Panel on BP Oil Spill Calls for Tougher Oversight

A White House panel probing BP’s massive oil spill has called for an overhaul of a regulatory system that was “entirely unprepared” for disaster and outlined stringent, new oversight, a plan sure to face opposition from Republicans reluctant to expand government involvement.

The commission said in its final major report that the U.S. government needs to expand its drilling regulations, as well as set up an independent drilling safety agency.

“None of the major aspects of offshore drilling safety — not the regulatory oversight, not the industry safety standards, not the spill response practices — kept pace with the push into deepwater,” said commission co-chair Bill Reilly. “In effect, our nation was entirely unprepared for an inevitable disaster,” he said.

Many of the recommendations would require Congressional approval, however, Republicans have been critical of extensive new regulations, saying they would further slow the exploratory pace following last year’s drilling moratorium that was imposed in response to the spill.

Michigan Republican Rep. Fred Upton, who heads the House Energy and Commerce Committee, blasted the findings, saying they failed to clearly identify the root cause of the “unprecedented disaster.”

Oil companies have voiced concerns that new regulations could hamper offshore exploration and drive up oil prices. U.S. Gulf of Mexico oil production fell by 70,000 barrels per day in fourth quarter of 2010, with further drops expected this year and in 2012.

But Reilly said it was time for Congress “to exercise serious oversight” in a regime that has not kept pace with the industry’s push into deeper and deeper waters.

As a first step, he demanded that Congress provide the funding to hire additional government inspectors for drilling operations.

Following the BP accident, the Interior Department restructured the agency responsible for overseeing drilling and has instituted a raft of new safety rules.

“We have already implemented several of the key reforms the commission has made clear are necessary, and we will use the commission’s report and the findings of other investigations to inform future actions to strengthen safety and oversight,” Interior Secretary Ken Salazar said in a statement.

The commission also pushed for the oil industry to create a self-regulating entity to help enforce standards and called on Congress to raise liability limits on offshore drilling operators. Modeled on the nuclear industry’s Institute of Nuclear Power Operations, a self-regulatory group would allow offshore drillers to hold their counterparts more accountable.

While not calling for a halt to drilling in the Arctic, the commission said there is need for more study of the intense physical conditions and Interior should ensure that companies have adequate plans and resources to handle a spill there.

The commission was created by President Barack Obama after an April 20 explosion ruptured BP’s underwater Macondo well, killing 11 workers in the Gulf of Mexico and leading to the worst offshore oil spill in U.S. history.