Just over a year ago, on Dec. 1, 2011, retired Coast Guard Adm. James Watson took the reins at the Interior Department’s Bureau of Safety and Environmental Enforcement, the agency that oversees offshore energy development. In an interview, Watson outlined his enforcement philosophy, discusses a risk-based approach to policing the oil and gas industry and highlights bureau training programs. He also addresses the one-year-old requirement that companies working offshore have safety and environmental management systems designed to lessen workplace hazards and human errors. Edited excerpts follow:
Q: Your motto at BSEE has been “safety at all levels, at all times.” What are you doing to keep people from thinking there is lax enforcement and that they can cut corners? What is the most important thing you’ve done to deter bad actions offshore?
A:As an enforcement agency, when we get out the enforcement tools, that is a deterrent. We do sort of random, unannounced inspections as well as, on the oil spill response side, exercises or drills, and that’s certainly a deterrent. I think what we see coming out of the Deepwater Horizon incident — the Justice Department action — that certainly has been a huge deterrent to high-risk, high-consequence type of incidents.
Q: Critics say the process of issuing incidents of non-compliance (INCs) and imposing civil penalties is too unwieldy — that there are far too many opportunities for companies to appeal and drag out the process and that the punishments capped at $40,000 per incident per day are too small when they finally do come. Is the enforcement process too clunky to be really effective?
A:We do need an effective process, and we’re looking at that. I really don’t have any specific opinion, until we finish looking at what options there are besides the status quo. But, I don’t see that there’s that many appeals that we are totally bogged down in (them). Civil penalties seem a little low to me, given the kind of investment and money that is involved in this particular industry. I would be a proponent of increasing the amount of penalties, but I’m also the proponent of a fair system, so to the extent that you can improve the appeals process and still keep it fair, I would be a proponent of that.
Q: Are you looking at and evaluating the civil penalty process?
A: We’re looking at just about everything that we’re doing. We have some teams that are working in various different areas we’ve carved out as part of (a strategic) plan, and enforcement is one of the big parts of (that). So we’re definitely looking at things associated with the penalties, with the authorities we have, with the personnel training and how we use the authorities and how we use the IT systems and other support structures that we have to make sure that we have a good enforcement program.
Q: What are some of the biggest challenges you have enforcement-wise?
A: The biggest challenge is that we are enforcing the things that really need to be enforced. We have (to have) the people at the right place at the right time when things that are really critical to be in compliance are observed. If you are spending your time pursuing a penalty on something that is less-than-the-highest-risk thing . . . then there’s opportunity costs of not having your people be observing the things that are really important for them to observe. The biggest challenge here is doing a risk analysis each day with good data and then hopefully having the weather to be able to (use) a helicopter to get to the operation that needs to be gotten to and not going to another one that you might find a lot of little INCs and miss the big one. It’s resource management and it’s risk management combined together.
Q: We learned recently that Black Elk Energy had 315 incidents of non-compliance in just two years of operation on the shelf. That sounds like an awful lot, but we don’t really know, since INCs and the enforcement process are pretty opaque and pretty hidden from view. Why aren’t these records public and easy for the average joe to access?
A: There are some technical issues that we are looking at because we can’t spend all our manpower, if it’s really difficult to extract things, just to make them public. The concept of transparency is something I clearly endorse and would like to do as much as we possibly can. We’re looking at that. I think it’s going to take some modifications to our system to be able to do that. But I’m a little concerned that someone would measure risk or measure performance or draw conclusions if all they have is INCs. To me, that’s a piece of information. We have a pitfall potentially if we’re totally just driven by INCs and not by the larger risk picture. There are companies that are just plain operating in higher-risk environments than other companies. And we don’t want to take our eye off those companies just because they don’t have any INCs. We want to be very worried about high-consequence activities as well as those (operators) that appear to have trouble maintaining compliance with things they should be able to comply with.
Q: How does the requirement for safety and environmental management systems (SEMS) fit into that?
A: That’s intended for both ends of the spectrum. It’s intended for the companies who are operating in these high-risk areas as well as companies who are just doing average stuff but need to strive for better compliance to have a system so that those INCs go down, or if you’re offshore, have a system so that risk is minimized. It’s a non-proscriptive thing.
Q: SEMS programs were a requirement as of Nov. 15 last year, and while there have been six audits done, those were done voluntarily by companies in advance of the November 2013 deadline. If audits or some kind of BSEE-directed verification is the only way right now to be sure that a company has a SEMS plan in place and is in compliance, why hasn’t the agency done some enforcement or spot checks in the meantime?
A: Companies have been doing audits, and they are looking at the rule that we wrote that says we have until 2013 to submit their audit to BSEE in compliance with the rules. I think they are using that time to do a lot of practice auditing and trying to get their safety and environmental management systems improved so that the audit they do submit to us is going to be a good audit. I think that’s human nature. I would, frankly, love to see, every audit that they do, not for the purpose for looking for non-compliances, but just to see if they are on the right track with their safety and environmental management program.
We don’t review and approve the safety and environmental management system programs and that’s by design. It’s by design too that we will do very few audits ourselves, because if the industry is relying on the government, they’re not going to be engaged in this thing. They (would) just … potentially let the government do some of the management. And that’s what this is intended to reverse. When we have nothing but prescriptive rules — like what we’ve had for years — and inspections, then we have taken on, to a certain degree, a responsibility for those kind of things that we wrote prescriptive rules about. It seems to me that the last thing we want to do is take over management of these companies. We want to see them manage themselves, and we want them to do what we do themselves, i.e., do their own inspections, correct things themselves. And that’s what this is all about.
Q: On some level, it seems like spot checks just to make sure they have the paper done reminds the enforced community that you’re watching. If they think they have two years to get their house in order, what’s to prevent them from going too slowly?
A: The proof in the pudding of this program is not necessarily going to bear out in the audits. I feel like it’s going to bear out in the compliance, in the safety record, and so we’re monitoring that pretty closely, and I woud hope that we would start to see a really good trend here. SEMS did go into effect in 2011, and so as we go into 2013, we should be able to say, ‘Yeah, this is having a positive effect,’ and it wouldn’t be because we’re looking at a bunch of audits. It would be because we’re looking at safety indicators.
Q: With regard to the idea of moving away from a prescriptive approach, the Deepwater Horizon commission, Chemical Safety Board witnesses and others have indicated that you can move to a more performance-based approach to monitoring safety, but to be effective at that, you have to have enough qualified personnel that can go toe to toe with industry, that are equally matched if not superior to the folks they are regulating. Does BSEE have that now, and if not, what’s standing in the way of being a robust powerhouse?
A: I think we’ve come a long way. We’ve added people. We’ve trained a lot of people. We’ve actually doubled the amount of training from what we’ve done in previous years this year. The trend, as far as the competencies of our people, are definitely going in that direction. I think we’ve taken on some tough cases. Certainly we’ve taken on BP. These are actions you don’t do unless you feel you’re going toe to toe with these companies.
I really do think that we’re becoming a powerhouse, and I think we are going to start to really show that in the in some of these more challenging technical areas. We’ve started those kind of discussions where companies are looking at some challenging areas to do new exploration and they’re bringing more production online. These are things that we take very seriously. They’re not just normal everyday compliance reviews. There is an amazing capacity in BSEE that we’re going to bring to bear on those.
Q: After the agency reorganization, there was a big effort to create a new internal training center. The permanent director hasn’t been on board since June. How many people are dedicated to the training center? Is that still a robust thing?
A: We’ve got about a dozen people that are focused on this training program. That includes some people who have been sort of detailed to training. We have, actually, a pretty big effort going on that really includes me. I went down and participated in training our engineers this past summer, and I’m keeping a real close focus on curriculums that are being developed and intervals for training people (and) what’s required training for different qualifications. We are spending money on this. We are targeting numbers of hours per employee per year for training. And I would characterize the progress that has been made in the past six months in training as pretty significant. This . . . is one of the shining areas of our bureau right now.”