Interior weighs expansion of offshore rules to contractors

The Interior Department is probing whether its regulation of offshore drilling should extend beyond oil-and-gas companies to reach contractors including rig owners, a top official said.

The move would represent a major shift in drilling oversight, and it would come after Interior has already toughened rules for oil-and-gas companies in the wake of the BP oil spill.

Michael Bromwich, the department’s top offshore regulator, told reporters Tuesday the he’s concerned the department’s rules may be “artificially limited” to the energy companies that seek drilling permits and file exploration plans.

“Our regulations clearly, now, reach to operators and not to the various contractors and subcontractors that work with the operators. That dramatically limits the scope of our oversight in a way that makes me question whether there is a different and better way to do business,” said Bromwich, who directs Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement.

Such an expansion would allow closer regulation of companies like Transocean Ltd., which owned the Deepwater Horizon rig that BP had contracted to drill its ill-fated Macondo well that blew out in the Gulf of Mexico last year.

“Among the many, many things we are reviewing is whether our regulations could or should be extended to cover not only operators directly, but other entities like Transocean that supply the rigs or supply the services to the rigs,” Bromwich said.
 
Bromwich said information he has received thus far from the agency’s regulators and attorneys suggests that the current authority is not able to extend that far, and hence congressional action may be needed to implement such a step.

But he stressed the question remains under review, noting Congress “may” be needed if Interior decides rules that capture contractors are needed.

Bromwich and Interior Secretary Ken Salazar spoke to reporters at Interior headquarters ahead of the upcoming one-year anniversary of the start of the BP oil spill. Salazar touted what the drilling reforms that he said is allowing development to proceed more safely.

"The Gulf of Mexico remains an incredibly important energy resource for our nation, and we are moving forward with all of the power we have within Interior and the government to make sure the president's policy of safe oil-and-gas production is pursued and a goal which we will achieve," Salazar said.

But many Republicans allege the department is moving too slowly in the issuance of offshore drilling permits and making too few areas available for leasing.

This post was updated at 5:28 p.m. and 8:30 p.m.