Document Type

Working Paper

Publication Date

10-2-2010

SSRN Discipline

PSN Subject Matter eJournals; Industrial Organization & Regulation eJournals; Political Economy - Comparative eJournals; ERN Subject Matter eJournals; Sustainability Research & Policy Network; CGN Subject Matter eJournals; Economics Research Network; Legal Scholarship Network; Public Choice & Political Economy eJournals; Political Economy - International eJournals; Law School Research Papers - Legal Studies; Corporate Governance Network; SRPN Subject Matter eJournals; Law School Research Papers - Public Law & Legal Theory; Political Institutions eJournals; Political Science Network; Social Responsibility of Business eJournals

Abstract

The BP oil spill in the Gulf of Mexico is destined to take its place as one of the greatest environmental disasters in the history of the United States or for that matter of the entire planet Like so many other disasters on that list it was entirely preventableBP must shoulder its share of the blame of course Similarly the Minerals Management Service MMS "“ since reorganized and rebranded "“ has come under much deserved criticism for its failure to rein in BP's avaricious approach to drilling even where it was unable to respond to a worstcase scenario in a responsible and timely fashion But the problems run much deeper than a single risktaking company and a single dysfunctional regulatory agencyThis report sketches out widespread regulatory failure touching several agencies of the federal government and affecting several critical environmental statutes Prepared by Member Scholars of the Center for Progressive Reform CPR it has two goals 1 to identify how and why the regulatory system failed to protect the public and environment and prevent the BP disaster and 2 to recommend the priority reforms that are essential to correct these regulatory deficienciesThe report begins by laying out the shortcomings in the primary statute under which deepwater oil drilling is regulated "“ the Outer Continental Shelf Lands Act OCSLA "“ and outlines key reforms needed to provide the authority necessary to protect the public interestIt then turns to systemic problems within the agency charged with regulation of deepwater oil drilling under the OCSLA "“ the Mineral Management Service MMS renamed the Bureau of Ocean Energy Management Regulation and Enforcement BOEMRE in the wake of the disaster These include problems of agency capture and inadequate fundingThe third topic addressed in the report is the role of the National Environmental Policy Act NEPAÂ "“ how and why this landmark statute was disabled from performing its critical role in the case of the BP well and what regulatory changes can ensure that it functions effectively in the futureThe report next details the problems that surrounded the implementation and enforcement of the Endangered Species Act ESA as it applied to oil drilling and recommends several key reformsThe report then discusses a systemic problem that is a theme in each prior section and that specific statutory reforms cannot fully remedy obstacles to making sound regulatory decisions in the face of uncertain low probability risks of potentially catastrophic or irreversible harm This section highlights a common sense solution adoption of a precautionary stance A precautionary approach would replace the current widelyadopted presumption that regulation must await a high "“ and often unattainable "“ degree of certainty even when the potential costs are irreversible or catastrophicIn the last sections of the report we step back to look at the regulatory system from a broader perspective We consider first how the regulatory system and its failures in this case were caused in part by the absence of coherent policies on energy and climate change Our current policy provides vast incentives for risky oil and gas development like deepwater drilling and few for lowcarbon alternative energy sources In the wake of yet another painful lesson on the cost of our current incoherent approach it is time to focus political attention on the difficult but necessary task of debating and adopting a coherent and sound energy policyIn the final section we step back geographically to suggest why another lesson of this disaster is that the United States should undertake to learn more from the experience abroad offering the example of the North Sea Had we been paying closer attention the investigations and reforms in the wake of the infamous Piper Alpha spill or the Bravo platform blowout might have offered insights to help us avoid this disaster

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