CHAPTER 12 WHAT TO EXPECT IN THE EVENT OF AN OIL SPILL OR OTHER SIGNIFICANT OFFSHORE INCIDENT OR CATASTROPHE

• Jurisdiction: United States

Federal Offshore Regulatory Enforcement
(Jan 2016)
CHAPTER 12
WHAT TO EXPECT IN THE EVENT OF AN OIL SPILL OR OTHER SIGNIFICANT OFFSHORE INCIDENT OR CATASTROPHE

Kevin A. Ewing
Partner
Moderator and Panelist:
Bracewell
Washington, DC
kevin.ewing@bgllp.com
202-828-7638
Roberta Lewis
Panelists:
Senior Legal Counsel
Shell Oil Company
Houston, TX
Denee Diluigi
Counsel
Noble Energy, Inc.
Denver, CO
Kevin D. Collins ¹
Bracewell
kevin.collins@bgllp.com
512-494-3640

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KEVIN A. EWING is a partner with Bracewell in Washington, DC. Kevin advises energy companies concerning compliance, enforcement, and risk management in light of federal laws governing the environment, natural resources, and safety. He has particular experience representing companies involved in offshore exploration and development, defending them in regulatory enforcement actions and guiding them in the prevention, response, and investigation of accidents. He represented a leading oilfield services company in the federal investigations of the Deepwater Horizon incident. Kevin regularly advises companies on federal policy and regulatory developments affecting energy development, including new requirements from the Department of the Interior, shifting liability regimes on the Outer Continental Shelf, government enforcement initiatives, permitting, environmental impact assessment, and species protection. His recent work includes representing multiple offshore service contractors in enforcement proceedings brought by the Bureau of Safety and Environmental Enforcement.

ROBERTA SAIELLI LEWIS is a Senior Legal Counsel at Shell Oil Company. As a member of Shell's Global Safety & Environment legal practice group, Ms. Lewis advises a variety of Shell businesses regarding health, safety, and environmental law. Her responsibilities include advising Shell's offshore Gulf of Mexico operations with regard to laws and regulations administered by the U.S. Department of the Interior's Bureau of Safety & Environmental Enforcement and its Bureau of Ocean Energy Management, the U.S. Coast Guard, and the U.S. Environmental Protection Agency. She is also a member of the Shell Americas Response Team, which provides emergency response support for Shell in the Americas. Ms. Lewis began her legal career in private practice at the Chicago law firm of Gardner Carton & Douglas LLP (now Drinker Biddle & Reath LLP), where she represented corporate and municipal clients in environmental litigation, permitting, compliance, remediation and enforcement matters, and environmental aspects of corporate transactions. Ms. Lewis left private practice in 2000 to take a position as in-house counsel at BP America Inc., and then joined Shell in 2007. Ms. Lewis holds a J.D. from Loyola University Chicago School of Law, and a B.A. in History from Grinnell College. She lives in Cypress, TX with her husband, Tom, and son, Samuel.

DENEE A. DILUIGI serves as Counsel with Noble Energy, Inc. (NYSE: NBL). In this role, Denee is responsible for providing legal support on the company's Environment Health, Safety and Regulatory (EHSR) matters. Denee, who brings more than 20 years of EHSR experience to her role, joined the company in 2010 after serving as outside counsel. In addition to EHSR legal support, she also previously provided legal support for gas marketing matters, internal investigations, human resource related matters, and upstream exploration projects. Prior to Noble Energy, Denee has worked or both public and private entities in a legal capacity. In Colorado, Denee worked for a Colorado law firm representing a variety of private and public natural resource companies and served as an Assistant Attorney General within the natural Resource and Environment Section of the State of Colorado's Department of Law, where she represented Colorado's Department of Public Health and Environment and Department of Labor and Employment. While in California, Denee served as a Special Assistant U.S. Attorney for the Northern District of California, where she focused on natural resource and major crime matters representing a number of agencies, including those within the Department of Interior, Commerce, Homeland Security, and Justice. She began her career in 1995 in Houston within the Technical Services group of Gulf Coast Waste Disposal Authority, where she worked on various issues associated with industrial wastewater treatment. Denee holds a bachelor's degree in marine biology from Texas A&M University and a juris doctorate with specializations in environmental law, criminal law, litigation, and public interest law from Golden Gate University. She is licensed to practice in Colorado, Pennsylvania, and West Virginia.

KEVIN D. COLLINS is a Partner in the Austin, Texas office of Bracewell. He is a former Assistant U.S. Attorney from the Eastern District of Texas. He assists companies responding to government investigations after major industrial accidents and chemical releases in the energy and chemical sectors. He was one of the key lawyers supporting the work of the BP U.S. Refineries Independent Safety Review Panel, which investigated the safety culture and corporate oversight of BP's North American refineries on behalf of a panel of experts chaired by former U.S. Secretary of State James A. Baker III. As a result of that experience, Kevin often advises companies on methods for assessing and improving safety culture.

The principles and practice of federal enforcement after major offshore incidents have changed rapidly over the last five years, shifting settled expectations - in government and in industry - about when and how enforcement will be initiated, conducted, and concluded. The initial accelerant for change was undoubtedly the Macondo well control incident that began in April 2010. Subsequent incidents - such as the West Delta 32E incident - have pushed further changes in the scope and techniques of offshore enforcement.

As enforcement has evolved, so too have the methods for effective incident response. The increasing likelihood of parallel investigations and the broader expectations for cooperation and responsiveness demonstrate the need for improved approaches to incident preparedness.

Our intent in this paper is to provide a practical perspective on enforcement and liability following major incidents. We start with a brief review of the federal investigative landscape and some principles of effective response to investigations. Then the paper turns to important legal issues involved in offshore enforcement, beginning with an overview of the offshore statutory regimes, followed by perspectives on recent liability rulings and on BSEE's efforts to expand OCSLA enforcement against contractors.

A. Background on Offshore Investigation

There were 2,883 documented incidents in the Gulf of Mexico and Pacific regions of the Outer Continental Shelf ("OCS") between January 2011 and October 2014.² An "incident" is defined as "[a]ny accident, injury, marine casualty, or unexpected event occurring in the course of an OCS activity that affects or is likely to affect operational safety or the environment."³ The

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Bureau of Safety and Environmental Enforcement ("BSEE") investigated 275 or just under 10 percent of these incidents.⁴ During this time period, BSEE⁵ also established a special Investigations and Review Unit ("IRU") and charged the unit with, among other things, investigating significant incidents related to spills and accidents.⁶ The unit is composed of professionals with law-enforcement backgrounds or technical skills. The IRU participated in under 2 percent of the 2,883 investigations.⁷

Despite the low percentage of IRU-led investigations in the OCS, government investigation--especially of significant incidents--is an important reality. The Outer Continental Shelf Lands Act ("OCSLA") requires the Secretary of the Interior and the U.S. Coast Guard to investigate and issue a report on incidents involving death, serious injury, fire, or pollution that occur as a result of offshore oil-and-gas operations.⁸ An event of such magnitude generally constitutes a crisis for the companies involved, where "crisis" is understood to be a situation that must be handled properly in order to avoid further negative consequences following the incident.⁹

To properly prepare for a crisis, it is important to understand the investigative goals of the agencies most likely to investigate an offshore incident.

BSEE

BSEE investigations are fact-finding missions to determine the cause of an incident and to prepare a public report.¹⁰ BSEE has subpoena power and can request and record oral testimony.¹¹ During an investigation, BSEE investigators may conduct interviews of personnel, require production of data and documents, request relevant evidence be preserved, require access to relevant evidence for investigators, and take other reasonable acts necessary to ensure an orderly investigation.¹² In some instances, BSEE investigators will request forensic analysis of evidence or review a company's safety-and-compliance policies and procedures. Smaller-scale incident investigations are referred to as "district investigations" and require fewer investigative

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resources. For more serious incidents, BSEE will prepare a panel investigation that concludes with detailed findings and recommendations.¹³ These panel investigations may include recommended enforcement, referrals to other agencies, or safety alerts to industry.¹⁴ The panels may include members from the U.S. Coast Guard, members of BSEE's IRU, and other experts.

Coast Guard

The U.S. Coast Guard shares jurisdiction and responsibility for investigating incidents on the OCS.¹⁵ Like BSEE, the Coast Guard has the power to administer oaths, issue subpoenas, and require the production of documents and other evidence.¹⁶ The Coast Guard Investigative Service ("CGIS") conducts criminal investigations.¹⁷ CGIS special agents are...