Bromwich: More emergency rules unlikely for drilling offshore

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Jan. 13 -- Unless continuing investigations of the Macondo well accident and spill uncover significant new information, Bureau of Ocean Energy Management, Resources, and Enforcement Director Michael R. Bromwich does not expect to issue additional emergency rules, he said.

“Over the past few months, especially since new rules were announced at the end of October, we have heard from countless companies, trade associations, and members of Congress about the significant anxiety that exists in the industry that we will soon change the rules of the permitting process significantly, thereby creating further uncertainty about what is required to conduct business on the [US Outer Continental Shelf],” he said Jan. 13 in an address at the Center for Strategic and International Studies.

“The phrases we hear repeatedly are that we are ‘changing the rules’ and ‘moving the goalposts.’ The implication is that we have other regulatory requirements up our sleeve that we have not yet unveiled,” said Bromwich. “That is not the case. Barring significant, unanticipated revelations from investigations of the Deepwater Horizon explosion that remain in process, I do not anticipate any further emergency rulemakings, period.”

BOEMRE will move through the standard notice and comment rulemaking process to implement further safety measures, including features of the next generation of blowout preventers, remotely operated vehicles, and other subsea containment equipment, he indicated. The US Department of the Interior agency also will promulgate additional workforce safety reforms through rulemakings, including requirements for independent third-party verification of operators’ safety and environmental management systems (SEMS), Bromwich said.

“We also will continue to evaluate the regulatory standards used by other countries to ensure that the standards applied in US waters, as well as the agency that enforces those standards, are world-class,” he said, adding that all of these matters were discussed in the final report that US President Obama’s Oil Spill Commission issued on Jan. 11, and that the report provided useful insights about them.

‘Must keep pace’
“At the same time, we can no longer accept the view that the appropriate response to a rapidly evolving, developing, and changing industry which employs increasingly sophisticated technologies is for the regulatory framework and the applicable rules to remain frozen in time,” Bromwich continued. “Over time, the regulatory framework and the specific requirements must keep pace with advances in the industry—and with industry ambitions to drill in deeper water in geological formations that have greater pressures.”

He said the oil and gas industry has reflexively opposed new regulations several times in the past. Such an attitude is as irresponsible as mindlessly multiplying new requirements for their own sake, he maintained. “We must strike a new balance that fully involves industry in the regulatory process, but recognizes the need for us to exercise independent judgment,” he said.

Bromwich said industry generally has been cooperative, but added that it has different concerns than BOEMRE, especially since it was used to speedy permit approvals. “When I meet with operators, I specifically ask them if the rules we have imposed are unreasonable and misguided. Every one of them has said no. That suggests that everyone realizes we weren’t where we needed to be,” he said.

“Activity has not resumed as quickly as anyone likes,” he noted. “The fact is that we have some demanding new rules which we are implementing, and we are consulting extensively with everyone who is involved. We plan to continue this approach.”

He said the challenge now is to ensure that the US doesn’t once again become complacent, but continues to make progress in developing state-of-the-art safety, containment, and response capabilities. “Government, industry, and the best minds in our universities must collaborate on ongoing research and development to create cutting-edge technologies in areas such as well condition sensor capabilities and remove BOP activation, among others,” Bromwich said.

Changes at BOEMRE
Reorganization of the former MMS has been under way since US Interior Sec. Ken Salazar ordered it last May. Bromwich said the agency’s revenue-collection operations became the Office of Natural Resources Revenue on Oct. 1 and moved to another part of DOI. He said BOEMRE’s two remaining responsibilities—offshore resource management and regulatory enforcement—will also become separate, independent agencies over the next year, a process he believes will be more difficult, but also more important.

“On the one hand, the new Bureau of Ocean Energy Management (BOEM) will be responsible for managing development of the nation’s offshore resources in an environmentally and economically responsible way,” Bromwich said. “On the other hand, the new Bureau of Safety and Environmental Enforcement (BSEE) will enforce safety and environmental regulations.”

He said BOEMRE has been gathering facts for the past several months that are necessary to complete the reorganization as rationally and sensibly as possible. “We have been busy interviewing bureau employees in all of our regional offices; collecting and analyzing data related to the bureau’s processes, systems, and regulatory metrics; and developing various models and options for restructuring and reforming the bureau,” he said.

“The work has been painstaking and time-consuming, but it is critical to inform decision-making regarding the transformation of [BOEMRE],” said Bromwich, adding that the agency is “close, very close, to being ready to lay out the detailed framework for the reorganization.”

Separating resource management from safety oversight will allow the agency’s permitting engineers and inspectors greater independence, more budgetary authority, and clearer senior leadership focus, he said. “The goal is to create an aggressive and tough-minded, but fair, regulator that can effectively evaluate the risks of offshore drilling, will promote the development of safety cultures in offshore operators, and will keep pace with technological advances,” he said.

Appropriate weight
Bromwich said the restructured agency also will provide a structure that ensures thorough environmental analyses are conducted and that the potential environmental effects of proposed operations are given appropriate weight during BOEM’s resource management decision-making.

“That structure must ensure that leasing and plan approval activities are properly balanced. These processes must be both rigorous and efficient so that operations can go forward in a timely way—but they must be based on a complete understanding of the potential environmental effects of those operations,” he explained. “We must also ensure that appropriate mitigation of those potential environmental effects is in place. We will also strengthen the role of environmental review and analysis in both organizations through various structural and organizational mechanisms.”

The reforms generally align with recommendations in the Oil Spill Commission final report, and BOEMRE will continue to take those ideas into account in designing its final reorganization structure, according to Bromwich. He said the agency has created 11 implementation teams that have been working for several months to analyze critical aspects of BOEMRE’s structures, functions, and processing, and implementing reforms in six key areas: permitting, inspections, regulatory enforcement, environmental compliance and enforcement, incident investigations, and oil-spill response.

The agency’s drilling permit review and approval process is central to making certain that proposed operations are conducted safely, Bromwich said. “This review and evaluation process must be rigorous, but it must also be efficient so that proposed operations are not unduly delayed,” he said. “This team has been working on plans to address the permitting workload in light of current resources. The team also is developing a comprehensive handbook of policies and practices which will be designed to assist permit reviewers in carrying out their responsibilities and ensure greater consistency across our offices and clarity for the industry.”

The inspections implementation team actually has several groups focused on various discrete issues associated with developing effective, risk-based approaches to offshore inspections, Bromwich said. Their activities include analyzing alternative organizational structures and developing risk-based programs that identify risks posed by specific types of operations, the appropriate distribution of inspections employees throughout the organization, and internal management and oversight structures, he said.

Compliance strategies
Another inspections implementation group is developing strategies to ensure well operators, drilling contractors, and service companies are meeting safety and environmental requirements, including measures imposed by the drilling safety rule, published last fall, Bromwich said. The agency also is developing the infrastructure and will recruit the necessary personnel needed to conduct real-time monitoring of the highest-risk operations, such as deepwater drilling.

A third inspections implementation group is developing programs and curriculums for inspectors, supervisory inspectors, and engineers involved in the agency’s safety compliance and enforcement programs, an effort Bromwich considers center to BOEMRE’s reform agenda. He said the group is working on evaluating resources necessary to develop appropriate in-house training, new recruit and refresher curriculums and programs, a formal field training program, individual professional development programs, and programs to ensure that government employees keep up with technological developments related to offshore operations.

“We are also examining how to provide our personnel with better inspections and enforcement tools, including technological solutions, for increasing inspections coverage and efficiency, and for improving the bureau’s ability to conduct real-time monitoring of offshore drilling activities,” Bromwich said. “We are evaluating the increased use of laptop computers and digital tablets by inspectors and environmental enforcement personnel. We are also analyzing the potential of satellite imagery, e-inspections software, and live data feeds from offshore facilities to enhance our inspections capacity and effectiveness.”

Finally, he said, BOEMRE has introduced, for the first time in the US regulatory system, performance-based standards for identifying safety and environmental risks and developing systems and personnel requirements to address those risks. The performance standards are embodied in the workplace safety rules BOEMRE published last fall, and the agency has an inspections implementation group devoted to designing an oversight program to review and evaluate operators’ compliance with these new requirements, he said.

The implementation team dealing with regulatory enforcement is evaluating whether existing enforcement tools are adequate, including the system for documenting and tracking violations of prescriptive regulations, whether existing civil penalties are adequate, whether operator qualification evaluations are suitable, and whether the system for disqualifying unsafe operators works.

‘Patently inadequate’
“We are reviewing potential gaps in our regulations, including a thorough review of the regulatory standards used by other countries,” said Bromwich. “We are also looking for ways to enhance the civil penalties available for violations of BOEMRE’s safety and environmental regulations, although our view is that legislation is required to make those more meaningful. The current enforcement framework, which permits maximum fines of only $35,000/day/incident, is patently inadequate to deter violations.”

He said the environmental compliance and enforcement implementation team is designing new inspections and enforcement programs that have not existed previously. This team is developing staffing plans, analyzing support requirements, and studying systems to obtain information necessary to support environmental enforcement, he said.

“We have an incident investigations team that is, among other things, evaluating and developing investigative procedures relating to specific categories of accidents and incidents, including industrial accidents on rigs and platforms, fires, and spills,” Bromwich said. “We are identifying the types of expertise necessary to support BOEMRE’s investigations programs, and designing systems necessary for tracking the status of investigations, the imposition of sanctions based on investigative findings, and the implementation of improvements to safety and environmental regulations and practices recommended as a result of the investigations.”

The last of the six implementation teams is conducting a comprehensive review of oil spill response technologies and whether operators’ response plans are adequate, he said. The team is working closely with the US Coast Guard and other federal agencies to develop enhanced spill response plans and more effective reviews of those plans based on lessons learned responding to the spill from the Macondo well, he said.

Bromwich said BOEMRE also is in the midst of reviewing how it applies the National Environmental Policy Act, particularly the use of categorical exclusions. It also has issued a tough new recusal policy aimed at reducing the potential for real or perceived conflicts of interest, he said. And it is recruiting internal and external candidates for the new Investigations and Review Unit that will promptly and credibly response to allegations of misconduct or unethical behavior, pursue allegations of misconduct against oil and gas companies involved in offshore energy projects, and provide the agency with the ability to respond swiftly to emerging issues and crises, including significant incidents such as spills and accidents.

Asked how he expects BOEMRE to pay for all this, Bromwich replied: “I care less about where the money comes from than getting what we need.” He said that he’s seeking further clarity on the budget process, which became clouded late last fall. “Our ability to move full speed ahead is stymied by our uncertain budget situation, but we are proceeding the best we can with the resources we have,” he said.

Contact Nick Snow at nicks@pennwell.com.



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