In the wake of the Macondo disaster, regulation of the offshore industry on the Outer Continental Shelf (OCS) has undergone profound change, both in terms of the agencies who regulate and the substantive regulations. Almost immediately after the April 20, 2012 blowout of the Macondo well, President Obama dissolved the former Mineral Management Services (MMS, a sub-bureau within the Department of the Interior, which was wracked with internal problems and corruption) and formed a new agency (Bureau of Ocean Energy Management, Regulation, and Enforcement) that ultimately became two related agencies: (1) the Bureau of Ocean Energy Management (BOEM), which handles lease sales and permitting of OCS wells; and (2) BSEE, which handles regulation with regard to safety and operational requirements for activities on the OCS. While this overhaul of the former MMS was dramatic and comprehensive, it did not affect the traditional, historic jurisdiction of the United States Coast Guard (USCG) over vessels and certain aspects of other OCS facilities.
However, in the nearly four years since the Macondo disaster, it has become clear – as acknowledged by BSEE and the USCG themselves – that there is a problem of overlapping jurisdiction with respect to vessels and facilities/units operating on the OCS. In particular, in the first of five memoranda of understanding between BSEE and the USCG expressly notes the existence of regulatory overlap, and adopts an “if-not-us-then them” gap-filling approach to this overlap:
[BSEE] and the USCG agree to work cooperatively to avoid overlapping and duplicative regulatory regimes with regard to vessels involved with, or servicing, OREIs [offshore renewable energy installations].
For vessels inspected and certificated by the USCG, the participating agencies agree that the safety of vessel-related systems and equipment on those vessels will be regulated by the USCG if the USCG has an applicable regulation. If [BSEE] has a regulation or safety management system requirement applicable to a vessel system for which there is no USCG regulation, the participating agencies agree that [BSEE] regulation or safety management system requirement will apply unless the USCG objects to such application.
To add to this confusion, BSEE has unilaterally (and notoriously) purported to extend its jurisdiction – without any new rulemaking or adequate statutory/regulatory explanation – to include all contractors (including, presumably, vessel operators) working on the OCS. This unilateral extension of jurisdiction would ostensibly bring vessels and vessel operators within the ambit of a myriad of BSEE safety and operational regulations, as evidenced, inter alia, by the following exemplary regulatory provisions:
- BSEE requires that companies operating on the OCS have a Safety and Environmental Management System (SEMS) that complies with the American Petroleum Institute (API) Recommended Practice (RP) 75;
- BSEE has (somewhat indirectly/surreptitiously) promulgated regulations that relate to dynamic positioning (DP) systems for offshore units. Specifically, as part of a so-called Deepwater Operations Plan (DWOP), an operator must provide for approval by BSEE “[i]nformation on any active stationkeeping system(s) involving thrusters or other means of propulsion used with a surface system.” 30 C.F.R. §250.292. BSEE’s ostensible extension of its jurisdiction to DP systems encroaches on the traditional USCG authority over navigational systems.
- BSEE has issued regulations governing crane operations that incorporate the provisions of API RP D2, and potentially apply to both rigs and certain offshore support vessels outfitted with cranes.
In response to these inroads by BSEE into the traditional USCG regulatory sphere, the USCG has apparently taken the “if you can’t beat’em, join’em” approach, perhaps in the interest of ensuring predictability and certainty for the OCS industry (as well as the federal regulators).
In particular, with respect to SEMS, the USCG has recently issued a notice of proposed rulemaking (NPRM) to seek comment on a proposed rule that would require all “vessels engaged in OCS activities” – including both domestic and foreign-flagged vessels – “to develop, implement, and maintain a vessel-specific [SEMS program] that incorporates [API RP 75] . . . to be . . . compatible with a designated lease operator’s SEMS required under [BSEE] regulations.” 78 Fed. Reg. 55230 (Sept. 10, 2013). This SEMS requirement would solve the problem of BSEE-USCG overlap by rendering SEMS applicable to all vessels and facilities across the board on the OCS. Likewise, with respect to DP systems, over the last two years, the USCG has issued two calls for comments “regarding a draft policy letter on [DP]Systems, Emergency Disconnect Systems, Blowout Preventers, and related training and emergency procedures on [Mobile Offshore Drilling Units, MODUs]” in light of the potential for catastrophic environmental damage and loss of life in the event of a DP failure on a MODU on the OCS. 77 Fed. Reg. 26562 (May 4, 2012). Finally, the USCG has recently issued an NPRM proposing the adoption of API RD 2 for all vessel-mounted cranes on MODUs and offshore supply vessels, which would again solve the problem of BSEE-USCG regulatory dichotomy by simply rendering all cranes on the OCS (vessel-mount or rig-mounted) to the same standards. 78 Fed. Reg. 27913 (May 13, 2013).
These recent instances in which the USCG has adopted and/or reacted to the prior edicts of BSEE seems to indicate a trend. As a result, vessel operators working on the OCS need to be aware of new rulemaking by both BSEE and the USCG that may be applicable to vessel and/or vessel related operations, and should consider submitting comments in response to any NPRMs issued by both agencies as and when appropriate.