Bromwich concerned budget cuts may reverse hard-won reforms

Michael R. Bromwich prepares to finish 17 months at the US Department of the Interior satisfied that necessary reforms were beginning to be made at a troubled agency there, but concerned that their permanence may be threatened by funding cuts, he said 2 days before stepping down as head of what formerly was the US Minerals Management Service.

“I never thought I’d do anything like this. It’s been the biggest challenge of my career,” he told reporters during a Nov. 28 briefing at Interior’s headquarters. “It’s a huge accomplishment that’s a tribute to the hard-working and dedicated employees of an agency that was vilified as immoral and corrupt, particularly since we began reorganizing it in a crisis environment.”

But Bromwich also expressed deep concern that members of Congress and the White House might slash DOI’s offshore resources management budget to reduce the federal budget deficit. “People have short memories,” he observed. “We’ve tried to institutionalize these reforms, but there are people who believe that this spill was an anomaly and the changes are too onerous. This agency fought a losing battle for resources over 28 years, and I think these budget gains need to be sustained. I’m worried that the larger budget climate, particularly after the congressional super-committee failed to reach an agreement, may undermine the progress we’ve made.”

He said the change he made in MMS’s relationship with the industry it was supposed to regulate to one where “we are expecting more and yielding less” was necessary to implement badly needed safety and environmental reforms. “The amount I knew about offshore oil and gas issues you could fit in a thimble,” Bromwich said. Despite a steep learning curve, he said he quickly recognized that stronger safety rules would be needed. “These couldn’t just be paper standards,” he maintained. “Fairly quickly, we set the tone with industry that this was not the same agency it had been dealing with.”

Came at critical time

Bromwich became director of the US Bureau of Ocean Energy Management, Regulation, and Enforcement—the former MMS—on June 21, 2010, as federal, state, local and oil and gas industry responders tried to contain a massive oil spill from BP PLC’s deepwater Macondo well. He arrived after US Interior Sec. Ken Salazar announced he was moving MMS’s royalty and revenue responsibilities to a new Office of Natural Resources Revenue under Asst. Interior Sec. for Policy, Management, and Budget Rhea Suh.

The move ended one of MMS’s mission conflicts, but Salazar and Bromwich concluded that BOEMRE itself would need to be divided to separate leasing and resource management from enforcement of safety and environmental regulations. The separation occurred on Oct. 1 with the creation of the Bureau of Ocean Energy Management, with Tommy L. Beaudreau as director, and the Bureau of Safety and Environmental Enforcement, which Bromwich agreed to lead on an interim basis until a permanent director could take over.

US Coast Guard Rear Adm. James A. Watson IV, who coordinated the joint response to the spill, will take BSEE’s helm on Dec. 1, and Bromwich will stay on for 30 days as a counselor to Salazar, to assist in the transition, and to attend to other matters including continuing to build an international offshore regulatory alliance. “I can’t count the number of foreign regulators who have come to us asking what we have learned and how to implement it,” he said.

He said that the next critical phase for BSEE will be reviewing safety and environmental management systems in December which offshore operators and contractors are supposed to have developed and implemented. “We will initially put our composites of our most common findings,” he said. “Ultimately, we will want to specifically identify violators, but in the short term publicly identifying the most prevalent problems while providing immediate feedback to specific operators is the best approach.”

Shuns revolving door

After Dec. 31, Bromwich said he would like to continue working on offshore resource issues, but not as a representative of any group having dealings with BOEM or BSEE. “There’s been too much of a revolving door with former directors returning in new capacities with outside organizations. I refuse to do this,” he declared, adding that he might join a law firm or start one of his own.

Bromwich said that he thought his relationships with individual oil and gas producers were better than those he had with trade associations which represented them and some members of Congress. “The operators knew who they were dealing with from the beginning,” he said. “I wasn’t a member of their team…I didn’t have any conceptions, let alone preconceptions, of the issues. I made the industry and environmental groups unhappy, but I called matters as I saw them.”

He suggested that his lack of oil and gas experience may have worked to his advantage by making him question long-standing practices, such as MMS’s limiting its regulation and penalties to offshore well operators and letting producers sort out penalties with drilling contractors and service and supply companies. Referring to his effort to begin citing other well drilling participants, Bromwich said: “I didn’t believe we should give across-the-board immunity to a contractor who had committed a major violation.”

He said that he was more successful recruiting new inspectors and environmental engineers to come work at BOEM and BSEE than he was at hiring senior petroleum engineers. “We need to pay them more, and recruit them more,” he said. “I’ve heard from some industry executives that they’re having trouble too, and it’s more urgent for them because they need to design the kind of wells that meet our new requirements.”

Retraining engineers from other specialties may be one way to address this problem, and Bromwich noted that the Colorado School of Mines has such a program under way. “Every option needs to be explored so neither industry nor the agencies that regulate it experience a bottleneck,” he said.

Contact Nick Snow at nicks@pennwell.com.

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