Feds add teeth to offshore drilling safety mandates

Federal regulators on Thursday finalized a plan designed to boost the safety of offshore drilling by insisting that workers have the power to halt dangerous activity and requiring third-party audits of risk management programs.

The so-called SEMS II rule effectively bolsters a 2011 requirement that companies working offshore implement broad “safety and environmental management systems” for holistically assessing and managing risks at every stage of their work.

The measure, finalized by the Bureau of Safety and Environmental Enforcement, also requires companies to establish procedures authorizing all employees at their facilities to stop work whenever they see risky or dangerous activity — “without fear of reprisal.” Many oil companies and offshore service firms already have voluntarily implemented such stop-work policies, but the new rule makes that a requirement with the full force of the federal government.

With the new rule, regulators also are requiring offshore drilling operators to beef up their existing safety and environmental management systems to include job safety analyses and new employee participation plans, so workers are more involved in limiting hazards. Companies also must encourage offshore workers to report possible safety and environmental violations to federal regulators

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James Watson, the director of the safety bureau, cast the new mandate as taking “another important step toward protecting workers and the environment from preventable accidents” by encouraging “a robust positive safety culture” offshore.

“BSEE’s workplace safety rules are designed to promote that culture by eliminating complacency and making sure that companies are looking at the human factors that underlie too many accidents,” Watson said.

Federal regulators are giving companies a little over a year to comply with most requirements under the new rule; the final deadline for implementing the changes is June 4, 2014.

Under existing mandates, companies already have until Nov. 15, 2013 to complete an audit of their safety and environmental management systems. While that first audit can be done in-house, the new rule ensures companies will have to rely on assessments from outside, accredited auditors afterward.

The first third-party audits required under the new rule are due June 4, 2015.

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The new rule leaves open the possibility that federal regulators at the safety bureau will conduct surprise inspections of companies’ SEMS programs, either randomly or based on performance problems. The safety bureau also can require companies to conduct additional audits under some circumstances.

Both the new rule and the original SEMS requirement apply broadly to oil and gas facilities on the outer continental shelf — not just to drilling rigs and initial exploration.

According to the safety bureau, “the SEMS program addresses facilities and all stages of (outer continental shelf) operations, from start to finish,” including the decommissioning of those facilities. “This requirement applies to all facilities, including (mobile offshore drilling units) when they are attached to the seabed.

The initial SEMS mandate, finalized in the wake of the Deepwater Horizon disaster (though proposed years earlier) was meant to shift the United States into the path of the United Kingdom, Norway and other countries that are blending some proscriptive regulations with a performance-based approach to offshore oversight that puts the onus on companies to holistically assess and manage risk.

After the 2010 Gulf oil spill, at least two government panels suggested the U.S. should adopt a performance-based system. And the Chemical Safety Board, which is set to issue its report on the Deepwater Horizon disaster this year, is exploring whether the government needs to do even more to move toward a risk-based model.

The original SEMS mandate is modeled after standards created by the American Petroleum Institute, which established a Center for Offshore Safety focused on the safety management programs after the 2010 spill.

“The finalized rule recognizes the industry’s safety-first approach by incorporating best practices recommended by both API and the Center for Offshore Safety,” said API spokesman Brian Straessle.

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