The Policy and Regulatory Response to Deepwater Horizon: Transforming Offshore Oil and Gas Leasing?

Environmental Law Reporter, Vol. 40 Issue 11 pp.84

November 2010

By Jonathan Simon and Jennifer Owen

Since the mobile offshore drilling unit Deepwater Horizon exploded and sank into the Gulf of Mexico in late April 2010, the resulting oil spill and the events that may have contributed to the disaster have captured the attention of the general public, as well as government officials, on a historic scale.  Despite the length of time that has passed since the incident, the environmental, operational, and regulatory impact of the spill, and the full range of public and private-sector responses, remains to an extent uncertain.  However, it is apparent from the key issues that have emerged from the carious investigations and reports, congressional hearings, and public debate relating to the spill that the federal policy and regulatory response to this incident will have significant implications, not only for those entities that engage in or support offshore drilling, but perhaps also for the broader energy industry and the manner in which the United States produces, transports, and consumes energy.

While cleanup and restoration efforts continue, administrative and congressional action to reform the offshore oil and gas leasing program in the United States is already well underway. In the wake of the Deepwater Horizon incident, more than 40 U.S. House of Representatives and U.S. Senate hearings have been held, and multiple congressional committees have developed and advanced proposals to address a breadth of issues relating to offshore oil and gas development activity. At the same time, the Administration, and particularly the U.S. Department of the Interior (DOI), has moved forward with its own efforts at reform. On May 19, in a change later echoed by legislative proposals, the Administration restructured the Minerals Management Service (MMS)—the division of the DOI that, in the past, has managed federal oil and gas leasing, exploration, development, and production on the U.S. Outer Continental Shelf (OCS), as well as been responsible for the collection of revenues from leasing—in order to address perceived conflicts of interest that some believe have compromised the agency’s effectiveness. Both the Administration and the U.S. Congress have explored, and continue to evaluate, a broad range of measures to address environmental and safety concerns raised by the Deepwater Horizon incident and to change liability requirements for those who engage in oil and gas exploration and drilling. Most new deepwater offshore exploration and drilling in the Gulf of Mexico remains under a highly controversial moratorium until new standards can be fully implemented.

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Reprinted with permission by the Environmental Law Institute www.eli.org. More information on the Environmental Law Reporter is available here.