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FACTBOX-U.S. oil spill panel's main recommendations
January 11, 2011 / 5:10 PM / 7 years ago

FACTBOX-U.S. oil spill panel's main recommendations

Jan 11 (Reuters) - The White House oil spill commissions’s final report on the BP Plc (BP.L)(BP.N) oil disaster released Tuesday contained recommendations including raising the liability cap for drillers and creating an independent safety agency.

The accident on the Macondo well in the Gulf of Mexico killed 11 workers and led to the worst offshore oil spill in U.S. history.

Following are the main recommendations released by the panel on preventing similar accidents:

INDEPENDENT SAFETY AGENCY

Congress and the Obama administration should create an independent safety agency within the Department of Interior headed by an official shielded by political interference with a fixed term. The official should have energy and engineering experience and the agency should have enforcement authority to oversee all aspects of offshore drilling safety.

DRILLERS SHOULD BE RESPONSIBLE, $75 MLN CAP RAISED

Drilling operators should be financially responsible for the consequences of failure. The current $75 million cap on liability for offshore facility accidents is “totally inadequate and places the economic risk on the backs of the victims and the taxpayers,” the panel said.

The cap should be raised to place the burden of catastrophic failure on those who will gain economic rewards from drilling and to compensate innocent victims. “Provisions can be made to ease the burden on small-scale operators ... including mechanisms for sharing risk such as insurance pools,” the report said.

U.S. SHOULD LEAD

Existing U.S. drilling regulations should be expanded to address all features essential to well safety, and should be updated to ensure safer drilling in all U.S. offshore operations. The new regulations should be, at a minimum, at least as stringent as those in peer oil-producing countries such as Norway and the United Kingdom. The United States should lead an international effort to develop global best practices that can be adopted worldwide.

“RISK-BASED” REGULATORY APPROACH

The new regulations should be supplemented by a “risk-based” regulatory approach that requires all offshore drilling companies to show they have evaluated all risks associated with drilling a particular well and are prepared to address any and all risks pertaining to that well. This approach has long been used in Norway and the United Kingdom.

CONSULTATIONS AMONG FEDERAL AGENCIES

Broader consultations among federal agencies, including the Coast Guard and the National Oceanic and Atmospheric Administration, prior to leasing and exploration to help identify and address risks. Congress should amend the Outer Continental Shelf Lands Act to provide NOAA with a more formal consultation rule relating to environmental protection in Department of Interior leasing decisions.

OVERSIGHT FUNDING

“Adequate and predictable funding for regulatory oversight is essential for the reforms to be effective and to meet the challenges of ensuring offshore safety and environmental protection,” the report said.

Budgets for the regulators that oversee drilling should come directly from fees paid by the companies that are being granted access to a publicly owned resource. Funding sources could include a regulatory fee on new and existing leases or an increase in the inspection fees already collected by the Department of the Interior.

Reporting by Timothy Gardner; Editing by Lisa Shumaker

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