Bromwich pledges careful, measured enforcement for contractors

Interim US Bureau of Safety and Environmental Enforcement Director Michael R. Bromwich said enforcement will be careful and measured as he defended extending the US Department of the Interior’s offshore oil and gas regulatory reach to drilling contractors and service and supply companies.

“We did not take this step lightly, nor did we take it before fully satisfying ourselves that we had the legal authority to do so,” he said in a keynote address at the International Association of Drilling Contractors’ 2011 annual meeting in Austin. “But once we concluded that we did, there was no good reason not to do so.”

Bromwich said the fact that the US Minerals Management Service, BSEE’s predecessor agency, unilaterally decided to exempt nonoperators “was a misguided act of administrative grace rather than a result dictated by law or good policy. The fact that we had followed a bad practice was not a sufficient reason to continue it.”

He said he considered it inappropriate for BSEE to limit its regulatory reach to offshore well operators when it had the authority to enforce rules for all entities involved in oil and gas exploration and production on the US Outer Continental Shelf, especially after the 2010 Macondo deepwater well accident and crude oil spill.

“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,” Bromwich maintained.

Regulators of other US industries and of other businesses operating offshore have found it bizarre that DOI historically limited its offshore regulatory reach to well operators, he told his IADC audience. “As I have said many times, we will be careful and measured in applying our regulatory authority to contractors, but we will not hesitate when we determine it is appropriate and necessary,” he said.

Bromwich said it is also time to make the process by which BSEE imposes civil penalties more rational and efficient. “Under our current process, it can take up to a year to determine whether civil penalties should be imposed after the issuance of incidents of noncompliance,” he said. “That is entirely and unacceptably too long, and I have directed my staff to find a way to significantly reduce that time.”

He also noted that he has repeatedly said that maximum fines need to be increased. “I do not believe that a top fine of $40,000/day/incident, is any type of meaningful deterrent in an industry in which operators pay between $0.5-1 million/day for a rig,” Bromwich indicated. “We will be working through the legislative process to remedy that.”

Contact Nick Snow at nicks@pennwell.com.