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Changes to federal offshore drilling regulation after Deepwater Horizon (Dec 6, 2010)

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Brad Keithley
Brad Keithley

The document discusses changes to offshore drilling regulation in the US following the 2010 Deepwater Horizon explosion. It outlines the evolution of regulatory structure, splitting the former Minerals Management Service into three new agencies. Upcoming issues that could impact Alaska include a new National Oceans Policy establishing coastal planning and potential changes to Alaska's Coastal Zone Management program which determines permitting for coastal activities.

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CHANGES TO FEDERAL OFFSHORE DRILLING REGULATION AFTER DEEPWATER HORIZON: WHAT'S NEXT ON THE LEGISLATIVE AND REGULATORY FRONTS Energy in Alaska: December 6, 2010 Bradford G. Keithley Perkins Coie LLP Anchorage and Washington, D.C.
Overview Alaska OCS Regulator Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE), formerly the Minerals Management Service (MMS) Evolving BOEMRE Structure and Policy Pre- Deepwater Horizon Immediately following Deepwater Horizon Continued evolution Upcoming legislative and regulatory issues Executive Order on National Oceans Policy Alaska Coastal Management Program (ACMP)
Regulatory Structure Pre- Deepwater Horizon Minerals Management Service Federal royalty administration, both onshore and offshore Management of offshore Federal lands But building legislative discontent even before Deepwater Horizon : Rahall H.R. 3534 Terminate royalty-in-kind (done by Secretary Salazar administratively in September 2009) Consolidate oil and gas leasing functions of MMS and BLM Move royalty audit and collections to Department of Interior Inspector General
Regulatory Structure Immediately Following First response: April 20, 2010: Deepwater Horizon explosion May 19, 2010: Salazar order (Secretarial Order No. 3299) splitting MMS into three parts Three parts: Bureau of Ocean Energy Management (BOEM) Bureau of Safety and Environmental Enforcement (BSSE) Office of Natural Resources Revenue (ONRR) Interim step June 18, 2010: Renames MMS as BOEMRE (Secretarial Order No. 3302) and appoints Michael Bromwich (prosecutions and investigations background) as Director
Regulatory Structure Ongoing Steps Evolving toward three-part structure ONRR made effective Oct. 1, 2010 (reports to DOI Asst Sec. for Policy Management and Budget) Formation of Investigations and Review Unit (June 29, 2010) Continuing work to split remaining organization into two separate Bureaus Restructuring Implementation Plan (July 14, 2010) OCS Safety Oversight Board Report (Sept. 1, 2010) Formation of 11 Implementation Teams to work on issues raised in Safety Oversight Board Report (Sept. 4, 2010) Target: End of year 2011
Regulatory Structure Current Insights Challenge of continuing to run the business while reorganization ongoing Dec. 1, 2010 announcement on Revised OCS Leasing Program Largely, focus on existing leases Alaska lease sales No further lease sales under 2007-12 program Potential for new lease sales in Alaska OCS during 2012-2017 after further study and EIS Process Shells existing application for its Beaufort exploration well If Shells proposed drilling operation is approved, BOEMRE would have safety personnel on site throughout the drilling operation to monitor the operation and hold them accountable for compliance with BOEMREs drilling safety and environmental regulations.
Upcoming Issues Two to keep an eye on Executive Order on National Oceans Policy Alaska Coastal Management Program
National Oceans Policy Presidential Executive Order (July 19, 2010) Based on Recommendations of the Interagency Ocean Policy Task Force (July 19, 2010) Establishes the National Ocean Council Provides for development of coastal and marine spatial plans Work is just now getting underway (first meeting of full Council on Nov. 12, 2010) Effect on Alaska One of 9 regional planning areas EO provides for Governance Coordinating Committee that includes State, tribal and local governments Goal is to provide for a coastal and marine spatial plan within each planning area
Alaska Coastal Zone Management Alaskas implementation of the federal Coastal Zone Management (CZM) program Entering its sunset year Subject to termination upon recommendation by Legislative Budget & Audit Anticipate a major effort at legislative changes Effect on Alaska OCS development ACMP establishes framework for permitting of onshore coastal activities Federal actions required to be consistent with State CZM plan Major issue: Local or State control of planning

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Changes to federal offshore drilling regulation after Deepwater Horizon (Dec 6, 2010)

  • 1. CHANGES TO FEDERAL OFFSHORE DRILLING REGULATION AFTER DEEPWATER HORIZON: WHAT'S NEXT ON THE LEGISLATIVE AND REGULATORY FRONTS Energy in Alaska: December 6, 2010 Bradford G. Keithley Perkins Coie LLP Anchorage and Washington, D.C.
  • 2. Overview Alaska OCS Regulator Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE), formerly the Minerals Management Service (MMS) Evolving BOEMRE Structure and Policy Pre- Deepwater Horizon Immediately following Deepwater Horizon Continued evolution Upcoming legislative and regulatory issues Executive Order on National Oceans Policy Alaska Coastal Management Program (ACMP)
  • 3. Regulatory Structure Pre- Deepwater Horizon Minerals Management Service Federal royalty administration, both onshore and offshore Management of offshore Federal lands But building legislative discontent even before Deepwater Horizon : Rahall H.R. 3534 Terminate royalty-in-kind (done by Secretary Salazar administratively in September 2009) Consolidate oil and gas leasing functions of MMS and BLM Move royalty audit and collections to Department of Interior Inspector General
  • 4. Regulatory Structure Immediately Following First response: April 20, 2010: Deepwater Horizon explosion May 19, 2010: Salazar order (Secretarial Order No. 3299) splitting MMS into three parts Three parts: Bureau of Ocean Energy Management (BOEM) Bureau of Safety and Environmental Enforcement (BSSE) Office of Natural Resources Revenue (ONRR) Interim step June 18, 2010: Renames MMS as BOEMRE (Secretarial Order No. 3302) and appoints Michael Bromwich (prosecutions and investigations background) as Director
  • 5. Regulatory Structure Ongoing Steps Evolving toward three-part structure ONRR made effective Oct. 1, 2010 (reports to DOI Asst Sec. for Policy Management and Budget) Formation of Investigations and Review Unit (June 29, 2010) Continuing work to split remaining organization into two separate Bureaus Restructuring Implementation Plan (July 14, 2010) OCS Safety Oversight Board Report (Sept. 1, 2010) Formation of 11 Implementation Teams to work on issues raised in Safety Oversight Board Report (Sept. 4, 2010) Target: End of year 2011
  • 6. Regulatory Structure Current Insights Challenge of continuing to run the business while reorganization ongoing Dec. 1, 2010 announcement on Revised OCS Leasing Program Largely, focus on existing leases Alaska lease sales No further lease sales under 2007-12 program Potential for new lease sales in Alaska OCS during 2012-2017 after further study and EIS Process Shells existing application for its Beaufort exploration well If Shells proposed drilling operation is approved, BOEMRE would have safety personnel on site throughout the drilling operation to monitor the operation and hold them accountable for compliance with BOEMREs drilling safety and environmental regulations.
  • 7. Upcoming Issues Two to keep an eye on Executive Order on National Oceans Policy Alaska Coastal Management Program
  • 8. National Oceans Policy Presidential Executive Order (July 19, 2010) Based on Recommendations of the Interagency Ocean Policy Task Force (July 19, 2010) Establishes the National Ocean Council Provides for development of coastal and marine spatial plans Work is just now getting underway (first meeting of full Council on Nov. 12, 2010) Effect on Alaska One of 9 regional planning areas EO provides for Governance Coordinating Committee that includes State, tribal and local governments Goal is to provide for a coastal and marine spatial plan within each planning area
  • 9. Alaska Coastal Zone Management Alaskas implementation of the federal Coastal Zone Management (CZM) program Entering its sunset year Subject to termination upon recommendation by Legislative Budget & Audit Anticipate a major effort at legislative changes Effect on Alaska OCS development ACMP establishes framework for permitting of onshore coastal activities Federal actions required to be consistent with State CZM plan Major issue: Local or State control of planning