By James T. Brown and Michael J. Wray
While both the energy industry and federal regulators agree that offshore safety is paramount, industry leaders recently expressed concerns over the ability to carry out new regulations from the Bureau of Safety and Environmental Enforcement (BSEE) and whether they reflect “real world” operating conditions. Now comes the latest regulatory ripple effect after the 2010 Deepwater Horizon oil spill: The U.S. Coast Guard is proposing its new rules for offshore vessels.
The Coast Guard proposes that each vessel involved in exploration, development or production have its own comprehensive safety and environmental management system, or SEMS. In line with BSEE’s new SEMS regulations for operating companies, the Coast Guard reasons that supply boats, crew boats and other offshore “vessels” face personnel and operational risks that demand their own careful planning and safeguards.
Due to the stark contrasts in the types of vessels that support offshore exploration and drilling, the proposed Coast Guard rule-making process is a complex and problematic undertaking. Roughly 2,200 vessels are affected. The deadline for commenting on these proposed changes is Jan. 23, 2014.
The Coast Guard governs many aspects of vessel operations on the outer continental shelf. But the majority of these vessels are not now subject to a federally mandated SEMS — a systemwide planning and documentation process for protecting workers, property and the environment. SEMS plans mainly have been the responsibility of operating companies that impose their own rules on the vessel operators with whom they contract. Alternatively, many vessel operators have their own SEMS programs, using various standards published by industry groups.
Historically, the government took the view that overall responsibility for safety lay with the lease operator. In the aftermath of the Gulf oil spill, BSEE seeks to hold both the operating company and its contractors liable for rules violations. The new BSEE SEMS rules incorporate recommended practices from the American Petroleum Institute (API). The Coast Guard is now following suit and envisions each vessel having specific safe-operating procedures and training that incorporate the management principles from API. There would be periodic safety audits and procedures for emergency response. But while the American Petroleum Institute may know drilling, does it know boats?
Do API’s policies translate effectively to vessels, especially such a variety of vessels? There are MODU’s (mobile offshore drilling units), FPSO’s (floating production storage and offloading units) OSV’s (offshore supply vessels), crew boats, lift boats and tug supply boats to name a few. All are uniquely designed for specific tasks. Some are risky places to work, others minimally so. It is a daunting prospect to consider a uniform safety structure for all.
The agency’s current approach suggests cost, confusion and layers of regulations for vessel owners and operators. Some “mom-and-pop” operators likely would go out of business.
The problem is this: One-size-fits-all rules simply aren’t realistic. It’s important that the government impose regulations that acknowledge the unique work all these different players do.
There is universal agreement on the desire to prevent another catastrophic explosion and spill. But there is the risk of doing harm by overreaching in regulating for a safer environment.
Brown and Wray are partners with the Houston law firm Legge, Farrow, Kimmitt, McGrath & Brown L.L.P. with expertise in offshore energy legal issues. They represent energy operators, contractors and vessel operators.