BOEMRE Director Delivers Final
Speech Before Agency Reorganization
WASHINGTON – Bureau of Ocean Energy Management, Regulation
and Enforcement (BOEMRE) Director Michael R. Bromwich delivered
remarks today at the Center for Strategic and International Studies
(CSIS) Energy and National Security Program.
Director Bromwich detailed the
reorganization of the former Minerals Management Service and the
creation of the Bureau of Ocean Energy Management and the Bureau of
Safety and Environmental Enforcement on October 1, 2011. Director
Bromwich discussed the tremendous work of the bureau to reform the
federal offshore energy regulatory structure while at the same time
continuing to fulfill its responsibility to oversee the safe and
environmentally responsible development of the nation’s offshore
energy resources.
Director Bromwich’s remarks, as
prepared for delivery, are below:
Good morning. Thank you for the
opportunity to speak to you today about our efforts over the past
fifteen months to design and implement our comprehensive overhaul of
the former Minerals Management Service (MMS).
This is my third appearance at Center
for Strategic & International Studies since President Obama and
Secretary Salazar asked me to lead the Bureau of Ocean Energy
Management, Regulation and Enforcement (BOEMRE) in June 2010. When
I was here the first time in January 2011, we discussed the
Presidential Commission’s report on the Deepwater Horizon explosion
and oil spill, which had just been released, and focused on the
important new safety requirements BOEMRE had developed and was
implementing. I also outlined in broad terms how we planned to
separate and clarify the agency’s multiple missions of energy
development, revenue management, and safety and environmental
enforcement.
When I was here in April, I addressed
the not-so narrow topic of the future of offshore oil and gas
development, but I also outlined what we were planning for the two
new agencies that were going to result from the reorganization – the
Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety
and Environmental Enforcement (BSEE). I also discussed the
regulatory reforms that we continued to implement, and our full
engagement with the international regulatory community.
Today, I am pleased to report to you
that we have accomplished what we set out to do. Seventeen days
from now, BOEMRE will cease to exist, and in its place, BOEM and
BSEE will open their doors. Together, they embody our collective
efforts to institutionalize a set of structural and substantive
reforms that will do several important things. They will greatly
enhance our nation’s ability to responsibly develop our offshore
energy resources and reduce our dependence on foreign sources, they
will improve the safety of operations, and they will provide greater
environmental protection. We have done all of this at the same time
as we have continued to move forward with our day-to-day operations.
We have undertaken more rigorous environmental reviews; we have
continued to approve plans and permits that comply with our new
safety and environmental requirements; and we are preparing right
now for an important, upcoming oil and gas lease sale. And this
does not even touch on the hard work we have done in promoting
offshore renewable energy development, which is an important story
we will leave largely for another day.
When the Government Accountability
Office placed the Department of the Interior on the 2011 High Risk
List with respect to oil and gas oversight, it stated that the
bureau must, “…meet its routine responsibilities to manage these
resources in the public interest, while managing a major
reorganization that has the potential to distract agency management
from other important tasks and put additional strain on Interior
staff. It must also do this in a constrained resource environment…”
Well, despite the concern of GAO and
many others, we have met this enormous challenge.
I am extremely proud of what we have
accomplished. I have been impressed each day by the dedication
demonstrated by BOEMRE employees. I am confident we have selected
the personnel and created the organizational structure that will
enable the nation to move forward with responsible domestic energy
exploration, development and production.
I. Regulatory Reform
The Deepwater Horizon explosion and
oil spill highlighted a number of problems and weaknesses in the way
that MMS had historically carried out its business. Those
weaknesses included the adequacy of the agency’s regulations,
especially as they related to offshore safety and environmental
protection. But they also included the excessively broad focus of
the agency that was charged with multiple important and complex
missions – and the enormous shortfall in resources that had
historically been made available to that agency.
In the immediate aftermath of the
spill, we found that existing regulations had not kept up with the
advancements in technology used in deepwater drilling. In response,
we quickly issued new, rigorous regulations that bolstered offshore
drilling safety, and we also ratcheted up our efforts to evaluate
and mitigate environmental risks. We introduced – for the first
time – performance-based standards similar to those used by
regulators in the North Sea, to make operators responsible for
identifying and minimizing the risks associated with drilling
operations. We did this through the development and implementation
of two new rules that raised standards for the oil and gas
industry’s operations on the Outer Continental Shelf (OCS).
Even before the various reports in
the Deepwater Horizon tragedy were completed, we knew that we needed
to address drilling safety issues. We did this last October through
our emergency Drilling Safety rule, which created tough new
standards for well design, casing and cementing – and well control
procedures and equipment, including blowout preventers. This rule
requires operators to have a professional engineer certify the
adequacy of the proposed drilling program. In addition, the new
Drilling Safety rule requires an engineer to certify that the
blowout preventer to be used in a drilling operation meets new
standards for testing, maintenance and performance.
The second rule was our Workplace
Safety rule. That rule requires operators to systematically
identify risks and establish barriers to those risks. It seeks to
reduce the human and organizational errors that cause many accidents
and oil spills. Under the rule (also known as the SEMS rule),
operators must develop a comprehensive safety and environmental
management program that identifies the potential hazards and
risk-reduction strategies for all phases of activity, from well
design and construction through the decommissioning of platforms.
Many companies had developed such SEMS systems on a voluntary basis
in the past, but many had not. Because the rule required
substantial work by many operators, we delayed enforcement of the
rule for a year. Starting in November, we will begin to enforce
compliance. Based on my discussions with our own personnel who have
been gearing up to ensure compliance with the SEMS rules, and my
meetings with individual operators, I am confident that the vast
majority of operators will be ready with their SEMS programs by that
date.
Today, we proposed a follow-up rule
that further advances the purposes of the SEMS rule. It addresses
additional safety concerns not covered by the original rule and
applies to all oil and natural gas activities and facilities on the
OCS. We first announced that this rule would be forthcoming at the
time we announced the original SEMS rule, so it comes as no surprise
to anyone. The proposed SEMS II rule includes procedures that
authorize any employee on a facility to cause the stoppage of work –
frequently called Stop Work Authority – in the face of an activity
or event that poses a threat to an individual, to property or to the
environment. The proposed rule also establishes requirements
relating to the clear delineation of who possesses ultimate
authority on each facility for operational safety; establishes
guidelines for reporting unsafe work conditions that give all
employees the right to report a possible safety or environmental
violation and to request a BOEMRE investigation of the facility; and
requires third-party, independent audits of operators SEMS
programs. We believe these are reasonable, appropriate, and logical
extensions of our original SEMS rule. We look forward to the
comments and suggestions of operators and other interested
stakeholders as this proposed rule moves through the rulemaking
process.
As you all know, we are in the final
stages of completing our own investigation into the Deepwater
Horizon tragedy. That report is the result of a collaborative
effort between BOEMRE and the Coast Guard. Following the issuance
of that report, which is imminent, we expect to make available for
pubic comment additional proposals that will further enhance
drilling safety and environmental protection. In order to ensure
that we incorporate the very best ideas and best practices of the
offshore industry and other interested stakeholders in offshore
exploration, development and production, we will proceed through a
notice and comment rulemaking process that will begin with an
Advance Notice of Proposed Rulemaking. It is our hope and
expectation that at the end of this process, we will develop
consensus proposals that will significantly enhance safety and
environmental protection. Again, this is not a new announcement.
We have been discussing our intention to further enhance offshore
safety regulation for the past year. We have waited this long
because we thought it was important to wait until we were in a
position to benefit from the insights and lessons learned from the
joint investigation.
On previous occasions, I have
mentioned other steps that we have taken to enhance offshore safety
and environmental protections. These include elaborating on
requirements that oil spill response plans include a well-specific
blowout and worst-case discharge scenario, and that operators
demonstrate that they have access to, and can deploy, subsea
containment resources that would be sufficient to promptly respond
to a deepwater blowout or other loss of well control.
These enhanced requirements are
substantial and necessary – and many of them were long overdue.
They have made the important enterprise of offshore exploration,
development and production safer and more environmentally
responsible than ever before. And the new regulations we are
proposing and will propose are limited and common-sense elaborations
of the rules we have already put in place. We believe they will
have the support of the operator community, which shares our
interest in promoting safe and responsible operations.
In addition, we have developed an
entirely new mechanism that will assist us in making sure that our
efforts to enhance safety will not languish in the future. In
January, Secretary Salazar established the Ocean Energy Safety
Advisory Committee to advise us on a broad range of issues related
to offshore energy safety. I have met with the committee, led by
former Sandia Labs Director Tom Hunter, on two occasions and am very
pleased and impressed with their commitment to helping us address
these challenges. The Advisory Committee will assist BSEE, and we
expect to receive the first set of recommendations from its
subcommittees by the end of this year.
II. Restructuring the Way We Do
Business
One of the fundamental weaknesses
highlighted by the Deepwater Horizon tragedy was the fact that the
agency charged with enforcing federal regulations had three
competing missions – revenue generation, responsible energy
development, and safety and environmental enforcement. Through no
fault of the agency’s employees, the agency lacked the necessary
resources, the leadership and vision to effectively fulfill all of
its responsibilities. For decades and across Administrations, the
prevailing focus was on revenue generation and energy development.
The inspector workforce fell further and further behind as it tried
to keep pace with the rapid growth in the number of facilities they
were responsible for overseeing. In addition, industry’s advances
in technology significantly outpaced the agency and its development
of regulations. It became clear that the agency had simply been
asked to do too much with too little, and that there was inherent
tension among the multiple missions it had been asked to fulfill.
The President’s Commission found that
the top priority of all of the prior MMS directors it interviewed
was the generation of maximum revenues for the federal treasury
through royalty and rental collections. It was inevitable that
setting this as the top priority would have an effect on the ability
to arrive at responsible and balanced decisions concerning the
development of our offshore resources. It was also inevitable that
the priority assigned to revenue collection would have an even
greater adverse impact on the agency’s ability to ensure that the
appropriate rules were in place, and to aggressively enforce the
rules that were in place. Therefore, it became apparent that those
three missions had to be separated and made independent of each
other to ensure that all three missions had appropriate focus and
adequate resources.
On May 19, 2010, a month before I
arrived, Secretary Salazar signed a Secretarial Order announcing his
intention to separate the former MMS into three separate
organizations with the goal of separating these functions and
enhancing the ability of our personnel to accomplish these important
but quite different missions. My job, then, was to lead this
reorganization and make real the creation of three new entities,
each with specific and independent missions, and each with the
authority and resources necessary to effectively carry them out.
Last summer, we began a thorough
review of all of our programs and processes. We took a very close
look at the organizational structure and culture of the former MMS.
We took prompt action to address conflicts of interest, real and
perceived, by implementing a strict recusal policy and setting up an
internal Investigation and Review Unit. We reinvigorated ethics
training and made that training specific to the situations our
employees encounter in their day-to-day jobs, and issued updated and
more stringent guidance on the acceptance of gifts.
We also addressed the lack of
resources that had plagued the agency for decades. The President
submitted a substantial supplemental budget request in the summer of
2010, which was partially funded, and that enabled us to begin
hiring additional staff. We launched an aggressive nationwide
recruitment campaign, and I personally visited college campuses
across the country to talk about the rewarding and challenging
careers awaiting engineers and scientists in BOEMRE. We have since
hired 122 new employees across various disciplines and specialties,
but we need many more.
The creation of BOEM and BSEE,
initially announced more than a year ago, separates resource
management from safety and environmental oversight. This allows our
permitting engineers and inspectors, who are central to overseeing
safe offshore operations, greater independence, more budgetary
autonomy, and clearer focus. Our goal has been to create a
tough-minded, but fair regulator that can effectively keep pace with
the risks of offshore drilling and will promote the development of
safety cultures in offshore operations.
In BOEM, we have created a structure
that ensures that sound environmental reviews are conducted and that
the potential environmental effects of proposed operations are given
appropriate weight during decision-making related to resource
management. This is to ensure that leasing and plan approval
activities are properly balanced. These processes must be rigorous
and efficient so that operations can go forward in a timely way
based on a thorough understanding of their potential environmental
impacts and the confidence that appropriate mitigation against those
potential environmental effects are in place.
We have renewed and reaffirmed our
commitment to develop thorough, credible and unfiltered scientific
data to serve as the basis for our resource development decisions.
To that end, we have established the position of a Chief
Environmental Officer in BOEM. This person will be empowered, at
the national level, to make decisions and final recommendations when
leasing and environmental program directors cannot reach agreement.
This individual will also be a major participant in setting the
scientific agenda for the nation’s oceans. I have selected this
first-ever Chief Environmental Officer and hope to be able to
announce it in the very near future.
BOEMRE and its predecessor agencies
have long maintained a robust scientific studies program. However,
in the past, there was little effort to disseminate and promote the
important work that was being performed. Further, there was
insufficient attention paid to the program by senior leadership –
again because of the emphasis given to revenue generation. We are
refocusing our efforts to showcase the world-class research being
conducted and directed by our scientists, and we are taking
institutional steps to ensure that their research is given
appropriate weight in the decision-making process.
To ensure adequate environmental
reviews, we have launched a review of our historical policies on the
use of Categorical Exclusions, as suggested by the Council on
Environmental Quality. During the pendency of that review, we have
been conducting site-specific environmental reviews for Exploration
Plans submitted by operators. And even though we are doing more
rigorous and more extensive environmental reviews, so far we have
managed to make decisions on those plans within the 30-day timeframe
set by Congress.
In shaping BSEE, we took a broad look
at the best practices of domestic and international regulators to
create strong enforcement mechanisms across the bureau. We have
established for the first time an Environmental Enforcement
Division. This Division will provide sustained regulatory oversight
that is focused on compliance by operators with all applicable
environmental regulations, as well as making sure that operators
keep the promises they have made at the time they obtain their
leases, submit their plans, and apply for their permits. Our new
Chief of this Division, recruited from outside the agency, started
work yesterday.
In BSEE, we have already established
multi-person inspection teams that are being equipped with better
and more advanced tools than ever more to do their jobs. Our new
inspections process and protocols will allow teams to inspect
multiple operations simultaneously and will enhance the quality of
our inspections, especially of larger facilities.
We have established a National
Training Center in BSEE whose initial focus will be on keeping our
experienced inspectors current on new technologies and processes,
and ensuring that our new inspectors are given the proper foundation
for carrying out their duties rigorously and effectively. We have
already run two sets of our newest inspectors through the initial
inspector training curriculum. I have selected the first Director
of our National Training Center from outside the agency and he too
came on board yesterday.
As I have discussed on several
occasions over the past several months, we will be extending our
regulatory reach to include contractors as well as operators. We
have not done so in the past, but we clearly have the legal
authority to exercise such regulatory authority. And there is no
compelling reason in law or logic not to do so. In my judgment, it
is simply inappropriate to voluntarily limit our authority to
operators if in fact we have authority that reaches more broadly to
the activities of all entities involved in developing offshore
leases. I am convinced that we can fully preserve the principle of
holding operators fully responsible, and in most cases, solely
responsible, without sacrificing the ability to pursue regulatory
actions against contractors for serious violations. We will be
careful and measured in applying our regulatory authority to
contractors.
As we considered changes in how we do
business, we worked to strengthen our collaboration with our
international counterparts. Offshore regulators and senior policy
officials have much to learn from regulators in other countries to
improve safety and environmental protection. In this spirit, last
April, the Department of the Interior hosted ministers and senior
energy officials from twelve countries and the European Union for
the Ministerial Forum on Offshore Drilling Containment. This
historic meeting led to fruitful dialogue about best practices and
how to develop cutting-edge, effective safety and containment
technologies, and we are currently working with these other nations
to make this forum permanent. We are also continuing to work
through existing channels for international cooperation and the
sharing of best practices across regulatory regimes such as the
International Regulators Forum, an organization BOEMRE helped to
found in 1994 and in which BSEE will continue to play an active
role.
Throughout this process, we have been
open and transparent with our intentions and our plans for
regulatory reform and the reorganization of the former MMS. Our
goal has been to do everything possible not to disturb the
day-to-day operations of the bureau. We have worked very hard to
ensure those in industry and all interested parties are aware of the
changes being considered and made, that they have a voice in the
discussion, and that the reforms we have implemented make sense and
are appropriate to the goals we wish to achieve.
III. Our Work Goes On
In the midst of all this activity, we
have continued to move forward with the full range of our important
day to day activities – conducting environmental studies, performing
environmental analyses, reviewing and approving plans, reviewing and
approving permits, and conducting inspections. This has taken
dedication and commitment, and our personnel have shown this to a
truly impressive degree.
More specifically, we are reviewing
and approving exploration and development plans and applications for
permits to drill. We are conducting environmental reviews and
making preparations for a Western Gulf of Mexico lease sale this
December, and for a consolidated Central Gulf sale late next
spring. We continue to review proposals to drill in the Arctic next
summer. And we are aggressively working toward offshore wind energy
development in the Atlantic and working with states on the Pacific
Coast toward their renewable energy goals. The amount of work being
accomplished every day by this relatively small bureau is quite
remarkable.
We have made special efforts to
ensure that offshore operators understand the new standards and that
they have the tools and information needed to fully comply with
those requirements. Our staff and I have participated in scores of
meetings with individual operators, groups of operators, and trade
associations to explain the requirements, answer questions, and
address concerns. And, as we approach October 1, we are focusing
substantial energy on making sure that those in industry, the
conservation community, and our sister federal agencies understand
the coming changes so there will be no interruptions in our
operations.
Not everyone, however, is willing to
see the facts as they are, nor to appreciate the level of effort of
our personnel, nor to recognize that additional requirements
designed to enhance the safety of offshore operations and protection
of offshore operations mean that plan and permit approvals do not
proceed at the same pace as they did in the past. I continue to be
disappointed to see politically-motivated, erroneous reports and
commentaries, sponsored by various industry associations and groups,
criticizing the bureau for allegedly “slow-walking” permits and
plans. That is a phrase we see repeated over and over again, and it
is simply not true.
One trade association representative
recently said, “While the industry has met every requirement for
resuming operations in the Gulf, permits and leases have been issued
too slowly, which is costing jobs, hurting the Gulf Coast, the
national economy and reducing energy security.” Another described
the rate of permitting in this way: “It’s like leasing an apartment
from the government for 20 million dollars and the government
refuses to give you the key.” These groups continue to distort the
facts and in some cases, use undisclosed or incomprehensible
methodologies to suggest that the slower pace of plan and permit
approval is part of a strategy to slow down offshore energy instead
of the predictable product of more searching and rigorous reviews
and analyses conducted by a small staff.
Last week, in a publicly-released
letter to President Obama, twenty representatives from various
industry associations again used incorrect and misleading statistics
to make a case for returning permitting levels to a pace
commensurate with the industry’s ability to invest. In the letter,
the groups stated, “…some in your administration dispute the actual
rate of permitting in the Gulf of Mexico…we would prefer less
dispute on numbers and more action on permits.”
I fully understand why these groups
are becoming increasingly uncomfortable about discussing our plan
approval and permit approval numbers – it is because we have
demonstrated that they are using flawed and frequently unstated
methodologies – and numbers that are created out of thin air.
As of the close of business
yesterday, September 12, the real statistics are as follows:
-
In shallow water: To date, we
have issued 74 new shallow water well permits since the
implementation of new safety and environmental standards on June
8, 2010. Just 13 of these permits are currently pending; 10
have been returned to the operator for more information.
-
In deepwater: Since an applicant
first successfully demonstrated containment capabilities in
mid-February, we have approved 129 permits for 40 unique wells
requiring subsea containment, with 12 permits pending, and 23
permits returned to the operator with requests for additional
information, particularly information regarding containment.
-
Also in deepwater: We have
approved 45 permits, with 1 permit pending, and 1 permit
returned to the operator with requests for additional
information for activities that include water injection wells
and procedures using surface blowout preventers.
The simple fact is, we are reviewing
and approving permits as expeditiously as we can given our current
resources. Another fact that should not be overlooked is our
employees have put in more than 1,350 hours of overtime reviewing
plans and permits alone in the past 6 months. In light of that, it
is unfair and inappropriate to accuse this bureau of “slow-walking”
anything. I was pleased to see that, for the first time last week,
the CEO of one of the major oil and gas companies said he thought
the claim that we have been slow-walking permits was false. It was
about time that we heard an oil company executive say publicly what
many had been saying privately to us for many months. We understand
that operators would like the permitting process to move more
quickly. But that’s very different from suggesting that there have
been concerted efforts to slow things down.
And the truth is that industry needs
to step up its game if it is genuinely interested in a more
efficient process. Instead of commissioning studies that don’t
bother to understand how the process actually works, they would be
better served by devoting more resources to improving the quality of
their applications. The fact is that flawed and incomplete
applications are a significant source of delays in the process.
Operators need to stop turning in applications with missing or
incomplete information, or that completely lack information about
subsea containment. We are still receiving applications that use
cookie-cutter templates. For example, we have had cases in which we
received an application from an operator that detail their plans to
drill Well A. The operator then submitted another application to
drill Well B, except that the application included the
specifications for Well A – they simply cut-and-pasted the
information. This is unacceptable, and we will obviously not
approve an application with such blatant errors. We are not talking
about simple typographical errors. We are talking about
applications with completely incorrect data, or that are missing key
data, or that contain completely inconsistent data. We see this day
in and day out – and then we face criticism for the high rate of
drilling applications that are returned to operators.
Despite much unfair, inaccurate and
misplaced criticism, we have been doing our best to assist industry,
consulting with operators individually and in groups, and holding
workshops to clarify what may remain unclear or confusing to
operators. For example, in March 2011, we held a day-long workshop
on Exploration and Development Plans, led by our personnel who are
actively involved in reviewing and analyzing plans. More than 200
industry representatives attended the workshop, which focused on the
many aspects of plan submissions. Much of the discussion from the
workshop was subsequently incorporated into a web page focusing on
“Submitting Complete Exploration and Development Plans.” Thanks to
the input we received from that workshop, as well as other meetings
and conversations, the page includes helpful information such as: a
checklist of required information for plans, frequently asked
questions, and a guidance document recently added that is entitled
“Top Ways Operators Can Submit Stronger Plan Applications.”
We have made similar efforts
regarding drilling permits. We have met regularly with oil and gas
operators, both individually and in groups, to discuss their
concerns and respond to requests for additional information and
additional clarity regarding our permit review process. We have
created a completeness checklist for our drilling engineers to use
in ensuring a more efficient analysis and to aid in setting
priorities for reviews, and we have shared the checklist with
operators. We have developed an online tracking system that enables
operators to track the status of their individual permits as they
move through the review and approval process. Late last month, the
Gulf of Mexico Regional staff presented a full-day Permitting
Workshop for approximately 200 industry representatives. The
workshop included a discussion of common errors and omissions found
in the submission of permit applications, and overviews and updates
on sub-sea containment and the software screening tool we use to
evaluate permit applications. A panel of operators discussed proven
methods and strategies for the completion of fully compliant permit
applications.
We will continue to engage industry
to ensure they understand the requirements. Many operators have
demonstrated that they do, and that they are able to comply with the
requirements. Their permit applications are being approved. The
two ingredients we need to speed up the review and approval of
permits are applications that contain all the elements of a fully
compliant application, and additional agency resources. The
drumbeat of criticism that urges us to approve plans and issue
permits more rapidly will not cause us to cut corners or compromise
safety to speed the process.
IV.Conclusion
All of us involved in creating our
two new agencies – BOEM and BSEE – have worked to create the
structure, select the leadership, and work to obtain the resources
needed to fulfill our responsibilities to the American public. We
need our people to approach environmental reviews and regulatory
enforcement in a way that is tough, but fair, which places safety
above all else, which promotes the responsible development of our
nation’s energy resources, and ensures all reasonable steps are
taken to protect the fragile coastal and marine environment.
We need everyone to embrace those
goals and to recognize their importance. We cannot afford to have
critics take liberties with the facts and act as though the only
things that matter are the rapid approval of plans and permits,
whether or not they comply with the standards and requirements that
help ensure safety and environmental protection. Some may have
forgotten Deepwater Horizon or wish to pretend it either did not
happen or that it was a singular event that should not have a
lasting impact on the way we do business. We recognize it as a
seminal event in the history of offshore drilling. It has driven
much of what we have done over the past fifteen months, and much of
the agenda we will be pursuing in BOEM and BSEE as we move forward.
It has been a difficult and
challenging year-and-a-half, for everyone involved with offshore
energy development in the United States. As I look back, I am
extremely proud of what we have accomplished, and I am very
optimistic about what lies ahead. I firmly believe we can move
forward, safely and responsibly, and continue to work toward energy
independence for our nation.
Thank you for your time and your
attention. I am happy to take any questions you might have in the
time we have remaining.
Contact: BOEMRE
Public Affairs