Obama rebukes firms involved in spill; orders MMS reforms

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, May 17 -- US President Barack Obama on May 14 harshly criticized companies involved in the ill-fated Macondo well in the Gulf of Mexico for refusing to accept responsibility during congressional hearings for the Apr. 22 accident and subsequent oil spill. The president also said it is time to end what he considers a “cozy relationship” between the oil and gas industry and the US Minerals Management Service.

Obama noted that BP, which holds the lease, has agreed to pay for cleaning up the spill, and he promised to hold the company to its commitment. “I have to say, though, I did not appreciate what I considered to be a ridiculous spectacle during the congressional hearings into this matter,” he said. “You had executives of BP and Transocean and Halliburton falling over each other to point the finger of blame at somebody else. The American people could not have been impressed with that display, and I certainly wasn’t.”

Obama said he understood legal and financial issues are involved and a full investigation will reveal what exactly happened. “But it is pretty clear that the system failed, and it failed badly. And for that, there is enough responsibility to go around, and all parties should be willing to accept it,” the president said.

“That includes, by the way, the federal government,” the president continued. “For too long, for a decade or more, there has been a cozy relationship between the oil companies and the federal agency that permits them to drill. It seems as if permits were too often issued based on little more than assurances of safety from the oil companies. That cannot and will not happen anymore. To borrow an old phrase, we will trust but we will verify.”

He noted that US Interior Secretary Ken Salazar has recognized such problems since he took office. “Oftentimes he has been slammed by the industry, suggesting that somehow these necessary reforms would impede economic growth,” Obama said. “Well, as I just told Ken, we are going to keep on going to do what needs to be done.”

Outlines actions
Obama said he had asked Salazar to conduct “a top-to-bottom reform” at MMS, the US Department of the Interior agency responsible for offshore federal resource management, and that the secretary already had announced that MMS’s safety and environmental enforcement responsibilities would be separated from the agency’s leasing, permitting, and revenue collection activities. DOI and the White House Council on Environmental Quality also will jointly review MMS’s procedures involving the National Environmental Policy Act, particularly when it comes to issuing categorical exclusions from a full environmental assessment such as the one BP received for the Macondo well, Obama said.

He reiterated that US oil production remains part of his administration’s overall energy strategy which he said emphasizes clean, renewable sources more than his predecessors’. “But it’s absolutely essential that going forward we put in place every necessary safeguard and protection so that a tragedy like this oil spill does not happen again,” he maintained.

Congressional Democrats applauded the president’s remarks. “We continue to have many questions about the role [MMS] may have had in this economic and ecological disaster. In the meantime, I support Secretary Salazar’s plan to separate [its] regulatory and royalty-collecting functions,” said US Rep. Bart Stupak (Mich.), who chairs the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee, which held a hearing to examine the accident and spill.

“I was also pleased to hear President Obama’s call for a review of the MMS National Environmental Policy Act procedures for oil and gas exploration and development on the [US] Outer Continental Shelf,” Stupak added. “If we are going to drill in environmentally sensitive areas we must be certain that all possible precautions are taken to protect these areas—and that includes thorough and conclusive environmental and safety reviews by the federal government.”

“The inadequacy of BP’s and Transocean’s emergency response, and reports that BP may have failed to adopt adequate ‘blowout’ measures are deeply troubling and suggest problems with MMS’s approach to offshore drilling,” said US Rep. Edolphous Towns (NY), who chairs the Oversight and Government Reform Committee as he announced its own investigation on May 14. “We need to understand if proper safeguards were in place before the Deepwater Horizon spill occurred, and if not, we need to know why.”

‘Institutional conflict’
Towns said he has written Salazar asking information on MMS’s management, operations, and effectiveness, including matters relating to the accident and spill. He said he also is interested in what he termed “revolving door” issues, conflicts of interest within MMS, and its apparent lack of offshore rig oversight. He also sees what he considers an institutional conflict of interest which may have emphasized collecting royalties over ensuring safety because nearly half the agency’s annual budget comes from fees and rentals which lessees pay. “In other words, while MMS has the power to shut down unsafe operations, it has an enormous incentive to keep the oil flowing,” Towns said.

One key congressional Republican also endorsed Obama’s call to reform MMS. US Rep. Darrell E. Issa (Calif.), the Oversight and Government Reform Committee’s ranking minority member who requested that the committee investigate the accident on May 3, said on May 14 that the president “today acknowledged what has been obvious but ignored for many years: MMS has been an agency in crisis for the better part of the past three administrations.” Eighteen reports compiled by the Government Accountability Office and DOI inspectors general in the last 10 years show an “extensive history of corruption and dysfunction” at MMS, he added.

“I agree with the president that this crisis should not be used as means to further any political showboating which is why I am committed to conducting a thorough and nonpartisan examination of [DOI] and MMS,” said Issa, who aggressively pushed the subcommittee to investigate uncollected federal offshore oil and gas royalties in 2005. “Senior officials will need to answer tough questions about what appears to be just another example of failed oversight and systemic unaccountability.”

GOP members of the Oversight and Investigations Subcommittee expressed their dismay at its May 12 hearing at the absence of administration officials as witnesses to answer questions about MMS and its offshore minerals management policies. Ranking Minority Member Michael C. Burgess (Tex.) said that companies which were involved “could have exercised more care up-front, but I have several troubling questions to ask the officials who prepared” the Macondo well’s drilling permit.

“The federal agency, which simply stamped and approved this document, is where some of the real problems lie,” he declared. John Sullivan (Okla.) also expressed disappointment that DOI and MMS officials had not been asked to testify.

Contact Nick Snow at nicks@pennwell.com.

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