On October 15, 2010, the former Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) issued new regulations, incorporating in its entirety and making mandatory the implementation of the American Petroleum Institute’s Recommended Practice 75 (API RP 75).  The rule requires development of Safety and Environmental Management Systems (SEMS) plans by “a lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s), a pipeline right-of-way holder, or a state lessee granted a right-of-use and easement.” 30 C.F.R § 250.105. According to BOEMRE, “the purpose of SEMS is to enhance the safety and cleanliness of operations by reducing the frequency and severity of accidents.” This final rule applies to all Outer Continental Shelf oil and gas and sulphur operations and the facilities under BOEMRE jurisdiction including drilling, production, construction, well workover, well completion, well servicing, and DOI pipeline activities.

Responsibility for developing and implementing a SEMS program lies with the lessee (or owner or holder of an operating right), unless it delegates the responsibility to another (likely the operator). Contractors are not responsible for developing the plan; however if compliant, contractor procedures may be incorporated into the lessee’s/operator’s SEMS plan.

This rule requires completion of two significant efforts by November 15, 2011, including:

  • SEMS program must be complete and in effect, 40 C.F.R. 250.1900(a); and
  • Initial hazard analysis, 40 C.F.R 250.1911(a).

On October 11, 2011, the Bureau of Safety and Environmental Enforcement (“BSEE”) issued guidance concerning the implementation of the rule. While repeating required elements of a SEMS plan, the guidance provides examples of adequate documentation and coordination between the operator and its contractors. As described below, operators must do more than rely on assurances made by the contractor. Under the SEMS program, the operator must:

  • agree with and accept the contractor’s safety procedures and make them available during an inspection;
  • document that each contractor is knowledgeable and experiences (by auditing / testing);
  • perform periodic evaluations of contract employees;
  • inform the contractor of any known hazards; and
  • verify how contractors are trained.

While the SEMS rule was progressing to final promulgation, BOEMRE proposed amendments to the rule to add further requirements for SEMS programs. It is apparent from the proposal that BOEMRE believes employees need additional rights to affect the development of the SEMS plan and to stop and report unsafe acts to the government. Comments are due on the proposal by November 14, 2011. The proposed rules include the following additions to the SEMS program:

  • procedures to allow any employee to stop work;
  • clearly defined requirements as who has authority to make safety decisions;
  • demonstrations that employees are involved in development of the SEMS plan;
  • guidelines for employees to report unsafe conditions and request a BSEE inspection; and,
  • requirements for third party audits.