Panel blames industry and government for BP oil spill

Reporting from Los Angeles and Washington —  The presidential commission examining the causes of the BP oil spill Wednesday laid blame for the disaster on corporate mismanagement, inadequate government regulation and ultimately a lack of political will to ensure proper oversight of the oil industry as it pushed drilling rigs into ever deeper waters.

Releasing a key chapter of its final report on the April 20 explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico, the commission recounted what is by now the well-known string of missteps that led to one of the world’s largest offshore oil spills.

But it went on to issue a broader indictment, calling for both the industry and the government to reform their practices or risk a repeat of the BP disaster, which killed 11 men and tainted the gulf with 205 million gallons of crude.

“The blowout was not the product of a series of aberrational decisions made by rogue industry or government officials that could not have been anticipated or expected to occur again,” the chapter said. “Rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur.”

The commission, established in May by President Obama to examine the causes of the blowout and make recommendations to prevent future spills, will issue its full report next week.

The findings suggest that the Justice Department may have a strong case in the civil lawsuit it filed against BP, rig owner Transocean Ltd. and other companies involved in the spill for violation of the Clean Water Act. Legal experts say criminal charges against the companies are likely to follow.

David Uhlmann, a law professor at the University of Michigan who formerly headed the Justice Department’s environmental crimes unit, said the latest chapter of the report reinforces that all the companies involved in the spill “are going to face substantial liabilities.”

But Uhlmann said the report may also contain some relatively good news for the companies.

Given what the commission has found so far, he said, it seems less likely that prosecutors will be able to show that the corporate behavior amounted to “gross negligence” on the civil side or “intentional misconduct” on the criminal side, which could have exposed the firms to billions more in fines or longer jail sentences for key players.

“Certainly you had very highly trained professionals making decisions here,” Uhlmann said. “They may have made mistakes or exercised poor judgment, but proving gross negligence may require more.”

The commission faulted not just the federal agency that oversaw drilling operations, but political indifference: “The root cause can be better found by considering how … efforts to expand regulatory oversight, tighten safety requirements and provide funding to equip regulators with the resources, personnel and training needed to be effective were either overtly resisted or not supported by industry, members of Congress and several administrations.

“The accident of April 20 was avoidable,” the panel said. “It resulted from clear mistakes made in the first instance by BP, Halliburton and Transocean, and by government officials who, relying too much on industry’s assertions of the safety of their operations, failed to create and apply a program of regulatory oversight that would have properly minimized the risks of deepwater drilling.

“It is now clear that both industry and government need to reassess and change business practices to minimize the risks of such drilling,” it concluded.

BP said in a statement that the report appeared to confirm the results of the company’s own investigation, noting that it “concludes that the accident was the result of multiple causes, involving multiple companies.”

“BP is working with regulators and the industry to ensure that the lessons learned from [the] Macondo [well] lead to improvements in operations and contractor services in deepwater drilling,” it said.

Halliburton took issue with several findings and said the commission “selectively omitted information we provided to them in response to their numerous inquiries.”

“Halliburton acted at the direction of BP, as acknowledged in several places in the National Commission report,” the statement said.

The report chapter comes as the oil industry and its allies in the new Congress are banking on political momentum to demand that the Obama administration reverse its recent decision to prohibit oil and gas drilling in the eastern Gulf of Mexico and off the Atlantic and Pacific coasts, and to delay the next five-year plan for offshore leases in the central and western gulf.

At the American Petroleum Institute’s annual luncheon in Washington on Tuesday, the group’s president, Jack Gerard, argued that opening more areas to drilling would help reduce the federal budget deficit. API’s guest at the luncheon, Rep. Fred Upton (R-Mich.), the new chair of the powerful House Energy and Commerce Committee, said he was considering holding hearings on the drilling bans.

API spokesmen declined to comment on the report chapter, saying they wanted to assess the report in its entirety after it comes out Tuesday. An industry executive, speaking on condition of anonymity because he had not seen the full report, denied that the oil industry was mired in complacency, as the commission’s chairmen have said.

The executive said oil and gas companies were already improving their equipment and practices based on lessons learned from the BP disaster and would not back down from their demands that the federal government open other areas to drilling.

In the wake of the spill and widespread criticism of lax government oversight, the Obama administration reorganized the agency that regulates oil and gas operations, now known as the Bureau of Ocean Energy Management, Regulation and Enforcement.

In an e-mailed statement, the agency said it had been working since the explosion to reform regulation of the offshore oil industry. In recent months, it has issued new rules that mandate such practices as running critical well pressure tests, which the crew of the Deepwater Horizon apparently failed to perform properly. It also called for more rigorous evaluations of blowout preventers and more detailed spill-response plans.

“The report released today reflects areas [the Interior Department] has already identified, acknowledged and spent months working aggressively to reform,” the agency said in its e-mail. “In response to the Deepwater Horizon oil spill in the Gulf of Mexico, the Obama Administration has launched the most comprehensive reforms in U.S. history to ensure the safe development of offshore oil and gas regulation.”

Some experts voiced concerns that the commission was drawing overly broad conclusions about the industry’s commitment to safety based on the decisions made on a single rig.

“I think it’s an unfair generalization,” said Robin West, chairman of the consulting group PFC Energy and a former assistant Interior secretary responsible for offshore drilling. “It ignores the overall success and safety record of the industry. Clearly the Macondo well was a disaster and mistakes were made. But the industry produces 85 million barrels a day worldwide and with a remarkable safety record.”

West said he worried that sweeping recommendations would put pressure on the Interior Department to keep large swaths of rich drilling opportunities off the table when perhaps they deserved a second look. Offshore drilling “requires a scalpel, not a meat ax,” he said, “and this report takes a meat ax … because it says the whole program is deeply flawed, and the record doesn’t support that.”

Engineering mistakes and management failures highlighted in the chapter include: a flawed design for the cement slurry used to seal the bottom of the well, the misreading of a critical pressure test, flawed procedures for securing the well, inattention to signals of the impending blowout, and an ineffective response to the blowout once it began.

bettina.boxall@latimes.com

neela.banerjee@latimes.com

Boxall reported from Los Angeles and Banerjee from Washington. Times staff writer Richard Fausset in Atlanta contributed to this report.