“Shell screwed up in 2012.” Interior Secretary Ken Salazar was bluntly accurate when speaking about Shell’s calamitous Arctic drilling program today.

The Interior Department’s new high-level, 60-day review – while not comprehensive – calls attention to serious shortcomings in Shell’s 2012 effort and recommends a more thorough, integrated approach to planning and oversight before deciding on whether to approve future Arctic drilling operations.

The review confirms what we already knew: that Shell simply was not ready to conduct safe and responsible operations in icy Arctic waters. It also demonstrates that federal agencies need to do a better job holding the oil industry accountable and setting higher standards for safety and environmental protection.

To that end, Shell will be required to submit a “comprehensive, integrated plan” covering all aspects of drilling and related operations, and “commission and complete a full third-party audit” of its management systems.

The company’s drilling program was plagued by problems throughout the season. Its performance has been notable only for its failures, and has provided us with a laundry list of reasons for why industry is not ready for offshore oil exploration in the Arctic.

The Interior Department initiated its urgent review of Shell’s actions in the Arctic in light of the recent grounding of the Kulluk drilling rig off the coast of Sitkalidak Island in the Gulf of Alaska. The company’s other Arctic drillship—the Noble Discoverer—suffered significant problems with propulsion, safety and pollution prevention systems. As a result, Shell now plans to dry-tow both vessels to Asia for repair and renovation. This latest setback prompted the troubled oil company to announce that it would hit pause on its plans to drill in the Arctic during the 2013 season.

While Shell’s admission of defeat this year reduces the short-term threat of Arctic drilling, it only makes the findings of the Interior Department’s review that much more important in the long run. Shell may have halted its drilling operations for now, but it plans to bring its drill rigs back to the Arctic soon. Furthermore, ConocoPhillips recently declared that it is not backing off on its plan to drill exploratory wells in the Arctic in 2014.

Without meaningful action from the Interior Department and other government agencies, Arctic drilling could lead to a disaster for the region. As the 60-day review put it, a “significant accident or spill in the remote and inhospitable Alaskan Arctic could have catastrophic consequences on fragile ecosystems and the people who depend on the ocean for subsistence.”

The Interior Department’s review is a first step on the road to implementing stronger, safer and more protective oversight of Arctic waters. Now, government agencies need to follow through on the report’s recommendations and make meaningful changes to the way they plan for and manage Arctic oil and gas operations.

In the meantime, there should be a complete time-out on Arctic drilling until we have improved our understanding of the Arctic ecosystem, protected important ecological and subsistence areas and developed effective methods to clean up an oil spill in icy Arctic water. Thankfully, Shell’s decision to pass on the 2013 drilling season gives us time to make progress.