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Oil Spill commission says industry needs regulation but lets BP off hook

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PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington. And in Washington on Tuesday, President Obama’s national oil spill commission had a press conference and released its report. Here’s a little bit of what they said.


BOB GRAHAM, CO-CHAIR, NAT’L COMMISSION ON BP DEEPWATER HORIZON OIL SPILL & OFFSHORE DRILLING: A fundamental finding of our six months investigation is that the Deepwater Horizon disaster did not have to happen. It was both foreseeable and preventable.


JAY: Now joining us in the studio to give his take on the commission’s report is Tyson Slocum. He’s the director of Public Citizen’s energy program. Thanks for joining us.


JAY: So was this a good take on why the BP spill took place, or was it a bit of a coverup?

SLOCUM: No, I think this is actually a pretty good, comprehensive, fair overview of a very, very serious industrial accident on April 20, 2009. What we saw here was a presidentially appointed commission that was fairly moderate in its composition spend months of fact-finding, of holding public hearings throughout the country, sitting down with industry officials and with other stakeholders to get to the bottom of this huge industrial accident. And what the commission found is that the oil industry as a whole is unprepared to self-regulate going forward in deepwater offshore drilling, that additional, strong government regulations are required to protect workers, to protect the environment, and to preserve the way of life on coastal communities in the Gulf and elsewhere.

JAY: Well, the industry’s saying that the industry as a whole, first of all, has learnt its lesson, and number two, that they have to report to boards and to shareholders, and they can’t open themselves up to the kind of $20 billion of liability that BP wound up facing. And so they can self-regulate, and more regulation’s just going to slow things down. What do you make of the argument?

SLOCUM: That’s completely inaccurate. The fact is is that every time the industry is presented with some sort of calamity, they always run back to the argument that, well, government is overreaching; we can handle this on our own. And the fact is they cannot handle it on their own. And the details of the commission’s findings really illustrate that effectively, where they’ve got email after email of top managers at BP and the other companies that were contracted out–Transocean and Halliburton–where these managers knew the risks they were taking, they knew that they could put workers and the environment in danger, but they were responding to short-term profit pressures, and that’s where the decision was being made. And the commission knows that unless you have government mandates to prioritize the safety of workers and the environment, the industry will always move away from doing that if they can make more money. That doesn’t say that oil companies are evil for doing that. That’s the way that the system works. And as a result, you need to have government intervention in the form of regulations that require them to expend additional resources on worker and environmental safety. Is that going to increase costs slightly for future offshore oil development? You bet. But that will help ensure that we don’t have the kind of tragedy that occurred that–how can you put a price tag on 11 lives that were lost or on the 5 million gallons of oil that were put into the Gulf of Mexico that we still haven’t really assessed what the impact on the ecosystem has been?

JAY: And the destruction of much of the local fishing economy.

SLOCUM: Absolutely. And so the fact is is that these regulations will actually help the industry in the long term. But, you know, the industry is very powerful. They had a very aggressive lobbying organization in Washington, DC, and they’ve got a new Congress that is more friendly and receptive to their line of argument.

JAY: Are you concerned at all that the commission, in its assessment of the government regulators during this period, let them off the hook a little easily? Like, there’s talk about lack of oversight, but we know there was evidence of really what amounted to corruption–parties being paid for by the oil industry–and also, going forward, a more systemic problem, which is, if the government or president of the day appoints a regulator that’s extremely industry-friendly, as the last one was, then a lot of these regulations won’t mean anything.

SLOCUM: Yeah, no, that’s a fair point. I don’t think the commission came down as hard as it could have on the role that government regulators and the incestuous relationship that had developed over decades–.

JAY: I mean, some people call it crony capitalism.

SLOCUM: Absolutely. Now, the Obama administration has taken some steps to address some of that, but there still is no confidence on the part of the administration in the ability of the regulators do their job effectively. And that’s where Congress coming in and rewriting the rules, making the rules more explicit, so that you give a little less discretion to the regulators and more certainty in what rules need to be followed, that has to be part of the reforms. And the commission is strong in talking about what new specific reforms are necessary that we need to–science needs to play a much bigger role in the full environmental review of what the impact of new deepwater drilling is going to have on the Outer Continental Shelf in the Gulf of Mexico. So all of that needs to be taken into account. But this commission is not binding. They have no power.

JAY: I think that’s a very important point, that the commission’s not binding, they have no power. And there’s even some indication that the Obama administration is already sort of caving to some of the industry pressure. Let me read you a quote from Miyoko Sakashita, the senior attorney and director of the Oceans Program at the Center for Biological Diversity: “The Commission’s report confirms that the oil industry cannot be trusted, and the federal government is also to blame for being asleep at the wheel. There are systemic problems at the Department of the Interior that have allowed drilling in the Gulf to evade safety and environmental protections.” And here’s the key line. “However, Secretary of the Interior Salazar seems to have learned nothing from the catastrophic oil spill, and again opened up the Gulf to deepwater drilling without adequate environmental review.” Now, this happened just, what, a few weeks–just a couple of weeks ago, before the commission reported, so they didn’t wait for the commission report before they gave the go-ahead. Doesn’t it suggest that the industry’s already starting to get its way again in the Gulf?

SLOCUM: Absolutely. The American Petroleum Institute and its member oil companies have been pushing very aggressively against all efforts to improve regulations over their offshore drilling operations, and part of this was these 13 companies that had pending drilling applications in deep water in the Outer Continental Shelf, that the Obama administration was asking them to go through a more detailed environmental impact statement. The American Petroleum Institute started lobbying new members of Congress, did a public relations campaign, talked about how many jobs this longer environmental review is taking, and the Obama administration caved and allowed these 13 companies with their 16 applications to move forward without going through the additional environmental review. So, again, that underscores how critical it is for Congress to come in and ensure that we rewrite the rules that regulators, whether they were serving under Dick Cheney or under President Obama, have to follow. And if they don’t follow it, outside groups could sue for noncompliance.

JAY: So [inaudible] become law.

SLOCUM: Absolutely. And so that’s the critical thing right now, ’cause–.

JAY: Okay. Really quickly, what are the most important rules that the commission recommends that you think are good, that people should be aware of, telling their representatives that you better vote for this?

SLOCUM: Right. I think the most important one is the commission comes right out and says companies should certify that they have technology that can work to quickly stop an oil gusher in a mile deep of water, and if they can’t, they should not be allowed to get a new permit. That is, I think, the most important element, and it’s something the Obama administration hasn’t been talking about.

JAY: And would that have prevented the BP–?

SLOCUM: It would have. If you have a technology that you can certify to third-party entities or to the regulators that you can quickly and conceivably plug a hole in a mile deep of water–.

JAY: Didn’t BP more or less tell the regulators that they did, and then it turned out they didn’t?

SLOCUM: Well, they claimed that they had a disaster response plan that included protection for walruses, which aren’t even found in the Gulf of Mexico. Basically what you had–.

JAY: Picking up some boilerplate.

SLOCUM: They had boilerplate language that included their Arctic operations.

JAY: So how would the new rule change that?

SLOCUM: Well, you’d have to be extremely explicit and you would have to–. What you would have to do is tailor regulations to each individual well. Right now what BP is allowed to have, and any other oil company operating in the Gulf of Mexico, they’re allowed to have general area compliance review plans, where one well or a thousand wells, it doesn’t matter. What new rules ought to have, and this is what the commission articulates, is you have to have a per well review. Will that increase the length of this review process? Yes, it will. But will it help ensure that drilling is done in a sustainable, responsible manner? Absolutely, and that has to be the goal of the government. This is, remember, a public resource. This is the people’s land. We are leasing it temporarily to private corporations to explore. We have the right to put any conditions on it we want. This is lucrative territory, companies make enormous amounts of money there, and we have a responsibility to make sure that it’s done in an effective way.

JAY: So the industry is saying, first of all, you can’t judge the whole oil industry by this one example; we’ve learnt our lesson. But they also say that, you know, we can’t–our boards and our shareholders don’t want to get sued, and that’s enough to keep us honest on these issues. So why isn’t that enough? They can get sued. They’d be liable. Some of them would be wiped out, in theory, if they had to come up with $20 billion.

SLOCUM: Well, no, it’s not enough, ’cause right now federal law caps an individual company’s liability at $75 million.

JAY: And what did the commission say about that?

SLOCUM: The commission said that has to be increased dramatically.

JAY: But they didn’t put a number on it.

SLOCUM: They didn’t put a number on it. We support having unlimited liability, ’cause I don’t want public taxpayers to assume any risk for a private entity operating in the Gulf of Mexico. And I think it’s reasonable to say, if you are a private corporation, you want to take on the risk of offshore drilling that includes the strong potential of massive financial rewards, you have to assume all of the risk. Now, some argue that that will squeeze smaller firms out of the business. It won’t. What they can do is team up with larger companies. We saw that on the BP Macondo well, where two smaller oil companies owned minority interests in the well. So smaller companies can continue to compete. It’s just we should have an era of corporate responsibility. You know, individuals are asked to have responsibility, and corporations should, too.

JAY: So people who are following this story, number one, if they see legislation passed without unlimited cap, number two, they can’t prove to third-party verification that they can immediately cap if there’s a problem,–

SLOCUM: Right.

JAY: –you think this could happen again, BP can happen again.

SLOCUM: Of course it can happen again.

JAY: Okay. Number three, does there not need to be some kind of a judicial accountability for what happened? I mean, if people knew this was going to happen, or at least took such shortcuts that it becomes negligence, even criminal negligence, if the industry’s really going to have a shot across the bow, doesn’t something need to happen on the criminal front?

SLOCUM: Absolutely. And that’s where–.

JAY: And is there?

SLOCUM: Well, there is a pending Department of Justice criminal investigation. Now, the thing with criminal investigations is you never know how it’s going to end or where exactly it’s going, because all of it is confidential. But we know that there is an ongoing criminal probe.

JAY: And do you get any sense that there actually will be some charges?

SLOCUM: I think there need to be. But, again, the Department of Justice has kind of compromised itself, because the $20 billion voluntary escrow payment that BP paid, all of it is financed only through BP’s Gulf of Mexico offshore oil and gas operations, not from the company’s Alaskan operations or from its domestic refining, or even its joint Russia partnership. So that means the continued financing of the recovery payments is–.

JAY: And why did the government agree to that?

SLOCUM: Because the government did a terrible negotiating job. And so what the government did is it may have handcuffed its ability to seek sanctions in the event that BP was criminally negligent, because what you want to do if you’re criminally negligent, just like with a human being that’s criminally negligent, you take sanctions. We throw people in jail against their will. With a corporation, that means seizing properties, seizing leases, inhibiting their ability to bid on future leases. But instead, here we have ensured that BP, no matter what the outcome of the criminal probe, will continue to have a robust presence in deepwater drilling. And I think that’s problematic.

JAY: Or you won’t get the $20 billion.

SLOCUM: Right.

JAY: Smart deal for BP. Thanks very much for joining us.

SLOCUM: My pleasure.

JAY: Thank you for joining us on The Real News Network.

End of Transcript

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Tyson Slocum

Tyson Theron Slocum is Director of Public Citizen's Energy Program. Tyson works to highlight the significant financial costs and safety and security risks associated with nuclear power. Tyson covers the regulation of electricity, natural gas and petroleum markets, including commodity futures and FERC-jurisdictional matters to promote stronger transparency measures. Tyson was appointed to serve on the CFTC's newly created Energy & Environmental Markets Advisory Committee. Tyson also covers federal legislative efforts to address climate change, particularly the impact such programs will have on the ability of moderate- and low-income households to afford access to sustainable energy. Tyson is the author of numerous reports on these subjects, presenting his findings in testimony before the U.S. Congress.