BP spill panel to urge tougher oversight on offshore drilling

Tougher federal oversight of offshore drilling is needed, according to a report to be released Tuesday by a commission investigating last year's BP oil spill.

The findings from the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling come amid political disputes over offshore oil-and-gas drilling access, with groups on both sides gearing up for a messaging battle.

The report's rollout will shine a spotlight on drilling policy, with oil prices recently trading at two-year highs and gas prices at $3 per gallon. 

Republicans and pro-drilling Democrats are calling for Interior to resume permitting for deepwater projects and, longer term, open new areas for offshore drilling. 

Environmentalists and many other Democrats, meanwhile, say expanded drilling is unsafe. The Obama administration has backed off plans to sell oil-and-gas leases off the Atlantic Coast and in the eastern Gulf of Mexico.

According to a source familiar with the report, other recommendations will include raising the current $75 million liability cap for economic damages from a spill (although BP has already said its payments won’t be limited by the cap), and steering 80 percent of Clean Water Act penalties from the spill to Gulf Coast restoration. Both actions would require congressional approval.

Elsewhere, the source said, the report will call for better U.S. Coast Guard capacity to respond to a potential spill in icy waters off Alaska’s northern coast and better industry capacity as well; greater scientific input by the National Oceanic and Atmospheric Administration into Interior Department offshore development decisions; and greater funding for Interior’s offshore regulation arm, the Bureau of Ocean Energy Management, Regulation and Enforcement.

The source familiar with the forthcoming report says that the seven-member commission will also call for creation of a new, industry-backed body to help ensure offshore drilling safety practices. William Reilly, co-chairman of the spill commission, has repeatedly cited the nuclear industry’s Institute of Nuclear Power Operations — which was created in 1979 after the Three Mile Island accident — as a model.

Many of the recommendations were telegraphed in the commission's public hearings in recent months.

The Interior Department has reorganized its offshore drilling oversight and issued new safety rules in the wake of last year’s catastrophic BP spill. But the source said the report will call for reforms that go even further.

Interior Department spokeswoman Kendra Barkoff on Monday touted the agency’s work while pledging openness to the panel’s findings.

“As part of these reforms we have issued new rules and guidelines requiring companies to strengthen their safety practices, modernize their equipment, and develop the tools needed to prevent and respond to deepwater blowouts, and we will continue to work closely with industry to make sure they not only meet these new regulations but increase their own safety standards,” she said in a statement.

“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 as we continue this important work,” Barkoff added.

The spill commission released partial findings last week that cited “systemic” problems in the industry, and claimed another disaster could occur absent major reforms by government and oil companies.

Environmental groups are preparing to claim the findings help make the case against expanded offshore drilling, and the call for better Arctic response capacity in particular will likely be used in their campaign against allowing Royal Dutch Shell to drill off Alaska’s northern coast.

But industry groups say they have already moved to increase safety.

Staff for the spill commission are slated to brief Capitol Hill staff Tuesday afternoon, and the co-chairmen of the panel — Reilly and former Florida Sen. Bob Graham (D) — are slated to testify at House and Senate hearings on January 26.

Reilly, a Republican, lead the Environmental Protection Agency under former President George H.W. Bush.