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World Obama takes aim at industry, regulators over oil spill disaster

U.S. President Barack Obama, with Interior Department Secretary, Ken Salazaer, on Friday went on the attack over the Deepwater Horizon oil spill disaster, saying he will not tolerate 'more irresponsibility.'

Alex Wong/Getty Images

U.S. President Barack Obama sharply scolded corporate executives for "finger pointing" over the Deepwater Horizon oil spill disaster on Friday and promised to end the "cozy relationship" between oil companies and the federal regulators that are supposed to police them.

He also ordered a broad examination of the environmental laws and analyses that govern oil and gas exploration, in response to reports that government regulators ignored warnings from federal ocean analysts about offshore drilling plans.

"It is pretty clear the system failed, and it failed badly," Mr. Obama said. "For that, there is enough responsibility to go around."

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Mr. Obama delivered his stinging rebuke of industry and regulators in remarks at the White House Rose Garden, flanked by cabinet secretaries involved in the massive response and cleanup effort. They were his sharpest remarks yet since the April 20 explosion of the Deepwater Horizon rig that killed 11 people and triggered the spill gushing from a crumpled pipe at a BP well about 40 miles south of Louisiana.

Obama castigated executives from BP PLC, Transocean Ltd., and Halliburton Co. for "a ridiculous spectacle" during two days of congressional hearings on the oil spill this week, as the business leaders - all targets of negligence lawsuits - traded blame over what went wrong.

"You had executives from BP, Transocean and Halliburton falling all over each other trying to point the finger of blame at someone else," Mr. Obama said.

"This is a responsibility that all of us share," he said. "I will not tolerate more finger pointing or irresponsibility."

Mr. Obama also zeroed in on the Minerals Management Service, the beleaguered Interior Department agency tasked with regulating drilling safety as well as issuing federal drilling leases and collecting revenues from oil and gas production on federal lands and waters.

"For too long … there has been a cozy relationship between the industry and the [regulators]that permit them to drill," Mr. Obama said. "That cannot and will not happen any more."

On Tuesday, Interior Department Secretary Ken Salazar announced plans to divide the MMS into two pieces.

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A newly created independent safety and environmental enforcement authority would take over oversight of the oil industry and regulation of its drilling operations. Meanwhile, a separate agency would continue to administer federal drilling leases and royalty collections.

Mr. Obama said that the firewall between royalties and regulation would ensure "there's no conflict of interest - real or perceived" between the two roles.

At the same time, he ordered a review of the environmental analyses that are required whenever the government approves new drilling or seismic research designed to help locate hidden underwater pockets of oil and gas. The move came in response to reports that federal regulators had approved offshore drilling projects without first requiring permits mandated by federal laws designed to protect marine mammals and endangered species.

Canadian Federal Environment Minister Jim Prentice said the National Energy Board does not suffer from the same conflicts that the U.S. regulator has, despite concerns from the New Democrats that the board both promotes and regulates the industry.

In an interview, Mr. Prentice said that, unlike the U.S. Minerals Management Service, the NEB does not assess or collect royalties, and has no financial relationship with the industry that is regulates.

"We have separated the two functions and that is the model that the Americans are looking to," he said.

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However, critics argue the Conservative government has moved the NEB to a less prescriptive regulatory model in which it does not tell companies precisely what safety equipment they must employ but rather assesses the adequacy of their safety and environmental plan.

Kathy Dunderdale, the Natural Resources Minister for Newfoundland and Labrador, has said the federal-provincial board that regulates drilling off the coast of that province also has no role in setting or collecting royalties or taxes from the companies, or in negotiating benefits.

New York Times News Service

With a report from Shawn McCarthy

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