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Agency would focus exclusively on safety in offshore oil drilling, production

The announcement by the Obama administration is part of an ongoing effort to overhaul lax oversight that investigators say contributed to April's explosion and spill in the Gulf of Mexico.

January 13, 2011|By Neela Banerjee, Washington Bureau

Reporting from Washington — The Obama administration has announced the creation of an agency to focus exclusively on safety in offshore drilling and production, part of an ongoing effort to overhaul lax oversight that investigators said contributed to last year's Gulf of Mexico oil spill.

Speaking in unusually blunt terms, Bureau of Ocean Energy Management, Regulation and Enforcement Director Michael Bromwich said Thursday that the government's heightened commitment to safety meant that his agency was unlikely to issue offshore drilling permits at the rapid rate they were before the April 20 explosion of the Deepwater Horizon, which killed 11 men and started the worst offshore oil spill in U.S. history.

Industry lobbying groups and their congressional allies have complained for months that the already slowed rate amounts to a de facto moratorium, threatening local economies and domestic oil supplies. But a federal judge in New Orleans on Thursday rebuffed a lawsuit requesting that the agency be ordered to speed up its permit process, saying it was unclear whether there was a deadline for regulators to decide on a permit's merits.

In his speech at the Center for Strategic and International Studies, Bromwich said industry estimates that permits wouldn't be issued until the third quarter of 2011 or later were overly pessimistic. But he also insisted that oversight could not remain "frozen in time" from a pre-disaster period in which regulators were considered dangerously lax.

"The Deepwater Horizon tragedy has shaken government, and, I hope and trust, shaken industry out of a complacency and overconfidence that had developed over the past several decades," Bromwich said. "That complacency and overconfidence — hubris is not too strong a word — created a circumstance in which the increased dangers of deep-water drilling were not matched by increased vigilance and concern for the safety of those operations."

Reforms last year divided the revenue arm of the agency from its leasing and oversight operations in the Interior Department. Now, the Bureau of Ocean Energy Management drops its "regulation and enforcement," in title and in duty, and would focus on development of offshore energy resources. A newly created Bureau of Safety and Environmental Enforcement would enforce health, safety and environmental regulations.

Which agency would issue permits remains unclear, but Interior Department officials said responsibilities would be clarified next week.

Oil industry lobbying groups worried that changes would add to delays. "While continued vigilance on safety is essential, the time has come to get back to work producing the energy the nation needs," said Erik Milito, the American Petroleum Institute's director of upstream and industry operations.

Bromwich mapped out more changes, including improved training of inspectors, new monitoring equipment, stiffer penalties and a new state-run safety institute for the industry.

But he warned that reforms would be imperiled unless Congress acted soon. The administration asked Congress last year to give the Bureau of Ocean Energy Management $100 million to improve oversight. So far, the agency has received about $25 million. The rest is tied to legislation that has stalled in Congress.

"We've been stymied in building the capabilities we need to build," Bromwich said. "I couldn't care less where the money comes from as long as we get what we need."

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