Reports Start Flowing on BP's Gulf Oil Disaster

9/14/2010

New reports on BP's April 20 Deepwater Horizon oil spill disaster detail problems with oil drilling operations and regulation, including environmental reviews, agency approvals, and industry oversight.

On Aug. 16, the White House Council on Environmental Quality (CEQ) released a report on the former Minerals Management Service's (MMS) National Environmental Policy Act (NEPA) policies and practices related to outer continental shelf oil and gas production. The CEQ review and report were prompted by the April 20 BP Deepwater Horizon oil rig explosion and subsequent underwater oil and gas spill.

MMS, renamed and restructured as the Bureau of Ocean Energy and Management, Regulation and Enforcement (BOEMRE), had procedures that allowed policymakers to incorporate broad environmental reviews into subsequent, narrower reviews. The result was that the agency did not evaluate the environmental impacts of specific projects like BP's drilling project.

The report detailed MMS's process and makes recommendations for reform. The NEPA process requires agencies to produce detailed environmental impact statements for broad programmatic planning and then use "tiering" to incorporate information from the general impact statements to progressively narrower projects, adding new information if necessary. The goal of tiering, according to CEQ's regulations, is "to focus on the issues which are ripe for decision and exclude from consideration issues already decided or not yet ripe." The process MMS used to approve the Deepwater Horizon exploration plan and the various permits to drill the well used this tiering process to address environmental impacts of outer continental shelf activities. According to the report:

This process was not transparent, however, and has led to confusion and concern about whether environmental impacts were sufficiently evaluated and disclosed. It is essential to ensure that information from one level of review is effectively carried forward to—and reflected in—subsequent reviews, that the agencies independently tests assumptions, and that there is appropriate evaluation of site-specific environmental impacts. 

As a result, MMS issued categorical exclusions – environmental waivers – for plans and permits that allowed MMS to ignore the environmental impacts of BP's oil drilling project.

The CEQ report made several recommendations to the agency dealing with the use of tiering, ensuring greater transparency and accountability, revising the agency's categorical exclusions, and reconsidering its NEPA policies and practices in light of the BP oil spill disaster. The report stated that the agency will be using these recommendations as "guideposts" as the agency continues its reforms.

Also on Aug. 16, the Department of Interior and BOEMRE announced that BOEMRE "will restrict its use of categorical exclusions for offshore oil and gas development to activities involving limited environmental risk." The announcement did not identify specific limited-risk activities but noted that shallow water permits could be issued. The announcement also said that Interior will conduct a new environmental analysis for the Gulf of Mexico. BOEMRE will publish details about the agency's supplemental environmental impact statement in the Federal Register "in the coming days," according to the announcement.

On Sept. 9, BP released the results of an internal investigation it conducted on the Deepwater Horizon disaster. The report is mostly an evaluation of the technical and engineering problems that occurred around the date of the April explosion.

The report identified eight key findings that allow BP to spread the blame for the incident to many companies and attribute the disaster to multiple causes. For example, the report stated that the investigators "did not identify any single action or inaction that caused this accident" but that it was a combination of failures that escalated. "Multiple companies, work teams and circumstances were involved over time," the report concluded.

However, a one-page disclaimer undermined the report by minimizing the reader's ability to draw firm conclusions from the information in the report. For example, the report noted that additional information may have led others to different conclusions, that the information gathered was not evaluated according to legal standards of evidence, and that the investigating team did not attempt to establish the credibility of the evidence when it was "contradictory, unclear or uncorroborated."

The disclaimer may be an important component of BP's legal strategy. There are many other investigations of the disaster ongoing, including those of the U.S Justice Department and the U.S. Coast Guard, and BP faces potentially significant liability for the explosion, spill, and cleanup. On Sept. 9, a New York Times article on the BP report called it "part mea culpa, part public relations exercise, but mostly a preview of BP’s legal argument as it prepares to defend itself against possible criminal or civil charges, federal penalties and hundreds of pending lawsuits." The report's technical analysis laying out multiple engineering and design failures appears designed to spread the blame for the disaster to multiple parties involved in the project.

Also on Sept. 9, Interior announced the release of a report to Interior Secretary Ken Salazar on the agency's oversight and regulation of offshore energy production programs. The report was undertaken by a team of senior Interior officials, the Safety Oversight Board, including the acting inspector general of the department. The report recommended "a framework for improvement that would create more accountability, efficiency, and effectiveness in a bureau with significant responsibilities." The major themes in the report are the need to create a culture of safety and for more personnel who are well-trained and capable of meeting the challenges presented by the increased complexity of deepwater drilling.

The announcement also stated that BOEMRE Director Michael R. Bromwich issued an implementation plan based on the 59 recommendations in the report. The plan addressed interagency cooperation, resources, ethics reforms, permitting procedures and training, inspections, enforcement, environmental management, and post-accident investigations.

In conjunction with the release of these reports, Salazar asked for an additional $100 million for the agency to hire hundreds of additional inspectors, according to a Sept. 8 Washington Post article. BOEMRE has about 60 inspectors for the more than 3,500 oil rigs in the Gulf of Mexico, according to the Post.

The need for additional inspectors is made clear in the Safety Oversight Board's report. It quoted a 2007 management consulting report given to MMS that, despite a 200 percent increase in leasing and a 185 percent increase in oil production, staffing at MMS had decreased by 36 percent since 1983. As a result of these and other inspection-related issues, the Board's report recommended that BOEMRE "undertake a comprehensive workforce and workload analysis of the inspection program."

Image in teaser by the U.S. Coast Guard.