Offshore Safety in the Wake of the Macondo Disaster: The Role of the Regulator

I. INTRODUCTION Part (1) II. THREE CHANGES TO BUSINESS AS USUAL Part One III. THE ROLE OF THE REGULATOR: BEST PRACTICES A. Introduction: the Pre-Macondo Regulator B. The Model of a Good Regulator. C. The U.S. Safety Regime Today IV. WHERE THE GAPS ARE: MEET OESAC. V. CONCLUSIONS, RECOMMENDATIONS AND FINAL OBSERVATIONS. A. Conclusion: BSEE Is Not (Yet) a Nimble and Competent Regulator B. The "New Governance": Regulation by Third-Party Certification C. Recommendations to Help BSEE Become a Competent and Nimble Regulator. D. Final Observations APPENDIX A III. THE ROLE OF THE REGULATOR: BEST PRACTICES A. Introduction: the Pre-Macondo Regulator "[The Macondo incident] challenged 40 years of generally accepted belief that offshore operations could occur safely under existing regulation and oversight." --Mary Kendall Acting Inspector General, Department of Interior (2) From 2004 to 2009, fatalities in offshore oil and gas operations in U.S. waters were more than four times higher per person-hours worked than in European waters. (3) After citing this data, the National Commission Report on the BP-Deepwater Horizon oil spill noted that differing regulatory systems seemed most likely to explain the gap. (4) Part One of this Article discussed how a mandatory safety and environmental management system (SEMS) for regulating offshore operations appeared in the Gulf of Mexico in the wake of the Macondo disaster. This Part Two of the Article addresses the role of the regulator in this new regime. How does the government safety agency fit into the newly adopted SEMS regime which is to mimic many of the principles of the Safety Case regimes used in the North Sea? The purpose of both systems is to hold individual companies accountable for identifying and minimizing all major safety hazards in order to maintain a safe workplace. How does the regulator enforce operators' compliance with required SEMS programs and with other rules governing offshore safety equipment and processes? Part One concluded with Professor Hopkins' assessment that serious weaknesses still exist in the U.S. regime. This Part Two takes up his assertion and provides a detailed analysis of the current state of offshore safety in the Gulf of Mexico and a road map to improvements needed. Several reports on the Macondo disaster have pointed to "government failure" as an important contributing cause. The National DWH Commission Report, for one, recited the same failures of the U.S. regulatory system that had contributed to the Exxon Valdez spill twenty years earlier: An under-resourced regulator, subject to the political winds of Congressional and Executive funding and oversight, could not prevail against a pro-industry ideology that treated additional regulation as a nuisance, especially when no large oil spills had occurred since tanker shipments had started moving Alaskan crude to market. (5) The National DWH Commission Report presents a doleful history of the impediments to better offshore safety regulation over a twenty-year period before Macondo. (6) From 1989 on, the MMS took fitful steps to strengthen its inspection processes and to move to a limited adoption of some elements of a SEMS regime, but the agency's efforts were "repeatedly revisited, refined, delayed, and blocked alternatively by industry or skeptical political appointees." (7) Just as deepwater drilling began to surge in the 1990s, the MMS budget went into a steep decline. (8) Training of MMS inspectors was nothing short of "abysmal," (9) and MMS personnel reviewing applications to drill were not competent to assess safety-critical technology or procedures. (10) In short, MMS personnel were not professionally capable of either regulating or enforcing safety in offshore waters.. To its credit, the MMS realized two decades before the Macondo blowout that it had a significant problem enforcing safety offshore and asked the National Research Council's Marine Board to assess how the MMS could be more effective. …