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Posted at 7:00 PM ET, 01/10/2011

Oil commission to call for greater liability, consultation in offshore drilling

By Steven Mufson and Juliet Eilperin

The presidential oil spill commission is planning to recommend tougher regulation, stiffer fines and a new industry-run safety organization in its final report Tuesday of its investigation into the Gulf of Mexico disaster last year.

The commission's recommendations include strengthening the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), which the commission report will call "underfunded" with personnel who are "often badly trained," according to a person briefed by William K. Reilly, co-chair of the commission.

The report suggests that the head of BOEMRE should have technical expertise and that an office of safety and environment should report directly to the Interior Secretary.

Borrowing an idea from the nuclear power industry, the oil spill commission will also back the creation of a new industry-run organization, modeled on the Institute for Nuclear Power Operations that was created following the Three-Mile Island disaster. That organization helps establish best practices and technology for reactors.

The commission will also recommend boosting the liability cap on oil spills, currently set at $75 million for environmental and economic damage. BP has said that it would disregard the cap, but many members of Congress have pushed for a limit of $10 billion or more.

Reilly told people yesterday that the Interior Department should also include the National Oceanic and Atmospheric Administration in the decision-making process about where and how to conduct oil and gas leasing. If Interior were to reject NOAA's recommendations, it would have to say in writing why that would be in the national interest.

The commission also plans to recommend that 80 percent of the Clean Water Act fines and penalties linked to the Gulf of Mexico oil spill be devoted to environmental restoration.

Looking to the north, the commission said that the Coast Guard needs better capabilities if it is to respond to a spill resulting from offshore drilling in the Arctic. Oil and gas companies should be able to demonstrate their abilities to respond in those areas off Alaska.

BOEMRE, the agency the administration created in the wake of the oil spill, has already changed the way the government oversees offshore drilling. It has created an investigations and review unit to probe wrongdoing within the agency as well as the petroleum industry; it has separated leasing revenue collection from safety, environmental and regulatory enforcement; and it has temporarily stopped issuing "categorical exclusions "that exempt drilling proposals from detailed environmental reviews.

"Over the last eight months, the Department of Interior has undertaken an aggressive overhaul of the regulatory agency responsible for overseeing offshore oil and gas operations, increasing safety and ensuring oil and gas development is conducted responsibly," Interior spokeswoman Kendra Barkoff wrote in an e-mail in response to an inquiry about the commission's recommendations. "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. 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."

A spokesman for the commission declined to comment on the report Monday.

While Reilly and former Sen. Bob Graham (D-Fla.), the commission co-chairs, will outline the reasoning behind their recommendations in a press conference Tuesday, they will also present them to Congress later this month. House Natural Resources Committee Chairman Doc Hastings (R-Wash.) announced Monday that his panel would have the two men testify before the committee on Jan. 26.

"The Committee will be particularly interested in the Commission investigation into the causes and findings related to the April 20, 2010 oil spill and ongoing federal response," Hastings wrote Reilly and Graham. "In addition, the Committee will be interested in your recommendations, and other proposals for drilling on the Outer Continental Shelf going forward."

By Steven Mufson and Juliet Eilperin  | January 10, 2011; 7:00 PM ET
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