Obama on beachCross-posted from the Wonk Room.

On May 22, 2010, President Obama established the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, to investigate the Gulf of Mexico disaster and recommend policies to guard against future offshore disasters, as recommended by the Wonk Room earlier that month. Today, as the commission nears its six-month deadline, it has issued several staff-written draft reports on contentious topics, from dispersants to oil-flow estimates.

On the scope of the disaster

The commission sharply criticized the government’s failure to correctly estimate the scope of the disaster:

By initially underestimating the amount of oil flow and then, at the end of the summer, appearing to underestimate the amount of oil remaining in the Gulf, the federal government created the impression that it was either not fully competent to handle the spill or not fully candid with the American people about the scope of the problem.

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“Throughout the first month of the spill, government responders officially adhered to what we now know were low and inaccurate estimates,” the commission writes. “Non-governmental scientists, on the other hand, used the small amount of publicly available flow data to generate estimates that have proven to be much more accurate.” The government took an “overly casual approach” in determining its 5000-barrel-a-day estimate, the report finds: the rough guess of one NOAA scientist, who was not an expert in flow rate estimates.

On the chain of command

The commission found that National Incident Commander Thad Allen had a hands-off approach to managing the disaster, establishing the National Inicident Center (NIC) primarily as a press-relations shop, while letting regional command posts make the practical decisions:

Because of this lack of regulatory guidance, the NIC set up during the Deepwater Horizon response was based largely on the National Incident Commander’s view of what his role and the role of his staff should be. The NIC, as envisioned by Admiral Allen, primarily functioned as a national coordination and communications center to deal with high-level political and media inquiries so that the Unified Area Command and the Incident Command Posts could focus on response efforts. The goal was for the NIC not to direct tactics or response operations, but to deal with political and high-level strategy issues associated with the response. Similarly, the goal of the Federal On-Scene Coordinator and the Unified Area Command was not to direct all response operations, but rather to coordinate resources, communications, and the relationship with the responsible party. Most tactical and operational decisions were intended to be made at the Incident Command Post level.

Investigating why people had the perception that BP was “running the show,” the commission found that BP was, in fact, running the show:

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In some command chains, a BP employee was at the top and a Coast Guard member would report up to the BP employee.

BP may have heightened the perception that it was running the show by distributing money for response costs directly to state and local governments. … These sums, provided completely outside of the unified command structure and without any requirement that the monies be used in a manner consistent with the NCP, gave states and communities reason to believe that BP controlled the means and the methods of the response.

On BP’s conflict of interest

The commission explored just a few of the problems with leaving the corporation responsible for the disaster in charge of the response, even though “it shares the public’s interest in cutting off the oil flow as quickly as possible”:

On other issues, the incentives of the public and the responsible party may diverge. For instance, the responsible party may, at least in theory, have an interest in using dispersants even if they cause ecological harm. Environmental damage caused by low concentrations of widely dispersed oil may be harder to document than concentrated surface harm in coastal areas. Moreover, public opinion may be more likely to be influenced by easily visible harm to wetlands, beaches, birds, and terrestrial animals. Hence, the responsible party may have an incentive to favor greater use of dispersants than is in the public interest. Similarly, the public may have an interest in knowing the rate of flow from the well, while the responsible party may benefit from obfuscating or underestimating the rate of flow because high flow means higher liability. Moreover, a responsible party has a fiduciary duty to its shareholders to minimize costs incurred. This fiduciary duty can be at odds with the public’s interest in maximizing cleanup efforts.

The commission also noted that BP maintained exclusive access over the gushing wellhead at all times, despite its huge conflict of interest. “Given that its potential liability under the Clean Water Act depended directly on the flow rate, BP had real incentives to maintain exclusive control over the ability to estimate that rate.”

On dispersants

“The government was not adequately prepared for the use of dispersants to address such a large oil spill,” the commission found, faulting EPA and NOAA, although the officials in charge once the disaster happened “appear to have acted reasonably in the difficult circumstances in which they were placed.” The commission noted that a directive to “eliminate” surface dispersants was not followed:

Despite the joint Coast Guard/EPA directive that BP “eliminate the surface application of dispersants” except in “rare cases where there may have to be an exemption,” the use of surface dispersants was not eliminated after May 26, 2010. The “rare cases” were not very rare.

“In the future, government officials must leave no doubt that they, and not private industry, are making difficult decisions,” the commission report concluded.