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Crosscurrents: Increasing Regulatory Liability and Enforcement In An ERA of Deregulation

Nadira Clarke, John Cossa, Today's Environmental Agencies: Regulatory Enforcement, Citizen Suits, and the Natural Resources Industries (Dec 2018)

Since early 2017, U.S. natural resource producers have been working with the Trump administration to reverse or repeal a number of Obama-era regulatory initiatives. These efforts include proposed revision of the Environmental Protection Agency's ("EPA") 2016 Clean Air Act New Source Performance Standards for existing oil and gas sources,1 repeal of the Bureau of Land Management's ("BLM") oil and gas methane "waste" prevention rule,2 defeat of the BLM's "Planning 2.0" initiative,3 withdrawal of a U.S. Customs and Border Protection proposed interpretation of the Jones Act that would require the use of domestically-flagged vessels in offshore oil and gas operations,4 and the issuance of a Department of the Interior ("DOI") Solicitor's Opinion confirming that the Migratory Bird Treaty Act's criminal sanctions cannot be applied to operators who unintentionally "take" migratory birds.5 Although litigation over some issues continues, the current administration appears to support these industry initiatives. However, though a number of the high-profile policies of the previous administration were either reversed in court or defeated administratively, the Trump administration continues to pursue and expand upon some of the Obama-era enforcement initiatives. Industry has successfully challenged a number of these carry-over initiatives, but the administration continues to defend and prosecute others that could have a significant impact on the regulated community. II. BUREAU OF SAFETY AND ENVIRONMENTAL ENFORCEMENT ("BSEE") FAILS TO EXTEND REGULATORY LIABILITY TO OUTER CONTINENTAL SHELF ("OCS") CONTRACTORS In the wake of the Deepwater Horizon, the newly-formed Bureau of Safety and Environmental Enforcement ("BSEE") within the U.S. Department of the Interior ("DOI")6 informally initiated a policy of enforcing its safety and environmental regulations directly against contractors working for owners and operators of federally-issued oil and gas leases on the OCS.7 Until that time, and since the enactment of the Outer Continental Shelf Lands Act ("OCSLA") in 1953,8 each of the government agencies responsible for overseeing the development of OCS oil and gas exclusively held lessees and their designated operators accountable for all violations of applicable oil and gas operating regulations, regardless of whether the violation was attributable to the lessee, the operator, or one of their independent service contractors. This was due to the widely held belief that DOI's offshore oil and gas enforcement authority was limited, by statute and regulation, to holders of OCS leases and their designated operators, and did not extend to their contractors, subcontractors, or non-operator service providers. Unlike lessees and operators, contractors have no relationship or privity with DOI. Contractors have no lease or other agreement with DOI agencies, and need no formal approval from BOEM or BSEE to perform work on an OCS lease. Instead, under OCSLA, contractors have traditionally been held accountable only to the lessee or operator for the satisfactory and compliant performance of their duties. As far as DOI was concerned, it was the lessees and operators who bore the responsibility of ensuring that their contractor's work was compliant with federal regulations.9 If there was any problem, the regulations would be enforced against the lessees or operators.10