New Offshore Enforcement Bureau Now on the Beat
Continuing the reorganization of the Department of the Interior in the wake of the Gulf oil spill, Interior Secretary Salazar has formed a new offshore enforcement agency, the Bureau of Safety and Environmental Enforcement ("BSEE"). The new bureau began operations on October 1, 2011 and will involve more than 1,000 employees moving from the Bureau of Ocean Energy Management, Regulation and Enforcement ("BOEMRE") into the new enforcement agency. BSEE and its new sister agency, the Bureau of Ocean Energy Management ("BOEM"), are both formed out of BOEMRE, which replaced the Minerals Management Service following the Gulf oil spill.
The severance of BSEE and BOEM separates resource management from safety and environmental enforcement activities. This will allow inspectors of offshore facilities greater independence, more budgetary autonomy and clearer mission focus. The establishment of BSEE is intended to create an inspection force that can effectively evaluate and keep pace with the risks of offshore drilling and will promote the development of safety cultures in offshore operators. This greater emphasis on enforcement could likely lead to an increase in the issuance of Incidents of Non-Compliance to offshore operators.
In contrast, BOEM will be responsible for managing development of the nation’s offshore resources in an environmentally and economically responsible way. Functions will include leasing, 5-Year Leasing Plan administration, environmental studies, National Environmental Policy Act analysis, resource evaluations, economic analysis and the renewable energy program.
The reorganization responds to recommendations from the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling that investigated the causes of the accident leading to the spill. The commission recommended separating the offshore leasing function from the offshore inspection function.
There are areas of significant concern to operators and service companies that arise from the formation of BSEE. Foremost are new regulations and enforcement strategies relating to enhanced drilling safety. For example:
- Operators must demonstrate that they are prepared to deal with the potential for a blowout and worst case discharge per Notice to Lessees ("NTL")-06.
- Permit applications for drilling projects must meet new standards for well design, casing, and cementing and be independently certified by a professional engineer per the new Drilling Safety Rule.
- New guidance, through NTL-10, requires a corporate compliance statement and review of subsea blowout containment resources for deepwater drilling, a key lesson of the Deepwater Horizon oil spill.
- The number and intensity of BSEE inspections will likely increase. BSEE will use multiple-person inspection teams for offshore oil and gas inspections. The new practice will allow teams to inspect multiple operations simultaneously and thoroughly and enhance the quality of inspections on larger facilities.
- Beyond the increased emphasis on drilling safety, for all offshore facilities BSEE will have authority to issue Incidents of Non-Compliance that could lead to civil penalties and, in the worst case, leasing disbarment.
- BSEE's duties will include the issuance of new safety and environmental requirements.
- BSEE will likely charge fees for its inspections, which may be unlawful in the absence of a regulation authorizing such fees.
BSEE's formation is exacerbated by two other regulatory developments. One is the increasing practice of promulgating substantive regulations for the Gulf of Mexico by the use of NTLs that avoid public notice and comment and that are inherently imprecise and vague. The NTL process is expressly intended (under 30 C.F.R. § 250.103) for providing clarification of existing regulations not as a unilateral tool for establishing substantive policy or regulation. The other development is the Department of the Interior's self-announced expansion of direct regulatory authority over service companies.
Perkins Coie is currently holding a series of Round Table meetings with lessees, operators and service companies who are interested in more closely monitoring these developments. Those who want more information on the formation of BSEE or want to participate in the Round Tables should contact
© 2011 Perkins Coie LLP