1 Before and After Macondo: Offshore Safety and Environmental Regulation in Historical Context Tyler Priest C.T. Bauer College of Business University of Houston

The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling 2

A Competent and Nimble Regulator “The industry needs a robust, expertly staffed, and well-funded regulator that can keep pace with and augment industry's technical expertise. A competent and nimble regulator will be able to establish and enforce the rules of the road to assure safety without stifling innovation and commercial success.” Testimony of Marvin Odum, President, Shell Oil Company, and Upstream Americas Director, Royal Dutch Shell, before National Commission, November 9,

Safety and Environmental Protection Inseparable concepts – especially offshore Occupational vs. Process Safety Management Prescriptive vs. Performance-Based, or Risk- Based Regulation Historical Background on Safety and Environmental Management Systems (SEMS) rule 4

Major Offshore Accidents, 1980s 5

South Pass Block 60 explosion, Louisiana (1989) Report by National Research Council Marine Board of the National Academy of Sciences, (1990)

SEMP to SEMS OSHA PSM Rule – did not apply to OCS Safety and Environmental Management Program proposed by MMS in 1991 API RP 75 – Recommended Practice for Development of a Safety and Environmental Program for Outer Continental Shelf (OCS) Operations and Facilities MMS decision in 1994 to make SEMP a “voluntary” standard Proposed “SEMS” (Safety and Environmental Management Systems) rule of 2006 – included only 4 of 12 elements of API RP 75 7

MMS Resource Constraints 8 MMS InspectionsOCS Oil Production and MMS Budget

“Streamlined” Regulatory Apparatus at MMS Inspections – Plummeting number of unannounced inspections – MOU with USCG (2002) Training – Reduced MMS requirements Reporting – Incident reporting requirements lagged by international standards Technical Cooperation – Disappearance of MMS from industry technical literature 9

New SEMS - Post-Macondo Transformation of API RP 75 from voluntary to required standard, with added elements. Applicable to all operations and to all operators. Not required of contractors, but must have documented agreement with operator. Addresses both occupational and process safety. Must be in place by November 15,

SEMS – Basic Elements 1. General provisions 2. Safety and Environmental Information 3. Hazards Analysis 4. Management of Change 5. Operating Procedures 6. Safe Work Practices 7. Training 8. Mechanical Integrity 9. Pre-start up Review 10. Emergency Response and Control 11. Investigation of Incidents 12. Audits 13. Records and documentation 11

SEMS - Issues Implementation – interpreting the rules Costs of compliance – differential impact on international and domestic operators Enforcement – jurisdictional overlaps and conflicts; audits Efficacy – effect of SEMS in making positive impact on safety culture of companies 12

For More Information on SEMS 13 BOEMRE, PEC/Premier Safety Management

For More Information on National OSC Web Site : Final Report: Deep Water – also available in paperback from the Government Printing Office, Amazon.com, and Barnes and Nobel Chief Counsel’s Report: Macondo – also available in interactive multimedia mode on web site The Gulf Spill – A multimedia summary of the Commission’s findings available on the web site Summary Report: Deep Water: Recommendations Resources: Testimony, Correspondence, Research, Staff Working Papers 14 Reports – All available in PDF format from web site