BOEMRE Issues A New Rule For Offshore Drilling

On January 3, 2011, the federal Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) issued a new rule affecting thirteen oil companies whose drilling activities in the Gulf of Mexico were suspended by the federal moratorium following the April 20, 2010 Deepwater Horizon blowout.  Some of the press reports about this rule gave the impression that renewed drilling in the Gulf is likely to occur soon.  That is not necessarily true, and so I’m writing to explain why not.

First, here’s what the new rule doesn’t do.  It doesn’t exempt the thirteen companies it covers from complying with the new safety rules that BOEMRE adopted after the Deepwater Horizon blowout.  Nor does it exempt the companies from recalculating a realistic worst-case oil spill number, as they are required to do under BOEMRE’s Notice to Lessees 2010-N06, which you can find here.  So there is no free pass on, for example, using a blowout preventer that doesn’t meet the standards in the new safety rules.

What the new rule does is to set up a comparison between the recalculated worst-case oil spill number and the number that the companies used when they got their pre-spill permits from what was then called the Minerals Management Service.  If the new number is higher – which, in my view, it is likely to be – then the companies must revise their pre-spill cleanup and contingency plans.  Those revisions would be subject to review under the National Environmental Policy Act (“NEPA”).  If the new number is lower, the companies can continue to rely on the cleanup and contingency plans that they submitted to MMS, without additional NEPA review.

 We don’t know yet how the comparison of the recalculated and old numbers will turn out.  It seems clear to me that oil companies who lowballed their worst-case estimates to MMS, as was a common practice, will come off badly under the new rule and that, for them, resumption of drilling is many months away.  So my takeaway message is that there is no reason to get worked up about BOEMRE’s new rule until they have done the math.