WASHINGTON D.C. (
) -- The federal government took its first crack at post-oil spill policing of the oil and gas industry on Monday. There were cracks in the report, too, showing just how messed up the Minerals Management Service process for approving new deepwater wells has been, and how ridiculous were the statements from BP about preparedness for an oil spill that received the blessing of the federal government.
First, let's give credit where credit is due: The big headline sifted from the 41-page report is that the review process for new deepwater wells is going to be more stringent (at least until industry uses a lobbying top kill or bottom kill to gut it). The government is taking aim at the categorical exclusion that has allowed for the rubber-stamping of drilling projects, will require more direct, site-specific environmental assessments, and will aim for longer than the 30-day deadline under which the MMS operated to approve drilling permits to complete reviews of drilling permits.
And you thought the government couldn't do anything quickly.
The reaction from the oil & gas lobby was strewn with rhetoric -- a good sign for those hoping the government is at least starting off from a position of putting dents in the previously impenetrable armor of the oil & gas status quo. The oil lobby worries that the federal oversight will force smaller companies out of the business, discourage future exploration, and increase reliance on foreign oil -- but let's just say it's not the first time these rhetorical quivers have been unleashed by the anti-regulation bow.
"Let's hope it's not our Three Mile Island," was the catch phrase adopted by the head of the Independent Petroleum Association of America in speaking to
The New York Times
about the government's review. Now that's the type of upping of the usual anti-regulatory rhetoric from the business world in which proponents of more regulation should take comfort. Just wait until the oil and gas lobby starts drawing editorial cartoons of Sheikh Obama in his OPEC cartel headdress.
Still, in redressing the wrongs of the oil and gas industry and Minerals Management Service -- now nicely rebranded as the Bureau of Ocean Energy Management (and you thought rebranding was just for tobacco companies and private defense contractors) -- the Obama administration oil spill review presented some reasons for outrage.
The following is a short list of our favorite gripes about the Obama oil spill review.
Death to the Word "Robust"
Let's just start with this: it's time to ban the word "robust" from usage as a term of action by both business and government. We can't even read the word "robust" anymore in a corporate press release or government statement without a language lie detector in our brain igniting neuron fireworks -- and we had to read the word many times in the Obama oil spill review document.
In announcing the results of the review process, Michael Bromwich, director of BOEM, said, "We are building a more robust and aggressive independent oversight agency." In fact, it's hard to understand why the MMS wasn't rebranded as the Bureau of Robust Ocean Energy Management.
The document notes that the Obama administration "believes these recommendations ... will improve BOEM's ... practices and procedures and ensure robust environmental reviews for future oil and gas exploration and development activities."
In the report, "the Council on Environmental Quality (CEQ) offers several recommendations to promote robust and transparent implementation of National Environmental Policy Act (NEPA) practices, procedures, and policies," and recommends procedures to "ensure that NEPA documents provide decision makers with a robust analysis of reasonably foreseeable impacts."
Later in the report, the authors refer to the generic environmental assessment completed in 2000 for all deepwater drilling as having featured discussion about potential oil spills that was "robust." Going further, the "robust" discussion in 2000 led the MMS to conclude that "more detailed investigation was needed."
Fast forward to footnote 107 in the oil spill review document and what did the robust discussion lead to?
Of five major studies completed between 2002 and 2008 that conducted more detailed investigation, the Obama administration oil spill review notes that the deepwater environmental impact statement and environmental assessment specific to the BP lease sale did not incorporate any of the subsequent studies for which the robust discussion in 2000 sounded a trumpet call.
Kids Gloves/Legal Evasion
It was easy to be miffed at BP CEO Tony Hayward when his testimony before Congress amounted to nothing more than a collection of legal evasions. Of course, Congressional inquiries can make one sympathetic to the witnesses -- even bad actors among the corporate elite -- given the grand-standing of which politicians are capable. Still, the outgoing BP CEO went out of his way to not even make an effort of engaging in a discussion with government officials about the oil spill.
The Obama administration oil spill review document provides a wealth of detail on MMS processes and recommendations for best practices. Still, it refuses to take the extra step of calling a messed up regulatory agency a messed up regulatory agency.
At the outset of the review, the Obama administration team stresses, "Mindful of the complexities of pending and future litigation involving the BP Oil Spill, this review focused on ways to strengthen and improve BOEM's NEPA practices going forward. It did not seek to evaluate the substantive adequacy of any of MMS's specific NEPA (National Environmental Policy Act) analyses and documents."
After the worst oil spill in the history of the U.S, at least partially caused by lax government regulation, was it too much to hope for some evaluation of the "substantive adequacy" of the MMS?
The government is wearing the white gloves in reviewing its own defunct MMS, and focusing on the "robust" future of the BOEM. We expected nothing but legal evasion for Tony Hayward and BP, and maybe we should expect no more of the government, but it's still frustrating to read these words at the outset of its comprehensive review of the MMS policy.
A Map of the MMS World
There are lots of nuggets of MMS flaws littered throughout the Obama administration review document, and even if the government won't call a flawed regulatory body a flawed regulatory body, we have no problem doing so. Here's an example of the type of thinking that passed for logic at the MMS in its review of drilling projects:
Two environmental impact statements used by the MMS in approving the BP offshore lease sale, and downplaying the risk of an oil spill as an environmental hazard, cited a study conducted in Norwegian waters that analyzed deepwater spills.
Yet when it came to time to review the largest oil spill ever in the Gulf of Mexico, the 1979 Ixtoc spill, the Mexican oil spill was deemed not germane to several key aspects of the deepwater drilling review process. The MMS only recognized Ixtoc by referring to it in a review of impacts on specific Gulf species.
The MMS decided to not include Ixtoc in its oil spill probability analysis because it occurred outside U.S. waters. The Ixtoc spill does not appear in a chart of historical spills MMS compiled in a Gulf of Mexico environmental impact statement.
If Ixtoc had occurred in Norway, maybe the oil spill would have made the geographic cut in "robust" discussion of oil spill probability analysis.
BP's Oil Spill Containment Confidence
It's not, of course, polite to pick on the government when it's making a good-faith effort to police the powerful oil and gas industry, and there are some numbers provided by BP in the original planning process for its deepwater drilling in the Gulf that standout -- and not for a good reason.
The original BP exploration plan offered some eye-popping words about how large an oil spill in the Gulf of Mexico could be, yet bold words about the oil company's ability to handle an oil spill of any size.
This was, of course, long before outgoing BP CEO Tony Hayward kept saying that the Gulf oil spill might be no larger than 5,000 barrels of oil per day, and long before Hayward conceded that BP didn't have all the tools in the toolkit that it would have liked to contain the oil spill.
BP stated in its exploration plan that an oil spill in the region of the Macondo well could reach a flow of 162,000 barrels per day. That might seem like a whopping number, given that BP still hasn't even agreed to the current best estimate from the government about the oil spill flow rate. Yet, in the perspective of what BP told the government it could handle in terms of oil spill size, 162,000 barrels of oil daily is relatively minor. In its original exploration plan, BP told the MMS that it could handle up to 300,000 barrels of oil per day.
I don't think we need to review how well BP did in making good on that bold prediction.
-- Written by Eric Rosenbaum from New York.
Follow TheStreet.com on
and become a fan on
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.