US congressional Democrats Thursday called for larger fines and stronger safety laws at a hearing on a 17-month federal investigation into the Macondo blowout, but Republicans pushed back, warning that new laws could stifle offshore exploration.
At a House of Representatives Committee on Natural Resources hearing, Representative Edward Markey of Massachusetts, the senior Democrat on the panel, said the interagency investigation into the Gulf of Mexico oil spill showed that companies must face steeper penalties to be held accountable.
"The facts are in, and it is well past time for this committee to enact comprehensive legislation to ensure that we prevent a similar disaster in the future," Markey said.
He said the charges of regulatory violations by the US Bureau of Safety and Environmental Enforcement, issued Wednesday night against Macondo operator BP, could total up to $21 million, which amounts to a "slap on the wrist" when compared to the company's projected billions in annual profits.
"We need to ensure that there are sufficient financial incentives in place to deter oil companies from cutting corners," Markey said, calling for higher civil penalties and a higher liability cap for companies responsible for a spill.
Currently, penalties are limited to a maximum of $35,000/day for each violation. Federal law caps liability for damages stemming from oil spills at $75 million.
BSEE Director Michael Bromwich, in his testimony, agreed that violation penalties need to be increased significantly.
"The kinds of figures you're talking about are trivial to these companies," Bromwich said. "It needs to be clearly well into the six figures to be a significant deterrent to oil companies and to serve as a deterrent to the industry as a whole."
But committee Chairman Doc Hastings, Republican of Washington, said the Joint Investigation Team report, despite calling for many improved procedures and regulations, does not ask for any new laws.
"While the report makes a number of recommendations, it's interesting to note that it includes no specific recommendations for congressional action," Hastings said.
"Offshore drilling must be done safely, but we cannot afford to make it impossible through overregulation," he continued later in his opening statement.
Bromwich agreed that the Interior Department does not need new legal authority to overhaul drilling safety regulations.
In response to a question from Markey, Bromwich said BP will be allowed to participate in a planned offshore lease sale in December, in part because of the company's cooperation in the wake of the oil spill.
The US Bureau of Ocean Energy Management, Regulation and Enforcement conducted the investigation with the Coast Guard. The agencies issued their report in September.
At Macondo, BP was the operator while Transocean provided the Deepwater Horizon drilling rig and Halliburton provided a variety of oilfield services, including cement work on the well that blew, killing 11 workers and creating the largest marine oil spill in US history.
BP America Vice President Raymond Dempsey testified that the company has spent about $14 billion responding to the spill, in addition to creating a $20 billion trust fund to compensate victims of the disaster. As of October 11, the company had paid out more than $7 billion in claims, he said.
Bill Ambrose, managing director of Transocean's North America division, said that company has updated its safety procedures, including standardizing "negative pressure tests." Investigators cited misreading of a pressure test as a key factor in the disaster. He declined to respond questions about the findings of the Joint Investigation Team report or BSEE's civil penalties.
James Bement, vice president of Hallliburton's Sperry Drilling division, said he had not reviewed the allegations of civil violations and could not comment on them. But he maintained that the well owner is ultimately responsible for design of exploratory wells and said Halliburton's work on the Macondo well "was completed in accordance with the requirements of the well owner's well construction plan."
