Obama, Bush Faulted by Congress for Decade of Lax Offshore Oil Regulation

The Obama administration continued a decade-long pattern of lax U.S. regulation of offshore oil and natural gas drilling that led to BP Plc’s spill in the Gulf of Mexico, lawmakers investigating the incident said.

Regulators during George W. Bush’s presidency failed to protect safety and the environment, and actions by President Barack Obama’s Interior Department were “more cosmetic than substantive,” Representative Bart Stupak, a Michigan Democrat, said today at a House Energy and Commerce Committee hearing.

Decisions dating to the start of Bush’s administration played a role in the BP spill, the worst in U.S. history, Stupak said at the hearing examining the April 20 explosion on a drilling rig leased by BP. Congressional investigators said the Interior Department under Bush offered incentives for drillers without imposing safety standards.

“There has been a pervasive failure by the regulators to take the actions necessary to protect safety and the environment,” Stupak said. “These failures to regulate happened at the time federal officials offered oil and gas companies new incentives to drill in deeper and riskier waters in the Gulf of Mexico.”

While Obama’s Interior secretary, Ken Salazar, canceled a royalty-in-kind program faulted by a government watchdog, adopted ethics rules and sought more inspectors for offshore facilities, “there is little evidence that these reforms changed the laissez-faire approach” by the Minerals Management Service “in regulating the BP well,” said Representative Henry Waxman, a California Democrat and chairman of the committee.

MMS Decisions

“MMS approved the drill plan and changes to the well design that we have questioned during our investigation,” he said, referring to the BP spill.

Salazar said government officials had been “lulled into a sense of safety,” after 40,000 wells were drilled in the Gulf of Mexico without major spills.

“The prior administration and this administration have not done as much as they could have done relative to making sure there was safer production on the Outer Continental Shelf,” Salazar told the committee. “In my point of view there is a shared responsibility.”

Decisions made in the days before the explosion by BP have been questioned by Stupak and congressional investigators. The London-based company took shortcuts to save money and was unprepared to deal with the spill, Stupak said.

Too Few Inspectors

There are too few inspectors to effectively cover the number of deepwater wells, which rose to 600 last year from 65 in 1985, Stupak said. Regulators failed to implement stronger safety standards, at times after protests by industry.

“Part of the investigation will determine whether regulations were followed or whether they were simply broken,” Salazar said.

Bush’s former Interior secretaries, Dirk Kempthorne and Gale Norton, testified about decisions on offshore drilling during the Bush administration, and described broad support from lawmakers and the public for oil exploration.

Representative Ed Markey, a Massachusetts Democrat, said a 2001 report from an energy task force created by Vice President Dick Cheney warned that regulations were delaying drilling projects. The report prompted the Bush administration to waive a requirement that companies plan for the type of blowout that occurred at the BP well, Markey said.

‘Put In Motion’

“The conditions that created the BP disaster in the Gulf were put in motion many years ago,” Markey said.

In implementing Bush’s goal to expedite production, Norton, Interior secretary from 2001 to March 2006, failed to resolve questions about the adequacy of blowout preventers to contain spills, investigators said in a memorandum to the committee. The blowout preventer at BP’s well failed to shut off the flow of oil after the rig exploded.

“There was a deregulatory ticking time bomb that was set while you were secretary that has now exploded,” Markey said to Norton. “Was it wrong?”

“It was reasonable to take into account what the history had been,” Norton said. “There were very few large spills.”

Waxman said he is concerned that the Cheney task-force report gave no consideration to “improving drilling safety while we encourage more exploration.”

Norton said tougher rules on blowout preventers are “something that can be looked at in the future.” Norton joined Royal Dutch Shell Plc as a general counsel 10 months after leaving government.

Congress, Environmentalists

Kempthorne, Interior secretary when BP won the right to drill the Macondo well that ruptured in April, said plans to explore in the Outer Continental Shelf are developed in consultation with Congress and environmental groups.

“We received comments from more than 100,000 interested citizens,” Kempthorne said. “Seventy-five percent of the comments received from the public supported some level of increased” drilling.

BP said it plans to keep the Macondo well in the Gulf shut today after the U.S. concluded leaks at the site pose no threat. BP shut valves atop Macondo on July 15 for a pressure test to determine the integrity of the well, which had been leaking for almost three months after an explosion aboard the Deepwater Horizon drilling rig.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.