By Ayesha Rascoe
WASHINGTON (Reuters) - Blaming the massive BP oil spill on government and industry complacency, a White House panel on Tuesday called for a dramatic overhaul of the way the U.S. regulates offshore drilling.
The White House oil spill commission, in its final report of the BP drilling disaster, said the U.S. government needs to expand its drilling regulations, as well as set up an independent drilling safety agency.
But the report was immediately criticized by the main industry lobby, the American Petroleum Institute, and calls for more regulation will likely be opposed by resurgent Republicans in U.S. Congress who have long been calling for an expansion of offshore drilling, despite the spill.
Commission co-chair Bill Reilly said it is time for Congress "to exercise serious oversight" of offshore drilling. As a first step, he demanded that Congress provide the funding to hire additional government inspectors of drilling rigs.
The seven-member commission also pushed for the oil industry to create a self-regulating entity to help enforce standards and called on Congress to raise liability limits on offshore drilling operators.
The commission was created by President Barack Obama after an April 20 explosion ruptured BP's underwater Macondo well, unleashing millions of barrels of oil into the Gulf of Mexico over the summer.
"Like it or not, oil and gas companies are in this together, and they must adopt rigorous standards through an industry-wide safety institute, or risk losing access to these leases and resulting profits," Reilly said.
The commission is the first government-sanctioned group to wrap up its probe of the causes of the BP accident.
Although the commission lacks the authority to establish drilling policies or punish companies, its findings could influence future court proceedings and legislative efforts.
The House Natural Resources Committee and the Senate Energy and Natural Resources Committee are both slated to hold hearings on the commission's report this month.
It could be difficult to enact comprehensive drilling reform, however.
With Republicans, who are traditionally supportive of the oil industry, in control of the House of Representatives, the oil sector may be able to successfully argue that stringent new rules could hurt domestic production.
The API criticized the panel's report for casting doubt on the entire oil industry based on a single accident.
"This does a great disservice to the thousands of men and women who work in the industry and have the highest personal and professional commitment to safety," said API Upstream Director Erik Milito.
Much of the commission's final report reiterates statements and reports released by the panel over the past six months.
Commission co-chair Reilly told Reuters last year that the panel was seriously considering calling for an independent self-regulating oil industry group.
Modeled on the nuclear industry's Institute of Nuclear Power Operations, a self-regulatory group would allow offshore drillers to hold their counterparts more accountable, the commission said in its final report.
Oil industry representatives have warned that the INPO model might not be well suited for the ultra-competitive and technologically diverse nature of offshore oil drilling.
(Additional Reporting by Timothy Gardner; Editing by Russell Blinch and Lisa Shumaker)
