By Brian J. Donovan

July 11, 2010

INTRODUCTION

As of July 11, 2010, regardless of whether you prefer to say “spill” or “gusher,” underwater “plume” or underwater “cloud,” these are the numbers to consider:

Total Amount of Oil Released to Date: 4,455,000 barrels
Amount of Oil Recovered by BP to Date (via Containment Cap): 771,100 barrels
Oily Water Recovered: 694,286 barrels of oily water = 69,429 barrels of oil
Oil Consumed by Controlled Burns: 237,857 barrels
Total Amount of Unrecovered Oil in Gulf of Mexico to Date: 3,376,614 barrels

Currently, the official release rate of oil from the Deepwater Horizon blowout is estimated to be 35,000 to 60,000 barrels per day. Unofficial credible estimates indicate that 80,000 to 100,000 barrels of oil may be spewing from the damaged well each day. Two vessels, the Q4000 and the Discoverer Enterprise, are collecting approximately 25,000 barrels of oil per day. The U.S. Coast Guard (USCG) expects BP’s third containment vessel, the Helix Producer, to increase total collection capacity to approximately 53,000 barrels of oil per day.

Under the Clean Water Act (CWA), BP faces fines of up to $4,300 for each barrel spilled. Furthermore, pursuant to Section 2702 of the Oil Pollution Act of 1990 (OPA 90), BP may be required to pay royalties (18.75%) owed to the federal government for the oil gushing from the well.

BP owns 65 percent of the Deepwater Horizon well, Anadarko owns 25 percent, and Mitsui owns 10 percent. Under OPA 90, responsible parties and guarantors are jointly and severally liable for the costs incurred. In this incident, BP has been named the responsible party. Pursuant to OPA 90, a “responsible party” means, in the case of an offshore facility, the lessee or permittee of the area in which the facility is located. Under the definition of responsible party in OPA 90, the fact that Anadarko and Mitsui are also “lessees,” may relate to the potential liability of Anadarko and Mitsui. However, the role of Anadarko and Mitsui as solely financial partners rather than operators of the well is a key issue. Passive investors like Anadarko and Mitsui would normally be required to pay their pro rata share of liability unless it is possible to prove gross negligence on the part of BP.

Gross negligence is defined as “the intentional failure to perform a manifest duty in reckless disregard of the consequences as affecting the life or property of another.”

The question is, given BP’s documented violation of federal safety regulations aboard the Deepwater Horizon, e.g., using an improper cementing technique to seal the well, failing to adequately test and maintain blowout prevention equipment and drilling deeper than BP’s federal permit allowed, did BP know or should BP have known about a condition that could lead to the disaster of April 20, 2010? If the answer is yes, it may be possible to prove gross negligence on the part of BP. If gross negligence can be proven on the part of BP, Anadarko and Mitsui could be fully indemnified.

This article briefly discusses BP’s strategy to limit its liability in regard to the Deepwater Horizon blowout. This strategy includes, but is not limited to, intentionally underestimating the rate of flow of oil that’s being released into the Gulf of Mexico, prohibiting independent measurement of the BP oil gusher by unbiased third party scientists and engineers, the excessive and unprecedented use of dispersants (both on the surface and underwater), systematically and intentionally collecting as small an amount of oil as possible from the waters of the Gulf of Mexico, and controlling and restricting media access to the areas affected by the Deepwater Horizon oil gusher.

INTENTIONALLY UNDERESTIMATING THE RATE OF FLOW OF OIL
THAT’S BEING RELEASED INTO THE GULF OF MEXICO

The BP Numbers Game
On April 24, BP reported that approximately 1,000 barrels per day (bbl/day) of oil were being released into the Gulf. On April 28, it was estimated that approximately 5,000 bbl/day were being released into the Gulf of Mexico. On May 27, USGS Director Dr. Marcia McNutt, Chair of the National Incident Command’s Flow Rate Technical Group (FRTG), announced that the amount of oil flowing from BP’s leaking oil well was estimated to be 12,000 to 19,000 bbl/day. On June 10, is was guesstimated that the well was gushing 20,000 to 40,000 bbl/day.

On June 15, 2010, Secretary of Energy Steven Chu, Secretary of the Interior Ken Salazar, and Dr. Marcia McNutt announced that the most likely flow rate of oil is between 35,000 and 60,000 bbl/day. Unofficial credible estimates indicate that 80,000 to 100,000 bbl/day of oil may be spewing from the BP well.

Since April 22, 2010, BP has knowingly and intentionally underestimated the flow rate of oil from the Deepwater Horizon well. For example, from April 22 to June 3, the official estimated rate of release of oil was between 20,000 and 40,000 bbl/day, the upper and lower estimates announced by the FRTG on June 10, 2010. Prior to May 27, BP had made no attempt to update its estimate of 5,000 bbl/day since releasing it on April 28th. Moreover, NOAA supported BP’s strategy to underestimate the amount of oil being released from the well. “I think the estimate at the time was, and remains, a reasonable estimate,” said Dr. Lubchenco, the NOAA administrator. “Having greater precision about the flow rate would not really help in any way. We would be doing the same things.”

PROHIBITING INDEPENDENT MEASUREMENT OF THE BP OIL GUSHER
BY UNBIASED THIRD PARTY SCIENTISTS AND ENGINEERS

Rate of the Flow of Oil from the BP Well
Scientists have come down hard on BP for refusing to take advantage of methods available to measure the oil. On May 13, The New York Times reported that BP was planning to fly scientists from the Woods Hole Oceanographic Institute to Louisiana to conduct volume measurements. The oceanographers were poised to use underwater ultrasound equipment to measure the flow of oil and gas from the ocean floor when BP canceled the trip.

On June 8, in responding to a question regarding the rate of the flow of oil from the BP well, Admiral Thad Allen told ABC News, “Everything we know and everything we see is through either the remote sensors or remote-operated vehicles that are like looking through a particular keyhole at a particular time.” Unfortunately, access to that keyhole is still completely controlled by BP.

An accurate measurement of the flow of oil could change the way people remember this gusher and their opinion of BP.  Once the leak is plugged and the oil is dispersed throughout the oceans of the world, who’s to say for certain whether BP’s oil well blowout gushed an average of 1,000 or 100,000 bbl/day of oil? By allowing BP to obscure the gusher’s true magnitude, the federal government appears to support BP’s strategy.

Deep Spill 2
Frustrated with limited data on the BP oil gusher, a group of independent scientists, led by Ira Leifer, a researcher at the Marine Science Institute of the University of California at Santa Barbara, has proposed a large experiment that would give a clearer understanding of where the oil and gas are going and where they’ll do the most damage. The research project, titled “Deep Spill 2,” calls for about two weeks of experiments with two research vessels and robotic vehicles at a cost of $8.4 million. The scientists would use monitoring equipment and sampling to conduct experiments at various levels in the water column. The scientists say their mission must be undertaken immediately, before BP kills the runaway well. They propose using what’s probably the world’s worst oil accident to learn how crude oil and natural gas move through water when they’re released at high volumes from the deep sea. Leifer’s team also wants to see how the oil breaks down into toxic and safer components in different ocean conditions, information that would help predict which ocean species are most at risk.

Mr. Leifer’s proposed experiment could help improve the estimate, but because the flow amount can change over time, it would still be impossible to come up with an accurate amount. “We’re trying to figure out not just how much is coming out, but where it’s going,” Leifer said. “The question is where is it going, why is it going there and what is it killing?”

On July 2, 2010, McClatchy Newspapers reported that many experts say the overall scientific evaluation of the spill is surprisingly uncoordinated, as federal officials and BP have failed to mount a speedy, focused inquiry to understand its impact. “BP has not been an agent for insuring that learning occurs in the past,” Leifer noted drily.

EXCESSIVE AND UNPRECEDENTED USE OF DISPERSANTS
(BOTH ON THE SURFACE AND UNDERWATER) 

To date, 1,762,000 gallons of oil dispersant (1,070,000 gallons of surface dispersant; 692,000 gallons of subsea dispersant) have been applied by BP since the April 22 sinking of the Deepwater Horizon rig, an unprecedented application and for a duration and at depths also without precedent.

A Toxic Strategy
BP is using the dispersant “Corexit 9500.” While Corexit 9500 is on the EPA’s approved list, BP is using this dispersant in unprecedented volumes and has been using it underwater at the source of the leak, a procedure that has never been tried before. The EPA has acknowledged that “much is unknown about the underwater use of dispersants.” Moreover, of all the chemicals approved by the EPA for use on oil spills, Corexit 9500 is among the most toxic to certain organisms. It also is among the least effective in breaking up the kind of oil that is prevalent in the area around the spill site, EPA tests concluded. Corexit might also be contributing to the formation of large undersea “oil plumes” thousands of feet below the surface.

On April 29, 2010, BP began using the chemical dispersant Corexit to dissolve the crude oil, both on the surface and underwater. Dispersing the oil is considered one of the best ways to protect birds and keep the slick from making landfall. But the dispersants contain harmful toxins of their own and can concentrate leftover oil toxins in the water, where they can kill fish and migrate great distances.

“There is a chemical toxicity to the dispersant compound that in many ways is worse than oil,” said Richard Charter, a foremost expert on marine biology and oil spills who is a senior policy advisor for Marine Programs for Defenders of Wildlife and is chairman of the Gulf of the Farallones National Marine Sanctuary Advisory Council. “It’s a trade off – you’re damned if you do damned if you don’t — of trying to minimize the damage coming to shore, but in so doing you may be more seriously damaging the ecosystem offshore.”

Dispersants are mixtures of solvents, surfactants and other additives that break up the surface tension of an oil slick and make oil more soluble in water, according to a paper published by the National Academy of Sciences. They are spread over or in the water in very low concentration -  a single gallon may cover several acres.

Once they are dispersed, the tiny droplets of oil are more likely to sink or remain suspended in deep water rather than floating to the surface and collecting in a continuous slick. Dispersed oil can spread quickly in three directions instead of two and is more easily dissipated by waves and turbulence. But the dispersed oil can also collect on the seabed, where it becomes toxic food for microscopic organisms at the bottom of the food chain and eventually winds up in shellfish and other organisms. Moreover, experiments by John Nyman of Louisiana State University indicate that the combination of Louisiana crude and the dispersant used on the current gusher is more toxic to marsh-dwelling invertebrates than oil alone would be.

According to a 2005 National Academy of Sciences report, the dispersants and the oil they leave behind can kill fish eggs. A study of oil dispersal in Coos Bay, Ore. found that Polycyclic Aromatic Hydrocarbons (PAHs) accumulated in mussels, the Academy’s paper noted. Another study examining fish health after the Exxon Valdez spill in Alaska in 1989 found that PAHs affected the developing hearts of Pacific herring and pink salmon embryos. The research suggests the dispersal of the oil that’s leaking in the Gulf could affect the seafood industry there.

“One of the most difficult decisions that oil spill responders and natural resource managers face during a spill is evaluating the trade-offs associated with dispersant use,” said the Academy report, titled Oil Spill Dispersants, Efficacy and Effects. “There is insufficient understanding of the fate of dispersed oil in aquatic ecosystems.”
 
Sylvia Earle, the National Geographic’s explorer-in-residence and former chief scientist at NOAA, stated that “the instructions for humans using Corexit warn that it is an eye and skin irritant, is harmful by inhalation, in contact with skin and if swallowed, and may cause injury to red blood cells, kidney or the liver.” “People are warned not to take Corexit internally,” she said, “but the fish, turtles, copepods and jellies have no choice. They are awash in a lethal brew of oil and butoxyethanol.”

Earle further states, “Not only is the flow of millions of gallons of oil an issue in the Gulf, but also the thousands of gallons of toxic dispersants that make the ocean look a little better on the surface – where most people are – but make circumstances a lot worse under the surface, where most of the life in the ocean actually is. We don’t know what the effect of dispersants applied a mile underwater is; there’s been no laboratory testing of that at all, or the effect of what it does when it combines with oil a mile underwater.” One problem with breaking down the oil is that it makes it easier for the many tiny underwater organisms to ingest this toxic soup.

Earle called for a halt on the subsurface use of dispersants, while limiting surface use to strategic sites where other methods cannot safeguard critically important coastal habitats.

The National Oil and Hazardous Substances Pollution Contingency Plan
The National Oil and Hazardous Substances Pollution Contingency Plan, more commonly called NCP, is the federal government’s blueprint for responding to both oil spills and hazardous substance releases. Pursuant to NCP Section 300.310, “As appropriate, actions shall be taken to recover the oil or mitigate its effects. Of the numerous chemical or physical methods that may be used, the chosen methods shall be the most consistent with protecting public health and welfare and the environment. Sinking agents shall not be used.” Sinking agents means those additives applied to oil discharges to sink floating pollutants below the water surface. The question is whether BP’s dispersants are “sinking agents” when they are applied a mile underwater at the source of the well leak.

Undersea Oil Plumes
On May 15, 2010, The New York Times reported that scientists are finding enormous oil  plumes in the deep waters of the Gulf of Mexico, including one as large as 10 miles long, 3 miles wide and 300 feet thick in spots. Researchers from the University of Georgia, University of Southern Mississippi, University of South Florida and Louisiana State University have added to this preliminary body of evidence suggesting that some of the oil – no one knows what proportion – is dissolving into the water and forming huge plumes of dispersed oil droplets beneath the surface. This is worrisome because it raises the possibility that sea life, including commercially important species of fish, could be exposed to a greater load of toxins than conventional models of oil spills would suggest. The undersea plumes may go a long way toward explaining the discrepancy between the flow estimates, suggesting that much of the oil emerging from the well could be lingering far below the sea surface.

On May 28, 2010, Reuters reported that the toxic dispersants applied underwater by BP may work their way up the food chain.

David Hollander, a University of South Florida oceanographer, headed a research team that discovered a six-mile (10-km) wide “oil cloud” while on a government-funded expedition aboard the Weatherbird II, a vessel operated by the university’s College of Marine Science. “We were collecting samples down to two miles (3 km) below the surface,” Hollander told Reuters in an interview on Friday. Hollander said the contaminants – which could eventually be pushed onto the continental shelf before shifting slowly down towards the Florida Keys and possibly out to the open Atlantic Ocean – raised troubling questions about whether they would “cascade up the food web.” “The threat is that they will poison plankton and fish larvae before making their way into animals higher up the food chain,” Hollander said.

The underwater contaminants are particularly “insidious” because they are invisible, Hollander said, adding that they were suspended in what looked like normal seawater. “It may be due to the application of the dispersants that a portion of the petroleum has extracted itself away from the crude and is now incorporated into the waters with solvents and detergents,” he added. He said dispersants, a cocktail of organic solvents and detergents, had never been used at the depth of BP’s well before, and no one really knows how they interact physically and chemically under pressure with oil, water and gases.

“Out-of-Sight, Out-of-Mind”
Carl Safina, president and co-founder of Blue Ocean Institute, a New York-based conservation organization, believes BP’s dispersant strategy has more to do with PR than good science. “It takes something that we can see that we could at least partly deal with and dissolves it so we can’t see it and can’t deal with it,” he said. It’s not at all clear to me why we are dispersing the oil at all,” Safina said. “It’s an out-of-sight, out-of-mind strategy. It’s just to get it away from the cameras on the shoreline.

SYSTEMATICALLY AND INTENTIONALLY COLLECTING AS SMALL AN AMOUNT OF OIL AS POSSIBLE
FROM THE WATERS OF THE GULF OF MEXICO

Let’s conservatively assume that, since April 22, 2010, the average rate of flow of oil gushing from the BP well is 55,000 bbl/day.

As of July 9, 2010
Total Amount of Oil Released to Date: 4,455,000 barrels
Amount of Oil Recovered by BP to date (via Containment Cap): 771,100 barrels
Oily water recovered: 694,286 barrels of oily water = 69,429 barrels of oil
Oil Consumed by Controlled Burns: 237,857 barrels
Total Amount of Unrecovered Oil in Gulf of Mexico to Date: 3,376,614 barrels

In a March 24, 2010 response plan filed with the Minerals Management Service (MMS), BP claimed it had the capacity to skim and remove 491,721 barrels of oil each day in the event of a major spill.

As of July 9, 2010, the skimming operations that BP stated to MMS were key to preventing an environmental disaster have averaged 857 barrels a day. That’s less than .2% of BP’s claimed capacity. Mathematically, it’s the equivalent of BP claiming the distance between New York City and San Francisco is 6 miles.

Skimming has captured only 69,429 barrels, and BP has relied on burning to remove 237,857 barrels. Most of the oil recovered, approximately 771,100 barrels, has been captured directly at the site of the leaking well.

The disparity between what BP promised in its March 24 filing with federal regulators and the amount of oil recovered since April 22, 2010 underscores what some officials and environmental groups call a misleading numbers game that has led to widespread confusion about the extent of the spill and the progress of the recovery. “It’s clear they overreached,” said John F. Young Jr., council chairman in Louisiana’s Jefferson Parish. “I think the federal government should have at the very least picked up a phone and started asking some questions and challenged them about the accuracy of that number and tested the veracity of that claim.”

On April 22, 2010, although its projections reported to the federal government were only weeks old, BP cited a greatly reduced number in a news release filed with the federal Securities and Exchange Commission. BP projected that it had “skimming capacity of more than 171,000 barrels per day, with more available if needed.”

These intentionally misleading figures clearly have confused journalists, with many media outlets reporting the figures as solid oil recovery numbers.

“This has been a cat-and-mouse game since March when they put out these estimates,” said Earthjustice attorney Colin H. Adams. “We want real figures instead of inflated estimates on what they are cleaning up and deflated estimates on how much is gushing out.”

BP’s Flotilla of Futility
As of July 9, 2010, BP reports that there are more than 6,840 response vessels actively involved in the collection of the oil that has been released into the waters of the Gulf of Mexico from the BP well.

Unfortunately, collection of the BP oil spill has never been a “skimming” operation. This “spill” is a gusher of oil being released from the seafloor, approximately one-mile below the sea surface. BP, with support and authorization from USCG, is using conventional skimmers, boom and dispersants normally deployed for inland waterway surface oil spills. This ineptitude would be humorous if the situation were not so serious. BP and USCG will eventually use tankers to collect the oil that has been released into the Gulf of Mexico as a result of the Deepwater Horizon blowout of April 20, 2010. Unfortunately, this decision will be made after the devastation of many coastal communities.

Boom
As of July 9, 2010, BP reports that more than 3,060,000 feet of boom are deployed.

The use of the boom strategy in open water is nothing more than public relations. Deploying boom may be an effective containment strategy in the calm waters of rivers, lakes, or municipal swimming pools but, as has been demonstrated since April 22nd, in the open waters of the Gulf of Mexico the boom will be breached.

Personnel
As of July 9, 2010, BP reports that approximately 47,800 people are involved in this response.

BP fails to note that the vast majority of response personnel are: untrained individuals walking on beaches attempting to collect tar balls with shovels and plastic bags, out-of-work commercial fisherman and charter boat operators assisting with positioning ineffective boom, and employees of subcontractors involved in the very inefficient skimming operation. 

Window Dressing
The number of response vessels, the amount of deployed boom, and the number of response personnel in BP’s alleged response “effort” is extraordinary. However, given that only 69,429 barrels of oil have been skimmed and 237,857 barrels of oil have been consumed by controlled burns since April 22nd, it is merely window dressing.     

The blowout of April 20, 2010 aboard the Deepwater Horizon was clearly preventable. The fact that oil from the BP oil gusher has been allowed to reach coastal areas is inexcusable.

CONTROLLING AND RESTRICTING MEDIA ACCESS TO THE AREAS
AFFECTED BY THE DEEPWATER HORIZON OIL GUSHER

BP continues to employ its “out-of-sight, out-of-mind” strategy by controlling and restricting media access to the areas affected by the Deepwater Horizon oil gusher.

Lack of Transparency
As BP makes its latest attempt to plug its gushing oil well, news photographers are complaining that their efforts to document the slow-motion disaster in the Gulf of Mexico are being thwarted by local and federal officials – working with BP – who are blocking access to the sites where the effects of the gusher are most visible. More than a month into the disaster, a host of anecdotal evidence is emerging from reporters, photographers, and TV crews in which BP and Coast Guard officials explicitly target members of the media, restricting and denying them access to oil-covered beaches, staging areas for clean-up efforts, and even flyovers.

On June 30, 2010, the Captains of the Port for Morgan City, La., New Orleans, La., and Mobile, Ala. , under the authority of the Ports and Waterways Safety Act, established a 20-meter safety zone surrounding all Deepwater Horizon booming operations and oil response efforts taking place in Southeast Louisiana. Vessels must not come within 20 meters of booming operations, boom, or oil spill response operations under penalty of law. The safety zone allegedly has been put in place to protect members of the response effort, the installation and maintenance of oil containment boom, the operation of response equipment and protection of the environment by limiting access to and through deployed protective boom. In areas where vessels operators cannot avoid the 20-meter rule, they are required to be cautious of boom and boom operations by transiting at a safe speed and distance. Violation of a safety zone can result in up to a $40,000 civil penalty. Willful violations may result in a class D felony. Permission to enter any safety zone must be granted by the Coast Guard Captain of the Port of New Orleans

Initially, the establishment of a “safety zone” seems reasonable and prudent. However, these are not hypersensitive journalists and environmentalists complaining about limited access. This is not merely one photojournalist complaining because he or she finds it more difficult to get that award-winning picture of an oil-covered pelican, breached boom, response personnel wearing hazmat uniforms, etc. This “safety zone” regulation is a way for BP and USCG to hide the failures of their oil gusher response. CNN’s Anderson Cooper describes the new rule as making it “very easy to hide incompetence or failure.” Since “oil spill response operations” covers much of the clean-up effort on the beaches, Cooper describes the rule as banning reporters from “anywhere we need to be.”

“With this, the Gulf Coast cleanup operation has now entered a weird Orwellian reality where the news is shaped, censored and controlled by the government in order to prevent the public from learning the truth about what’s really happening,” writes Mike Adams at NaturalNews. “We might expect something like this from Chavez, or Castro or even the communist leaders of China, but here in the United States, we’ve all been promised we lived in ‘the land of the free,’” Adams continues.

The U.S. government uses this same tactic during every war. The first casualty of war, as they say, is the truth. There are lots of war images the government doesn’t want you to see and there are other images they do want you to see. War reporting is carefully monopolized by the government to deliver precisely the images they want you to see while censoring everything else. However, the feeble response to the BP oil gusher is definitely not a war. The federal government has not declared war on BP. In reality the federal government and BP are allies.

Lack of Trust
Trust between the media and the BP/federal government team leading the oil spill response is non-existent. It was forfeited long ago, when BP misrepresented the true extent of the gusher and were slow to even release underwater video of the leak; when the federal government questioned the credibility of independent researchers who had found evidence of underwater oil plumes, evidence that turned out to be correct; when BP and its contractors, with the apparent support of local police in the region, kept media away from oiled beaches and wildlife and created an atmosphere where cleanup workers felt they’d lose their jobs if they talked; when the gross discrepancy between what BP claimed to be able to do in the case of an oil spill and what it can actually do became obvious; when BP employed a group of in-house “reporters” to bring back absurdly optimistic stories of the gusher. It’s impossible now for the media or the public to take at face value anything concerning the oil gusher that comes from official sources – the trust is gone, and no amount of official press conferences will change that.

As McClatchy has reported, it’s been obvious from the start that BP has looked at the oil spill through the lens of legal risk, not reputational risk – BP moved quickly to hire all the best oil spill experts, to make sure they couldn’t testify against the company in coming litigation. They’re not really concerned about the truth; they’re more concerned about ensuring the complete destruction of the proof!

A Few Specific Examples of Controlling and Restricting Media Access
(a) BP has bought entire police departments which now do its bidding:  “One parish has 57 extra shifts per week that they are devoting entirely to, basically, BP security detail, and BP is paying the sheriff’s office.”

(b) Southern Seaplane Inc., based in Belle Chasse, Louisiana, which was scheduled to take a New Orleans Times-Picayune photographer for a flyover, and says it was denied permission once BP officials learned that a member of the press would be on board. “We are not at liberty to fly media, journalists, photographers, or scientists,” the owner of Southern Seaplane said in a letter it sent to Sen. David Vitter (R-La.). “We strongly feel that the reason for this massive (temporary flight restriction) is that BP wants to control their exposure to the press.”

(c) Photographers who have traveled to the Gulf commonly say they believe that BP has exerted more control over coverage of the spill with the cooperation of the federal government and local law enforcement. “It’s a running joke among the journalists covering the story that the words ‘Coast Guard’ affixed to any vehicle, vessel, or plane should be prefixed with ‘BP,’ ” says Charlie Varley, a Louisiana-based photographer.

(d) BP determines what reporters see and when they see it. AP photographer Gerald Herbert has been covering the disaster since the Deepwater Horizon rig exploded on April 20. He says that access has been hit or miss, and that there have been instances when it’s obvious members of the press are being targeted. “There are times when the Coast Guard has been great, and others where it seems like they’re interfering with our ability to have access,” says Herbert. One of those instances occurred early last week, when Herbert accompanied local officials from Plaquemines Parish in a police boat on a trip to Breton Island, a national wildlife refuge off the barrier islands of Louisiana. With them was Jean-Michel Cousteau, son of Jacques, who wanted to study the impact of the oil below the surface of the water. Upon approaching the island, a Coast Guard boat stopped them. “The first question was, ‘Is there any press with you?’ ” says Herbert. They answered yes, and the Coast Guard said they couldn’t be there. “I had to bite my tongue. That should have no bearing.”

(e) Local fishermen and charter boat captains are also being pressured by BP not to work with the press. Left without a source of income, most have decided to work with BP to help spread booms and ferry officials around. Their passengers used to include members of the press, but not anymore. “You could tell BP was starting to close their grip, telling the fishermen not to talk to us,” says Jared Moossy, a Dallas-based photographer who was covering the spill along the Gulf Coast earlier this month. “They would say that BP had told them not to talk to us or cooperate with us or that they’d get fired.”

(f) “I think they’ve been trying to limit access,” said Representative Edward J. Markey, a Democrat from Massachusetts who fought BP to release more video from the underwater ROVs that have been filming the oil-spewing pipe. “It is a company that was not used to transparency. It was not used to having public scrutiny of what it did.”

(g) Senator Bill Nelson, Democrat of Florida, tried to bring a small group of journalists with him on a trip he was taking through the gulf on a USCG vessel. Mr. Nelson’s office said USCG agreed to accommodate the reporters and camera operators. But at about 10 p.m. on the evening before the trip, someone from the Department of Homeland Security’s legislative affairs office called the senator’s office to tell them that no journalists would be allowed.

(h) A reporter and photographer from The Daily News of New York were told by a BP contractor they could not access a public beach on Grand Isle, La., one of the areas most heavily affected by the oil spill. The contractor summoned a local sheriff, who then told the reporter, Matthew Lysiak, that news media had to fill out paperwork and then be escorted by a BP official to get access to the beach. “For the police to tell me I needed to sign paperwork with BP to go to a public beach?” Mr. Lysiak said. “It’s just irrational.”

(i) CBS News reported that one of its news crews was threatened with arrest for trying to film a public beach where oil had washed ashore. USCG said later that it was disappointed to learn of the incident.

(j) Michael Oreskes, senior managing editor at the Associated Press, likened the situation to reporters being embedded with the military in Afghanistan. “There is a continued effort to keep control over the access,” Mr. Oreskes said. “And even in places where the government is cooperating with us to provide access, it’s still a problem because it’s still access obtained through the government.”

We’ve frequently heard excuses that the federal government has little power to do anything to BP because “under OPA 90, BP, the responsible party, has the primary responsibility to clean up its oil spill.” However, the federal government certainly seems to have ample power to do a great deal for BP. 

Obviously, the federal government and BP share the same interest – preventing the public from seeing the magnitude of the gusher and the incompetency of the clean-up efforts – but police state tactics are unacceptable in the U.S.

THE FEDERAL GOVERNMENT’S RESPONSE TO BP’S STRATEGY

Question: What is the name of the bayou that is most representative of the federal government’s response to the victims of the BP oil gusher?
Answer: ”Bayou Self”

The federal government fully supports BP’s strategy. The Obama administration has shown no indication that it intends to hold BP accountable. MMS (now the Bureau of Ocean Energy Management, Regulation and Enforcement), NOAA, and USCG have abdicated their respective responsibilities.

“Under OPA 90, BP, the responsible party, has the primary responsibility to clean up its oil spill” has been repeated, in one form or another, so many times by President Obama that it has become the truth. The truth is that President Obama, under OPA 90, has the primary responsibility to “ensure effective and immediate removal of a discharge, and mitigation or prevention of a substantial threat of a discharge, of oil.”

Pursuant to OPA Section 4201, and given that the BP oil spill is a “discharge posing substantial threat to public health or welfare,” President Obama should have federalized the collection of the oil that is in the sea and the restoration of the coastal areas impacted by the oil. Both of these activities could be done without having to federalize the operational priority of stopping the flow of oil from the well.

BP, with the full support of the federal government, is knowingly and systematically underestimating the size of the gusher to limit the financial impact on the company. Under the CWA, BP faces fines of up to $4,300 for each barrel spilled. Furthermore, pursuant to Section 2702 of OPA 90, BP should be required to pay royalties (18.75%) owed to the federal government for the oil gushing from the well.

CONCLUSION

BP’s strategy to limit liability in regard to its Gulf oil gusher will succeed for the following reasons: (a) BP’s excessive and unprecedented use of toxic dispersants both on the surface and a mile underwater ensures that the oil either sinks or remains suspended in deep water rather than floating to the surface and collecting in a continuous slick; (b) BP’s misleading numbers game ensures the continued widespread confusion about the extent of the spill and the progress of the recovery: (c) BP’s systematic and intentional collection of as little of the oil as possible from the waters of the Gulf of Mexico; (d)  the practice by BP and its contractors, with the apparent support of local police in the region, to kept media away from photographing and reporting on oiled beaches and wildlife; and (e) the fact that the federal government fully supports BP’s strategy.

The Obama administration has shown no indication that it intends to hold BP accountable under either OPA 90 or CWA: (1) pursuant to OPA Section 4201, and given that the BP oil spill is a “discharge posing substantial threat to public health or welfare,” President Obama should have federalized the collection of the oil that is in the sea and the restoration of the coastal areas impacted by the oil. Both of these activities could be done without having to federalize the operational priority of stopping the flow of oil from the well; (2) under the CWA, BP faces fines of up to $4,300 for each barrel spilled; and (3) pursuant to Section 2702 of OPA 90, BP should be required to pay royalties (18.75%) owed to the federal government for the oil gushing from the well.

BP is not concerned about the truth; the oil company is concerned about ensuring the complete destruction of the proof. Once the leak is plugged and the oil is dispersed throughout the oceans of the world, who’s to say for certain whether BP’s oil well blowout gushed an average of 1,000 or 100,000 bbl/day of oil?

APPENDICES

References
Adams, Mike, “First Amendment suspended in the Gulf of Mexico as spill cover-up goes Orwellian,” NaturalNews (July 3, 2010), available at: http://www.naturalnews.com/029130_Gulf_of_Mexico_censorship.html

Bhattacharyya, S., P.L. Klerks, and J.A. Nyman. 2003. Toxicity to freshwater organisms from oils and oil spill chemical treatments in laboratory microcosms. Environmental Pollution 122:205-215.

BP is Not the Only Responsible Party, available at: http://renergie.wordpress.com/2010/05/25/bp-is-not-the-only-responsible-party/

Chokkavelu, Anand, “The BP Stat That Will Shock You,” Motley Fool (July 9, 2010), available at: http://www.msnbc.msn.com/id/38165954/ns/business-motley_fool/

Clean Water Act

EPA: http://www.epa.gov/oem/content/lawsregs/opaover.htm

Greenwald, Glenn, “The BP/Government police state,” Salon (July 5, 2010), available at:
http://www.salon.com/news/opinion/glenn_greenwald/2010/07/05/bp/index.html

Kindy, Kimberly, “Recovery effort falls vastly short of BP’s promises,” Washington Post
(July 6, 2010), available at:
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/05/AR2010070502937.html

Lustgarten, Abrahm, “Chemicals Meant To Break Up BP Oil Spill Present New Environmental Concerns,” ProPublica (April 30, 2010), available at: http://www.propublica.org/article/bp-gulf-oil-spill-dispersants-0430

MMS: http://www.mms.gov/

National Contingency Plan

NOAA: http://www.noaa.gov/

Oil Pollution Act of 1990

Peters, Jeremy W., “Efforts to Limit the Flow of Spill News,” The New York Times (June 9, 2010)

Philips, Matthew, “BP’s Photo Blockade of the Gulf Oil Spill,” Newsweek (May 26, 2010), available at: http://www.newsweek.com/2010/05/26/the-missing-oil-spill-photos.html

Schoof, Renee and Bolstad, Erika, “BP well may be spewing 100,000 barrels a day, scientist says,” McClatchy Newspapers (June 7, 2010), available at: http://www.mcclatchydc.com/2010/06/07/95467/bp-well-may-be-spewing.html

Schoof, Renee, “Scientists propose big experiment to study Gulf oil spill,” McClatchy Newspapers (July 11, 20100, available at:
http://www.miamiherald.com/2010/07/11/1725271/scientists-propose-big-experiment.html

USA Today: http://content.usatoday.com/communities/greenhouse/post/2010/05/how-responsible-is-us-government-for-gulf-oil-spill/

USCG: http://www.uscg.mil/

Walsh, Bryan, “The Oil Spill and the Perils of Losing Trust,” Time (July 7, 2010), available at:
http://ecocentric.blogs.time.com/2010/07/07/the-oil-spill-and-the-perils-of-losing-trust/

About the Author
Brian J. Donovan is an attorney and marine engineer with thirty-five years of international business experience.

Mr. Donovan, a member of The Florida Bar, The U.S. District Court, Middle District of Florida and The United States Court of Appeals for the Eleventh Circuit, holds a J.D. from Syracuse University College of Law (where he was recipient of the “Global Law & Practice Award” as the outstanding graduate in the areas of International Law and International Business Law) and a B.S., with honors, in Marine/Mechanical and Nuclear Engineering from the United States Merchant Marine Academy.

Mr. Donovan, with deep family roots in southern Louisiana, has first-hand knowledge of the catastrophic devastation of the Louisiana Gulf Coast caused by hurricanes Katrina and Rita. He fully appreciates that the damage caused by Katrina and Rita may pale in comparison to the massive and potentially unprecedented environmental and economic impact of the BP oil gusher of April, 2010.

UPDATE No. 1

Scientists say Gulf spill altering food web
By MATTHEW BROWN and RAMIT PLUSHNICK-MASTI (AP)
July 14, 2010

NEW ORLEANS — Scientists are reporting early signs that the Gulf of Mexico oil spill is altering the marine food web by killing or tainting some creatures and spurring the growth of others more suited to a fouled environment.

Near the spill site, researchers have documented a massive die-off of pyrosomes — cucumber-shaped, gelatinous organisms fed on by endangered sea turtles.

Along the coast, droplets of oil are being found inside the shells of young crabs that are a mainstay in the diet of fish, turtles and shorebirds.

And at the base of the food web, tiny organisms that consume oil and gas are proliferating.

If such impacts continue, the scientists warn of a grim reshuffling of sealife that could over time cascade through the ecosystem and imperil the region’s multibillion-dollar fishing industry.

Read the entire article at:
http://www.google.com/hostednews/ap/article/ALeqM5iJwXzrq3lD7vHJJH4DU8uNjjihPwD9GUPEC00

UPDATE No. 2

BP buys up Gulf scientists for legal defense, roiling academic community
By Ben Raines
Press-Register
July 16, 2010

For the last few weeks, BP has been offering signing bonuses and lucrative pay to prominent scientists from public universities around the Gulf Coast to aid its defense against spill litigation.

Robert Wiygul, an Ocean Springs lawyer who specializes in environmental law, said that he sees ethical questions regarding the use of publicly owned laboratories and research vessels to conduct confidential work on behalf of a private company.

With its payments, BP buys more than the scientists’ services, according to Wiygul. It also buys silence, he said, thanks to confidentiality clauses in the contracts.

Read the entire article at:
http://blog.al.com/live/2010/07/bp_buys_up_gulf_scientists_for.html

By Brian J. Donovan

May 24, 2010

INTRODUCTION

The U.S. Coast Guard has named both BP (owner of the well) and Transocean (the owner and operator of Deepwater Horizon) as “responsible parties” in the oil spill that resulted from the explosion on April 20, 2010 and subsequent sinking of the oil rig Deepwater Horizon on April 22, 2010. Cameron (the company that manufactured the blowout preventer that failed to function after the explosion) and Halliburton (which performed drilling services like cementing) may also be found to be legally responsible. Since April 20, 2010, “BP is the responsible party” has been repeated so many times by President Obama, Secretary Salazar, Secretary Napolitano, Admiral Allen, and NOAA Administrator Lubchenco that it has become the truth. The truth is, in addition to Transocean and possibly Cameron and Halliburton, the Minerals Management Service (MMS), the National Oceanic and Atmospheric Administration (NOAA), and the U.S. Coast Guard (USCG) are also responsible, although not legally liable, for heavy crude oil entering the Louisiana wetlands and the loop current.

Recently Renergie, Inc. submitted unsolicited proposals to U.S. Senator Bill Nelson (D-FL), the Governor of Louisiana, and the USCG for the purpose of: (a) collecting the BP oil spill in the Gulf of Mexico with three Panamax crude tankers; (b) separating the oil and water onboard the tankers; and (c) transporting the separated crude oil to a shoreside facility. The three tankers employed by Renergie, Inc. would be capable of collecting 1,419,000 barrels of the BP oil spill; and, via a series of onboard skid-mounted three-stage oil/water separators, be able to separate a combined total of 432,000 barrels/day of the BP oil spill. 

To date, U.S. Senator Bill Nelson (D-FL) has not responded.

The Office of the Governor of Louisiana forwarded Renergie’s proposal to BP and the USCG for their review.

The USCG response, sent via three emails, stated, “The Coast Guard is not currently hiring contractors.  BP, the responsible party, continues to handle all contracting requirements.” and “Unfortunately, the Coast Guard does not currently have a mission and is not hiring contractors. However, if BP requests names, I will recommend and forward your company.” As the BP oil spill continues to wash ashore in Louisiana, USCG futher explained, “I am the POC for unsolicited proposals for the Coast Guard. A valid unsolicited proposal must be an innovative and unique product or service that is not commercially available to the Government. Federal Acquisition Regulation (FAR) 15.603 provides the specific criteria that must be met before an unsolicited proposal can be submitted. It appears that your product better fits the description of a commercial item offer, which is therefore not suitable for submission as an unsolicited proposal. We appreciate your interest in U.S. Coast Guard requirements.”

This article briefly discusses how MMS, NOAA, and USCG have abdicated their responsibility; reviews current oil response efforts; presents an overview of the Oil Pollution Act; and suggests a viable strategy for moving forward.

MMS

Background
The MMS, a bureau in the U.S. Department of the Interior, is the federal agency that manages the nation’s natural gas, oil and other mineral resources on the outer continental shelf (OCS). The agency also collects, accounts for and disburses an average of $13.7 billion per year in revenues from federal offshore mineral leases and from onshore mineral leases on federal and American Indian lands. The MMS is comprised of two major programs: Offshore Energy and Minerals Management (OEMM) and Minerals Revenue Management (MRM).

OEMM
The MMS plays a key role in America’s energy supply by managing the mineral resources on 1.7 billion acres of the OCS. The OCS is a significant source of oil and gas for the nation’s energy supply. The approximately 43 million leased OCS acres generally accounts for about 15 percent of America’s domestic natural gas production and about 27 percent of America’s domestic oil production. The MMS’s oversight and regulatory framework are meant to ensure that drilling and production are done in an environmentally responsible manner, and done safely.

The offshore areas of the United States are estimated to contain significant quantities of resources in yet-to-be-discovered fields. MMS estimates of oil and gas resources in undiscovered fields on the OCS (2006, mean estimates) total 86 billion barrels of oil and 420 trillion cubic feet of gas. These volumes represent about 60 percent of the oil and 40 percent of the natural gas resources estimated to be contained in remaining undiscovered fields in the United States.

MRM
The MRM collects, accounts for and distributes revenues associated with offshore and onshore oil, gas and mineral production from leased federal and Indian lands.

How MMS Abdicated its Responsibility
MMS fell well short of its own policy that safety inspections be done at least once per month, an Associated Press investigation shows. Since January 2005, MMS conducted at least 16 fewer inspections aboard the Deepwater Horizon than it should have under the policy, a dramatic fall from the frequency of prior years, according to the agency’s records. Under a revised statement recently given to the AP, MMS officials said the last infraction aboard the Deepwater Horizon occurred in August 2003, not March 2007 as originally stated.

The inspection gaps and poor recordkeeping are the latest in a series of questions raised about the agency’s oversight of the offshore oil drilling industry. Members of Congress and President Obama have criticized what they call the cozy relationship between regulators and oil companies.

NOAA has said on repeated occasions that drilling in the Gulf affects endangered species and marine mammals, but since January, 2009 MMS has approved at least three huge lease sales, 103 seismic blasting projects and 346 drilling plans. MMS records also show that permission for those drilling projects was granted without getting the permits required under federal law.

Earlier AP investigations have shown that the Deepwater Horizon was allowed to operate without safety documentation required by MMS regulations for the exact disaster scenario that occurred; that the BOP which failed has repeatedly broken down at other wells in the years since regulators weakened testing requirements; and that regulation is so lax that some key safety aspects on rigs are decided almost entirely by the companies doing the work.

MMS set aside requirements for documentation outlining what companies would do if a “worst-case scenario” spill were to happen. This documentation, which includes the disclosure of blowout scenarios and response plans, is required by law before exploratory offshore drilling is approved.

Reacting to the latest disclosures, House Natural Resources Committee Chairman Nick J. Rahall, D-W.Va., said while he applauded Interior Secretary Ken Salazar’s remedial actions, it seems “MMS has been asleep at the switch in terms of policing offshore rigs.” He said the committee, slated to hold hearings May 26-27, will examine these issues “in the context of what our offshore leasing program will look like in the future.”

In response to a Freedom of Information Act request filed by AP, the agency has released copies of only three inspection reports, from Feb. 17, March 3 and April 1. According to the documents, inspectors spent two hours or less each time they visited the massive rig. Some information appeared to be “whited out,” without explanation.

MMS also routinely overruled its staff biologists and engineers who raised concerns about the safety and the environmental impact of certain drilling proposals in the Gulf and in Alaska, according to a half-dozen current and former agency scientists. These scientists said they were also regularly pressured by agency officials to change the findings of their internal studies if they predicted that an accident was likely to occur or if wildlife might be harmed. In a September, 2009 letter, obtained by The New York Times, NOAA accused the MMS of a pattern of understating the likelihood and potential consequences of a major spill in the Gulf and understating the frequency of spills that have already occurred there. The letter accuses the agency of highlighting the safety of offshore oil drilling operations while overlooking more recent evidence to the contrary. The data used by the agency to justify its approval of drilling operations in the Gulf play down the fact that spills have been increasing and understate the “risks and impacts of accidental spills,” the letter states. NOAA declined several requests for comment.

“You simply are not allowed to conclude that the drilling will have an impact,” said one scientist who has worked for the MMS for more than a decade. “If you find the risks of a spill are high or you conclude that a certain species will be affected, your report disappears and they find another scientist to redo it or they rewrite it for you.”

Another biologist who left the agency in 2005 after more than five years said that agency officials went out of their way to accommodate the oil and gas industry. He said, for example, that seismic activity from drilling can have a devastating effect on mammals and fish, but that agency officials rarely enforced the regulations meant to limit those effects. He also said the agency routinely ceded to the drilling companies the responsibility for monitoring species that live or spawn near the drilling projects. “What I observed was MMS was trying to undermine the monitoring and mitigation requirements that would be imposed on the industry,” he said.

NOAA

Background
The mission of NOAA is “to understand and predict changes in Earth’s environment and conserve and manage coastal and marine resources to meet our nation’s economic, social, and environmental needs.”

On NOAA’s website, NOAA Administrator Jane Lubchenco further explains, “NOAA is an agency that enriches life through science. Our reach goes from the surface of the sun to the depths of the ocean floor as we work to keep citizens informed of the changing environment around them. NOAA’s dedicated scientists use cutting-edge research and high-tech instrumentation to provide citizens, planners, emergency managers and other decision makers with reliable information they need when they need it. NOAA’s mission touches the lives of every American and we are proud of our role in protecting life and property and conserving and protecting natural resources.”

How NOAA Abdicated its Responsibility
A. Allowing MMS to Grant Permission to Oil Companies for Drilling Projects Without the Permits Required Under Federal Law

NOAA has said on repeated occasions that drilling in the Gulf affects endangered species and marine mammals. NOAA knew that MMS was granting permission for drilling projects to oil companies without the permits required under federal law. “MMS has given up any pretense of regulating the offshore oil industry,” said Kierán Suckling, director of the Center for Biological Diversity, an environmental advocacy group in Tucson, which filed notice of intent to sue the agency over its noncompliance with federal law concerning endangered species. “The agency seems to think its mission is to help the oil industry evade environmental laws.”

B. Failure to Accurately Estimate the Amount of Oil Being Released

It has been estimated that approximately 5,000 barrels a day (bbl/day) of oil is being released into the Gulf of Mexico. Repeated endlessly in news reports, this figure has become conventional wisdom. However, the 5,000 bbl/day estimate was hastily produced in Seattle by a NOAA unit that responds to oil spills. It was calculated with a protocol known as the Bonn convention that calls for measuring the extent of an oil spill, using its color to judge the thickness of oil atop the water, and then multiplying. Alun Lewis, a British oil-spill consultant who is an authority on the Bonn convention, said the method was specifically not recommended for analyzing large spills like the one in the Gulf of Mexico, since the thickness was too difficult to judge in such a case.

Ian R. MacDonald, an oceanographer at Florida State University who is an expert in the analysis of oil slicks, said he had made his own rough calculations using satellite imagery. They suggested that the leak could “easily be four or five times” the government estimate, he said. Steven Wereley, an associate professor of mechanical engineering at Purdue University, analyzed videotape of the seafloor gusher using a technique called particle image velocimetry.  A computer program simply tracks particles and calculates how fast they are moving. Wereley put the BP video of the gusher into his computer. He made a few simple calculations and came up with an astonishing value for the rate of the oil spill: 70,000 bbl/day.

Dr. MacDonald believes NOAA  had been slow to mount the research effort needed to analyze the leak and assess its effects. Sylvia Earle, a former chief scientist at NOAA and perhaps the country’s best-known oceanographer, said that she, too, was concerned by the pace of NOAA’s scientific response.

The government has made no attempt to update its estimate since releasing it on April 28th. “I think the estimate at the time was, and remains, a reasonable estimate,” said Dr. Lubchenco, the NOAA administrator. “Having greater precision about the flow rate would not really help in any way. We would be doing the same things.”

Scientists have come down hard on BP for refusing to take advantage of methods available to measure the oil. The New York Times reported that BP was planning to fly scientists from the Woods Hole Oceanographic Institute to Louisiana to conduct volume measurements. The oceanographers were poised to use underwater ultrasound equipment to measure the flow of oil and gas from the ocean floor when BP canceled the trip.

An accurate measurement of the flow of oil could change the way people remember this spill and their opinion of BP.  Once the leak is plugged and the oil is dispersed throughout the Gulf, who’s to say for certain whether BP’s blown well gushed 5,000 or 80,000 barrels of oil a day? By allowing BP to obscure the spill’s true magnitude, NOAA seems to agree.

C. Failure to Track and Monitor the Massive Oil Plumes Beneath the Surface

NOAA, whose job it is to assess and track the damage being caused by the BP oil spill that began four weeks ago, is only monitoring what’s visible - the oil slick on the Gulf’s surface – and currently does not have a single research vessel taking measurements below.

The one ship associated with NOAA that had been doing such research is back in Pascagoula, MS, having completed a week-long cruise during which scientists taking underwater samples found signs of just the kind of plume that environmentalists fear could have devastating effects on sea life of all shapes and sizes.

Frank Muller-Karger, an oceanography professor at the University of South Florida who testified before the House Energy Committee, said that testing for oil beneath the surface should be a top priority. “I think that should be one of our biggest concerns, getting the technology and the research to try to understand how big this amorphous mass of water is, and how it moves,” he said. “It’s like an iceberg. Most of it is below the surface. And we just have no instruments below the surface that can help us monitor the size, the concentration and the movement.”

“The fact that NOAA has missed the ball catastrophically on the tracking and effects monitoring of this spill is inexcusable,” said Rick Steiner, a University of Alaska marine conservationist who recently spent more than a week on the Gulf Coast advising Greenpeace. NOAA officials “haven’t picked it up because they haven’t looked in the right places,” he said. “There have to be dozens of these massive plumes of toxic Deepwater Horizon oil, and they haven’t set out to delineate them in any shape or form.” Steiner said, “NOAA is not only failing to fully measure the impact of the spill but, if they rationally want to close and open fisheries, they need to know where this stuff is going.” “And truly, they really need 20 or 30 vessels out there yesterday,” Steiner said. “And I think they know that. And so all the spin – that they have this under control, that there’s no oil under the surface to worry about – they’re wrong, and they know it.”

D. Conflict of Interest in Sample Testing

The question is whether a lab paid by BP can provide an unbiased assessment of the environmental damage from the BP oil spill.

Local environmental officials throughout the Gulf Coast are feverishly collecting water, sediment and marine animal tissue samples that will be used in the coming months to help track pollution levels resulting from the Deepwater Horizon oil spill. Hundreds of millions of dollars are at stake, since those readings will be used by the federal government and courts to establish liability claims against BP. But the laboratory that NOAA officials have chosen to process virtually all of the samples is part of an oil and gas services company in Texas that counts oil firms, including BP, among its biggest clients. Pursuant to OPA, BP is paying for testing the samples, which simultaneously gives BP control over this process. Some people are justifiably questioning the independence of the Texas lab.

USCG

Background
The USCG is one of the five Armed Forces of the United States and the only military organization within the Department of Homeland Security. The USCG protects against hazards to people, maritime commerce, and the environment, defends our maritime borders, and saves those in peril. It responds quickly to disasters to restore the nation’s waterways. It promotes resiliency of the Marine Transportation System. When called upon, it defends the nation at home and abroad alongside the other Armed Forces. In the heartland, in the ports, on the seas, and around the globe, the USCG is Here to Protect, Ready to Rescue.

The USCG is the principal federal agency responsible for maritime safety, security, and environmental stewardship in U.S. ports and inland waterways, along the coasts, on the high seas, and in other regions where our nation’s maritime equities are at stake. As such, the USCG protects our nation’s vital economic and security interests throughout the maritime domain, including the marine transportation system, our natural and economic resources, and our maritime borders.

The USCG provides the primary federal maritime presence to enforce laws, secure the maritime border, conduct response operations, protect the maritime environment (“by responding  to oil and hazardous substance accidents and reducing their impact on the marine environment”), and ensure the resilience of the Marine Transportation System that is vital to the U.S. economy.

How USCG Abdicated its Responsibility
USCG Admiral Thad W. Allen, National Incident Commander, said during a recent visit to Mississippi that he saw no reason for the government to assume control of operations from BP. “BP is the responsible party. They have to be in charge and they have to be accountable and we have to conduct oversight,” he said. “Personally, whenever I have problem I call (BP CEO) Tony Hayward” on his cell phone, Allen said.

USCG responses to unsolicited proposals clearly state,
(a) “The Coast Guard is not currently hiring contractors.  BP, the responsible party, continues to handle all contracting requirements;” and
(b) “Unfortunately, the Coast Guard does not currently have a mission and is not hiring contractors. However, if BP requests names, (USCG) will recommend and forward your company.”

Although USCG has completely abdicated its responsibility, one has to admire the forthright and transparent manner in which it has done so.

OIL SPILL RESPONSE

USCG
The National Oil and Hazardous Substances Pollution Contingency Plan, more commonly called the National Contingency Plan (NCP), is the federal government’s blueprint for responding to both oil spills and hazardous substance releases. The NCP is the result of our country’s efforts to develop a national response capability and promote overall coordination among the hierarchy of responders and contingency plans.

Secretary Napolitano has declared the Gulf Coast incident a “spill of national significance.” A spill of national significance (SONS) means a spill that due to its severity, size, location, actual or potential impact on the public health and welfare or the environment, or the necessary response effort, is so complex that it requires extraordinary coordination of federal, state, local, and responsible party resources to contain and clean up the discharge.

Admiral Allen has explained that the USCG has established four operational priorities:
(a) stop the flow of oil from the well; (b) attack the oil that is in the sea with all available means – mechanical skimming, dispersant delivery, in-situ burning; (c) protect the shoreside resources by deploying boom around the resources; and (d) recover and mitigate the impacted areas.

BP
Source Subsea Control and Containment
In its May 20, 2010 update report on subsea source control and containment, BP stated, “Subsea efforts continue to focus on progressing options to stop the flow of oil from the well through interventions via the blow out preventer (BOP), and to collect the flow of oil from the leak points. These efforts are being carried out in conjunction with governmental authorities and other industry experts.

The volume of oil being collected by the riser insertion tube tool (RITT) containment system at the end of the leaking riser is estimated to be about 3,000 barrels a day (b/d) of oil. The oil is being stored on the drillship Discoverer Enterprise, on the surface 5,000 feet above.

BP also continues to develop options to shut off the flow of oil from the well through interventions via the failed BOP. Plans continue to develop a so called “top kill” operation where heavy drilling fluids are injected into the well to stem the flow of oil and gas, followed by cement to seal the well. Most of the equipment is on site and preparations continue for this operation, with a view to deployment in the next few days. Options have also been developed to potentially combine this with the injection under pressure of a variety of materials into the BOP to seal off upward flow.

Work on the first relief well, which began on May 2, continues. The DDII drilling rig began drilling the second relief well on May 16. Each of these wells is estimated to take some three months to complete from the commencement of drilling.

Surface Spill Response and Containment
In its May 20, 2010 update report on surface spill response and containment, BP stated, “Work continues to collect and disperse oil that has reached the surface of the sea. Over 930 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels. Intensive operations to skim oil from the surface of the water also continued. Some 187,000 barrels of oily liquid have now been recovered. The total length of boom deployed as part of efforts to prevent oil reaching the coast is now more than 1.9 million feet. In total over 19,000 personnel from BP, other companies and government agencies are currently involved in the response to this incident.”

BP’s surface spill and containment strategy primarily involves: (a) the use of dispersants; (b) skimming the oil from the surface of the water; and (c) deploying boom to prevent oil from reaching the coast.

Dispersants: An Out-of-Sight, Out-of-Mind Strategy
To date, 785,000 gallons of oil dispersant has been applied by BP since the April 22 sinking of the Deepwater Horizon rig, an unprecedented application and for a duration and at depths also without precedent.

Dispersants break oil into droplets that decompose more quickly. But scientists worry that extensive use of the chemicals in the BP spill is increasing marine life’s exposure to the toxins in oil. Environmentalists consider their use effective for ridding surface waters of oil but say when the toxins are broken down and become embedded on the sea bed they pose a significant threat to marine life.

BP is using the dispersant “Corexit 9500.” While Corexit 9500 is on the EPA’s approved list, BP is using this dispersant in unprecedented volumes and has been using it underwater at the source of the leak, a procedure that has never been tried before. The EPA has acknowledged that “much is unknown about the underwater use of dispersants.” Moreover, of all the chemicals approved by the EPA for use on oil spills, Corexit 9500 is among the most toxic to certain organisms. It also is among the least effective in breaking up the kind of oil that is prevalent in the area around the spill site, EPA tests concluded. Corexit might also be contributing to the formation of large undersea “oil plumes” thousands of feet below the surface.

Sylvia Earle, the National Geographic’s explorer-in-residence and former chief scientist at NOAA, stated that “the instructions for humans using Corexit warn that it is an eye and skin irritant, is harmful by inhalation, in contact with skin and if swallowed, and may cause injury to red blood cells, kidney or the liver.” “People are warned not to take Corexit internally,” she said, “but the fish, turtles, copepods and jellies have no choice.”

Earle further states, “We don’t know what the effect of dispersants applied a mile underwater is; there’s been no laboratory testing of that at all, or the effect of what it does when it combines with oil a mile underwater.” One problem with breaking down the oil is that it makes it easier for the many tiny underwater organisms to ingest this toxic soup.

Pursuant to NCP Section 300.310, “As appropriate, actions shall be taken to recover the oil or mitigate its effects. Of the numerous chemical or physical methods that may be used, the chosen methods shall be the most consistent with protecting public health and welfare and the environment. Sinking agents shall not be used.” Sinking agents means those additives applied to oil discharges to sink floating pollutants below the water surface. The question is whether BP’s dispersants are “sinking agents” when they are applied a mile underwater at the source of the well leak.

Carl Safina, president and co-founder of Blue Ocean Institute, a New York-based conservation organization, believes BP’s dispersant strategy has more to do with PR than good science. “It takes something that we can see that we could at least partly deal with and dissolves it so we can’t see it and can’t deal with it,” he said. It’s not at all clear to me why we are dispersing the oil at all,” Safina said. “It’s an out-of-sight, out-of-mind strategy. It’s just to get it away from the cameras on the shoreline.

Skimming
Since April 22, only 187,000 barrels of “oily liquid” have been recovered by BP. This equates to collecting a total of only 19,000 to 28,000 barrels of oil. BP  states, “over 930 vessels are involved in the response effort…” By now, BP should realize that small boats are used for small oil spills, but large ships must be used for large oil spills.

The three tankers employed by Renergie, Inc. would be capable of collecting 1,419,000 barrels of the BP oil spill; and, via a series of  onboard skid-mounted three-stage oil/water separators, be able to separate a combined total of 432,000 barrels/day of the BP oil spill. 

Boom: Public Relations in Open Water
The use of the boom strategy is nothing more than “public relations in open water.” Deploying boom may be an effective containment strategy in the calm waters of rivers, lakes, or municipal swimming pools but, as has been demonstrated over the past month, in the open waters of the Gulf of Mexico the boom will be breached. 

THE OIL POLLUTION ACT OF 1990

Pursuant to the Oil Pollution Act of 1990 (OPA), for an offshore facility the total of the liability of a responsible party and any removal costs incurred by, or on behalf of, the responsible party, with respect to each incident shall not exceed the total of all removal costs plus $75,000,000.

However, this limit on liability “does not apply if the incident was proximately caused by gross negligence, willful misconduct of, or the violation of an applicable Federal safety, construction, or operating regulation by, the responsible party, an agent or employee of the responsible party, or a person acting pursuant to a contractual relationship with the responsible party.”

OPA broadened the scope of damages (i.e., costs) for which an oil spiller would be liable. Under OPA, a responsible party is liable for all cleanup costs incurred, not only by a government entity, but also by a private party. In addition to cleanup costs, OPA significantly increased the range of liable damages to include the following:

• injury to natural resources,
• loss of personal property (and resultant economic losses),
• loss of subsistence use of natural resources,
• lost revenues resulting from destruction of property or natural resource injury,
• lost profits resulting from property loss or natural resource injury, and
• costs of providing extra public services during or after spill response.

OPA Section 4201 provides:
(c) FEDERAL REMOVAL AUTHORITY
(1) GENERAL REMOVAL REQUIREMENT
OPA Section 4201(c)(1)(B) amended Section 311(c) of the Clean Water Act of 1972 to provide the President with three options:
(1) perform cleanup immediately (“federalize” the spill);
(2) monitor the response efforts of the spiller; or
(3) direct the spiller’s cleanup activities.

OPA Section 4201(c) further provides:
(2) DISCHARGE POSING SUBSTANTIAL THREAT TO PUBLIC HEALTH OR WELFARE (A) If a discharge, or a substantial threat of a discharge, of oil or a hazardous substance from a vessel, offshore facility, or onshore facility is of such a size or character as to be a substantial threat to the public health or welfare of the United States (including but not limited to fish, shellfish, wildlife, other natural resources, and the public and private beaches and shorelines of the United States), the President shall direct all Federal, State, and private actions to remove the discharge or to mitigate or prevent the threat of the discharge.
(B) In carrying out this paragraph, the President may, without regard to any other provision of law governing contracting procedures or employment of personnel by the Federal Government -
(i) remove or arrange for the removal of the discharge, or mitigate or prevent the substantial threat of the discharge.

Oil spill response authority is determined by the location of the spill: the USCG has response authority in coastal waters, and the EPA covers inland oil spills. As the primary response authority in coastal waters, the USCG has the ultimate authority to ensure that an oil spill is effectively removed and actions are taken to prevent further discharge from the source. During response operations, the USCG coordinates the efforts of federal, state, and private parties. USCG response efforts are supported by NOAA. NOAA provides scientific analysis and consultation during oil spill response activities. Assistance can include oil spill tracking, cleanup alternatives, and knowledge of at-risk natural resources. Moreover, NOAA experts begin to collect data to assess natural resource damages during response operations.

A VIABLE STRATEGY

A viable strategy would be to establish three operational priorities: stop the flow of oil from the well, collect the oil that is in the sea, and restore the impacted coastal areas. Each task should be assigned to the entity with the most expertise in that particular area.

I. Stop the Flow of Oil from the Well
BP should perform this task. BP has in-house technical expertise and the ability to assemble a team of outside engineering and offshore oil & gas experts to cap the well. The only viable permanent solution is to drill a relief well. Hopefully, either the “top kill” or “junk shot” procedure will stop the flow of oil while the relief well is being drilled. MMS should merely monitor BP’s efforts.

II. Collect the Oil that is in the Sea
USCG should perform this task. Pursuant to OPA Section 4201, and given that the BP oil spill is a “discharge posing substantial threat to public health or welfare,” President Obama should federalize the collection of the oil that is in the sea. This could be done without having to federalize the operational priority of stopping the flow of oil from the well.

(1) Timecharter Crude Tankers to Collect the Oil
This would involve the following 3-step process: (a) collecting the BP oil spill in the Gulf of Mexico with three Panamax crude tankers; (b) separating the oil and water onboard the tankers; and (c) transporting the separated crude oil to a shoreside facility. Three Panamax tankers would be capable of collecting 1,419,000 barrels of the BP oil spill; and, via a series of  onboard skid-mounted three-stage oil/water separators, be able to separate a combined total of 432,000 barrels/day of the BP oil spill. Since April 22, only 187,000 barrels of “oily liquid” have been recovered by BP.

(2) Discontinue the Use of Dispersants
BP has been using dispersant in unprecedented volumes and has been using it underwater at the source of the leak, a procedure that has never been tried before. The EPA has acknowledged that “much is unknown about the underwater use of dispersants.” Moreover, of all the chemicals approved by the EPA for use on oil spills, Corexit 9500 is among the most toxic to certain organisms. The volume that is being used is creating a toxic soup that is more dangerous than the oil spill. As noted above, BP’s dispersant strategy has more to do with PR than good science. It takes something that we can see that we could at least partly deal with and dissolves it so we can’t see it and can’t deal with it. It’s an out-of-sight, out-of-mind strategy.

(3) Reposition Skimming to the Northern Edge of the Spill
BP claims, “Over 930 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels.” USCG should immediately reposition several skimming vessels to the northern edge of the spill to mitigate the oil damage to Louisiana’s wetlands.

(4) Expand Coordination with NOAA
NOAA’s Office of Response and Restoration should provide better scientific analysis of the incident. NOAA’s assistance should include an accurate measurement of the flow of oil from the well, oil spill tracking and monitoring (both surface and underwater), the collection of test samples and data to assess natural resource damages. Accurate information is crucial to our understanding of the true rate of flow, to improving our ability to gauge the amount of oil currently in the Gulf, and to preparing for the impacts this spill may have on our environment, fisheries and coastal communities.

(5) Deployment of Research Vessels
USCG should direct NOAA to immediately deploy 20 research vessels to identify, track and monitor the massive underwater plumes of oil in the sea. The undersea plumes may go a long way toward explaining the discrepancy between the flow estimates, suggesting that much of the oil emerging from the well could be lingering far below the sea surface. Depending on the depth of the plume, USCG could deploy a tanker to collect the underwater oil before it either reaches shore or enters the loop current.

(6) Discontinue Deployment of Boom
BP claims, “The total length of boom deployed as part of efforts to prevent oil reaching the coast is now more than 1.9 million feet.” The use of the boom strategy is nothing more than “public relations in open water.” Deploying boom may be an effective containment strategy in the calm waters of rivers, lakes, or municipal swimming pools but, as has been demonstrated over the past month, in the open waters of the Gulf of Mexico the boom will be breached. The use of boom in the Gulf of Mexico is a waste of time, money, and manpower. Since containment is not possible, all available resources should be used to collect the oil. 

III. Restore the Impacted Coastal Areas
EPA should perform this task. Again, pursuant to OPA Section 4201, and given that the BP oil spill is a “discharge posing substantial threat to public health or welfare,” President Obama should federalize the restoration of the coastal areas impacted by the oil. This could be done without having to federalize the operational priority of stopping the flow of oil from the well.

CONCLUSION

The blowout of April 20, 2010 aboard the Deepwater Horizon was clearly preventable. The fact that the BP oil spill has been allowed to reach coastal Louisiana is inexcusable. BP’s surface spill response and containment efforts would be comical if they were not so devastating. The  environmental and economic damages suffered by victims of the BP oil spill will be enormous and on-going. The livelihoods of all persons whose businesses rely on the natural resources of the Gulf Coast are at risk. Commercial fishermen, oyster harvesters, shrimpers, and  businesses involved, directly or indirectly, in processing and packaging for the seafood industry will experience the end of a way of life that, in many cases, has been passed down from one generation to the next.

BP should remain in charge of stopping the flow of oil from the well. Pursuant to OPA Section 4201, and given that the BP oil spill is a “discharge posing substantial threat to public health or welfare,” President Obama should federalize the collection of the oil that is in the sea and the restoration of the coastal areas impacted by the oil. Both of these activities could be done without having to federalize the operational priority of stopping the flow of oil from the well.

Under OPA, BP, as the responsible party, is liable for all cleanup costs incurred, not only by a government entity, but also by a private party. In addition to cleanup costs, OPA significantly increased the range of liable damages to include the following: injury to natural resources, loss of personal property (and resultant economic losses), loss of subsistence use of natural resources, lost revenues resulting from destruction of property or natural resource injury, lost profits resulting from property loss or natural resource injury, and costs of providing extra public services during or after spill response.

Pursuant to OPA, trustees for natural resources can collect “the cost of restoring, rehabilitating, replacing or acquiring the equivalent of the damaged natural resources.” Such resources include land, fish, wildlife, wetlands, groundwater and drinking water. If a resource can’t be rehabilitated, the defendant has to provide something of equal value, for instance by creating a new wetland.

Given BP’s documented violation of federal safety regulations aboard the Deepwater Horizon, e.g., using an improper cementing technique to seal the well, failing to adequately test and maintain blowout prevention equipment and drilling deeper than BP’s federal permit allowed, there will be no limitation on BP’s liability.

However, now is not the time for finger pointing or litigation. It is now time to implement a viable strategy.

APPENDICES

References
EPA: http://www.epa.gov/oem/content/lawsregs/opaover.htm

Marine Log: http://www.marinelog.com/DOCS/NEWSMMIX/2010may00011.html

MMS: http://www.mms.gov/

National Contingency Plan

NOAA: http://www.noaa.gov/

Oil Pollution Act of 1990

USA Today: http://content.usatoday.com/communities/greenhouse/post/2010/05/how-responsible-is-us-government-for-gulf-oil-spill/

USCG: http://www.uscg.mil/

About the Author
Brian J. Donovan is an attorney and marine engineer with over thirty-four years of international business experience.

Mr. Donovan, a member of The Florida Bar, The U.S. District Court, Middle District of Florida and The United States Court of Appeals for the Eleventh Circuit, holds a J.D. from Syracuse University College of Law (where he was recipient of the “Global Law & Practice Award” as the outstanding graduate in the areas of International Law and International Business Law) and a B.S., with honors, in Marine/Mechanical and Nuclear Engineering from the United States Merchant Marine Academy.

Mr. Donovan, with deep family roots in southern Louisiana, has first-hand knowledge of the catastrophic devastation of the Louisiana Gulf Coast caused by hurricanes Katrina and Rita. He fully appreciates that the damage caused by Katrina and Rita may pale in comparison to the massive and potentially unprecedented environmental and economic impact of the BP oil spill of April, 2010.

Further Reading
Is The BP Oil Spill Victim Compensation Fund Legitimate?

Will Victims of the BP Oil Gusher Also Be Victims of Class Action Lawsuits and the BP Oil Spill Victim Compensation Fund?

BP’s Strategy to Limit Liability in Regard to Its Gulf Oil Gusher

Why BP Does Not Want an Accurate Measurement of the Gulf Oil Spill

The Oil Pollution Act Provides for the Federalization of the BP Oil Spill

BP Oil Spill of April, 2010: Why Class Action Lawsuits May Not be in the Best Interests of Potential Plaintiffs

UPDATE No. 1

Oil Flow Rate Estimates

On May 27, 2010, USGS Director Dr. Marcia McNutt announced that the National Incident Command’s Flow Rate Technical Group (FRTG) has developed an independent, preliminary estimate of the amount of oil flowing from BP’s leaking oil well. Based on three separate methodologies, the independent analysis of the FRTG has determined that the overall best initial estimate for the lower and upper boundaries of flow rates of oil is in the range of 12,000 and 19,000 barrels per day. Measurement of the flow of oil is extremely challenging, given the environment, unique nature of the flow, limited visibility, and lack of human access to BP’s leaking oil well. As the FRTG collects more data and improves their scientific modeling in the coming days and weeks ahead, they will continue to refine and update their range of oil flow rate estimates, as appropriate.

UPDATE No. 2

Undersea Oil Plumes

On May 15, 2010, The New York Times reported that scientists are finding enormous oil  plumes in the deep waters of the Gulf of Mexico, including one as large as 10 miles long, 3 miles wide and 300 feet thick in spots. Researchers from the University of Georgia, University of Southern Mississippi, University of South Florida and Louisiana State University have added to this preliminary body of evidence suggesting that some of the oil – no one knows what proportion – is dissolving into the water and forming huge plumes of dispersed oil droplets beneath the surface. This is worrisome because it raises the possibility that sea life, including commercially important species of fish, could be exposed to a greater load of toxins than conventional models of oil spills would suggest. The undersea plumes may go a long way toward explaining the discrepancy between the flow estimates, suggesting that much of the oil emerging from the well could be lingering far below the sea surface.

UPDATE No. 3

Dispersants: An Out-of-Sight, Out-of-Mind Strategy

Pursuant to NCP Section 300.310, “As appropriate, actions shall be taken to recover the oil or mitigate its effects. Of the numerous chemical or physical methods that may be used, the chosen methods shall be the most consistent with protecting public health and welfare and the environment. Sinking agents shall not be used.” Sinking agents means those additives applied to oil discharges to sink floating pollutants below the water surface. The question is whether BP’s dispersants are “sinking agents” when they are applied a mile underwater at the source of the well leak.

Invisible Threat

On May 28, 2010, Reuters reported that the toxic dispersants applied underwater by BP may work their way up the food chain.

David Hollander, a University of South Florida oceanographer, headed a research team that discovered a six-mile (10-km) wide “oil cloud” while on a government-funded expedition aboard the Weatherbird II, a vessel operated by the university’s College of Marine Science. “We were collecting samples down to two miles (3 km) below the surface,” Hollander told Reuters in an interview on Friday.

Hollander said the contaminants – which could eventually be pushed onto the continental shelf before shifting slowly down towards the Florida Keys and possibly out to the open Atlantic Ocean – raised troubling questions about whether they would “cascade up the food web.” The threat is that they will poison plankton and fish larvae before making their way into animals higher up the food chain, Hollander said.

The underwater contaminants are particularly “insidious” because they are invisible, Hollander said, adding that they were suspended in what looked like normal seawater. “It may be due to the application of the dispersants that a portion of the petroleum has extracted itself away from the crude and is now incorporated into the waters with solvents and detergents,” he added. He said dispersants, a cocktail of organic solvents and detergents, had never been used at the depth of BP’s well before, and no one really knows how they interact physically and chemically under pressure with oil, water and gases.

Roughly 850,000 gallons (3.2 million litres) of dispersant had been used by BP to combat the Gulf oil spill as of May 27, 2010, including 150,000 gallons (570,000 litres) released below sea level.

EPA Analysis Demonstrated That Without Additional Support, Cleanest Biofuels Will Fail to Meet Targets
By Union of Concerned Scientists
February 3, 2010

The Environmental Protection Agency’s (EPA) new rules for the Renewable Fuel Standard, the nation’s primary biofuels program, got a favorable review from the Union of Concerned Scientists (UCS). The science group praised the agency for a transparent process that accurately accounted for biofuels’ lifecycle heat-trapping emissions by including so-called “indirect-land-use emissions.” The new rules reflect the fact that advanced and cellulosic biofuels deliver substantially greater pollution reductions than today’s biofuels, such as corn ethanol. 

“We now have a yardstick to measure the global warming pollution from different biofuels,” said Jeremy Martin, a senior scientist in UCS’s Clean Vehicles Program. “EPA should be congratulated for having an open process on this rule that involved scientists, farmers and the ethanol industry.”

Despite intense pressure from the corn ethanol industry to exclude emissions from indirect-land-use change, the EPA found that such emissions are a major source of heat-trapping pollution from corn ethanol and other food-based biofuels. This finding affirms the view of 200 scientists and economists with relevant expertise who sent a letter to the EPA in September 2009 arguing that “grappling with the technical uncertainty and developing a regulation based on the best available science is preferable to ignoring a major source of emissions.” The EPA also issued an analysis examining the scientific uncertainty involved in calculating emissions from indirect-land-use change and plans to ask the National Academy of Sciences to look at the issue.

Indirect-land-use-change emissions also have been the focus of recent analysis by the California Air Resources Board, as well as peer-review scientific articles, which concluded that using food crops to produce fuel increases worldwide demand for those crops, prompting farmers to clear previously untouched land to grow new crops. Clearing land, especially tropical forests, releases massive amounts of heat-trapping gases into the atmosphere.

The Renewable Fuel Standard, enacted in 2005, requires fuel suppliers to blend a higher percentage of renewable fuels, such as ethanol and biodiesel, into motor vehicle fuels over time. In 2007, Congress passed the “Energy Independence and Security Act,” which expanded the standard’s overall volume requirement from 7.5 million gallons by 2012 to 36 billion gallons by 2022, and significantly increased the requirement for low-carbon cellulosic biofuels. It also required the EPA to establish independent volume mandates for different fuel categories. Each category was to be defined by its lifecycle heat-trapping emissions compared with conventional gasoline. The categories include: renewable fuel (20 percent less emissions than gasoline), biomass-based diesel (50 percent less), advanced biofuels (50 percent less), and cellulosic biofuels (60 percent less).

Corn ethanol facilities that were operating or under construction in 2007 are exempt from meeting the emissions-reduction requirements. The EPA projects that new corn ethanol facilities coming on line in 2022 could meet the 20 percent heat-trapping emissions reduction threshold for renewable fuels. However, this analysis is based on projected increases in crop yields and improvements in ethanol production technology and is not an analysis of the performance of today’s corn ethanol facilities.  

UCS experts say cellulosic ethanol, derived from grass, wood chips and other waste material, is a better option. According to EPA analysis, ethanol made from corn residue, or stalks and cobs, could reduce emissions by more than 90 percent compared with gasoline, in part because it would not necessarily displace land used to grow food crops and therefore would not trigger significant indirect land use emissions. 

Cellulosic fuel production, however, has fallen short of the EPA target. The 2007 energy law required suppliers to produce 100 million gallons of cellulosic fuel in 2010. But current cellulosic ethanol production stands at only 6.5 million gallons. Therefore, the EPA announced today that it is waiving 93.5 million gallons of the 100 million gallon requirement.

“Achieving energy security and tackling climate change will require a big contribution from cellulosic fuels,” said Martin. “Just setting a goal isn’t good enough in this economy. We need investment policies that help this industry get off the ground.”

According to UCS, the most important thing federal legislators could do to meet the Renewable Fuel Standard’s goals would be to support investment in building commercial-scale cellulosic biofuel facilities across the country. An investment in this essential clean energy technology would jumpstart rural economies and expand the economic benefits of biofuels production.

The Environmental Protection Agency (EPA) handed a victory to ethanol producers Wednesday by issuing final regulations that conclude corn-based fuels will meet greenhouse gas standards imposed under a 2007 energy law.

The release of the final regulations follows a fierce campaign by ethanol companies that alleged 2009 draft rules unfairly found that large volumes of ethanol production would not meet targets in the statute for reducing greenhouse gases.

The new rules state that corn-based ethanol will meet a requirement of the 2007 law that they must emit at least 20 percent less in “lifecycle” greenhouse gas emissions than gasoline.

The statute expanded the national biofuels use mandate to reach 36 billion gallons annually by 2022. If the EPA had ruled that corn-based fuels did not meet their emissions target, the fuels could have been frozen out of the market.

The issue has been vital to the ethanol lobby, which feared that an adverse finding could stymie investment and tarnish the fuel’s image.

However, the nation’s current ethanol production — about 12 billion gallons annually — was exempted from the law’s emissions mandate.

EPA Administrator Lisa Jackson on Monday denied the agency had bent to pressure, instead arguing that EPA employed better modeling when crafting the final regulations.

“We have followed the science,” she told reporters on a conference call. “Our models have become more sophisticated. We have accrued better data.”

The new rules, which implement the expanded fuels mandate, are not a complete victory for ethanol lobbyists, who along with several farm-state lawmakers object to the way EPA measures the carbon footprint of biofuels.

Specifically, they’re upset that EPA didn’t give up on weighing “international indirect land use changes” as part of emissions calculations. The phrase refers to emissions from clearing grasslands and forests in other countries for croplands, in order to compensate for increasing use of U.S. corn and soybeans for making fuels.

“We will always be concerned about indirect land use,” said Gen. Wesley Clark, a former presidential candidate who now leads the ethanol industry trade group Growth Energy.

“Why should American farmers be penalized for the problems in the Brazilian rainforest? That’s the Brazilian government’s issue and maybe the United Nations’,” he said in an interview before EPA’s rules were released. “It is so farfetched. I know it comes out of an academic model, but it is just an academic model, and the model is not even based on current facts.”

The industry alleges the science behind the land-use emissions measurements is immature and inaccurate, while environmentalists say such calculations are vital to ensuring federal support for ethanol doesn’t actually worsen climate change.

Nathanael Greene of the Natural Resources Defense Council also praised the measure because EPA did not back away from considering the land-use emissions, even though it came up with numbers friendlier to the industry with the final rule.

“We finally have a tool that we can use to hold the industry accountable, to reward the people that are doing a better job and keep the folks that are doing a really bad job out,” said Greene, the group’s director of renewable energy policy.

EPA said several factors went into the revised emissions calculations. For instance, the agency said that better satellite data allowed more precise assessments of the types of land converted internationally.

The battle over the land use emissions is hardly over. Two senior House Democrats — Agriculture Committee Chairman Collin Peterson (Minn.) and Armed Services Committee Chairman Ike Skelton (Mo.) — introduced a bill this week that would block EPA from considering the land-use changes.

What is a cap-and-trade program and how does it work?
A cap-and-trade program is designed to reduce emissions of a pollutant by placing a limit (or cap) on the total amount of emissions. The cap is implemented through a system of allowances that can be traded to minimize costs to affected sources. Cap-and-trade programs for greenhouse gas emissions would increase the costs of using fossil fuels.

A cap-and-trade program is different from an emissions tax. An emissions tax is a fee on each unit of emissions released. A tax sets a price on emissions, which provides an incentive for emissions reduction, but allows the actual amount of reduction that occurs to vary.

A cap-and-trade program sets the quantity of emissions, letting the price of allowances be set in the marketplace. However, both programs ultimately place a value on emissions and provide incentives for emission reductions.

What Is a Cap-and-Trade Program?
A cap-and-trade program is an environmental policy tool designed to reduce emissions of a pollutant by placing a limit (or cap) on the total amount of emissions that can be released by sources covered by the program during a fixed time period.

The overall cap on emissions is implemented through a system of allowances. Each allowance represents the right to emit a specific amount of emissions, and each emissions source covered by the program must submit enough allowances to cover its actual emissions. These allowances, sometimes called permits, are initially allocated to affected sources or auctioned off by the agency implementing the program.

Allowances can be traded, which creates an incentive for those who can reduce emissions most cheaply to sell their allowances to those who face higher emission reduction costs. The incentive to trade allowances persists as long as one or more sources can reduce emissions by an additional unit at a lower cost than some other source faces to achieve its last unit of emissions reduction. Therefore, allowances will be traded until the marginal cost of emission reduction is equal across all covered sources. At this point, the pollution level required by the cap is achieved – theoretically at the lowest possible cost to society – regardless of how the allowances were initially allocated.

How Does a Cap-and-Trade Program Work?
Not all cap-and-trade programs are identical. Below is a list of four characteristics shared by all cap-and-trade programs, with some possible variations shown. These variations could affect how a particular program works.

1. A limit or cap on emissions of a pollutant is established.

Variations:
Who is required to limit their emissions. Is it all sources of emissions or just some sources of emissions?
What area the cap covers. Is it a region or State, the whole United States, or a group of nations?
When emission limits take effect. Will the cap be in place in the near term or at a later date?
Whether the cap will become tighter, meaning the total allowable level of emissions drops over time. If so, how quickly will this decrease happen?
When the cap is in place. Will it be in effect for a season – such as just for the summer months – or is it applied for the whole year?

2. An allowance must be surrendered for every unit (often a ton) of emissions generated.

Variations:
Who must submit allowances. While this depends on the specific cap-and-trade program, some examples include producers of the polluting substance, distributors of a product whose production or consumption generates emissions, States, or even nations.
How allowances are initially distributed. Allowances could be auctioned, distributed for free based on current or historical emissions, or given out using some combination of an auction and a free distribution. In an auction, allowances are sold to the highest bidders. Uses of auction revenue depend on the specific cap-and-trade program, and could include the distribution of a portion of the revenue to consumers.
Whether the program allows for the purchase of offsets in lieu of allowances. Offsets are certified reductions in emissions from sources that are not required by the cap-and-trade program to restrict their emissions.

3. Allowances can be traded.

Here’s an example of how the trade could work. Emitter ABC found it really easy and cheap to reduce its emissions below the level covered by its allowances, while Emitter XYZ had a tougher time. ABC was able to make larger reductions in its emissions and offered to sell its extra allowances to XYZ. This transaction was a good deal for XYZ because the cost of allowances it bought was lower than the cost of equipment needed to reduce its own emissions to a level that matched the number of allowances it held before buying more allowances from ABC.
 
Variations:
How much an allowance costs. In general, the allowance price depends on the options available to reduce emissions and the demand for allowances. If there are relatively low-cost options to reduce emissions, the price of allowances would be lower.
Whether emitters are allowed to save – or “bank” – allowances, either for their own future use or to sell to someone else later. Some proposals might also allow the current use of a future period’s allowances.

4. Actual emissions are measured and penalties are assessed if targets are missed.

Variation:
Depending on the program, these tasks could be the responsibility of one or more governmental agencies.

How Do Cap-and-Trade Programs Affect Our Use of Energy?
The burning of fossil fuels, including coal, oil, and natural gas, is the main source of carbon dioxide – the most important greenhouse gas produced by human activity – and a major source of other emissions. A cap-and-trade program for greenhouse gas emissions would increase the cost of using fossil fuels, making them less competitive with non-fossil energy resources and increasing the overall cost of energy to consumers. The cost of using coal, which has the highest carbon dioxide content and the lowest price per unit of energy among the fossil fuels, would be most affected by a cap-and-trade program for greenhouse gases.

Why Might a Cap-and-Trade Program Be Considered?
A cap-and-trade program allows emitters to have flexibility in their approach to reducing emissions. An alternative environmental policy might require each regulated source to use a specific emission control technology. With a cap-and-trade program, the overall cap on emissions is fixed, but the compliance approach by any individual source need not be specified. This flexibility allows parties to choose the least costly option and should reduce the cost of reaching the overall emissions cap.

The implementation of the U.S. cap-and-trade program for sulfur dioxide beginning in 1995 is an example of the benefits of flexibility in reducing environmental compliance costs in the energy sector. Allowances for sulfur dioxide emissions were actively traded as coal-fired electricity generating units covered by the program chose a variety of compliance strategies. These strategies included installing scrubbers, switching to lower sulfur coal, and buying allowances.

Where Has Cap-and-Trade Been Used?
Cap-and-trade programs have been used to limit several different types of emissions in State, U.S., and international contexts. 

As noted above, a cap-and-trade program limiting sulfur dioxide emissions has been operating in the United States since 1995. The European Union established its Emissions Trading System for greenhouse gas emissions in 2005. In 2009, the Regional Greenhouse Gas Initiative established an interstate cap-and-trade system for greenhouse gas emissions covering electric power plants in 10 northeastern States. Recently, there has been a lot of discussion about the Federal Government establishing a nationwide cap-and-trade program for greenhouse gas emissions.

Climate change and energy are two key issues that will play a significant role in shaping the future security environment. Although they produce distinct types of challenges, climate change, energy security, and economic stability are inextricably linked. The actions that the Department takes now can prepare us to respond effectively to these challenges in the near term and in the future.

Climate change will affect DoD in two broad ways. First, climate change will shape the operating environment, roles, and missions that we undertake. The U.S. Global Change Research Program, composed of 13 federal agencies, reported in 2009 that climate-related changes are already being observed in every region of the world, including the United States and its coastal waters. Among these physical changes are increases in heavy downpours, rising temperature and sea level, rapidly retreating glaciers, thawing permafrost, lengthening growing seasons, lengthening ice-free seasons in the oceans and on lakes and rivers, earlier snowmelt, and alterations in river flows.

Assessments conducted by the intelligence community indicate that climate change could have significant geopolitical impacts around the world, contributing to poverty, environmental degradation, and the further weakening of fragile governments. Climate change will contribute to food and water scarcity, will increase the spread of disease, and may spur or exacerbate mass migration.

While climate change alone does not cause conflict, it may act as an accelerant of instability or conflict, placing a burden to respond on civilian institutions and militaries around the world. In addition, extreme weather events may lead to increased demands for defense support to civil authorities for humanitarian assistance or disaster response both within the United States and overseas. In some nations, the military is the only institution with the capacity to respond to a large-scale natural disaster. Proactive engagement with these countries can help build their capability to respond to such events. Working closely with relevant U.S. departments and agencies, DoD has undertaken environmental security cooperative initiatives with foreign militaries that represent a nonthreatening way of building trust, sharing best practices on installations management and operations, and developing response capacity.

Second, DoD will need to adjust to the impacts of climate change on our facilities and military capabilities. The Department already provides environmental stewardship at hundreds of DoD installations throughout the United States and around the world, working diligently to meet resource efficiency and sustainability goals as set by relevant laws and executive orders. Although the United States has significant capacity to adapt to climate change, it will pose challenges for civil society and DoD alike, particularly in light of the nation’s extensive coastal infrastructure. In 2008, the National Intelligence Council judged that more than 30 U.S. military installations were already facing elevated levels of risk from rising sea levels. DoD’s operational readiness hinges on continued access to land, air, and sea training and test space. Consequently, the Department must complete a comprehensive assessment of all installations to assess the potential impacts of climate change on its missions and adapt as required.

In this regard, DoD will work to foster efforts to assess, adapt to, and mitigate the impacts of climate change. Domestically, the Department will leverage the Strategic Environmental Research and Development Program, a joint effort among DoD, the Department of Energy, and the Environmental Protection Agency, to develop climate change assessment tools. Abroad, the Department will increase its investment in the Defense Environmental International Cooperation Program not only to promote cooperation on environmental security issues, but also to augment international adaptation efforts. The Department will also speed innovative energy and conservation technologies from laboratories to military end users. The Environmental Security and Technology Certification Program uses military installations as a test bed to demonstrate and create a market for innovative energy efficiency and renewable energy technologies coming out of the private sector and DoD and Department of Energy laboratories.

Finally, the Department is improving small-scale energy efficiency and renewable energy projects at military installations through our Energy Conservation Investment Program.

The effect of changing climate on the Department’s operating environment is evident in the maritime commons of the Arctic. The opening of the Arctic waters in the decades ahead which will permit seasonal commerce and transit presents a unique opportunity to work collaboratively in multilateral forums to promote a balanced approach to improving human and environmental security in the region. In that effort, DoD must work with the Coast Guard and the Department of Homeland Security to address gaps in Arctic communications, domain awareness, search and rescue, and environmental observation and forecasting capabilities to support both current and future planning and operations. To support cooperative engagement in the Arctic, DoD strongly supports accession to the United Nations Convention on the Law of the Sea.

As climate science advances, the Department will regularly reevaluate climate change risks and opportunities in order to develop policies and plans to manage its effects on the Department’s operating environment, missions, and facilities. Managing the national security effects of climate change will require DoD to work collaboratively, through a whole-of-government approach, with both traditional allies and new partners.

Energy security for the Department means having assured access to reliable supplies of energy and the ability to protect and deliver sufficient energy to meet operational needs. Energy efficiency can serve as a force multiplier, because it increases the range and endurance of forces in the field and can reduce the number of combat forces diverted to protect energy supply lines, which are vulnerable to both asymmetric and conventional attacks and disruptions. DoD must incorporate geostrategic and operational energy considerations into force planning, requirements development, and acquisition processes. To address these challenges, DoD will fully implement the statutory requirement for the energy efficiency Key Performance Parameter and fully burdened cost of fuel set forth in the 2009 National Defense Authorization Act. The Department will also investigate alternative concepts for improving operational energy use, including the creation of an innovation fund administered by the new Director of Operational Energy to enable components to compete for funding on projects that advance integrated energy solutions.

The Department is increasing its use of renewable energy supplies and reducing energy demand to improve operational effectiveness, reduce greenhouse gas emissions in support of U.S. climate change initiatives, and protect the Department from energy price fluctuations. The Military Departments have invested in noncarbon power sources such as solar, wind, geothermal, and biomass energy at domestic installations and in vehicles powered by alternative fuels, including hybrid power, electricity, hydrogen, and compressed national gas. Solving military challenges—through such innovations as more efficient generators, better batteries, lighter materials, and tactically deployed energy sources—has the potential to yield spin-off technologies that benefit the civilian community as well. DoD will partner with academia, other U.S. agencies, and international partners to research, develop, test, and evaluate new sustainable energy technologies.

Indeed, the following examples demonstrate the broad range of Service energy innovations. By 2016, the Air Force will be postured to cost-competitively acquire 50 percent of its domestic aviation fuel via an alternative fuel blend that is greener than conventional petroleum fuel. Further, Air Force testing and standard-setting in this arena paves the way for the much larger commercial aviation sector to follow. The Army is in the midst of a significant transformation of its fleet of 70,000 non-tactical vehicles (NTVs), including the current deployment of more than 500 hybrids and the acquisition of 4,000 low-speed electric vehicles at domestic installations to help cut fossil fuel usage. The Army is also exploring ways to exploit the opportunities for renewable power generation to support operational needs: for instance, the Rucksack Enhanced Portable Power System (REPPS). The Navy commissioned the USS Makin Island, its first electric-drive surface combatant, and tested an F/A-18 engine on camelina-based biofuel in 2009—two key steps toward the vision of deploying a “green” carrier strike group using biofuel and nuclear power by 2016. The Marine Corps has created an Expeditionary Energy Office to address operational energy risk, and its Energy Assessment Team has identified ways to achieve efficiencies in today’s highly energy-intensive operations in Afghanistan and Iraq in order to reduce logistics and related force protection requirements.

To address energy security while simultaneously enhancing mission assurance at domestic facilities, the Department is focusing on making them more resilient. U.S. forces at home and abroad rely on support from installations in the United States. DoD will conduct a coordinated energy assessment, prioritize critical assets, and promote investments in energy efficiency to ensure that critical installations are adequately prepared for prolonged outages caused by natural disasters, accidents, or attacks. At the same time, the Department will also take steps to balance energy production and transmission with the requirement to preserve the test and training ranges and the operating areas that are needed to maintain readiness.

While a weak sugar harvest this year in Brazil may put a damper on ethanol exports, Royal Dutch Shell is taking aim both at the U.S. and European markets in its new joint venture with sugar giant Cosan.

Royal Dutch Shell executive Mike Williams said the oil major hopes to increase output from its Cosan joint venture to more than a billion gallons of ethanol a year, from about 500 million gallons now.

The sugar-based fuel could then be shipped to the U.S. or Europe, Williams said.

The new joint venture announced Monday would also target 792 million gallons of ethanol to the domestic Brazilian market.

“Our intention is to grow this business into a worldwide opportunity,” Williams said, according to a report by Dow Jones Newswires.

The prospects of more Brazilian ethanol in the U.S. hit a sore point with lobbying groups that support domestic supplies, already suffering from slack demand for car fuels.

Any imports into the U.S. would face an import tariff of 54 cents a gallon. Taking the sting out the cost, however, is a blenders tax credit of 45 cents a gallon offered to distributors who mix gasoline with ethanol.

Christopher Thorne, a spokesman with pro-U.S. ethanol group Growth Energy, said Brazil has been pushing to get the country’s sugar-based ethanol reclassified as an advanced biofuel to help circumvent the existing tariff.

Sugar futures touched a 29-year high of 30.4 cents a pound on Monday, before falling back, on expectations of a weak harvest after heavy rains.

Plinio Nastari, president of Brazilian consultancy Datagro, told Reuters that fungal disease is expected to hurt sugar output.

“This is the perfect illustration of why it makes no sense to become dependent on any foreign source of energy — whether it’s Middle East oil or Brazilian sugarcane ethanol,” the group said. “Between high sugar prices and a sugarcane crop shortage, Brazil can’t meet its own ethanol needs — let alone the ethanol needs of the United States.”

The U.S. imported about 12 million gallons of Brazilian ethanol in November, according to the Renewable Fuels Association,

“Brazil is having a supply issue themselves, and may be ready to import U.S. ethanol despite the 25% tariff Brazil puts on imports of ethanol,” said Matt Hartwig, a spokesman for the Renewable Fuels Association.

Integrated petroleum company Royal Dutch Shell plc. (RDS-A: News ,RDS-B: News ,RDSA.L: News ,RDSB.L: News ) announced Monday that its unit, Shell International Petroleum Co. Ltd., has signed a non-binding memorandum of understanding or MoU with Brazilian sugar and ethanol company Cosan S.A. (CZZ: News ) in order to form an about US$12 billion joint venture in Brazil. The proposed joint venture will create one of the world’s largest ethanol producers, which will produce ethanol, sugar and power, as well as supply, distribute and retail transportation fuels.

The proposed biofuel joint venture would see both the companies consolidating certain of their existing assets in Brazil, which could dominate Brazil’s ethanol market. Brazil is a leader in biofuel production and consumption because of its abundant land and sugarcane production. The deal would enhance both companies’ growth prospects and market position in the retail and commercial fuels businesses in Brazil.

Both the companies will now engage in exclusive negotiations towards evolving a binding joint venture agreement. The transaction is subject to the creation of a final transactional documentation, due diligence, regulatory approvals and respective corporate approvals.

In a statement, Royal Dutch Shell’s downstream director, Mark Williams said, “Today’s announcement demonstrates the continued importance of Brazil to Shell. We’re looking forward to joining with a leading company in Brazil to meet the needs of retail and commercial fuels customers in that growing market.”

As part of the proposed 50:50 joint venture, Shell will contribute its 2,740 petrol stations and other fuel-distribution assets in Brazil as well as US$1.625 billion in cash, payable over two years, while Sao Paulo, Brazil-based Cosan will contribute 1,730 retail sites as well as supply and distribution assets.
 
Additionally, Cosan will contribute its sugar cane crushing capacity of about 60 million tonnes per year from 23 mills, as well as its ethanol production capacity of about 2 billion liters per year. Cosan will also bring in US$2.5 billion of net debt into the joint venture balance sheet. Further, Shell would contribute its 50% stake in Codexis and 14.7% stake in Iogen, two ventures exploring next-generation biofuels technologies.

With annual production capacity of about 2 billion liters, the joint venture would enhance both companies’ growth prospects and market position in the retail and commercial fuels businesses in Brazil. The joint venture would have a network of about 4,500 retail sites and a total annual throughput of about 17 billion liters, with further prospects of growth and synergies.

“Cosan’s vision is to become a global leader in clean and renewable energy. Our size, degree of sophistication and stage of development means we need a partner that not only shares our vision, but also has access to international markets to help us deliver our growth potential,” Cosan’s chairman, Rubens Ometto Silveira Mello added.

RDS-B closed Monday’s regular trading session at $54.53, up $1.15 or 2.15% on a volume of 0.67 million shares, higher than the three-month average volume of 0.63 million shares. CZZ closed at $8.60, up $0.80 or 10.26% on a volume of 2.11 million shares, higher than the three-month average volume of 1.80 million shares.

It was music to the ears of carbon traders and clean-energy company executives to hear President Obama urge Congress to pass energy and climate change legislation that places a cost on greenhouse gas emissions.

“To create more of these clean-energy jobs, we need more production, more efficiency, more incentives,” Obama proclaimed in his first State of the Union address.

“And yes,” he said, “it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America.”

Obama thanked the House for passing a bill in June, sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.). At its core, that bill would create an economywide cap-and-trade program that ratchets down industrial carbon dioxide emissions over time by distributing a declining number of pollution permits to electric utilities and factories. Support in the Senate for cap and trade is much more tenuous, because of concern about the economic impact and the creation of an international commodity market for carbon allowances and offset contracts.

“This year, I am eager to help advance the bipartisan effort in the Senate,” Obama said.

Dirk Forrister, director of Natsource, a New York-based asset manager in carbon and renewable energy markets, said extending an olive branch to Republicans is critical to getting that bill passed out of the Senate, and Obama did just that.

‘A deal to be had on climate’
“He acknowledged the differences with the Republicans and said he’d work with them,” Forrister said after the speech. “So I took that as a real encouraging speech for climate and clean energy. There’s a deal to be had on climate if they can get past the partisanship.”

Forrister, former chairman of the White House Climate Change Task Force under President Clinton, and Henry Derwent, CEO of the Geneva-based International Emissions Trading Association (IETA), urged Obama to focus on passing a cap-and-trade scheme this year, rather than jettisoning the House approach for a less comprehensive energy bill. They called on Obama to “establish a clear timeline for passage of an economywide cap-and-trade bill.”

IETA represents some of the world’s largest investment banks and trading houses, most of which have carbon trading divisions poised to inject billions of dollars into a U.S. and European carbon emissions market.

The group asserts that a global financial trade in carbon credits, offset contracts and derivatives would fuel investment in clean-energy projects aimed at slashing global emissions. But it has long said it won’t happen unless Congress creates a U.S. market to buttress any global agreement on emissions reductions and financing programs for developing countries.

Obama placed energy and climate in the context of jobs, perhaps not suprisingly, given rising political pressure to turn his attention to bread-and-butter economic issues.

“I took it as a sign of real seriousness,” Forrister said.

Pitching a race to jobs and green technology
Obama emphasized an emerging race among the United States, China and Europe to capitalize on new clean-energy and battery technology to replace coal and oil, which dominate the world’s energy use.

“There is a race in the global theater,” Forrister said. “Folks in America don’t really like a defeatist attitude. They want a winning attitude.”

Ken Newcombe, CEO of C-Quest Capital, based in Washington, said the mere mention of “green jobs” should be a positive sign to the carbon trading and energy finance community.

“If he mentions green jobs, that’s talking big that he’ll continue on the climate security bill,” he said.

Before the speech, Newcombe warned that mentioning climate directly could complicate the political environment, but he said many investors are already convinced Obama is serious about the issue.

“The president turned up in Copenhagen and was singlehandedly responsible for getting accord out and breaking the deadlock,” he said. “That was a remarkable sign of his commitment.”

For his part, Obama also mentioned some items popular with the GOP: zero-emissions nuclear power plants, oil and gas drilling, biofuels and clean-coal technology.

Three Senate Democrats today joined a Republican effort to stop the Environmental Protection Agency from regulating greenhouse gases under existing law.

Democrats Blanche Lincoln of Arkansas, Mary Landrieu of Louisiana and Ben Nelson of Nebraska said they co-sponsored a motion that seeks to overturn the EPA’s finding that greenhouse gases are a threat to public health and should be regulated. The agency has proposed regulations for new cars, power plants, oil refineries and factories that could begin in March.

“This command-and-control approach is our worst option for reducing the emissions blamed for climate change,” said Senator Lisa Murkowski, an Alaska Republican, who wrote the measure. “Congress must be given time to develop an appropriate and more responsible solution.”

Murkowski decided today to seek a disapproval motion of the EPA’s Dec. 7 finding instead of trying to block the agency’s regulations by amending legislation now before the Senate. To pass the Senate, the disapproval motion would require 51 votes, fewer than the 60 required to amend legislation being debated this week to raise the U.S. government’s debt ceiling.

Lincoln said she will support Murkowski’s disapproval motion to block “heavy-handed EPA regulation.”

“I am very concerned about the burden that EPA regulation of carbon emissions could put on our economy,” Lincoln said in an e-mail.

Murkowski didn’t say how soon she would bring the motion to the Senate floor. Her decision will delay a vote on whether the EPA can regulate carbon dioxide from cars, power plants, oil refineries and factories “possibly until March,” Whitney Stanco, an analyst in Washington for Concept Capital, said in a report today.

Murkowski could ask for a vote on the disapproval resolution “at any time,” Robert Dillon, a spokesman for the Alaska Republican, said in a telephone interview.

The EPA’s authority stems from a 2007 Supreme Court ruling on the scope of the Clean Air Act. Legislation to limit that authority and set up a cap-and-trade market for carbon dioxide permits is stalled in the Senate.