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Oil Agency Draws Fire

Posted on 04 May 2010

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The agency that regulates offshore oil drilling drew sharp criticism in Washington as BP PLC began drilling a new well in a frantic attempt to stanch the gusher fouling the Gulf of Mexico.

BP and the Obama Administration say they are focused on stopping the flow of crude from the damaged well nearly a mile below the surface. But already lawmakers and interest groups are firing the first shots in what could be a lengthy fight over financial liability and political blame.The Gulf disaster is ratcheting up congressional scrutiny of the Minerals Management Service, the federal agency charged with regulating the nation's offshore oil-and-gas industry.

Rep. Darrell Issa (R., Calif.), announced Monday that Republicans on the House Committee on Oversight and Government Reform would investigate whether the MMS has pushed for regulations necessary to ensure the safety of offshore operators in the Gulf of Mexico. Citing a report in The Wall Street Journal, Mr. Issa expressed concern in a letter to Interior Secretary Ken Salazar that the MMS "may have sidelined regulatory efforts that would have brought the U.S. oil industry in line with prevailing industry safety standards."

The Journal's article revealed that the Deepwater Horizon oil rig, which caught fire and sank into the Gulf in April, didn't have a remote-control shut-off switch used in two other major oil-producing nations as a last-resort protection against underwater spills.

White House Chief of Staff Rahm Emanuel said he brought concerns over the failure of BP to use a remote-control shut-off switch to President Obama, showing him the newspaper's coverage. That suggests one of the administration's focuses is on regulatory lapses and potential technological fixes that would allow drilling expansion to move forward.

In response to Mr. Issa's letter, the MMS said that while it doesn't require the use of remote-control shut-off switches, it does require operators to employ at least one backup control system to shut off the well in an emergency.

An Interior Department official said the administration is keeping members of Congress apprised as it seeks to determine what caused the April 20th explosion. "Our priority at this time is to contain and remediate this oil spill," the official added.

White House officials stressed again Monday that BP would be held liable for the cost of the cleanup and economic compensation for losses on the Gulf Coast. But Democratic senators said the Oil Pollution Act of 1990, passed in the wake of the Exxon Valdez, caps economic damage liability at $75 million. Democratic Sens. Bill Nelson of Florida and Robert Menendez and Frank Lautenberg of New Jersey introduced legislation to raise that cap to $10 billion.

Workers prepared oil booms to be loaded onto boats in Pass Christian, Miss., Monday.

The law, dubbed the Big Oil Bailout Prevention Act, would eliminate a cap of $1 billion per incident on claims against the Oil Spill Liability Trust Fund.

If damages exceed the size of the trust fund—$1.6 billion—claimants would be able to collect damages from future revenues, with interest. The bill would also eliminate a $500 million cap on natural resources damage.

"BP says it'll pay for this mess. Baloney," Sen. Nelson said. "They're not going to want to pay any more than what the law says they have to."

White House budget office spokesman Ken Baer said Monday night the president supports efforts to raise the cap "based on the information we currently have."

California's Republican Gov. Arnold Schwarzenegger withdrew his support Monday for a plan to drill off the California coast as part of a strategy to narrow the state's budget gap.

In Washington, House minority leader John Boehner said the U.S. shouldn't put new limits on undersea exploration, "as such limits will only make us more dependent on foreign oil, slow the development of clean-energy alternatives, increase fuel costs, and destroy American jobs."

Along the Gulf Coast, frustration flared as workers scrambled to lay booms to protect the fragile and economically important marshes. Fred Everhardt, an official in St. Bernard Parish, southeast of New Orleans and on the Gulf, said contractors hired by BP to lay booms declined to venture into the water Sunday because of inclement weather. "They didn't want to put their guys in harm's way," Mr. Everhardt said.

Officials from BP and the federal government said they are doing everything possible to lay booms to protect the coast.

BP sent confusing messages. Jeff Childs, a deputy incident commander for BP, told a Fox television affiliate that the company activated part of a failed blowout preventer and slowed the flow of oil.

Later in the day, BP said that was wrong. While an underwater robot successfully triggered a device on the sea floor, a BP executive said, it failed to seal the gushing well.

The National Oceanic and Atmospheric Administration projected that the massive slick, now floating north, will spread out in the Gulf over the next couple of days as winds shift.

By the middle of the week, NOAA expects, winds will resume pushing the slick toward the Louisiana coast. Later in the week, NOAA expects, the winds will push the slick more toward Mississippi and Alabama.

An agency official said Monday that oil already may have landed along Louisiana's jagged coast in areas authorities haven't found.

The Deepwater Horizon rig sank April 22 about 50 miles off the Louisiana coast. Eleven workers were killed. Oil is leaking from three places in the twisted pipe, a mile below the water's surface, that once connected the rig to the well.

Estimates of the amount of oil leaking have risen, with some projecting the spill could surpass the Exxon Valdez disaster that poured 260,000 barrels of crude into waters off Alaska in 1989. BP officials say there's no way to know the volume yet.

BP said it began Sunday night drilling the first of two additional holes that it expects will ease pressure on the damaged well leaking and thus bring the spill under control. BP said it expects to begin drilling a second relief well—essentially a precaution in case the first relief well doesn't work—in the next couple of weeks. It says the effort could take three months.