INDIANAPOLIS | An independent review commissioned by Gov. Mitch Daniels backs up the state's contention that increases in Lake Michigan water pollution approved this summer for the BP Whiting refinery would not harm aquatic life or drinking water.

But the report from Indiana University professor James Barnes, which The Times obtained Wednesday, also faults state regulators for failing to explain why they gave the refinery a five-year grace period to meet tougher mercury restrictions included in the new wastewater discharge permit.

"The permitted discharge does not threaten drinking water supplies nor portend beach closings," he said.

Barnes, a former dean of IU's School of Public and Environmental Affairs, began his review of state water quality laws in August at the height of public uproar regarding BP's wastewater permit. Two weeks later, the petroleum giant promised to hold the line on Lake Michigan pollution, even if it means scrapping a planned $3.8-billion expansion of the Whiting plant.

BP spokesman Scott Dean had not seen the report Wednesday, but he said it appeared to contain good news.

"We're pleased that the report seems to confirm what we've said all along," Dean said. "We followed the law to the letter and filed a permit that either met or did better than state and federal requirements."

The permit, which IDEM approved in late June, gave BP until 2012 to meet more stringent mercury standards and allowed the Whiting refinery to release 54 percent more ammonia and 35 percent more suspended solids -- silty materials left over after wastewater is treated and filtered. Even so, the increased discharges met federal standards, and the U.S. Environmental Protection Agency approved the permit.

'Sludge' references stoked controversy

"Contrary to some of the initial press reports, the permit does not authorize BP to discharge industrial sludge into Lake Michigan and the mischaracterization, unfortunately, contributed to public misperceptions of the permitting decision," Barnes said.

The permitted ammonia concentration is equivalent to "one drop of household ammonia in a pint glass of water," Barnes notes in his report. And the permitted suspended solids, which could contain tiny particles of mercury and other metals, amounts to "10 grains of sand" per pint glass.

"I did that in part to help people visualize what kind of concentrations were being discussed," Barnes told The Times Wednesday evening. "It was unfortunate that a couple of those early newspaper reports described it as sludge."

The sludge references subsided after IDEM Commissioner Thomas Easterly addressed the issue during a July telephone conference. But by then, environmentalists and politicians from neighboring states already had seized on the controversy, and BP bashing was in full swing. The U.S. House overwhelmingly approved a resolution rebuking both BP and Indiana.

Whiting limits meet/exceed other states

Barnes also wrote that the higher ammonia and suspended solids limits approved for the Lake Michigan plant "appear to be significantly more stringent" than those included in a 2004 Ohio permit BP received for its Toledo refinery, which discharges into Lake Erie. In both the Indiana and Ohio cases, BP sought higher discharge allowances to facilitate the processing of heavier crude oil extracted from Canadian tar sands.

Barnes concluded IDEM had a tough time defending the Whiting permit because Indiana employs two separate -- and sometimes conflicting -- laws. The BP review marked IDEM's first attempt in years to update a permit covered by a state law concerning "outstanding state resource waters" such as Lake Michigan.

The law, unlike another concerning "high-quality" waters, did not require BP to submit an antidegradation -- or worsening of water quality -- analysis, but IDEM sought one anyway. Barnes concluded the deficiency in the antidegradation law prevented IDEM from getting complete information from BP, and that hindered the state agency's ability to publicly defend the more lenient permit.

State regulations not clear

The review cites shortcomings in state law that made it difficult for the Indiana Department of Environmental Management, or IDEM, to defend the increased discharge allowances it granted BP for ammonia and suspended solids.

"The current situation illustrates the pitfalls that accompany a less than clear set of regulations," Barnes wrote in his 33-page report, which is expected to be made public today.

The situation "does legitimately raise the issue of whether an increase in discharge levels can reasonably be avoided or -- if not -- whether the increase is in the overall public interest due to other social and economic considerations."

Daniels admin reaction

When contacted by The Times concerning Barnes' report, Daniels office reported it would move to adopt any recommendations it contains.

"The report shows that Indiana is a staunch protector of the water quality of Lake Michigan," said Jane Jankowski, Daniels' press secretary.

Barnes, a former EPA deputy administrator, met with several environmental groups, including the Michigan City-based Save the Dunes Council, before beginning his research nearly four months ago. He said he is confident his analysis will stand up to potential criticism.

"I approached it very skeptically," Barnes said. " The governor wanted this in six weeks. I wanted to make sure that, if I'm going to put my name on it, I'm going to do it well."