Hope Babcock, Professor of Law, Georgetown University Law Center

By Nicole Benincasa

Hope Babcock, Professor of Law spoke this afternoon on the generation of nuclear power and off-shore oil risk management development.

Ms. Babcock spoke about how two industries have responded to risky accidents that have occurred in the past several years: the 1979 Three Mile Island nuclear power plant accident in Harrisburg, Pennsylvania and the 2010 Deepwater Horizon oil spill. She explained that licensing of industrial activities reflect a political value judgment that these activities provide a social benefit that is greater than the social cost that occurs. However, that value judgment should be rethought. Based on what happened at the Deepwater Horizon oil drilling rig, it seems clear that no one took the likelihood of a catastrophic accident happening seriously enough, even though it was the third similar accident of its kind.

It took one major nuclear accident, Three Mile Island, to jolt the industry to take immediate steps to dissuade the industry from re-thinking nuclear power plant operations. Ms. Babcock explored the question of why the same type of internal correction did not happen after the first oil rig blowout in 1969.

There is a critical difference in how the public perceives the two activities; the public is not afraid of the deep-water drilling of oil, though it is afraid of nuclear radiation. This fear made it very likely that unless the nuclear power industry took steps to regain the public’s confidence in nuclear power, the industry was as good as dead. Collectively, this defining difference has contributed to a higher standard in the nuclear power industry than in the oil drilling industry.

Over 50,000 wells have been drilled, and more than 70 percent of all offshore oil and gas comes from these types of platforms. In the 1980s, the United States Secretary of Interior attempted to reinvigorate the offshore drilling process. This encountered enormous political resistance, and Congress responded with a series of annual moratoriums in offshore drilling. Today, 80 percent of the outer continental shelf is closed to drilling oil. The April 2010 blowout and resulting fire is, to date, the worst oil drilling accident in the United States.

In 1979, a blowout in the Gulf of Mexico affected 162 miles of the Gulf’s beaches. Well blowouts are not rare events; in 37 years, blowouts occur at a frequency of 1 every 3.7 years. Indeed, an accident of the April 2010′s magnitude was inevitable. In little more than two years, BP found itself paying millions of dollars to contain and mitigate the damages and to compensate the hundreds of thousands of people who were affected by the 2010 oil spill. The accident lasted for 152 days, before it was finally plugged in September. The oil spread to the eastern coast in Florida and as far west as Texas. The spill’s immediate impact on the marine environment has been devastating; many of the wetlands remain heavily oiled to this day. The release of toxic chemicals may have an adverse effect on the ecosystem. Even today, when little surface evidence of the spill is apparent, the economic and social impacts are equally devastating. The impact of the oil spill will continue long after its visible reminders are present.

The nuclear industry got its start at almost the same time as the offshore drilling industry. Today,  nuclear power makes up about 20 percent of the base load electrical power. Since 1979, there have been 47 incidents that required nuclear plants to be shut down, but none compare to what happened with the nuclear disaster which occurred in Harrisburg. The economic impact of the accident was devastating. In approximately two hours, conditions turned the power plant into a multi-billion dollar liability.  The Nuclear Regulatory Commission (NRC) issued the last permit for the commission of a nuclear plant the year before this disaster.

Alternatively, some of what happened on the Deepwater Horizon drilling rig is unknown, because some of the people on the rig tragically died. The mistakes that occurred on the rig severely compromised the ability of containing or avoiding the accident. The desires of both companies to keep business running created atmospheres where the risks of danger were under-appreciated. The drilling rig and the nuclear power plant were both extremely unsafe. The drilling rig was in poor shape, because it was not properly maintained. There were at least 26 components and systems on the rig that were in bad shape. These technical and mechanical problems led some experts to say that this was not a freak accident, but the result of the rig’s unsafe conditions. The rig’s malfunction rate was significantly worse than others. In addition, the companies responsible for key components of the well did not share information about the system’s integrity with their owners and operators. The same thing happened with Three-Mile Island Unit Two in Harrisburg. Amazingly, almost the entire chain of events that occurred at Unit Two happened at another reactor; again, this information was not shared with owners and operators. Facility operators failed to recognize what was happening as a result of inadequate training.

An alarm system on the Deepwater Horizon drilling rig designed to alert workers had been disabled, because it woke up workers on the drilling rig. The drilling crew made a decision to replace the well plug, precipitating the flow of gas up the pipe. Two minutes into the accident, the plan’s emergency core cooling system activated automatically, but it was turned off twice. The crews of both the nuclear power plant and the oil rig ignored or misinterpreted critical information that would have ensured that workers knew a disaster was about to occur. The drilling crew refused to believe what they were seeing, coming up with various explanations for the tell-tale signs of an impending blowout. The crew also inexplicably did not do a flow check when they realized that there was a discrepancy between pipes. The crew thought monitors were malfunctioning, and critical monitors were not visible to operators attempting to ensure that an accident would not occur.

Poor and non-existent communication in both accidents made matters worse. Some have suggested that the lack of pre-accident coordination contributed to the oil-rig blowout. Post-accident reports indicate that there was chaos, with no one on the rig clearly in charge. Similarly, there was minimum communication between Three Mile Island’s control room and company management. The nearest town was not told what was happening on the site until days later.

There were problems within the oil rig company that may have been indirect causes of the accident, as well. Many workers were concerned about safety practices, and feared reprisals if they were to report such practices. BP had a history of bypassing safety systems. BP always chose the least-expensive option, though it often elevated the risk of disaster. Time and money were a major concern to BP. Although BP denied that safety had been compromised, the results show otherwise.

Blind faith in engineering can lead people involved in such industries to forget to be afraid. The offshore oil and gas industry was and still is in total denial of what happened on the offshore oil rig. The immediate negative effect of this attitude was that a crew was not prepared or able to deal with the situation.

What the offshore oil and gas industry has done today is largely cosmetic. A short-term moratorium on offshore drilling, when compared to the nuclear power industry’s immediate upgrade to the power plant system and addition of stringent new requirements for the emergency response plan, are grossly insufficient.

Why the different responses to these accidents? Ms. Babcock believes that because the public is afraid of radiation, and it is not afraid of oil and gas, the fear of nuclear power has propelled the industry into a self-corrective path. The ramifications of human error and negligence are so great that another catastrophic event at a nuclear power plant would likely shut down the nuclear power industry forever. No such threat exists with offshore oil rigging. Nuclear power occupies an extreme position on the scale of risk. This fear-factor simply does not affect the off-shore oil drilling industry. There is minimal psychological pressure on this industry to exercise extreme caution. As a result, Ms. Babcock believes that the oil industry will not change its practices. Thus, it seems unlikely that any type of social rethinking will occur.

Rebecca Bratspies, Professor of Law, CUNY School of Law

By Catherine Wilmarth

Everyone knows that the BP oil spill was an environmental and social disaster, but Professor Rebecca Bratspies encouraged us to focus on one large problem that came to light after the spill: the dangers of implicit regulatory privatization. Self-regulation is the operating mode of the drilling industry. Oil companies set their own standards and measure their own compliance with those standards.

So how did the oil spill happen? One narrative tells us that BP is a sole bad actor who made poor private choices and always selected the least expensive, easiest path; a singular disaster in an otherwise functioning economy. Another tells us that the entire offshore drilling program is profoundly dysfunctional due to the political climate, the inadequate statutory authority, the corrupt agency culture, and the lack of agency resources.

There is a plethora of evidence that BP was a bad actor: their emergency response plans were lacking, they have astounding numbers of safety violations, and they have a history of other oil spill incidents. But these two narratives are not mutually exclusive. The status just before the incident of political culture, statute, and the Minerals Management Service (MMS), the agency responsible for regulation of the oil industry, proved that the entire offshore drilling program was in a distressing state. In early 2010 there was great political pressure to increase offshore oil and gas drilling in response to rising gas prices and other factors. Existing statutory authority decried the need to balance the impacts of drilling with the desire and need for exploration, but gave no detailed direction as to how to find the perfect balance between the two. Legal frameworks also included unrealistic deadlines, and the MMS itself often accepted gifts from numerous oil corporations and allowed oil employees to ghostwrite inspection and maintenance document drafts. In sum, MMS faced increasing demand for regulation while receiving decreasing resources.

Contrasted against the express delegation of duties to private actors, the shortcomings in the MMS forced implicit delegation of the development and execution of standards into the hands of private industry. The American Petroleum Institute (API), a private trade organization allied with the interests of private companies, often suggested the standards that should be applied. And on its face, this may seem sensible: the industry is the most knowledgeable in what is realistic and possible, and government agencies may not have the resources to develop truly meaningful regulations. However, the standards that the API came up with for the oil industry frequently did not require the best available technology, did not reflect best industry practice, did not incentivize smart and responsible development, and focused solely on the economic factors instead of the social and environmental concerns that should also have been important in the development of regulations.

Procedural flaws exist when private standards take precedence over government standards. The development of these rules should be legitimate: they should be made intelligently, with sensitivity to the needs of affected actors, and spearheaded by a trusted authority.  The API’s standards did not consider the inputs of affected communities, the interested public, or those opposed to the industry’s actions. These rules flowed mainly from industry perspectives, and this guaranteed that important viewpoints and issues fell through the cracks. The usual statutory tools that we turn to for government transparency such as the Freedom of Information Act, Sunshine Laws, and the Administrative Procedure Act do not apply to standards developed inside a private industry.

When we allow industries to create and enforce their own regulatory frameworks and simply gloss them over with the sheen of government approval, we lose both the input of important concerned actors and also the encouragement of economically, socially, and environmentally responsible development.

Calvin M. Lederer, Deputy Judge Advocate General, United States Coast Guard

By Bailey Woolfstead

Cal Lederer kicked off the symposium by giving an overview of what actually happened in the oil spill, the various approaches taken to stop the spill, and the authorities underlying spills in the future.  Mr. Lederer brought the perspective to the immediate aftermath of the spill from the Coast Guard, the United States’ primary military response.

Mr. Lederer began by providing an overview what Deepwater Horizon (also known as the Macondo well, or MC-252), a mobile offshore drilling unit, or MODU, is, commenting that there are currently 140 of these MODUs in the world right now and that various agencies, including the Coast Guard, share regulatory roles and responsibilities power .

Mr. Lederer continued by providing the basic facts of the oil spill including that the Deepwater Horizon well was located 50 miles Southeast of the nearest point of land, 5000 feet below the water, and the actual oil reservoir was locate an additional 13,000 feet below the sea floor, the area was leased to British Petroleum (BP) by the minerals management service and exploratory drilling began in the location in 2008.  11 people died during the blowout and the primary concerns in the immediate aftermath were search and rescue and firefighting.  He noted that there were 87 days from the time of the explosion to the final capping and killing of the oil spill in August and that in that time approximately 4.9 million barrels of oil escaped into the ocean.

Mr. Lederer next discussed the three approaches that were taken in the aftermath of the oil spill.  The first approach Mr. Lederer discussed was to contain and seal the source, which ultimately involved a capping stack and relief wells.  He explained the three phases to finding the ultimate solution, including attempting to force the blowout preventer to function the way it was designed who, which was approached initially with optimism but ultimately failed.  He then moved on to the second phase of trial, error, and failure based on a drastic underestimation of the number of barrels flowing from the well per day.  Finally, Mr. Lederer discussed the third phase to capping the well where the U.S. government began to take control,  oversee BP’s capping efforts, and ultimately placed a series of top hats which mitigated about half the flow of the oil spill by mid-June and placing a blowout preventer on top of the capping stack and drilling two relief wells to pump cement to finally kill the well.  Mr. Lederer noted that the national commission report shows how tense and dramatic this procedure actually was, including conference calls with hundreds of people determining what negative impacts, including a secondary blowout, may be caused by any of the potential solutions to the blowout.

The second approach discussed by Mr. Lederer was offshore engagement, including the three processes of dealing with the oil before it reaches the shore.  Aerial and subsea disbursements, including Corexit, were approved prior to the oil spill to break oil up into smaller droplets to discourage it from finding its way to shore and allowing the oil to naturally degrade.  An issue with the disbursements is that they may be more toxic than the oil itself and may have an adverse impact on organisms in the water.  As a result, the Coast Guard requested that BP reduce its usage of Corexit, which decreased by 60% during the month of June.

The second process Mr. Lederer discussed was skimming.  While not incredibly effective, skimming boats gave jobs to displaced fisherman and did remove 35 million gallons of oily-water mix.   The final major process Mr. Lederer discussed was the in-situ burn, which was controversial based on the fear of harm to sea creatures, particularly turtles, from the fires.  While this practice was not pre-approved, there were statutory provisions for emergency actions by the government.

Third, Mr. Lederer discussed protecting the shoreline including diversion and exclusion booming and the rapid response to beaches.

The final topic of Mr. Lederer’s presentation was authorities underlying spills in the future.  The response authorities discussed by Mr. Lederer include the Federal Water Pollution Control Act, the Oil Pollution Act of 1992, the National Contingency Plan, the Homeland Security Presidential Directive, and the National Response Framework.

In terms of the structure of the response to the Deepwater Horizon spill, Mr. Lederer pointed out that while there were typically only a few hundred individuals involved in cleanup in prior oil spills, thousands were involved in the cleanup of Deewater Horizon.  Federal, state, local and BP actors worked together in 17 branches and 32 staging areas under a unified command to coordinate the cleanup.  Mr. Lederer also discussed the high level interest from the president and cabinet level officials in the cleanup, and the difficulty in hearing the voices of technical experts over those of the cabinet level officials.  Mr. Lederer further noted the command and control issue that arose when the Oil Pollution Act gives federal command and control where the Stafford Act gives states and local government the lead in dealing with disasters.  Mr. Lederer specifically noted that the social and political nullification of the national contingency plan because state and local governments believed they should spearhead response needs to be addressed gong forward.

In response to the oil spill, Mr. Lederer discussed the investigations that have been initiated by the DOJ and the joint investigation by the Department of Homeland Security and the Department of the Interior.

Mr. Lederer concluded by discussing that the cost of oil spill removal is federalized with the United States paying out of picket many of the up-front costs through the oil spill liability trust fund with full reimbursement by BP.  While there was a $75 million cap for oil spill damage liability, which is an issue being discussed on Capitol Hill, BP has waived the cap.