Interior report calls for tougher offshore regulation

An Interior Department panel formed after the BP oil spill began has provided agency officials with a report that highlights gaps in oversight of offshore oil-and-gas drilling and suggests scores of reforms.

Interior officials say they have already been implementing changes in past months that reflect the report’s suggestions. The Obama administration is also preparing to seek additional resources from Congress.

Interior on Wednesday released the recommendations of the Outer Continental Shelf Safety Oversight Board, which is led by Interior Assistant Secretary Wilma Lewis, acting Inspector General Mary Kendall and Assistant Secretary for Policy, Management and Budget Rhea Suh.

“It is honest, it doesn’t sugarcoat problems, and it provides a blueprint for solving them,” Interior Secretary Ken Salazar told reporters on a conference call.

Salazar told reporters that Interior is working on a budget amendment that will seek roughly $100 million in new funding for additional inspections and training.

The 39-page report (available on Interior’s website) says interviews with personnel from Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement — the successor agency to the troubled and now-defunct Minerals Management Service — provided “ample information about the weaknesses of the program and operations.”

“BOEMRE must pursue, and industry must engage in, a new culture of safety in which protecting human life and preventing environmental disasters are the highest priority, with the goal of making leasing and production safer and more sustainable,” the report finds, offering a range of suggestions to bolster permitting, inspections and environmental safeguards.

The report finds that regulators’ resources have not kept pace with the growth of offshore development, creating a “high-pressure” work environment in which it is difficult to adequately review industry plans.

Other problems identified in the report include lack of coordination among offices; communication woes such as the inability of “on call” engineers to access a key permit database remotely; and many others.

For instance, it notes that the ocean energy agency lacks a “formal, bureau-wide compilation of rules, regulations, policies or practices pertinent to inspections, nor does it have a comprehensive handbook addressing inspector roles and responsibilities.”

“For example, although the informally acknowledged policy of GOM [the Gulf of Mexico region] is to inspect drill rigs once a month, none of those interviewed could provide a written directive to support this policy,” states the report. Elsewhere, the report notes that industry “often exerted pressure on [inspectors] to minimize reporting violations during inspections.”

The dozens of recommendations range from bolstering unannounced rig inspections, which are currently rare, and other improvements to inspection practices, such as better training. Others include new sanctions for repeated industry violations, a new evaluation of penalty rates and many others aimed at boosting safety and environmental regulation.

Michael Bromwich, who directs BOEMRE, told reporters that the offshore agency is already implementing the bulk of the recommendations, noting they reflect the overhauling of offshore regulation that has been under way for months in the wake of the Deepwater Horizon disaster.

A days-old BOEMRE “implementation plan” made public Wednesday spells out various steps that have been taken or are under way, such as creation of the agency’s Investigations and Review Unit. Salazar has also separated offshore revenue collections from environmental enforcement to end what Salazar called inherently conflicting missions.

Bromwich also noted on the conference call that by month’s end the agency plans to issue an “interim final rule” that spells out additional drilling-safety mandates, building on administrative notices issues to offshore operators in June that contained new requirements for areas such as blowout prevention testing and certification.

Bromwich, asked whether the various reforms will slow offshore development, replied, “Whether those cause a slowdown or not, that is not something we have any control over.”