been watching the situation closely were surprised by some of the things they learned.

Dawn and Bobby Aylesworth of St. Petersburg, who have a family wholesale fishing bait distribution business, said they were struck by the magnitude of the spill and its long-term impact.

They heard during the forum from D.T. Minich, executive director of Visit St. Pete/Clearwater, who said that hotel and restaurant bookings in Pinellas have already dropped 20 to 30 percent.

Tourism is a $6 billion industry for the county, Minich said.

“It was quite a shock,” Bobby Aylesworth said. “We’re very concerned about this.”

In between panels, the audience watched President Barack Obama’s live address to the nation about the spill.

They cheered when the president talked about the need for the nation to change its energy habits.

“It’s not going to be easy,” panelist David Friedman, research director for the Clean Vehicles Program, told the crowd afterward.

Still, some said they hope the forum will spark a new commitment from the public about environmental issues.

“The attention span of the public can be pretty short. Š It took a disaster like this to get people active, and that’s too bad,” said Kim Kandz, who along with her husband is active in St. Petersburg Audubon. “Let’s see what kind of action comes of this.”

Special thanks to Richard Charter

http://www.latimes.com/news/nationworld/nation/la-na-oil-nepa-20100618,0,74784.story
The pleas come as the White House Council on Environmental Quality is reviewing whether the federal drilling watchdog has appropriately followed the National Environmental Policy Act.

The drilling rig Discoverer Enterprise recovers oil from the leaking Deepwater Horizon site in the Gulf of Mexico. (James Edward Bates, Associated Press / June 13, 2010)
By Jim Tankersley and Jennifer Martinez
June 17, 2010 | 7:33 p.m.

Reporting from Washington – Oil and gas companies have told the Obama administration that environmental regulations for deep-water drilling rigs do not immediately need to be toughened because the Deepwater Horizon explosion was an unforeseeable event, not a failure of federal oversight, according to documents filed last week with the White House.

The industry’s chief lobbying arm, the American Petroleum Institute, submitted written comments to the White House Council on Environmental Quality. The council is reviewing whether the federal Minerals Management Service – the now-splintered and much criticized agency charged with regulating oil drilling – has appropriately conducted reviews mandated by the National Environmental Policy Act, known as NEPA.

“One accident does not mean that the practice and procedures of MMS are inadequate to implement NEPA’s requirements, especially when the cause of the accident has yet to be determined,” wrote the lobbying group, which represents 400 oil and gas companies, including BP.

Anadarko Petroleum, which owns a quarter share of the leaking BP well, wrote in a separate filing that it believes the government’s enforcement of environmental laws has not “in any way played a role” in the Gulf of Mexico spill.

Since the April 20 explosion, the MMS has drawn fire from environmentalists for routinely exempting hundreds of offshore drilling projects from detailed environmental analysis, including the one for the Deepwater Horizon rig. The practice is known as granting “categorical exclusions.” That practice is a specific focus of the White House review.

President Obama has assailed the “cozy relationship between the oil companies and the federal agency that permits them to drill,” referring to the MMS. He said his administration would close loopholes that allow oil companies to bypass environmental reviews.

Last month, Interior Secretary Ken Salazar announced that he would break MMS into three arms, separating environmental reviews from drilling leasing. Salazar this week appointed former Justice Department Inspector General Michael R. Bromwich to oversee the restructuring.

Before the Deepwater Horizon explosion, the MMS had all but ruled out the possibility of a catastrophic spill on any gulf rig, calculating that there was only a 3% to 5% chance of a blowout exceeding a total of 1,000 barrels.

Scientists estimate that the busted BP well is gushing up to 60,000 barrels a day.

The service based those risk assessment calculations on decades of drilling precedent, which indicated that major blowouts were rare. It failed to update those calculations to reflect the increased technological hurdles and blowout dangers of deep-water drilling, which proliferated in the late 1990s.

MMS officials said last month that they trusted the oil industry to develop new deep-water drilling techniques.

In their comments to the White House, the lobbying group and Anadarko defended the MMS’s risk calculations and its use of categorical exclusions. They suggested that eliminating categorical exclusions would burden drilling companies with another level of bureaucracy.

They implored the White House to delay issuing any new NEPA rules for drilling.

“The current process provides ample opportunity for both public input and review of the potential environmental consequences” of drilling, Anadarko wrote.

Paired with other industry filings presented to the White House’s environmental quality council before the April 20 disaster, the oil industry comments show almost no change in their posture on environmental oversight.

In a September 2009 letter to an Obama administration task force reviewing ocean use policies, BP said “effective controls are in place and being enforced to appropriately manage water resources in the ocean.”

The company warned against implementing “new designations such as protected areas or oversight groups that duplicate, add layers to or undermine current regulation, and that limit or discourage industrial use and development without significant benefit to marine ecology or national priorities.”

BP’s letter was echoed by oil industry trade groups. In statements made by American Petroleum Institute Senior Policy Advisor Lakeisha Harrison in August and October 2009, the trade group praised the existing MMS leasing program and resisted changes to ocean management that could restrict drilling.

The Chamber of Shipping of America, which counts ConocoPhillips and Chevron Shipping Co. as members, also voiced concerns.

The oceans policy task force has not yet released its final report. The public comment period for the White House review of MMS environmental regulation procedures was scheduled to close Thursday.

Asked about the oil industry filings, the communications director for the Council on Environmental Quality, Christine Glunz, said on Thursday that the council “receives input from a wide variety of people and interests and considers all comments we receive while developing new policy approaches.”

jtankersley@latimes.com

jenmartinez@tribune.com

Special thanks to Richard Charter

http://article.nationalreview.com/print/?q=NTE2ZDFiYWNmOGU0ZWExOGM1M2IwMTg5ZTFlNjJjOWM=
JUNE 7, 2010 4:00 A.M.
 
When the Deepwater Horizon first started gushing oil, many considered the incident an example of private enterprise having no regard for the environment. However, it is becoming clear that government was involved from the start, is in charge now (as President Obama himself tells us), and cannot do much about the problem. So is there any way to address this?

Yes. We need to move away from the crony corporatism that has characterized much of the nation’s energy sector during the last century or so. It would be foolish to promise that market-based reforms would prevent another disaster, but they would be more effective than yet more meaningless bureaucracy. There are several reasons for this.

First, the existing government regulations have been counterproductive. They pushed energy companies offshore – miles and miles offshore. America is a resource-rich country, and unlike other resource-rich countries, we have locked up most of our resources so we can’t use them. While the Gulf of Mexico holds about 44 billion barrels of oil in undiscovered reserves, according to Minerals Management Service (MMS) estimates, the continental U.S. has slightly more onshore. The difference is that we are allowed to explore and extract the offshore reserves, while it is extremely difficult to get permission to do the same on land. As a result, most exploration takes place offshore, where the consequences of a spill are so much greater.

Various restrictions also push the oil industry into deep waters, where it is so much more difficult to fix a blowout than in shallow coastal waters, where there is still plenty of oil. Allowing more onshore and shallow-water drilling would lessen the chances of an accident like this considerably.

Second, government and business corrupt each other. BP told the MMS that it could handle an event like this with ease with proven technology. The MMS took BP’s word for it. Now, as they attempt ad-hoc fixes, it is clear that both BP and the federal government were unprepared for such an event. Both are at fault.

As experience shows, when regulators and representatives from a regulated industry have day-to-day contact, they grow into a cozy relationship. This sort of state corporatism, where legislators, regulators, and industry become almost symbiotic, is hugely damaging to the polity and the economy.

The best way to end this relationship is for industry to no longer see government as a source of favors and privileges. The way to do this is by cutting back those rules that entice both entities into this relationship. For example, due to antitrust rules, companies seek to win favor with government regulators, rent-seeking industries get more income from government than from ordinary customers, companies divert important resources to support hortatory government policy (“Beyond Petroleum”), and so on. Dismantling the corporate state, so that corporate discipline comes from competition rather than from regulators’ largesse, is the best way to end this coziness. It will also lower barriers to entry and spur innovation. All of these effects will provide greater protections for consumers and the environment.

Third, those involved in potentially devastating activities must bear the costs of their failures. After the Exxon Valdez spill, legislators and industry got together and agreed to a cap on damages in exchange for an increase in tax payments. Generally, damage caps create what is known as “moral hazard,” lessening the consequences – and thus increasing the likelihood – of a potentially damaging act. There are good reasons for having shareholders limited in their liability, but there are few convincing reasons to shield corporations the same way. If ending that deal means lower tax revenues, so be it.

Finally, the Gulf has become a huge “tragedy of the commons.” No one stood ready to protect the sea – certainly not the federal government – because no one owned it. Yet there are many ways to invest the ocean with property rights. Individuals could own oceanic resources such as reefs and even shares in fish stocks. Not only would such property rights give owners a real incentive to ensure that these resources grow and develop, they give the owners an incentive to defend those rights. Thus, if a fishery or reef is threatened by a risky oil installation, the owner could take legal action to ensure that the risk is lessened. At the moment, that job is the government’s, and the government doesn’t do it. Having those most affected account for these risks would do much to internalize the external costs of oil drilling.

Some of these reforms might make oil drilling more expensive, while others would reduce its cost. But taken together, they would rebalance the oil industry’s priorities to make it more responsive to its neighbors and less invested in currying government favor.

– Iain Murray is vice president for strategy at the Competitive Enterprise Institute.

Special thanks to Richard Charter