The House Natural Resources Committee on Wednesday approved Rep. George Miller's (D-CA) amendment to bar new offshore oil and gas drilling permits to BP plc or any other company with a "significant" history of violating worker safety or environmental law.

"Actions have consequences," said Miller. "Companies with a history of being dangerous to workers or to the environment should not have the privilege of drilling off America's coastline for our natural resources. It is a privilege to be able to drill for the valuable resources that belong to the American people. And the American people have a right to insist that only the companies of the highest caliber and with the best records be permitted to drill off our shores for oil and gas."

Miller said his amendment, which does not mention BP or any other company by name, came in response to the blowout of the Deepwater Horizon exploratory well, which BP operated, in the Gulf of Mexico (GOM). Government regulators that review and approve requests for drilling licenses "should have taken into consideration BP's flagrant history of worker fatalities, OSHA [Occupational Safety and Health Administration] violations, and environmental fines at its various U.S. operations before approving its request last year to drill again in the Gulf Coast."

Miller admitted that BP now is the only producer operating in the GOM that would fail the standards under his amendment, which passed on a voice vote in committee.

If enacted, BP's current offshore leases would not be affected. BP also could continue to participate as a minority partner on future leases, said Miller.

BP, which now is the biggest producer offshore, in March was producing 500,000 boe/d from the GOM. The Macondo well blowout came just six months after BP announced a "giant" discovery at the Tiber well in the Lower Tertiary Trend near its Kaskida discovery (see Daily GPI, Sept. 3, 2009). If the well proves as successful as early tests, Tiber and the Kaskida discovery could boost BP's GOM output by more than 60% within the next 15 years.

"It's a question of whether or not they get to exercise the privilege of being able to drill going forward," Miller said of BP. "One of the things you should bring to this game is a safety record. You have a company that had an egregious safety record, a fatal safety record."

Current federal law, he noted, does not require federal regulators to consider a company's prior record before issuing drilling permits.

The amendment was offered in the sweeping offshore oil and gas reform measure authored by committee Chairman Nick Rahall (D-WV). The committee held a day-long mark-up of Rahall's HR 3534, the Consolidated Land, Energy, and Aquatic Resources Act of 2009, first introduced last September (see Daily GPI, Sept. 11, 2009).

Under Miller's amendment, a company would be barred from drilling in the Outer Continental Shelf (OCS) "if its record indicated five times the industry average for willful or repeat worker safety violations at their oil and gas facilities, if more than 10 fatalities occurred at any of its facilities, or if it incurred fines of $10 million or more under Clean Air Act or Clean Water Act within the preceding seven years." Additional amendments are designed to strengthen worker safety and whistle-blower protections for offshore workers.

"Even before the Deepwater Horizon disaster, BP's environmental and safety track record was egregious," said Miller. He cited several incidents, including two that have resulted in massive fines.

BP pleaded guilty to criminal charges and agreed to pay a record fine of more than $21 million for a 2005 explosion at its Texas City, TX, refinery that killed 15 workers and injured 180. OSHA found 300 safety violations at the refinery during its investigation of the tragedy. OSHA in 2009 again inspected the Texas City refinery and found another 700 violations; it has proposed a separate fine of $87.4 million.

Pipeline failures at BP's Prudhoe Bay, AK, facility in 2006 resulted in a spill of more than 200,000 gallons of crude oil. The company paid a $12 million fine following an investigation.

BP has been cited for more than 800 "egregious" violations at its facilities over the past seven years, compared with almost none by most other operators, Miller noted.

Rep. Doc Hastings (R-WA), the senior Republican on the House committee, said Miller's amendment was coming too soon. Hastings wants to wait until the investigations into the offshore disaster are completed.

Under Miller's proposal, when a bid is submitted to obtain a permit to drill offshore, the company would be required to affirm that neither it nor its related companies were violating any of the safety and environmental provisions, according to the amendment. To prevent corporate reorganization designed to avoid these requirements, the company would be responsible for the health and safety records of any company related by ownership or control, including subsidiaries, successors, contractors or subcontractors on oil and gas projects.

Rahall's bill was expected to clear the committee on Wednesday. It still requires approval by both the full House and Senate.

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