BP Five Years Later: Less Talk, More Legislating

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In the wake of the Deepwater Horizon oil spill, Congress introduced more than 150 oil spill-related legislative proposals and held 36 hearings examining everything from the use of chemical dispersants in oil spill response to how to ensure a financially responsible recovery.

Yet this flurry of activity in response to the worst oil spill in U.S. history resulted in the passage of only one significant piece of legislation: the narrowly focused RESTORE Act.

Shepherded by former U.S. Sen. Mary Landrieu of Louisiana and signed into law on July 6, 2012, the RESTORE Act, while a positive development for the states most affected by the spill, in no way addresses the liability issues beyond the BP oil tragedy.

The RESTORE Act directs 80 percent of any civil penalties paid under the Clean Water Act by the parties responsible for the Deepwater Horizon oil spill into a fund that is intended to support a variety of projects aimed at helping the Gulf of Mexico recover from environmental and economic harm caused by decades of oil and gas development in the region.

Now, five years after the Deepwater Horizon rig exploded and sank to the ocean floor, Congress is holding new hearings in both the House and the Senate to see if drilling is any safer and whether we are better prepared to deal with an oil spill disaster and those responsible. If by some small measure it is and we are, it’s no credit to Congress.

Moreover, the hearings likely won’t result in the introduction of new legislation. But they should. Here are five actions Congress should take now to improve offshore drilling oversight and accountability:

1)      Raise Inspection Fees to cover the cost of offshore drilling safety inspections and environmental enforcement activities. A key cause of the BP disaster was a lack of government oversight. As the oil industry pushes into even deeper water covering more area, regulatory oversight is not keeping pace. A better fee structure would allow the Department of Interior to meet inspection responsibilities without increasing taxpayer burden by shifting responsibility to the oil and gas industry.

2)      Increase Violation Fees and Strengthen Enforcement Activities. The current civil penalties for unsafe offshore drilling practices are too weak to deter oil and gas companies from committing violations.Civil penalties can be levied for violations that cause injury, death or environmental damage; threaten human life or the environment; or are not corrected after notice and expiration of a specified period. However, fines are currently capped at $40,000 per violation per day, a cost the Director of Bureau of Safety and Environmental Enforcement, Vice Admiral Brian Salerno, indicated at a congressional hearing last week is a pittance for the industry.

3)      Remove Oil Spill Liability Cap. The current liability cap of $75 million – unchanged since it was established in 1990 – is woefully inadequate. The BP oil spill makes clear that risky and inherently dangerous deep and ultra-deepwater drilling can lead to tens of billions of dollars in damages. Congress should act immediately to make sure oil companies are held fully responsible for their spills and that American taxpayers are fully protected. Current law leaves coastal communities and marine habitats at the mercy of any company that can’t afford to pay for the damage it causes.

4)      Mandate Regional Citizens’ Advisory Councils (RCACs) for all areas where offshore drilling is occurring or proposed. The Oil Pollution Act of 1990, which was passed after the Exxon Valdez spill to address oil spill prevention, response, and liability and compensation should spills occur, established RCACs for Prince William Sound and the Cook inlet region.

Following the BP oil crisis,the bipartisan presidential Oil Spill Commission called for the formation of RCACs, and that recommendation has been supported by formal requests and petitions from Gulf Coast citizens and multiple organizations. These regional councils could provide industry and government with the informed, organized engagement of local citizens to help prevent and respond more effectively to future accidents or pollution disasters in the Gulf of Mexico. They would give Gulf Coast communities and stakeholders insight – and a chance to provide input into – industry decisions that directly affect their lives, livelihoods and the environment.

5)      Amend Corporate Wrongdoer Tax Loopholes. Corporations are allowed to deduct the price of their misconduct as an “ordinary and necessary” cost of doing business. In 2010, BP wrote off its predicted cleanup cost and damages for the Deepwater Horizon oil disaster and collected a $10 billion federal tax windfall for the spill – signaling that corporations can wreak havoc and let taxpayers pick up the tab. Worse yet, because BP’s expenditures for the disaster have exceeded the initial charges claimed in 2010, BP likely will be able to file for additional tax credits unless Congress acts.