Deepwater Horizon Disaster

# Deepwater Horizon oil spill: selected issues for Congress

March 8, 2011, 1:56 pm
Source: Congressional Research Service Reports for the People
 Topics:

Deepwater Horizon oil rig explosion, Credit: www.csb.gov

Editor's Note: This article is excerpted directly from the Congressional Research Service Report for Congress, "Deepwater Horizon Oil Spill : Selected Issues for Congress," July 30, 2010. It has been edited only to conform to the Encyclopedia's style.

# Summary

On April 20, 2010, an explosion and fire occurred on the Deepwater Horizon drilling rig in the Gulf of Mexico. This resulted in 11 worker fatalities, a massive oil release, and a national response effort in the Gulf of Mexico region by the federal and state governments as well as BP. Based on estimates from the Flow Rate Technical Group, which is led by the U.S. Geological Survey, the 2010 Gulf spill is the largest oil spill in U.S. waters. The oil spill has damaged natural resources and has had regional economic impacts. In addition, questions have been raised as to whether offshore regulation of oil exploration has kept pace with the increasingly complex technologies needed to explore and develop deeper waters.

### Loss of Liability Limit

Liability limits do not apply if the incident was “proximately caused” by “gross negligence or willful misconduct” or “the violation of an applicable Federal safety, construction, or operating regulation.” If one of these circumstances is determined to have occurred, liability would be unlimited. In addition, the responsible party must report the incident and cooperate with response officials to take advantage of the liability caps. According to the National Pollution Funds Center, liability limits are “not usually well defined until long after response,” and litigation may be required to resolve the issue.58

### Oil Spill Liability Trust Fund

Before the passage of OPA, federal funding for oil spill response was widely considered inadequate,59 and damage recovery was difficult for private parties.60 To help address these issues, Congress established the Oil Spill Liability Trust Fund (OSLTF). Although Congress created the OSLTF in 1986,61 Congress did not authorize its use or provide its funding until after the Exxon Valdez incident.

The OSLTF is a federally administered trust fund that may be used to pay costs related to federal and state oil spill removal activities, costs incurred by federal, state, and Indian tribe trustees for natural resource damage assessments, and unpaid damages claims.62 The fund is financed by a per-barrel tax on crude oil received at U.S. refineries and on petroleum products imported into the United States for consumption.63

## OPA Compensation and Claims Process

*See end note 64

OPA established a compensation and claims process for removal costs and the costs/damages identified above.65 In general, claims for removal costs and damages must be presented first to the responsible party (i.e., BP).66 If the party to whom the claim is presented denies all liability, or if the claim is not settled by payment within 90 days after the claim was presented, the claimant may elect either to initiate an action in court against the responsible party or to present the claim directly to the OSLTF.67

The OSLTF managers are limited in the amount of payments that may be awarded for each incident.68 Under current law, the per-incident cap is $1 billion. Some are now arguing that increasing the per-incident cap would reduce the risk that parties (private citizens and governments) would not be fully compensated for losses associated with an oil spill. Statements from OPA’s legislative history suggest that drafters intended the fund to cover “catastrophic spills.”69 However,$1 billion today does not have the same value as it did in 1990, when OPA was enacted. Although OPA requires the President to issue regulations to adjust liability limits at least every three years,70 an analogous provision for the per-incident cap does not exist. As a point of reference, if the $1 billion figure had been adjusted for inflation, it would be approximately$1.6 billion in today’s dollars.

On June 16, 2010, the President announced that BP had agreed to set aside $20 billion to pay economic damage claims to people and businesses that have been affected by the oil spill. The claims will be processed by an independent claims facility administered by Kenneth Feinberg. An accompanying factsheet stated that the facility will develop and publish standards for claims.71 As of the date of this report, these standards are not yet available. It is uncertain whether these standards will mirror OPA’s liability framework or to what degree they may differ. Further, it is uncertain how the independent claims facility will interact with the existing claims process or if the facility is simply a means by which BP is complying with the process.72  A shoreline cleanup crew attempting to use high-pressure, hot water-washing to clean an oiled shoreline at the site of the Exxon Valdez spill. Credit: NOAA Although the$20 billion fund established by BP may render the per-incident cap a moot issue for the 2010 Gulf spill, a subsequent catastrophic spill could threaten the current per-incident cap threshold. As a reference point, the 1989 Exxon Valdez spill tallied approximately $2 billion in cleanup costs and$1 billion in natural resource damages in 1990 dollars. These combined figures equate to approximately $5 billion in today’s dollars and would not include the wider array of claims for which responsible parties are now liable. # Federal Regulatory Framework Regulations to implement federal statutes are promulgated by numerous federal authorities and vastly outnumber federal statutes. The bases for relevant federal regulation in this instance are, among other statutes, OCSLA73 and the OPA.74 The sheer number of regulations from these statutes and from other federal laws complicates the description of the regulatory framework. Frequently, case law, international measures, or other legal actions define the regulatory parameters that apply to the Deepwater Horizon events. The roles of the lead federal regulators, BOEMRE/MMS and the U.S. Coast Guard, are outlined below. ## Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE, Formerly MMS) *See end note 75 BOEMRE/MMS is the agency within the Department of the Interior with lead regulatory authority for offshore oil and gas leasing. Regulatory authority in the OCS encompasses resource assessment and development, operational safety, and environmental considerations. BOEMRE/MMS regulations generally require that a company with leasing obligations demonstrate that proposed oil and gas activity conforms to federal laws and regulations, is safe, prevents waste, does not unreasonably interfere with other uses of the OCS, and does not cause impermissible harm or damage to the human, marine, or coastal environments. Three types of regulatory authority govern OCS lease obligations: prescriptive requirements generally codified in the Code of Federal Regulations, performance-based goals, and consensus-based technical standards. BOEMRE/MMS regulations cover a wide range of equipment, procedures, and certifications. BOEMRE/MMS lease stipulations and regulations refer to maps, communications, and contingencies such as hurricanes and other emergencies. Many of the rules governing OCS exploration, development, and production are published in the Code of Federal Regulations.76 The major statutes that govern the leasing process are discussed in the “OCS Leasing” section. Once the agency has issued a lease for oil and gas exploration and development rights, a lessee or operator may submit an application to explore for oil and gas resources. Approval of the exploration plan by the BOEMRE/MMS regional office is a prerequisite for drilling. After the exploration phase, if the lessee decides to further develop the area governed by the lease, the lessee must submit another application, typically a Development and Production Plan or a Development Operations Coordination Document, for review and approval by BOEMRE/MMS. In water depths greater than 400 meters (1,312 ft.), a lessee would also submit a Deepwater Operations Plan and a Conservation Information Document. If a lessee seeks to use nonconventional production or completion technology such as floating or subsea production systems, BOEMRE/MMS may provide a different approval process. The agency is responsible for approving applications for a permit to drill (APDs), and subsequent BOEMRE/MMS approvals are typically required for further drilling actions to sidetrack, bypass, or deepen a well. It is difficult to determine at what stage in the BOEMRE/MMS approval process applicants typically address financial assurances, precautionary actions to control development operations, compliance with design criteria, and compliance with casing and cementing requirements. Furthermore, it is difficult to determine the agency’s approval process for diverter and blowout preventer systems in various exploration and development plans. Federal risk assessments are typically conducted at numerous stages of the exploration and development planning process and typically depend on risk assessments conducted at a previous stage in the leasing process. Congress is interested in when risk assessments are conducted, and hearings are underway to focus on the various stages of the BOEMRE/MMS leasing process. How the agency enforces regulations and assesses financial penalties for violations, and how it would suspend or shut down operations under certain conditions, have been raised as concerns since April 20, 2010. Phases of the OCS leasing process undergo review under the National Environmental Policy Act (NEPA),77 unless specifically excluded. Generally speaking, NEPA requires an agency to consider the environmental impacts of its actions and prepare a document describing its analysis. BOEMRE/MMS prepared four documents describing its environmental analysis related to the BP lease: an environmental impact statement (EIS) for the five-year plan for all OCS leasing; an EIS for the combined lease sales in the western and central Gulf of Mexico; an environmental analysis for Lease Sale 206; and a categorical exclusion for the exploration plan for activity on the Mississippi Canyon block 252. A categorical exclusion (CE) may be used under NEPA when an agency has determined that a type of project does not have significant impacts. A CE can be used unless certain exceptions— typically referred to as extraordinary circumstances—exist, such as the presence of endangered species or an archeological site. BOEMRE/MMS guidance provides that many exploration plans in the Gulf can be categorically excluded from further NEPA review. (For a more comprehensive discussion, see CRS Report R41265, The 2010 Oil Spill: The Minerals Management Service (MMS) and the National Environmental Policy Act (NEPA), by Kristina Alexander.) ### Wells The operator is required, pursuant to provisions contained in 30 C.F.R. 250, to submit an APD and obtain approval for it. BOEMRE/MMS reviews applications for drilling wells. Once a permit is approved, the lessee is required to take precautions to keep all exploratory well drilling under control at all times. There is increased interest in what constitutes compliance with “best available and safest technology” (BAST) to address pressure conditions during drilling operations, and in the potential for uncontrolled well flow.78 According to federal regulations, operators in the Gulf must use BAST whenever practical on all exploration, development, and production operations.79 However, the regulations also state that, “[i]n general, we consider your compliance with [BOEMRE/MMS] regulations to be the use of BAST.” The language of the regulation in effect defines BAST as whatever complies with the agency’s regulation. Some observers question whether the regulations preclude a more effective approach to BAST. ### Platforms The lessee typically designs, fabricates, installs, uses, inspects, and maintains platforms and structures on the OCS to assure their structural integrity for the conduct of operations at specific locations.80 BOEMRE/MMS program personnel typically use certified verification agents to provide third-party expertise and technical input in the verification process. After installation, platforms are required to be inspected.81 ### Equipment and Facilities Equipment used on the OCS is regulated to assure the safety and protection of the human, marine, and coastal environments. Surface- and subsurface-controlled safety valves and locks must conform to federal requirements.82 Facilities also have requirements concerning electrical systems, flow lines, engines, and firefighting systems.83 ## Role of U.S. Coast Guard *See end note 84 The Coast Guard regulates certain activities at mobile offshore drilling units (MODUs) such as the Deepwater Horizon. The Coast Guard generally overseas the safety of systems at the platform level of a MODU, as opposed to the sub-platform drilling systems overseen by BOEMRE/MMS. The areas of Coast Guard oversight include a MODU’s hull structure, navigation equipment, lifesaving equipment, and fire protection equipment and structures; the safety of the electrical system; and the safety and health of workers as they perform their routine tasks. The Coast Guard is to conduct an initial review of a unit before it is allowed to operate. Once a MODU is operating, the Coast Guard is to conduct a full survey of the rig every two years and an interim inspection annually. The Coast Guard’s regulatory framework for MODUs resembles that for ships calling at U.S. ports.  A U.S. Coast Guard worker stands on the bow of an oil-skimming vessel during operations to clean up the 450,000-gallon oil spill in the Sabine-Neches Waterway. Credit: NOAA The “checklist” the Coast Guard uses when inspecting a MODU depends on its “flag” or country of registration. Like ships engaged in international trade, MODUs on the OCS can be registered in foreign countries. The Deepwater Horizon was registered in the Marshall Islands.85 Registering a rig or ship in the Marshall Islands or another “flag of convenience” (FOC) country (Panama, Liberia, and the Bahamas are other common ones) provides tax and other economic advantages. FOCs are also referred to as “open registries” or “international registries” because they do not require that a vessel be owned or crewed by citizens of the flag state.86 For these reasons, the world shipping fleet is predominantly flagged in these countries. According to the regulatory compliance manager of the Deepwater Horizon, since MODUs can potentially be moved around the world, international registries provide more flexibility as to where repairs can be performed, the citizenship of the crew, and the timing of inspections.87 Foreign-flagged rigs either must meet the design, equipment, and operating standards of the flag state, provided the Coast Guard determines they are equivalent to or more stringent than U.S. standards (promulgated at 46 C.F.R. parts 108 and 109), or they must meet the design and equipment standards contained in the International Maritime Organization (IMO) Code for the Construction and Equipment of MODUs (2009 MODU Code, adopted by Resolution A.1023(26)).88 The Deepwater Horizon was inspected and found to be in compliance with the MODU code.89 ### The International Maritime Organization (IMO) The IMO is a U.N. body that has established international standards for the safety, security, and prevention of pollution from ships. Its first convention, the International Convention for the Safety of Life at Sea (SOLAS), was adopted in response to the Titanic disaster.90 The MODU code was developed, beginning in the 1970s, to provide for a level of safety on MODUs equivalent to that provided by SOLAS for ships. Countries must ratify IMO conventions and enforce their requirements. The United States is a signatory to most IMO conventions, including the MODU IMO convention.91 Like the Coast Guard’s regulatory oversight, the IMO MODU code does not address the drilling-related equipment of an oil rig. ### Classification Societies The offshore oil industry has also adopted classification societies as an institution of shipping oversight. Classification societies are independent organizations that inspect a ship or oil rig and certify that it meets the construction requirements and standards for its intended purpose. They inspect only the physical elements of a rig, not the qualifications of the crew or how it is operated. Inspections are performed during the construction phase as well as throughout the operating life of a unit and become more thorough as the unit ages. Ship and oil rig owners pursue certification from these societies for mortgage, insurance, and marketing reasons. Deepwater Horizon was certified mostly by the American Bureau of Shipping (ABS), but also by Det Norske Veritas (DNV).92 The Coast Guard checks for certification from approved classification societies when inspecting both foreign and U.S.-flagged vessels or rigs. Some have questioned the credibility of classification societies, because the societies are paid by vessel owners. Classification societies typically have a for-profit side of their business, selling technical expertise to vessel owners, and they compete with each other.93 They date back to the mid-18th century, when insurers would hire ex-sea captains to survey ships.94 Their pragmatic knowledge of ships was useful for insurers assessing risk. Eventually, ex-captains were replaced by naval engineers and technicians and standards were formalized in writing. For marketing reasons, shipbuilders found it advantageous to build their ships to these standards and therefore sought and paid for classification. Thus, from an insurer’s or banker’s perspective, a classification society had a conflict of interest if it was being paid by a ship’s owner. In response, insurers and banks began creating a separate method of inspection as their confidence in classification societies eroded. Some of the classification societies established a trade association in 1969 to set industry practices to address these concerns.95 In 2004, Congress required that the Coast Guard not accept certifications by classification societies that are not a member of this trade association or that have not been approved by the Coast Guard under specified criteria.96 # Oil Spill Response Issues ## Use of Dispersants *See end note 97 Dispersants are chemical agents that include surfactants, solvents, and other compounds. By reducing the connection (referred to as an interfacial tension) between oil and water, dispersants enhance the breakup of an oil slick into small oil droplets that mix with the water column. Oil spill dispersants do not reduce the amount of oil entering the environment; instead, dispersants alter the physical properties of oil, changing its transport, fate, and potential effects.98 In general, the decision to use dispersants poses trade-offs for oil spill responders. The objective of dispersant use is to minimize the amount of surface oil that reaches shoreline habitats, where it threatens a wide range of wildlife and organisms. The downside is that dispersants increase the exposure to oil of organisms living in the water column. As stated in a 2005 National Research Council study, “[d]ispersant application thus represents a conscious decision to increase the hydrocarbon load (resulting from a spill) on one component of the ecosystem (e.g., water column) while reducing the load on another (e.g., coastal wetland).”99 Section 311(d) of the Clean Water Act (33 U.S.C. 1251 et seq.) requires EPA, in cooperation with the states, to prepare a schedule of dispersants, other chemicals, and other spill-mitigating devices and substances. The Product Schedule100 includes dispersants and other chemical or bioremediation products that may be authorized for use on oil discharges in accordance with the procedures set forth in the National Contingency Plan (NCP). EPA may add products to the NCP Product Schedule after companies submit specific data to the agency. Data requirements include results from effectiveness and toxicity testing. Although EPA reserves the right to verify testing data (and to require additional information), the regulations do not establish a toxicity threshold for placement on the schedule. A decision that a product is eligible for listing on the Product Schedule does not constitute EPA approval of the product. As part of their oil spill response preparations, Regional Response Teams (RRTs) and Area Committees address the desirability of using dispersants and other oil control agents in particular situations. Planners consider the potential sources and types of oil that might be spilled, the existence and location of environmentally sensitive resources that might be impacted by spilled oil, available product and storage locations, the availability of equipment and adequately trained operators, and the available means to monitor product application and effectiveness. Regional Contingency Plans and Area Contingency Plans may preauthorize dispersants and the specific contexts in which products should and should not be used, and many regions/areas have done so, including those in the Gulf.101 Before authorizing dispersant use in an area without a preauthorization plan, an On-Scene Coordinator must (1) seek and receive “concurrence” with the RRT representative from EPA and representatives from states with jurisdiction, and (2), when practicable, consult with trustees from the Departments of Commerce and the Interior. An unprecedented volume of dispersants (at least for U.S. waters) has been applied to the oil spill in the Gulf. While dispersants have proven effective in breaking up the oil on the surface, numerous questions remain regarding the fate of the dispersed oil and the chemical dispersants. Moreover, the application of undersea dispersants is essentially experimental.102 Many have raised questions about the toxicity of the dispersant BP has been using in the Gulf. Although it is on the NCP schedule, other dispersants are listed as both more effective and less toxic.103 On May 20, 2010, EPA and the Coast Guard directed BP to evaluate available, preapproved dispersants for toxicity and effectiveness.104 On May 22, BP responded by (generally) concluding that the dispersant being used (COREXIT) continued to be the best option.105 On May 26, 2010, EPA and the Coast Guard directed BP to “eliminate the surface application of dispersants. In rare cases when there may have to be an exemption, BP must make a request in writing to the FOSC [the Coast Guard OSC] … to justify the use of surface application. The FOSC must approve the request and volume of dispersant prior to initiating surface application” (emphasis added).106 When this directive was made, BP had applied a reported 700,000 gallons of dispersants to the surface waters. Since the directive, responders have applied an additional (approximately) 300,000 gallons on the surface, at a fairly consistent daily rate (Figure 2). However, as of July 16, data indicated that July 6 was the last surface application. For up-to-date information from EPA, see http://www.epa.gov/bpspill; for more current dispersant application data, see http://www.deepwaterhorizonresponse.com. Source: Prepared by CRS with data from daily “Current Operations” updates, available at http://www.deepwaterhorizonresponse.com. Notes: Data for some days were not available. In these instances, the volume for the previous day was used. ## Louisiana Protective Berm Project *See end note 107 On May 11, 2010, the U.S. Army Corps of Engineers (Corps) received a request from the state of Louisiana’s Coastal Restoration and Protection Authority (LCRPA) for an emergency permit to construct a project of approximately 86 miles of sand berms in order to protect Louisiana’s barrier islands and coastal wetlands from damage by the Deepwater Horizon oil spill.108 Supporters of the plan to construct the protective berms (including federal agencies and nongovernmental entities) argue that the project is a promising means to mitigate the effects of the oil spill in Louisiana. They note that the urgent situation associated with the oil spill requires that the project move forward with maximum speed and regulatory flexibility. These observers contend that, combined with other natural barriers in the Gulf, strategically placed berms of relatively small size and minimal cost will protect large areas of coastline and wetland habitat from oil pollution. Some have expressed doubts regarding the barrier project. Specifically, agency and nongovernmental stakeholders have questioned the feasibility and effectiveness of the barriers.109 Further, some scientists—including those from the National Oceanic and Atmospheric Administration (NOAA), the U.S. Geological Survey (USGS), and the Fish and Wildlife Service (FWS)—have expressed preliminary concerns about the potential of the barriers to disrupt tidal currents and ocean circulation patterns, and to have other long-term environmental impacts.110 These observers note the unprecedented nature of large-scale berm construction of this type, and advocate for a significant degree of caution moving forward on this project. The original request by LCPRA proposed to construct 86 miles of berms standing 6 feet above the mean high water line in and around areas near Louisiana barrier islands in the Gulf. The plan called for the berms to be built largely from dredge and fill materials taken from nearby areas (including some barrier islands), and to leave open certain deepwater channels for tidal influx. The State of Louisiana estimated the preliminary cost of this plan to be$350 million. After subsequent discussions between LCPRA and the Corps, the state submitted a new permit request that revised the location from which certain borrowed materials would be taken, as well as the coverage areas of the berms themselves. The revised request was submitted on May 14, 2010, and circulated by the Corps for interagency comment on May 17, 2010.111 This revised version of the plan requested 128 miles of barriers over 19 separate areas (also known as reaches). Construction of the revised plan was estimated to take six to nine months, and no cost estimate was provided for this version of the plan.

 Construction of a Lousiana sand berm. Credit: Ecopolitology.org

Following interagency coordination and submission of comments, the Corps partially approved the LCPRA request on May 27, 2010. The Corps permit noted that approval of the project did not eliminate the need for a number of other associated requirements, including an FWS Special Use Permit, a Louisiana Coastal Use Permit, and approval from BOEMRE/MMS to dredge certain offshore borrow sites.

The Corps approved six reaches (four reaches to the west of the Mississippi River Delta, and two reaches to the east) of the revised request by the state.112 The final Corps environmental analysis noted that the state’s proposal was not selected in its entirety because of its potential to increase tidal circulation and reduce pathways for the oil to be flushed back out to sea.113 Additionally, the Corps highlighted concerns with the longevity of the structures and the timing of construction. The Corps concluded that the selected six reaches would offer the greatest immediate benefits without adverse environmental impact. The Corps noted that subsequent construction decisions may be based on monitoring of the initial structures.

Responsibility for financing and construction of the approved reaches of berm is an ongoing concern. In early June, National Incident Commander Thad Allen announced that the federal government would direct BP to pay for all six reaches approved by the Corps.114 BP announced support for this decision and estimated the cost for construction of the approved plan to be $360 million.115 Notably, while BP has agreed to make payments based on project milestones, it has also stated that it will not manage project construction or assume any liability associated with the project.116 Congress may consider what role, if any, the federal government should play in construction, upkeep, and monitoring of the Barrier Island Project. Responsibility for management of the barriers’ construction has not been formalized, although National Incident Commander Thad Allen has previously asserted that the state will have primary responsibility.117 Additionally, it is unclear who will assume ownership and liability of the barriers after they are constructed, and over what period of time the barriers will be maintained. Maintenance and monitoring requirements could result in additional costs beyond the original construction estimates, and BP has not indicated whether it will accept any additional responsibility for these elements. Finally, it is unclear whether other states in the Gulf region intend to pursue similar barrier strategies in response to the oil spill, and whether federal decisions on the Louisiana project would apply to these and other future efforts. ## Relief Wells *See end note 118 On May 2, 2010, 12 days after the Deepwater Horizon drill rig exploded and caught fire, BP began drilling the first of two relief wells, with the goal of intersecting the Deepwater Horizon well near the bottom and plugging it with heavy mud and cement. At the request of the Obama Administration, BP began drilling a second relief well on May 16 to provide a second chance at plugging the well if the first relief well failed. Both wells are being drilled vertically and then turned at an angle to intercept the Deepwater Horizon well just above the oil- and gas-producing reservoir at about 18,000 below sea level. (See Figure 3.) As of June 13, 2010, the first relief well had reached 13,973 feet and had begun to drill at an angle of 35 degrees; the second relief well had reached 9,022 feet and was still drilling vertically. BP and the Administration estimate that it will take several months, possibly until August, for the first relief well to reach the target area.119 ### What Are Relief Wells? A relief well is drilled and constructed similarly to an exploration well but for a different purpose. Instead of drilling to intersect a petroleum-bearing horizon and to produce oil and gas, a relief well is drilled to intersect an out-of-control well that suffered a blowout. The relief well is guided to the blown-out well and drilled into the existing well casing, and then heavy drilling mud and cement are injected into the well to form a permanent plug. The plug is intended to prevent oil and gas from flowing from the petroleum-bearing reservoir into the wellbore of the blown-out well and up to the surface. Source: BP, modified by CRS. Notes: Relief well 1 had reached a depth of 13,973 feet below sea level and relief well 2 had reached 9,022 feet as of June 13, 2010. Numbers listed next to the trace of the relief well locations indicate the diameter of casing at that point (e.g., CSG-36 indicates 36-inch diameter casing). ### Examples of Relief Wells Being Used to Stop Blowouts On June 3, 1979, more than 30 years prior to the Deepwater Horizon disaster, the Ixtoc I exploration well blew out in the Bay of Campeche, Mexico, resulting in a rig fire and subsequent sinking of the rig into 167 feet of water in the southern Gulf of Mexico. According to NOAA, the blowout resulted in the release of 10,000 to 30,000 barrels of oil per day until the leak was stopped on March 23, 1980, 290 days later.120 According to reports, two relief wells were drilled to intersect the well near the petroleum-bearing reservoir after other attempts to cap the well on the seafloor failed. Relief well Ixtoc 1A was spudded121 in the middle of June and relief well Ixtoc 1B was spudded in the middle of July.122 Ixtoc 1A reached the petroleum-bearing reservoir in the second week of February, approximately eight months after relief well drilling began. Mud pumped through the relief wells finally stopped the uncontrolled leak in Ixtoc 1 five weeks later.123 On August 21, 2009, a drill rig operating in the Montara oil field about 140 miles northwest of the northern Australian coastline suffered a blowout and uncontrolled release of oil on the seafloor in water approximately 240 feet deep. It is still unclear how much oil was leaking per day, although the rig operator initially estimated that about 400 barrels per day were being released into the ocean. Other reports indicate that as many as 2,000 barrels per day were leaking.124 A relief well was drilled to intersect the original well near the petroleum-bearing reservoir approximately 13,000 feet below the ocean bottom. After multiple attempts, mud injected into the leaking well finally stopped the leak on November 3, about 10 weeks after the initial blowout.125 A commission appointed by the Australian Minister for Resources and Energy is investigating the blowout, and is expected to release a report soon.126 ### Relief Well Policies Relief wells are mentioned in several places in federal regulations that govern offshore oil and gas development for the U.S. OCS, which includes the U.S. Gulf of Mexico.127 Under 30 C.F.R. § 250.213, an exploration plan (EP) approved by BOEMRE/MMS for oil and gas operations in the OCS must show that a company has or will have the financial capability to drill a relief well or conduct other emergency well control operations. The EP must also indicate the availability of a rig to drill a relief well, and an estimate of the time it would take to drill a relief well. Under 30 C.F.R. § 250.243, a company’s development and production plan, or development operations coordination documents, must also contain the same information: financial capability, rig availability, and estimated time to drill a relief well. The current regulations do not indicate that a drill rig must be on-site and ready to drill a relief well if a blowout occurs. An exhaustive review of regulations governing relief wells in other countries is beyond the scope of this report. However, news reports have frequently cited Canadian policies regarding relief wells.128 An issue for Canada that is not pertinent to the Gulf of Mexico is offshore drilling in regions where sea ice covers the ocean surface during the colder months, and the possible need to drill a relief well during the months when the sea is ice-free (a so-called “same-season” relief well). For example, if an offshore well suffers a blowout and uncontrolled leak at the end of the drilling season, a relief well drilled to curtail the blowout may not have sufficient time to reach the well and inject mud and cement before the winter ice forms and causes drilling operations to cease. The “same-season” relief well issue is of concern to offshore drilling in the Beaufort Sea (which also borders parts of Alaska), but may not necessarily be an issue for offshore drilling off the coasts of Newfoundland, Labrador, or Nova Scotia. According to the Canadian National Energy Board, which governs offshore drilling in the Beaufort Sea, the regulations require project-specific contingency plans that must include all measures to respond to an emergency situation with an offshore well.129 The Beaufort Sea regulations contain a definition for relief well (“a well drilled to assist in controlling a blow-out in an existing well”), but do not contain language specifically requiring a relief well as part of the contingency plan.130 Offshore drilling in Canada is also governed regionally by joint federal provincial agreements, and regulated under the Canada-Newfoundland and Labrador Offshore Petroleum Board and the Canada-Nova Scotia Offshore Petroleum Board.131 In a letter to the editor of the Ottawa Citizen, the chairs of the Canada-Newfoundland and Labrador Offshore Petroleum Board, the Canada-Nova Scotia Offshore Petroleum Board, and the National Energy Board wrote: The new drilling and production regulations state that companies are required to provide contingency plans describing how they plan to mitigate the effects of any reasonably foreseeable event that might compromise safety or environmental protection, which absolutely would include mitigating the effects of a blowout. Relief wells are a proven method of regaining well control and none of the regulatory boards would authorize companies to conduct any drilling or production activities if the contingency plans did not adequately address the drilling of a relief well.132 In response to some statements that relief well regulations have been relaxed under the current Canadian government, Christian Paradis, Minister of Natural Resources for Canada, wrote: Drilling program guidelines pertaining to relief wells have remained the same since 1990. These guidelines specifically address the issue of relief wells, and explicitly state that “operators are expected to identify an alternate drilling installation for relief well purposes and provide a description of its operating capability, its location, contractual commitments, and state of readiness.” The adequacy of these arrangements constitutes a crucial aspect of the board’s decision of whether or not to issue an authorization to drill in the first place. 133 ### Issues for Further Consideration Establishing a new policy for relief wells has captured the interest of the Administration and Congress. In response to a question about requiring oil companies to drill relief wells simultaneously to the production of oil, National Incident Commander Thad Allen stated that it would be a legitimate point to be raised and put in front of the national commission on the BP oil spill established by President Obama.134 On June 15, 2010, Senator Lautenberg introduced S. 3492, the Emergency Relief Well Act, that would require the concurrent drilling of at least one relief well whenever a new exploratory or development well is drilled. A requirement to drill a relief well concurrently with a new exploratory or development well would raise a number of safety and economic issues for offshore drilling. A rationale for drilling a relief well concurrently with drilling and exploration or development well would be to shorten the time, possibly by months for deep wells, between a blowout and when a leak is plugged. For example, the two relief wells now being drilled to intercept the Deepwater Horizon well are expected to take several months to reach the target zone. Plugging a well in days or weeks instead of months could prevent large quantities of oil and gas from leaking from a blown-out well that otherwise would leak over the time it takes to drill a relief well. The actual drilling and completion of a relief well, however, would likely require the same or even greater attention to safety so as not to experience a similar blowout while drilling into the same geological formation. Thus drilling a relief well is not a risk-free proposal, and a possibility would still exist for anomalous gas “kicks”135 in the well and for a blowout if the gas kicks are not prevented or controlled.  Kick illustration: Schematic of mud circulating system, with a close up view of the drill bit hitting the lower vein at unexpected higher pressure. KICK occurring. Mud pit fills. Shut-in well. Above the animation is the illustration of the mud return from the surface to the mud pit through the circulating system. Credit: OSHA Drilling a relief well with the same equipment needed for an exploration and development well, such as semi-submersible drilling platforms, marine risers, casing, cement, and blowout preventers, would likely mean that the cost to drill an exploration or development well would rise significantly compared to current practices. Whether costs would double—twice the wells required compared to current practices—is unclear, and might depend on whether a simultaneously drilled relief well could ultimately also be used for exploration, development, or production in the same oil and gas field. For deepwater and ultra-deepwater drilling requiring semisubmersible rigs or drill ships capable of drilling 4,000 feet or more below the seabed, the average daily rate for the drill rigs exceeds$400,000 per day.136 The time to drill and complete a well depends on water depth and how deep the petroleum-bearing reservoir lies beneath the seabed. Deeper water and deeper reservoirs require more time to drill. For example, BP began drilling the Deepwater Horizon well in 5,000 feet of water on October 21, 2009. BP halted operations on November 28 because of damage to the rig caused by Hurricane Ida, resumed drilling on February 3, 2010, and was nearing completion of the well at a depth of 18,000 below sea level on April 20 when the blowout and fire occurred. Total time drilling until the disaster was approximately 114 days. Assuming drill rig costs of $400,000 per day, the Deepwater Horizon well rig costs were approximately$45 million when the April 20 accident occurred. Presumably, costs to drill a concurrent relief well would be approximately the same. Currently there are 31 drill rigs operating in 5,000 feet or deeper waters in the U.S. Gulf of Mexico.137

An option to have a drill rig “standing by” but not actually drilling a relief well unless the exploration or development well experienced a blowout might be less costly than drilling two concurrent wells. If a blowout occurred, then the relief well would be positioned to begin drilling immediately. During the Deepwater Horizon incident, 12 days elapsed before the first relief well was spudded. Nevertheless, the Deepwater Horizon relief wells will take months to drill, so whether the time saved—and quantity of oil leaked—would be worth the expense of keeping a drilling operation on “stand-by” is another challenging policy issue.

## Response Vessels and the Jones Act

*See end note 138

A law commonly known as the Jones Act requires that cargo transported between any two U.S. points be transported by a U.S.-built, -owned, and -documented vessel (requiring a U.S. crew).139 This law applies to oil spill response vessels, such as skimmers, operating within 3 miles of the U.S. coastline. The law does not apply to response vessels outside the 3-mile limit, and as of June 15, 2010, 15 foreign-flagged vessels were engaged in oil spill cleanup activities.140 Within the 3-mile limit, foreign oil spill response vessels can be used if there is an inadequate supply of U.S. oil spill response vessels and the foreign country has a reciprocal agreement with the United States.141 The U.S. Maritime Administration is responsible for checking on the availability of U.S. vessels if a waiver is requested and in one instance with regard to the current spill found that U.S. vessels were available to perform the task.142 Some contend that the Jones Act is hindering cleanup efforts by delaying or preventing foreign offers of assistance, while others contend that many U.S. oil spill response vessels are sitting idle. The National Incident Command Center has stated that no offers of foreign assistance have been declined because of the Jones Act.143

Dredging must also be performed by U.S. vessels, and thus this requirement would be applicable to the Louisiana Protective Berm Project.144 For vessels not considered to be oil spill response vessels, a Jones Act waiver could be obtained pursuant to 46 U.S.C. § 501, which also requires a determination that not enough U.S. vessels are available.

# Investigations and Commissions

*See end note 145

Several investigations and commissions have been initiated to look into various issues surrounding the Deepwater Horizon incident. For the most part, these examinations are still in their early stages.

• The President directed the Secretary of the Interior to provide a study of current safety measures for OCS activities. Made available on May 27, 2010,146 the study—Increased Safety Measures for Energy Development on the Outer Continental Shelf—was the first of several formal investigatory measures related to the Deepwater Horizon accident and oil spill.

• The Secretaries from the Departments of the Interior and Homeland Security directed the Coast Guard and BOEMRE/MMS to conduct a joint investigation. The objective of the investigation is to develop conclusions and recommendations as they relate to the Deepwater Horizon explosion and loss of life on April 20, 2010.147

• President Obama established the Bipartisan National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. The commission is tasked with providing recommendations on how to prevent—and mitigate the impact of—any future spills that result from offshore drilling. The commission’s first meeting was on July 12.

Many companies (including BP), trade groups, and industry standards organizations are conducting internal reviews. The focus of private-sector investigations tends to include testing the use of blowout preventers and other procedures, as well as testing other safety, communications, and operational procedures.

# Environmental and Economic Impacts

Oil spills can cause significant harm to living organisms that inhabit ocean and coastal areas and may result in significant costs to businesses and the public. Coastal areas may be especially vulnerable because of oil stranding in wetlands and other coastal ecosystems. Oil coating, and absorption or ingestion of oil, result in direct mortality and sublethal effects that reduce the fitness of organisms. For example, oil can coat small animals and plants that inhabit shoreline areas and

 Oiled bird. Credit: America.gov

suffocate them. The uptake of dissolved components of oil may be toxic for fish, shellfish, and other invertebrates and plankton. Birds and fur-bearing marine mammals are among the most vulnerable species. When coated by oil, they lose protection and body heat maintained by their feathers and fur, and they may also ingest oil when preening. Coastal habitats may require years or decades to recover from lethal levels of oil exposure.148

## Environmental Impacts

*See end note 149

When natural resources are affected by oil spills, services that benefit the public may be damaged. Services can be divided into different categories, depending on the nature of the benefits they provide:150

• Supporting services—processes that provide the foundation for all ecosystem services, such as nutrient cycling and primary production.

• Provisioning services—direct material benefits that humans receive from the products of ecosystems, such as food (fisheries), timber, and genetic resources.

• Regulating services—indirect benefits provided by natural systems, such as retaining and purifying of water in wetlands or mitigation of natural hazards (e.g., storms) by coastal marshes and mangrove forests.

• Cultural services—a broad category that includes the general values humans place on natural areas. Benefits may be gained through direct use, such as recreational activities (recreational fishing and swimming), or through the value placed by the public on the continued existence of natural resources, including aesthetic values, bequest or generational values, and community and spiritual connections to natural resources.

### Natural Resource Damage Assessment and Compensation

OPA addresses natural resource damages and the restoration of resources that are injured and services that are lost as the result of an oil spill. Designated federal, state, tribal, and sometimes foreign trust agencies are responsible to act on behalf of the public. OPA directs trustees to undertake two main actions: (1) return injured natural resources to their baseline condition (the condition that existed prior to the spill), and (2) recover compensation for interim losses. Restoration actions focus on returning natural resources to the baseline level with as much certainty and as quickly as possible. Compensation includes actions to address interim losses of natural resources and services until resources have recovered. Compensatory actions provide services of the same type and quality and of comparable value as those lost or injured. Damage assessment is required to quantify the extent of injuries to natural resources and to determine the type and amount of restoration and compensatory actions needed. The process of recovery can be broken down into three main phases:151

• Pre-assessment phase—determines whether natural resource injuries have occurred or are expected and whether to continue to the next phase.

• Restoration planning phase—evaluates potential injuries to natural resources. This phase includes an assessment of the nature and extent of natural resource injuries and development of plans for restoring the resource and compensating the public for interim losses.

• Restoration phase—the final restoration plan is presented to responsible parties to implement or fund the plan. This provides the opportunity for settlement of damages claims without litigation. However, OPA authorizes trustees to bring civil action for damages.

In addition, natural resource impacts may disrupt business activity, especially sectors that depend directly (or indirectly) on natural resources and the environment. Direct economic losses may accrue from the closure of fishing grounds, effects on port operations, or the loss of tourist-related business. Unlike natural resource damages, which are considered by the appropriate natural resources trustees, costs to businesses are submitted as claims by the third parties that suffer the loss (as discussed above in “OPA Compensation and Claims Process”).

### Environmental Recovery

NOAA regulations state that recovery means the return of injured natural resources and services to baseline.152 Defining the baseline condition of the ecosystem is often hindered by limited scientific understanding of physical and biological processes in coastal and marine areas, natural variability of marine systems, and a paucity of related scientific data. These factors are coupled with uncertainties about acute and chronic effects of oil on marine organisms. In the face of these uncertainties, it is likely that many questions related to restoration and compensation will arise, including basic questions about what constitutes ecosystem recovery and when it has occurred.

## Economic Impacts

### Natural Resources and Related Economic Activity

*See end note 153

Natural resource-dependent sectors of the Gulf coastal economy that have been affected by the oil spill include commercial and recreational fisheries and the tourist industry. In 2008, the Gulf fishing industry landed 1.274 billion pounds of fish and shellfish with a dockside value of $659 million.154 When related processor, wholesale, and retail businesses are included, the Gulf seafood industry supports over 200,000 jobs with related income impacts of$5.5 billion.155 The top commercial species in terms of value are shrimp ($367 million), menhaden ($64 million), oysters ($59 million), and blue crab ($38 million).156 Recreational fisheries also make significant contributions to the region’s economy. In 2008, recreational anglers took 25.4 million fishing trips and spent over $12 billion on equipment and trips in the Gulf region.157 Some of the most popular recreational species include snappers, several types of drum, sheepshead, and Spanish mackerel. Recreational fisheries support businesses such as charters and bait and tackle shops, and services such as restaurants and hotels. In 2000, 21.9 million people visited Gulf beaches and accounted for 177.2 million beach days.158 The tourist industry contributed 620,000 jobs and over$9 billion in wages to the Gulf region. On the other hand, jobs related to cleanup activities could mitigate some of the losses in the fishing and tourism industry.

Immediate economic injuries of the oil spill have been incurred by the Gulf of Mexico fishing industry. As of July 14, 2010, NOAA had closed 83,927 square miles of the Gulf to commercial and recreational fishing (Figure 4).159 This is approximately 35% of the federally managed waters of the Gulf exclusive economic zone.160 Portions of Louisiana, Alabama, Mississippi, and Florida state waters have also been closed. These areas are some of the richest fishing grounds in the Gulf for major commercial species such as shrimp, blue crab, and oysters. Fishermen have filed claims with BP for economic injuries, and claims are being paid out to individuals on a monthly basis. As the supplies of Gulf oysters, shrimp, and crabs have decreased, prices for these items have increased. Imports of shrimp are likely to increase to substitute for lost domestic production.161 The seafood industry is also very concerned with consumers’ perceptions of Gulf seafood and potential effects on demand for Gulf seafood products. To ensure seafood safety, NOAA and FDA are monitoring fish caught just outside closed areas and testing them for oil compounds. Bookings and trips for recreational fishing charters have decreased, especially in Louisiana, and sportfishing tournaments have been cancelled.

Source: NOAA, http://sero.nmfs.noaa.gov/deepwater_horizon_oil_spill.htm.
Notes: For more recent closing announcements, see NOAA’s website, at http://sero.nmfs.noaa.gov/deepwater_horizon_oil_spill. htm.

Oil has reached many central Gulf of Mexico beaches, and visits to these areas have decreased significantly. Cancellations have also been reported for areas that are still clear of oil. Tourism officials are concerned that reporting on the spill has contributed to negative perceptions of the entire Gulf region. To counter these perceptions, BP has funded tourism promotion programs in Alabama, Mississippi, and Florida. Fishing and tourism have already been harmed by the Deepwater Horizon spill, but it is likely that the largest impacts have not yet surfaced and may occur over years.

### Impact on Oil and Natural Gas Prices

*See end note 162

The Deepwater Horizon incident has had limited immediate impact on oil and natural gas supply and prices because production has not been significantly disrupted.163 Longer-term impacts are uncertain and depend at least in part on policy and regulatory responses, which may affect the production of offshore oil and natural gas.

At the time of the incident, the oil and gas formation was still being explored, and was not yet in the production phase of the project.164 Stopping production activity near the spill location for safety reasons has so far resulted in a relatively small reduction in energy supply. MMS reported that five offshore platforms were evacuated, halting—at least temporarily—approximately 2,300 barrels a day (0.14% of the Gulf’s oil production) and 1.2 million cubic feet of natural gas (0.02% of the Gulf’s natural gas production).165

## Agency Reorganization Legislation During the 111th Congress

During the 111th Congress, both prior to and after the Deepwater Horizon oil spill, bills were introduced that would reorganize BOEMRE/MMS and its functions. On September 9, 2009, Representative Nick J. Rahall introduced H.R. 3534, the Consolidated Land, Energy, and Aquatic Resources Act of 2009. The bill was referred to the House Committee on Natural Resources. Hearings were held on the bill and a markup session was held on July 14 and 15, 2010. An amendment in the nature of a substitute, as amended, was agreed to and the bill was ordered to be favorably reported. The bill, as ordered reported, would, among other effects, abolish MMS and establish three new units within DOI. A Bureau of Energy and Resource Management would “manage the leasing and permitting for renewable energy, non-renewable energy, and mineral resources on all onshore and offshore Federal lands in the United States,” except for Indian lands.237 A Bureau of Safety and Environmental Enforcement would “carry out all the safety and environmental regulatory activities, including inspections, on all onshore and offshore Federal lands in the United States.”238 The third unit that would be established by the legislation, an Office of Natural Resources Revenue, would collect and disburse “all royalties and other revenues from energy and mineral related activities on onshore and offshore federal lands, [audit] such collections, and [promulgate] regulations relevant to revenue collection and management.”239

On June 21, 2010, Senator Jeff Bingaman introduced S. 3516, the Outer Continental Shelf Reform Act of 2010, and it was referred to the Senate Committee on Energy and Natural Resources. Hearings were held on the bill, and the committee voted to report it, as amended, favorably, on June 30, 2010. The bill, as reported, would direct the Secretary of the Interior to use his administrative authority to establish three new entities within the department. Two of the new organizations would carry out OCS leasing, permitting, and safety and environmental regulatory functions. The Secretary would be directed to eliminate conflicts of interest related to these functions, to the maximum extent practicable. The third entity would be responsible for revenue and royalty management functions.

On October 7, 2009, Representative Darrell E. Issa introduced H.R. 3736, the Minerals Management Service Reform Act. This bill would establish MMS as an independent establishment in the executive branch, outside of the Department of the Interior. It would vest in the MMS Director all powers and duties of the present MMS as well as all functions, powers, and duties that have been vested in DOI relating to bidding, leasing, and managing all offshore oil and gas, including with respect to the Gulf of Mexico and other areas of the outer continental shelf; and collection of revenue (other than taxes) generated by such oil and gas.

Each of these bills would establish the heads of newly established entities as positions to be filled through appointment by the President with the advice and consent of the Senate.

On June 22, 2010, Representative Vern Buchanan introduced H.R. 5572, the Oil Spill Prevention Act of 2010. This bill would, among other things, establish a Minerals Management Service in the Department of the Interior that would carry out functions formerly performed by MMS. The agency would comprise an Office of Leasing and Permitting, which would carry out the named functions with regard to the OCS; an Office of Inspection, which would carry out vessel and facility inspection; and an Office of Revenue, which would collect OCS lease revenue. The bill does not specify how the leader of these entities would be appointed.

# FEMA Issues

*See end note 240

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (referred to as the Stafford Act, 42 U.S.C. 5721 et seq.) authorizes the President to issue “major disaster” or “emergency” declarations before or after catastrophes occur. The Gulf oil spill is currently being addressed by a law fashioned for that purpose, the Oil Pollution Act of 1990 (OPA), P.L. 101-380.241 When certain events occur that carry with them such specific response authorities as pertain to oil spills or plane crashes, the President generally does not use his authority to issue a declaration and activate FEMA’s authorities. Given the current circumstance of the OPA authority being in place and the existence of the Oil Spill Liability Trust Fund, FEMA has been playing an auxiliary role. It includes assisting the lead agency in the response, the U.S. Coast Guard (like FEMA, an entity within the Department of Homeland Security), in staffing and related support areas. If some factors change, such as the scope of the impact on the coastal states, or the need to provide supplemental federal funding, FEMA’s role could expand. In that event, the Stafford Act, P.L. 93- 288, would present several options, and could provide a number of programs, to address the oil spill.

An emergency declaration under the Stafford Act is a potential approach to the current situation since it is intended to lessen the impact of an imminent disaster. Another option is a major disaster declaration, which would open up more Stafford Act programs that might be appropriate for the needs generated by the spill.242

## Federal Duplication/Federal Coordination

FEMA assistance can be rapid and flexible, but it also would need to be carefully delineated to avoid duplication of benefits and general confusion when working in conjunction with the OPA. Under that law, which provides both authorities and a fund for compensation, the incident is currently being addressed and the federal response coordinated. FEMA and other federal agencies are now seeking to maintain a delicate balance as they begin to coordinate assistance for small businesses and social services. It appears that the federal government is attempting to accomplish the provision of assistance, and a structure for response and recovery, without formally declaring an emergency or a disaster. The Obama Administration announced that FEMA would establish a task force by May 27, 2010, to develop a Social Services and Small Businesses Coordination Plan. As an Office of Management and Budget memorandum explains:

The plan is not intended to disrupt ongoing, day-to-day communications between operational agencies and their State, local and tribal partners. Rather, it will be a critical and timely resource to these partners to help provide a rapid Federal response to the evolving situation and to reinforce the cooperation of the responsible parties. This effort to ensure more seamless delivery of claims and benefits to individuals and small businesses is an important step of the administration’s response to the oil spill. Further steps include anticipating and preparing for the post-incident recovery needs of the Gulf Coast.243

The reluctance to use the presidential authority for a disaster declaration is understandable given the existing authorities and the desire not only to allow the OPA to work but also to maintain public pressure on the “responsible parties” to pay for the costs of the oil spill. It is not clear if the intent is to move the coordination work forward and later seek compensation from the responsible parties, or if this work is assumed to be a relatively low-cost task that will not require the statutory authority of the Stafford Act or the financial resources of the President’s Disaster Relief Fund.

## Exxon Valdez

 Exxon Valdez in the Prince William Sound. Photo credit: NOAA

During the previous large spill, the Exxon Valdez spill in 1989, President George H. W. Bush turned down the governor of Alaska’s two requests for an emergency declaration. The rationale for the turndowns was that a declaration by the President would hinder the government’s litigation against Exxon that promised substantial compensation for the incident. One FEMA attorney from that period offered an explanation for the turndown:

The Department of Justice opposed a declaration of disaster by then-President George H. W. Bush on the basis that it might impact adversely the case of the United States against Exxon. When asked at a Senate Appropriations Committee hearing by Senator Ted Stevens (R-Alaska) why no declaration of disaster had occurred, the then-Acting General Counsel of FEMA, George Watson, said on the record that he had issued a legal opinion stating that no declaration of an oil spill could be made under the Stafford Act.

When Sen. Stevens asked for a copy of the opinion, Mr. Watson said he would furnish one. Instead of an opinion, a somewhat garbled statement was given by FEMA’s congressional liaison for insertion in the record. The statement basically concluded that where a parallel statutory scheme offered both compensation and better litigation rights to the United States than the Stafford Act, then the president would not declare a disaster or emergency.244

FEMA’s position or interpretation may be defensible because the Exxon Valdez shipwreck that resulted in the oil spill arguably did not constitute a major disaster as defined in the Stafford Act. However, the current situation on the Gulf Coast caused by the explosion on the Deepwater Horizon drilling platform arguably may fall within the Stafford Act statutory language. Section 102 of the act defines a disaster in part as

any fire, flood, or explosion, in any part of the United States, which in the determination of the President causes damage of sufficient severity and magnitude to warrant major disaster assistance under this Act to supplement the efforts and available resources of states, local governments, and disaster relief organizations in alleviating the damage, loss, hardship, or suffering caused thereby.245

## Recent Regional Disaster History

Using a Stafford Act emergency or major disaster declaration for the Gulf oil spill, for Gulf Coast states that are now approaching the fifth anniversary of the Hurricane Katrina landfall, could remind them of difficult, lingering issues from that disaster in 2005. A declaration could also, however, present a second chance for long-term recovery assistance to that region, administered by new leadership at DHS and FEMA.

Managing public expectations is difficult even in the smallest disaster event. Working with a region that is aware of the potential aid under Stafford and mistrustful of its delivery would be a hard challenge. FEMA’s attempt to work in coordination with another set of authorities being carried out by other agencies and departments would only add to the complexity.

It could be argued that the absence of increased federal involvement could serve to simplify the response. At least one area, long-term recovery, is not directly addressed in the OPA. Some might argue that it is also an area the federal government did not address in the aftermath of Katrina. At congressional direction, FEMA has published a draft National Disaster Recovery Framework.246 Perhaps amid the current complications of overlapping authorities and funds, implementing that framework could provide a viable and limited option for the use of Stafford Act authorities.

Others might argue that a smaller role for the federal government might be the correct role, to encourage local initiative, private-sector renewal, and continuing involvement by the “responsible parties.” Within the context of a general distrust of government activity, possibly accentuated in the Gulf region, as well as the current strains on the Disaster Relief Fund, perhaps less government involvement and a lower federal profile would be a preferable option for the region’s recovery.247

# Conclusion

The Deepwater Horizon explosion and oil spill have set in motion a series of questions and concerns about oil exploration and recovery in the Gulf of Mexico generally, about the federal offshore oil and gas program, and about the risks of deepwater drilling in particular. The incident has raised many issues; this report provides a set of selected descriptions to give the reader a baseline and context for pursuing topics of interest.

Several themes trace through the diverse aspects of the incident:

• The explosion and oil spill having occurred, what lessons should be drawn from the incident? Such lessons may involve the appropriateness and capabilities of the technologies used in drilling and in trying to stop the spill; the adequacy of the regulatory regime and how it was administered and enforced; possible implications of corporate cultures of the companies involved; and the adequacy of cleanup technologies and of the safety net for impacted businesses and communities.

• As oil and gas exploration and recovery moved into the deepwater frontier, were technologies and regulatory capacities keeping pace with new and/or heightened risks? Technologies and regulations appropriate to onshore and shallow-water exploration and recovery may not be adequate to address risks in deep water. There are economic incentives to develop technologies to find and recover deepwater oil and gas, but the question arises of whether concomitant incentives exist to ensure that those technologies are safe in this more challenging environment. Likewise, it might be asked if administrative and regulatory requirements appropriate to the less-challenging onshore and shallow-water environments have been, or need to be, strengthened to address deepwater risks.

• What interventions may be necessary to ensure recovery of Gulf resources and amenities? The spilled oil will surely degrade over time; intervention might accelerate cleanup, but may have its own costs.

• What does the Deepwater Horizon incident imply for national energy policy, and the tradeoffs between energy needs, risks of deepwater drilling, and protection of natural resources and amenities?

Diverse stakeholders will find different lessons in the Deepwater Horizon incident. Some will focus on the risks to the environment and the economic impacts on fishermen and communities; others will focus on the value of the oil that fuels the U.S. economy. Some will find the risks unacceptable; others will say that the risks can be overcome. In the end, the focal issue may be the management of risk: even with robust efforts to prevent oil-related incidents, they can and will happen—at which point the crucial question is how to cope with the consequences.

# End notes

1 For up-to-date estimates of the spill rate, see the most recent press releases from the Department of the Interior, at http://www.doi.gov/news/index.cfm/.

2 Secretarial Order 3302, issued June 18, 2010, changed the name of the Minerals Management Service to the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE). The name change was effective immediately.

3 The undiscovered technically recoverable resource (UTRR) is an estimate of the volume of oil or natural gas that is likely to be recovered using currently available technologies without considering price. UTRR changes as available technology changes, but not as price changes.

4 Statement of Steven C. Allred, DOI/MMS, January 25, 2007.

5 Thirty-five percent of active OCS leases are in water depths of less than 200 meters, while 51% of active OCS leases are in water depths of 1,000 meters and deeper.

6 Prepared by Peter Folger, Specialist in Energy and Natural Resources Policy.

7 For a more detailed description of drilling rigs, see http://www.naturalgas.org/naturalgas/extraction_offshore.asp.

8 For specifications about the Deepwater Horizon, see http://www.deepwater.com/fw/main/Deepwater-Horizon- 56C17.html?LayoutID=17.

9 For example, in the Deepwater Horizon well, casing intervals spanned nine different diameters, from 36-inch diameter casing at the top of the well, to 7-inch diameter casing at the bottom, according to congressional testimony. Also, the witness stated that there was no continuous cement column throughout the entire wellbore. Testimony by Tim Probert, President, Global Business Lines and Chief Health, Safety, and Environmental Officer, Halliburton, hearing to review current issues related to offshore oil and gas development, U.S. Congress, Senate Committee on Energy and Natural Resources, 111th Cong., 2nd sess., May 11, 2010.

10 Testimony by Tim Probert, Halliburton, May 11, 2010.

11 30 C.F.R. § 250.442.

12 According to testimony by Steve Newman, President and CEO of Transocean Ltd., in response to questions during the House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations, Inquiry Into the Deepwater Horizon Gulf Coast Oil Spill, hearing, 111th Cong., May 12, 2010.

13 Prepared by Peter Folger, Specialist in Energy and Natural Resources Policy.

14 U.S. Department of the Interior, Minerals Management Service, Resource Evaluation Division, “Preliminary Evaluation of In-Place Gas Hydrate Resources: Gulf of Mexico Outer Continental Shelf,” OCS Report MMS 2008-004 (February 1, 2008), at http://www.mms.gov/revaldiv/GasHydrateFiles/MMS2008-004.pdf.

15 Timothy S. Collett and Scott R. Dallimore, “Detailed Analysis of Gas Hydrate Induced Drilling and Production Hazards,” Proceedings of the Fourth International Conference on Gas Hydrates, Yokohama, Japan, April 19-23, 2002.

16 George J. Moridis and Michael B. Kowalsky, “Geomechanical Implications of Thermal Stresses on Hydrate-Bearing Sediments,” Fire in the Ice, Methane Hydrate R&D Program newsletter, Winter 2006.

17 Prepared by Peter Folger, Specialist in Energy and Natural Resources Policy.

18 For more information about oil spills generally, see CRS Report RL33705, Oil Spills in U.S. Coastal Waters: Background, Governance, and Issues for Congress, by Jonathan L. Ramseur.

19 E-mail from Robert H. Weisberg , Professor of Physical Oceanography, and colleagues, College of Marine Science, University of South Florida, May 19, 2010.

20 Prepared by Harold F. Upton, Analyst in Natural Resources Policy.

21 See CRS Report RL33404, Offshore Oil and Gas Development: Legal Framework, by Adam Vann.

22 Prepared by Adam Vann, Legislative Attorney.

23 43 U.S.C. § 1331 et seq.

24 As noted above, MMS is in the process of reorganization into three bureaus (the Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement, and the Office of Natural Resource Revenue) pursuant to Secretarial Order No. 3299 issued by Secretary of the Interior Ken Salazar on May 19, 2010.

25 43 U.S.C. § 1349.

26 U.S.C. § 1301(b).

27 Prepared by Jonathan L. Ramseur, Specialist in Environmental Policy.

28 33 U.S.C. §§ 1251-1387.

29 33 U.S.C. § 1321(d).

30 The first NCP was prepared in 1968 after U.S. policymakers observed the British government’s response to a 37- million-gallon oil tanker spill (Torrey Canyon) off the coast of England. See EPA, “National Contingency Plan Overview,” at http://www.epa.gov/emergencies/content/lawsregs/ncpover.htm.

31 Subpart E addresses response to hazardous substances, which is beyond the scope of this report. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is the statute that authorizes response to hazardous substances. Combined, CERCLA, OPA, and the CWA provide the statutory authority for the NCP as a whole.

32 See e.g., http://www.whitehouse.gov/deepwater-bp-oil-spill/.

33 Information and documents from these regions can be accessed via the NRT website at http://nrt.org/.

34 The corresponding role for spills in EPA’s jurisdiction is the Remedial Project Manager (RPM).

35 33 U.S.C. § 1321(c).

36 The Oil Pollution Act of 1990 (P.L. 101-180) strengthened and clarified the federal government’s role in oil spill response and cleanup. OPA Section 4201 amended Section 311(c) of the CWA to provide the President with authority (delegated to the USCG or EPA) to perform cleanup immediately using federal resources, monitor the response efforts of the responsible party, or direct that party’s cleanup activities.

37 OPA § 1011.

38 The Coast Guard was transferred to DHS in 2003.

39 The White House, Management of Domestic Incidents, Homeland Security Presidential Directive - 5, Washington, DC, February 28, 2003, http://www.fas.org/irp/offdocs/nspd/hspd-5.html.

40 The predecessor to the National Response Framework—the National Response Plan (NRP)—contained a similarsounding phrase, “Incident of National Significance.” This term caused significant confusion and was subsequently eliminated in the NRF. For more information, see Department of Homeland Security, National Response Framework: Frequently Asked Questions, at http://www.fema.gov/pdf/emergency/nrf/NRF_FAQ.pdf.

41 The authority for the SONS classification and NIC designation is found specifically in the NCP regulations at 40 CFR Section 300.323. However, this section authorizes the Commandant of the Coast Guard to classify a spill as a SONS and to name a NIC. It is unclear whether the DHS Secretary was employing the authority provided by HSPD 5 to take these actions.

42 Authority for the creation of the NRF emanates from numerous sources. FEMA has described the NRF as being guided by 15 “principal emergency authorities,” 48 other statutory authorities and regulations, 17 executive orders, and 20 presidential directives. U.S. Department of Homeland Security, Federal Emergency Management Agency, National Response Framework: List of Authorities and References, January 2008.

43 For more on the NRF, see CRS Report RL34758, The National Response Framework: Overview and Possible Issues for Congress, by Bruce R. Lindsay.

44 Emergency Support Function #10—Oil and Hazardous Materials Response Annex, available at http://www.fema.gov/emergency/nrf/index.htm.

45 Per telephone conversation with DHS personnel (July 13, 2010).

46 Prepared by Jonathan L. Ramseur, Specialist in Environmental Policy, and James E. Nichols, Law Clerk.

47 The definition of “facility” is broadly worded and includes pipelines and motor vehicles. 33 U.S.C. § 2701(9).

48 Under OPA, the terms “liable” and “liability” are “construed to be the standard of liability which obtains under section 311 of the [Clean Water Act].” Courts have interpreted Section 311 of the Clean Water Act as imposing strict liability on parties responsible for the discharge of oil or other hazardous substances into the waters of the United States. See United States v. New York, 481 F.Supp. 4 (D.N.Y. 1979).

49 See 33 U.S.C. § 2701(32).

50 Responsible parties have several defenses from liability (33 U.S.C. 2703): act of God, act of war, and act or omission of certain third parties. These defenses are analogous to those of the Superfund statute (the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, commonly known as Superfund, P.L. 96-510) enacted in 1980 for releases of hazardous substances. See 42 U.S.C. § 9607(b).

51 OPA § 1002(b)(2).

52 Congress recognized that “there is no comprehensive legislation in place that promptly and adequately compensates those who suffer other types of economic loss as a result of an oil pollution incident.” U.S. Congress, House Committee on Merchant Marine and Fisheries, report accompanying H.R. 1465, Oil Pollution Prevention, Removal, Liability, and Compensation Act of 1989, H.Rept. 101-242, Part 2, 101st Cong., 1st sess., p. 31.

53 OPA § 1002(b)(1).

54 “Incident” means any occurrence or series of occurrences having the same origin, involving one or more vessels, facilities, or any combination thereof, resulting in the discharge or substantial threat of discharge of oil. 33 U.S.C. § 2701(14).

55 See National Pollution Funds Center, “Oil Pollution Act Liabilities for Oil Removal Costs and Damages as They May Apply to the Deepwater Horizon Incident” (undated).

56 33 U.S.C. § 2704(b).

57 See National Pollution Funds Center, “Oil Pollution Act Liabilities for Oil Removal Costs and Damages as They May Apply to the Deepwater Horizon Incident” (undated).

58 National Pollution Funds Center, FOSC Funding Information for Oil Spills and Hazardous Materials Releases, April 2003, p. 4.

59 Cynthia Wilkinson et al., “Slick Work: An Analysis of the Oil Pollution Act of 1990,” Journal of Energy, Natural Resources, and Environmental Law, 12 (1992), p. 188.

60 U.S. Congress, House Committee on Merchant Marine and Fisheries, report accompanying H.R. 1465, Oil Pollution Prevention, Removal, Liability, and Compensation Act of 1989, H.Rept. 101-242, Part 2, 101st Cong., 1st sess., p. 35.

61 Omnibus Budget Reconciliation Act of 1986 (P.L. 99-509).

62 33 U.S.C. § 2712. The standards and procedural requirements for claims filed against the fund are set forth in the USCG’s OPA regulations. See 33 C.F.R. §§ 136.1 through 136.241.

63 26 U.S.C. §§ 4611(a)(1) and (2). The Oil Spill Liability Trust Fund is also financed by a per-barrel tax on domestic crude oil “used in or exported from the United States.” 26 U.S.C. § 4611(b)(1)(A).

64 Prepared by Jonathan L. Ramseur, Specialist in Environmental Policy.

65 OPA § 1013 (33 U.S.C. 2713). Implementing regulations are found in 33 C.F.R. Part 136.

66 33 U.S.C. § 2713(a). Under OPA, the term “claim” means “a request, made in writing for a sum certain, for compensation for damages or removal costs resulting from an [oil spill] incident.” 33 U.S.C. § 2701(3).

67 33 U.S.C. § 2713(c). Claims for removal costs must be presented within six years after the date of completion of all removal activities related to the oil spill incident. 33 U.S.C. § 2712(h)(1).

68 “Incident” means facilities, or any combination thereof, resulting in the discharge or substantial threat of discharge of oil. 33 U.S.C. § 2701(14).

69 U.S. Congress, House Committee on Merchant Marine and Fisheries, report accompanying H.R. 1465, Oil Pollution Prevention, Removal, Liability, and Compensation Act of 1989, H.Rept. 101-242, part 2, 101st Cong., 1st sess., p. 36.

70 33 U.S.C. § 2704(d)(4).

71 See http://www.whitehouse.gov/the-press-office/fact-sheet-claims-and-escrow.

72 See http://www.bp.com/sectiongenericarticle.do?categoryId=9033791&contentId=7062345.

73 43 U.S.C. § 1331 et seq.

74 33 U.S.C § 2701.

75 Prepared by Curry L. Hagerty, Specialist in Energy and Natural Resources Policy.

76 See Code of Federal Regulations (30 C.F.R. Chapter 2, Minerals Management Service, Department of the Interior; 40 C.F.R., Protection of the Environment).

77 42 U.S.C. § 4321 et seq.

78 Specific requirements for sundry notices for well workovers, completions, and abandonments are detailed in Subparts D-G of 30 C.F.R. Chapter II.

79 30 C.F.R. 250.107.

80 30 C.F.R. 250.901-904.

81 30 C.F.R. 250.912. 82 30 C.F.R. 250.801.

83 The safety-system devices are tested by the lessee at specified intervals and must be in accordance with numerous certifications including API RP 14 C, Appendix D, and other measures.

84 Prepared by John Frittelli, Specialist in Transportation Policy.

85 This ship registry began in 1988 partly as a result of political instability in Panama and Liberia at the time. American interests were instrumental in its creation, as is the case with the Panamanian, Liberian, and other ship registries. The corporate headquarters of the Marshall Islands registry is located in Reston, VA, and the corporate headquarters of the Liberian registry is located in Vienna, VA.

86 Elizabeth R. DeSombre, Flagging Standards: Globalization and Environmental, Safety, and Labor Regulations at Sea (Cambridge, MA: MIT Press, 2006).

87 Oral and written testimony of Warren Weaver, Manager of Regulatory Compliance, Transocean, Ltd. before the House Committee on Transportation and Infrastructure, Subcommittee on the Coast Guard and Maritime Transportation, hearing on Foreign Vessel Operations in the U.S. Exclusive Economic Zones, June 17, 2010.

88 See http://www.imo.org/, and search under “MODU” for a brief description.

89 The Deepwater Horizon was built in 2001 and thus the 1989 version of the MODU code was applicable.

90 The convention has been updated since then.

91 See http://www.imo.org/, and select “status of conventions by country.”

92 The Deepwater Horizon’s record of certification and inspection can be viewed at http://cgmix.uscg.mil/PSIX/ PSIXSearch.aspx, searching under the vessel name or its number: 8764597.

93 “Quality Stem to Stern: The Changing Role of Classification Societies,” Marine Technology and SNAME News, vol. 34, no. 3 (July 1997).

94 Philippe Boisson, “Classification Societies and Safety at Sea: Back to Basics to Prepare for the Future,” Marine Policy, vol. 18, no. 5 (1994), pp. 363-377.

95 The International Association of Classification Societies (IACS).

96 The Coast Guard and Maritime Transportation Act of 2004 (P.L. 108-293, § 413). The Coast Guard issued a notice of proposed rulemaking on April 23, 2010; 75 Fed. Reg. 21212.

97 Prepared by Jonathan L. Ramseur, Specialist in Environmental Policy.

98 For a more comprehensive discussion, see National Research Council, Oil Spill Dispersants: Efficacy and Effects (National Academies Press, 2005).

99 Ibid.

100 EPA, National Contingency Plan Product Schedule, May 2010, http://www.epa.gov/emergencies/docs/oil/ncp/ schedule.pdf.

101 See Figure 2-1 in National Research Council, Oil Spill Dispersants: Efficacy and Effects (National Academies Press, 2005).

102 Nancy Kinner (co-director of the Coastal Response Research Center), testimony before the House Committee on Transportation and Infrastructure, May 19, 2010.

104 See http://www.epa.gov/bpspill/dispersants/bp-hayward-dhs-epa.pdf.

105 See http://www.epa.gov/bpspill/dispersants/5-21bp-response.pdf.

107 Prepared by Charles V. Stern, Analyst in Natural Resources Policy.

108 Under 33 C.F.R. § 325(b), authorization (through a permit) by the Corps of Engineers is required to conduct certain regulated activities within waters of the United States. This requirement is maintained during emergencies, although the Corps has modified procedures to expedite permit processing during an emergency under 33 C.F.R. § 235.2(e)(4).

109 One of the main critiques associated with feasibility of the project is timing. By some estimates, even if construction is initiated immediately, it would not be complete until the end of the calendar year. Additionally, questions have been raised as to the ability of the berms to withstand tidal fluctuations and storms, including hurricanes.

110 Concerns with the barriers are noted in the final permitting documents at http://155.76.147.200/news/ Emergency%20Permit%20Documents%20Compressed%20FINAL.pdf. Additionally, Admiral Allen noted the initial concerns of Dr. Jane Lubchenco, NOAA Administrator, with the barriers at a press conference on June 2, 2010. See http://www.deepwaterhorizonresponse.com/go/doc/2931/581707/.

111 The request was revised in part because the original proposal for a coastal restoration project did not qualify under Corps emergency authorization procedures.

112 The original request’s 19 reaches of berm included 15 reaches to the west of the Mississippi River Delta and four reaches to the east.

113 See environmental analysis by the Corps at http://155.76.147.200/news/ Emergency%20Permit%20Documents%20Compressed%20FINAL.pdf, pp. 88-89.

114 See http://www.deepwaterhorizonresponse.com/go/doc/2931/585863/.

115 In light of questions raised about the original cost estimate by the state of Louisiana for the larger project during the interagency comment period, BP appears to have used a more conservative estimate for the six reaches approved by the Corps.

116 See http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7062613.

117 See, for example, June 2 press briefing by Admiral Thad Allen, at http://www.deepwaterhorizonresponse.com/go/ doc/2931/581707/.

118 Prepared by Peter Folger, Specialist in Energy and Natural Resources.

119 Deepwater Horizon Response site, Ongoing Response Timeline, at http://www.deepwaterhorizonresponse.com/ posted/2931/updated_timeline_June_10.594723.pdf. Greg Bluestein and Jason Dearen, “Spill Relief Well Draws Scrutiny,” Associated Press, June 13, 2010., at http://news.yahoo.com/s/ap/20100613/ap_on_bi_ge/ us_gulf_oil_spill_relief_wells.

120 National Oceanic and Atmospheric Administration, National Ocean Service, Office of Response and Restoration, Incident News, at http://www.incidentnews.gov/incident/6250.

121 To “spud” a well means to start drilling into the sediments and rock.

122 Arne Jernelöv and Olof Lindén, “Ixtoc I: A Case Study of the World’s Largest Oil Spill,” Ambio, vol. 10, no. 6 (1981).

123 Ibid.

124 Keith Bradsher, “Relief Well Was Used to Halt Australian Spill,” New York Times, May 2, 2010.

125 Ibid.

127 See 30 C.F.R. § 250 for the regulations covering oil and gas operations in the OCS.

128 See, for example, Greg Bluestein and Jason Dearen, “Spill Relief Well Draws Scrutiny,” Associated Press, June 13, 2010; and Peter Overby, “BP Sought to Ease Canada’s Policy on Relief Wells,” NPR, June 3, 2010, at http://www.npr.org/templates/story/story.php?storyId=127381814.

129 E-mail from Sarah Kiley, Communications Officer, National Energy Board (Canada), June 11, 2010.

130 Under the Canada Oil and Gas Drilling and Production Regulations, Part 2—Management System, Application for Authorization and Well Approvals, Application for Authorization, the application for authorization “shall be accompanied by … contingency plans, including emergency response procedures, to mitigate the effects of any reasonably foreseeable event that might compromise safety or environmental protection.” See http://laws.justice.gc.ca/ PDF/Regulation/S/SOR-2009-315.pdf.

131 E-mail from Sarah Kiley, Communications Officer, National Energy Board (Canada), June 11, 2010.

132 Max Ruelokke, Diana Dalton, and Gaétan Carron, “Address Relief Wells,” Ottawa Citizen, June 11, 2010.

133 Christian Paradis, “Drilling Guidelines on Relief Wells the Same,” Ottawa Citizen, June 14, 2010.

134 White House Press Briefing by Press Secretary Robert Gibbs and National Incident Commander Admiral Thad Allen, June 7, 2010, at http://www.whitehouse.gov/the-press-office/press-briefing-press-secretary-robert-gibbs-andnational- incident-commander-admiral.

135 A “kick” is the flow of reservoir fluids into the wellbore during drilling operations.

136 Rigzone, Offshore Rig Day Rates, at http://www.rigzone.com/data/dayrates/.

137 As reported by Rigzone, Offshore Rig Search, at http://www.rigzone.com/data/advanced_search.asp, as of June 17, 2010.

138 Prepared by John Frittelli, Specialist in Transportation Policy.

139 46 U.S.C. § 55102.

140 Coast Guard press release dated June 15, 2010, at http://www.deepwaterhorizonresponse.com/go/doc/2931/660195.

141 46 U.S.C. § 55113.

142 Written testimony of David T. Matsuda, Acting Maritime Administrator, before the Subcommittee on the Coast Guard and Maritime Transportation, House Committee on Transportation and Infrastructure, hearing on Foreign Vessel Operations in the U.S. Exclusive Economic Zones, June 17, 2010.

143 National Incident Command, “Jones Act Fact Sheet,” June 18, 2010, at http://www.deepwaterhorizonresponse.com/ posted/2931/MARAD_revised_Jones_Act_Fact_Sheet.670991.pdf.

144 46 U.S.C. §§ 55109, 55110.

145 Prepared by Jonathan L. Ramseur, Specialist in Environmental Policy.

146 The May 27 study is available at http://www.doi.gov/deepwaterhorizon/loader.cfm?csModule=security/getfile& PageID=33598.

148 CRS Report R41311, The Deepwater Horizon Oil Spill: Coastal Wetland and Wildlife Impacts and Response, by M. Lynne Corn and Claudia Copeland.

149 Prepared by Harold F. Upton, Analyst in Natural Resources Policy.

150 Walter Reid et al., Millennium Ecosystem Assessment: Ecosystems and Human Well-being (Washington, DC: Island Press, 2005).

151 Department of Commerce, “Natural Resource Damage Assessments; Final Rule,” 61 Fed. Reg. 441-442, January 5, 1996.

152 Ibid., p. 441.

153 Prepared by Harold F. Upton, Analyst in Natural Resources Policy.

154 National Marine Fisheries Service, U.S. Department of Commerce, Fisheries Economics of the United States, Silver Spring, MD, 2008, http://www.st.nmfs.noaa.gov/st5/publication/econ/2008/FEUS%202008%20ALL.pdf.

155 Ibid.

156 Ibid.

157 Ibid.

158 Brent Ache, David Bylsma, and Kristen Crossett, et al., The Gulf of Mexico at a Glance, National Ocean Service, NOAA, A Tool for the Gulf of Mexico Alliance and the American Public, Washington, DC, 2008, http://gulfofmexicoalliance.org/pdfs/gulf_glance_1008.pdf.

159 See http://sero.nmfs.noaa.gov/deepwater_horizon_oil_spill.htm.

160 The exclusive economic zone includes the area between 3 and 200 nautical miles from shore.

161 The United States imports 90% of the shrimp it consumes.

162 Prepared by Neelesh Nerurkar, Specialist in Energy Policy.

163 Energy Information Administration, U.S. Department of Energy, “Deepwater Horizon Oil Spill, This Week In Petroleum,” Washington, DC, May 19, 2010, http://tonto.eia.doe.gov/oog/info/twip/twip.asp.

164 The Wall Street Journal cited an anonymous source who claimed that before the spill, BP had been days away from announcing the discovery was “commercially attractive,” and that the Macondo Prospect held “tens of millions of barrels” in potentially recoverable oil reserves (Russell Gold, Ben Casselman, and Guy Chazan, “Missing Workers Feared Dead as Gulf Rig Sinks—One of the Industry’s Worst Disasters in Decades Occurred Days Before BP Was Going to Disclose Significant Oil Find at Site,” Wall Street Journal, April 23, 2010). However, it would have taken some years to develop the project into a producing facility.

165 See http://www.deepwaterhorizonresponse.com/go/doc/2931/550055/ .

166 Energy Information Administration, U.S. Department of Energy, “Deepwater Horizon Oil Spill,” This Week In Petroleum, Washington, DC, May 19, 2010, http://tonto.eia.doe.gov/oog/info/twip/twiparch/100519/twipprint.html.

167 Energy Information Administration, U.S. Department of Energy, Petroleum Navigator, Washington, DC, July 8, 2010, http://www.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm.

168 Energy Information Administration, U.S. Department of Energy, Natural Gas Navigator, Washington, DC, June 15, 2010, http://www.eia.doe.gov/dnav/ng/hist/rngc1d.htm.

169 Eileen Moustakis, “US Henry Hub gas at 4-mth high, other prices slip,” Reuters, June 16, 2010.

170 Energy Information Administration, U.S. Department of Energy, Short-Term Energy Outlook, Washington, DC, July 7, 2010, http://www.eia.doe.gov/emeu/steo/pub/contents.html.

171 Julie Wilson et al., Deepwater Horizon Tragedy: Near-Term and Long-Term Implications in the Gulf of Mexico, Wood Mackenzie, Upstream Insights, Houston, TX, May 11, 2010.

172 Energy Information Administration, U.S. Department of Energy, http://www.eia.gov/oog/special/gulf/ gulf_fact_sheet.html?featureclicked=5& and http://www.eia.doe.gov/oil_gas/petroleum/info_glance/petroleum.html.

173 International Energy Agency, Monthly Oil Market Report, Paris, June 23, 2010.

174 Energy Information Administration, Short-Term Energy Outlook, U.S. Department of Energy, Washington, DC, July 7, 2010, http://www.eia.doe.gov/emeu/steo/pub/contents.html.

175 CRS Report R40487, Natural Gas Markets: An Overview of 2008, by Robert Pirog.

176 Energy Information Administration, U.S. Department of Energy, International Energy Statistics, Washington, DC, http://tonto.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm.

177 For further reading on offshore production and oil and natural gas prices, see CRS Report R40645, U.S. Offshore Oil and Gas Resources: Prospects and Processes, by Marc Humphries, Robert Pirog, and Gene Whitney.

178 Prepared by John Frittelli, Specialist in Transportation Policy.

179 Prepared by Linda Levine, Specialist in Labor Economics.

180 29 U.S.C. § 651 et seq.

181 29 U.S.C. § 653(a).

182 29 U.S.C. § 653(b)(1).

183 43 U.S.C. § 1333(d)(1).

184 43 U.S.C. § 1347(c).

185 Memorandum of Understanding Between the U.S. Coast Guard and OSHA Concerning Occupational Safety and Health on the Outer Continental Shelf (OCS) (December 19, 1979), available at http://www.osha.gov/pls/oshaweb/ owadisp.show_document?p_table=MOU&p_id=223.

186 Ibid.

187 See 33 C.F.R. subchapter N.

188 43 U.S.C. § 1348(a).

189 On May 19, 2010, the Secretary of the Interior issued Order No. 3299, which reassigned the safety and environmental enforcement functions of the Minerals Management Service to a new Bureau of Safety and Environmental Enforcement. See U.S. Dept. of the Interior, Order No. 3299, available at http://www.mms.gov/ooc/ pdfs/DOI_pressrelease/SecretaryOrder3299.pdf.

190 Prepared by Linda Levine, Specialist in Labor Economics.

191 NAICS stands for the North American Industry Classification System, which federal statistical agencies use to categorize establishments into industries. Establishments primarily engaged in oil and gas extraction as well as those chiefly providing support services for oil and gas operations are categorized in the mining sector (NAICS 21). The oil and gas extraction subsector (NAICS 211) includes firms that explore, develop, and produce oil or gas wells that they operate for themselves or under contract to others. The support activities for mining subsector (NAICS 213) includes companies that primarily drill oil and gas wells for others on a contract or fee basis (NAICS 213111) and perform other support services on a contract or fee basis for oil and gas operations (NAICS 213112) such as cementing and shooting wells.

192 CFO data at http://stats.bls.gov/iif/oshwc/cfoi/cftb0232.pdf.

193 Data are from 2007 because statistics are not available separately in 2008 for the oil and gas drilling industry.

194 The Survey of Occupational Injuries and Illnesses’ data chiefly is from the occupational safety and health logs that OSHA requires employers to maintain. Total recordable cases are the sum of cases with days away from work, job transfer, or restriction and other cases. Survey of Occupational Injuries and Illnesses data at http://stats.bls.gov/iif/ oshwc/osh/os/ostb1909.pdf.

195 These cases are limited to those involving days away from work, which are regarded as the most serious nonfatal injuries and illnesses. Survey of Occupational Injuries and Illnesses data at http://stats.bls.gov/iif/oshwc/osh/case/ ostb1946.pdf.

196 BOEMRE/MMS incident statistics at http://www.boemre.gov/incidents/IncidentStatisticsSummaries.htm.

197 Prepared by John Frittelli, Specialist in Transportation Policy.

198 House Committee on Transportation and Infrastructure, Subcommittee on Coast Guard and Maritime Transportation, Challenges Facing the Coast Guard’s Marine Safety Program, hearing, July 27, 2007.

199 “Hurricane Lessons Bring New Rules, Floating System Designs,” Offshore, June 2007, pp. 84-87.

200 Brett Clanton, “Federal Testing of Rigs Can Have Limits,” Houston Chronicle, May 13, 2010. The website of the joint investigation states that transcripts of hearing testimony will not be available until January 2011; http://www.deepwaterinvestigation.com/go/page/3043/46731/.

201 64 Fed. Reg. 68416, December 7, 1999. Comments can be viewed under ID # USCG-1998-3868 at http://www.regulations.gov.

202 OMB, Spring 2010 Unified Agenda, RIN: 1625-AA18.

203 U.S. Congress, House Committee on Transportation and Infrastructure, Subcommittee on Coast Guard and Maritime Transportation, Foreign Vessel Operations in the U.S. Exclusive Economic Zone, hearing, 111th Cong., 2nd sess., June 17, 2010.

204 Oral and written testimony of Kevin Cook, Coast Guard Director of Prevention Policy, U.S. Congress, House Committee on Transportation and Infrastructure, Subcommittee on Coast Guard and Maritime Transportation, Foreign Vessel Operations in the U.S. Exclusive Economic Zone, hearing, 111th Cong., 2nd sess., June 17, 2010.

205 Ibid.

206 The Coast Guard’s “Qualship 21 Initiative.”

207 The Coast Guard’s “Annual Targeted Flag List.”

208 The United States is a party to this convention.

209 Hossein Esmaeili, The Legal Regime of Offshore Oil Rigs in International Law (Aldershot, UK: Ashgate Dartmouth, 2001), pp. 157-158.

210 The only other detailed conventions regarding offshore rigs are one seeking to prevent ships from colliding with them and one to prevent terrorist acts against them.

211 Mikhail Kashubsky, “Marine Pollution from the Offshore Oil and Gas Industry: Review of Major Conventions and Russian Law (Part 1), Maritime Studies, November-December 2006, pp. 6 and 8, at http://www.customscentre.canberra.edu.au/librarymanager/libs/17/Marine_Pollution_part1.pdf.

212 Canadian Maritime Law Association, “Discussion Paper on the Need for an International Legal Regime for Offshore Units, Artificial Islands and Related Structures Used in Exploration for and Exploitation of Petroleum and Seabed Resources,” 1996, at http://www.cmla.org/papers/MAR96.htm.

213 Maria Gavouneli, Pollution from Offshore Installations (London: Graham and Trotman Ltd., 1995).

214 Prepared by Henry B. Hogue, Analyst in American National Government.

215 See, for example, U.S. Congress, Senate Committee on Energy and Natural Resources, Oil and Gas Royalty Management at DOI, 110th Cong., 1st sess., January 18, 2007, S.Hrg. 110-7 (Washington: GPO, 2007); U.S. Congress, House Committee on Natural Resources, Subcommittee on Energy and Mineral Resources, Getting Royalties Right: Recent Recommendations for Improving the Federal Oil and Gas Royalty System, 110th Cong., 2nd sess., March 11, 2008, Serial No. 110-64 (Washington: GPO, 2008); U.S. Congress, House Committee on Appropriations, Subcommittee on Interior, Environment, and Related Agencies, Minerals Management Service Oversight, 111th Cong., 1st sess., April 2, 2009, transcript available at http://appropriations.house.gov/images/stories/pdf/ienv/ Hearing_Volumes/Interior-FY10-Pt5.pdf#page=307; U.S. Congress, House Committee on Natural Resources, Subcommittee on Energy and Mineral Resources, Leasing and Development of Oil and Gas Resources on the Outer Continental Shelf, 111th Cong., 1st sess., March 17, 2009; and U.S. Congress, House Committee on Oversight and Government Reform, Offshore Drilling: Will Interior’s Reforms Change Its History of Failed Oversight, 111th Cong., 2nd sess., July 22, 2010, webcast available at http://oversight.house.gov/index.php?option=com_content&task=view& id=5038&Itemid=2.

216 See, for example, U.S. Department of the Interior, Office of Inspector General, Evaluation Report: Minerals Management Service Royalty-In-Kind Oil Sales Process, Report No. C-EV-MMS-0001-2008, Washington, DC, May 2008, http://www.doioig.gov/images/stories/reports/pdf//2008-G-00212.pdf; U.S. Department of the Interior, Office of Inspector General, Investigative Report: Island Operating Company et al, Case No. PI-GA-09-0102-I, Washington, DC, March 31, 2010, http://www.doioig.gov/images/stories/reports/pdf//IslandOperatingCo.pdf; and U.S. Department of the Interior, Office of Inspector General, Investigative Report: MMS Oil Marketing Group - Lakewood, Washington, DC, August 19, 2008, http://www.doioig.gov/images/stories/reports/pdf//RIKinvestigation.pdf.

217 GAO has summarized its recent work in this area in U.S. Government Accountability Office, Oil and Gas Management: Past Work Offers Insights to Consider in Restructuring Interior’s Oversight, GAO-10-888T, July 22, 2010, http://www.gao.gov/new.items/d10888t.pdf.

218 U.S. President (Obama), “Remarks on the Oil Spill in the Gulf of Mexico,” Daily Compilation of Presidential Documents, 2010 DCPD No. 201000384 (May 14, 2010), p. 2.

219 United States Commission on Fiscal Accountability of the Nation’s Energy Resources, Fiscal Accountability of the Nation’s Energy Resources (Washington, GPO, 1982).

220 Now the Government Accountability Office.

221 United States Commission on Fiscal Accountability of the Nation’s Energy Resources, Fiscal Accountability of the Nation’s Energy Resources (Washington, GPO, 1982).

222 Secretarial Order No. 3071, January 19, 1982. Amendment No. 1 to this order was issued on May 10, 1982. Copies of these documents are available from Henry B. Hogue, Analyst in American National Government.

223 The organization and functions of the Minerals Management Service are identified in Part 118 of the Department of the Interior Departmental Manual, available at http://elips.doi.gov/app_DM/index.cfm?fuseaction=home.

224 P.L. 97-394, 96 Stat. 1973.

225 U.S. Congress, House Committee on Appropriations, Department of the Interior and Related Agencies Appropriation Bill, 1983, report to accompany H.R. 7356, 97th Cong., 2nd sess. (Washington: GPO, 1982), p. 40.

226 U.S. Department of the Interior, “Salazar Names Senior Interior Officials to Lead Minerals Management Service Restructuring,” press release, May 13, 2010, http://www.doi.gov/news/pressreleases/Salazar-Names-Senior-Interior- Officials-to-Lead-Minerals-Management-Service-Restructuring.cfm#.

227 Ibid.

228 U.S. Department of the Interior, Secretarial Order 3299, “Establishment of the Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement, and the Office of Natural Resources Revenue,” issued May 19, 2010. This order was amended, on June 18, 2010, to extend the deadline for development of a schedule for implementing the reorganization from “within thirty (30) days,” or by June 19, 2010, to “by July 9, 2010.” This amended order, numbered 3299A1, is available at http://elips.doi.gov/app_so/act_getfiles.cfm?order_number=3299A1.

229 U.S. Department of the Interior, “Salazar Divides MMS’s Three Conflicting Missions: Establishes Independent Agency to Police Offshore Energy Operations,” press release, May 19, 2010, http://www.doi.gov/news/pressreleases/ Salazar-Divides-MMSs-Three-Conflicting-Missions.cfm.

230 U.S. Department of the Interior, “Salazar Receives Implementation Plan for Restructuring the Department’s Offshore Energy Missions,” press release, July 14, 2010, http://www.doi.gov/news/pressreleases/Salazar-Receives- Implementation-Plan-for-Restructuring-the-Departments-Offshore-Energy-Missions.cfm#.

231 U.S. Department of the Interior, “Implementation Report: Reorganization of the Minerals Management Service,” issued July 14, 2010, p. 2. Available at http://www.doi.gov/deepwaterhorizon/loader.cfm?csModule=security/getfile& PageID=38543.

232 Ibid., p. 4.

233 Ibid., p. 6.

234 Ibid., p. 6.

235 U.S. Department of the Interior, Secretarial Order 3302, “Change of the Name of the Minerals Management Service to the Bureau of Ocean Energy Management, Regulation, and Enforcement,” issued June 18, 2010. Available at http://elips.doi.gov/app_so/act_getfiles.cfm?order_number=3302.

236 U.S. Congress, Senate Committee on Energy and Natural Resources, hearing on issues involving offshore oil and gas exploration including the Deepwater Horizon accident, 111th Cong., 2nd sess., May 18, 2010, archive webcast available at http://energy.senate.gov/public/index.cfm?Fuseaction=Hearings.LiveStream&Hearing_id=69f3a508-9c1aa3d4- ffa5-fd397b02c93b. Excerpted comments at approximately 35:30.

237 U.S. Congress, House Committee on Natural Resources, “Consolidated Land, Energy, and Aquatic Resources (CLEAR) Act; H.R. 3534; Section-by-Section of the Amendement in the Nature of a Substitute Offered by Chairman Rahall,” July 12, 2010, pp. 2-3; available at http://resourcescommittee.house.gov/images/Documents/clear%20act%20- %20section-by-section%20-%20july%2012%202010.pdf.

238 Ibid., p. 3.

239 Ibid., p. 3.

240 Prepared by Francis X. McCarthy, Analyst in Emergency Management Policy. For additional information, see CRS Report R41234, Potential Stafford Act Declarations for the Gulf Coast Oil Spill: Issues for Congress, by Francis X. McCarthy.

241 For a detailed discussion of the OPA, see CRS Report RL33705, Oil Spills in U.S. Coastal Waters: Background, Governance, and Issues for Congress, by Jonathan L. Ramseur.

242 For more information on the declarations process, see CRS Report RL34146, FEMA’s Disaster Declaration Process: A Primer, by Francis X. McCarthy.

243 Jason Miller, “Feds to Help Small Businesses Affected by Oil Spill,” Federal News Radio, May 18, 2010, http://www.federalnewsradio.com/?nid=35&sid=1959850.

244 William R. Cumming, letter to the editor, Natural Hazards Observer, January 2009, http://www.colorado.edu/ hazards/o/archives/2009/jaan_observerweb.pdf.

245 42 U.S.C. § 5122.

246 DHS/FEMA, “National Disaster Recovery Framework—Draft”, February 10, 2010, http://www.disasterrecoveryworkinggroup.gov/ndrf.pdf.

247 For more information on the Disaster Relief Fund, see CRS Report R40708, Disaster Relief Funding and Emergency Supplemental Appropriations, by Bruce R. Lindsay and Justin Murray.

Glossary

### Citation

(2011). Deepwater Horizon oil spill: selected issues for Congress . Retrieved from http://www.eoearth.org/view/article/161925