Environmental Protection

Study: BP Disaster a Product of 'Regulatory Blowout'

The BP Oil Spill and its attendant environmental and economic harm were entirely preventable, and indeed, would have been avoided had government regulators over the years been pushed and empowered by determined leadership and given sufficient resources to enforce the law, says a study by Member Scholars of the Center for Progressive Reform.

To help avoid similar disasters in the future, regulators should apply the “precautionary principle” to assessing risks and needed safeguards, rather than essentially dismissing catastrophic outcomes as too unlikely to warrant serious consideration.

Regulatory Blowout: How Regulatory Failures Made the BP Disaster Possible, and How the System Can Be Fixed to Avoid a Recurrence (pdf) examines the performance of multiple regulatory agencies, most conspicuously, the Minerals Management Service (MMS), since reorganized and rebranded as the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).

“BP is responsible for this disaster, without question,” said study co-author Alyson Flournoy, CPR Member Scholar and law professor at the University of Florida. “But the Minerals Management Service’s permissive approach to its regulatory responsibilities together with inadequate legislative mandates for safety and environmental protection, and Congress’s inadequate funding of MMS created an environment that allowed BP to take shortcuts with safety, with disastrous results. Catastrophes like this spill are unlikely, but they happen, particularly when we repeatedly ignore small risks with dire consequences. Regulators need to apply the ‘precautionary principle,’ and not ignore low-probability risks or those about which we lack complete information. Rather we need to take these risks seriously and account for them.”

The study documents a series of regulatory failures dating back long before the Obama Administration, and offers specific reforms needed to avoid similar catastrophes in the future. Its findings include:

  • Compliance with regulatory standards has been far from consistent, and the threat of enforcement has not been a meaningful deterrent. The industry has operated in a climate in which costs were routinely balanced against safety and environmental protection. To motivate compliance with regulatory standards in such a climate, the cost of a failure to comply must be high. Several provisions of the Outer Continental Shelf Lands Act (OCSLA) ensured that the cost of noncompliance was minimal — most notably the feeble fine structure for violators – a maximum of $35,000 per day in civil penalties does little to deter a multi-billion dollar industry.
  • The MMS routinely ignored a requirement in the regulations implementing the National Environmental Policy Act (NEPA) that it consider reasonably foreseeable significant adverse impacts — catastrophic ones, in particular — even when they are improbable. In the BP case, the MMS completely ignored the risk of a serious oil spill, examining in its Environmental Impact Statement the prospect of spills no larger than 4,600 barrels of oil. Further, in assessing the aggregate risks of oil and gas drilling in the Gulf over the 40-year life of its plan for the region, it contemplated only that 11,000 to 31,000 barrels might be spilled. In the actual event, the BP spill unleashed an estimated 4.9 million barrels into the Gulf.

· Like its predecessor, the new Bureau of Ocean Energy Management, Regulation and Enforcement lacks important resources it needs to do the job of protecting the public and the environment, particularly in light of the scientific and engineering complexities inherent in deepwater and ultra deepwater drilling. In addition to funding to develop the technical expertise needed by regulators, resources for enforcement are lacking. According to one Department of the Interior official, the agency has just 60 inspectors charged with covering almost 4,000 facilities in the Gulf of Mexico. By contrast, BOEMRE employs 10 inspectors to oversee just 23 facilities on the Pacific Coast.”

· Despite language in multiple statutes imposing the “Precautionary Principle” on federal decision-making, the MMS proceeded in precisely the manner that the principle is designed to protect against—an indication that the principle is largely unobserved. That is true not just at the MMS, but at other agencies charged with protecting against harm to people and the environment.

The report calls for regulatory and legislative reforms. Congress should amend the OCSLA to overhaul environmental review procedures, require inter-agency consultation, extend deadlines for review, increase penalties, and create incentives for continual safety innovation. The Department of the Interior Secretary Ken Salazar and BOEMRE Director Michael Bromwich should continue to implement new ethics standards, end the revolving door, and create a culture in BOEMRE that supports the agency’s regulatory mission.

CPR President and study co-author Rena Steinzor, professor of law at the University of Maryland, said, “MMS … had come to regard the oil industry as its constituents, which no doubt contributed to the egregious ethical lapses of its staff. But somewhere along the line, they’d gotten the message that they were there to serve the industry, not to protect the public and the environment, or to make sure that industry exercised due caution.”

The Center for Progressive Reform (www.progressivereform.org) is a nonprofit research and educational organization dedicated to protecting health, safety, and the environment through analysis and commentary.

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