Thomas R. Kitsos, Ph.D.

Ocean Policy Consultant

8605 Bradmoor Drive
Bethesda, MD 20817
301 493-5938
tomkitsos@aol.com

Questions of the Oil Spill Commission to Thomas Kitsos

1. Please provide your views on the Safety Case system presented by Robinson West
in his testimony, a copy of which is attached.

Robin West draws an interesting linkage between a general business model concept --
what he deems as a “mismatch” between dynamic industrial processes and governmental
regulatory systems that tend to be static – and the offshore energy management system in
the United States. As noted in his written statement (p. 5):

In every business there is a tradeoff between production

and safety. The offshore industry progresses and meets
the growing global demand for oil, by constantly advancing
the barriers of what is possible and safe. A static regulatory
system cannot keep up in this dynamic environment.

There is certainly much truth in this assertion. In my appearance before the Commission,
I made clear my concern about what the government was able to know on a real time
basis with respect to the deepwater technological development of industry. Yet, it does
not necessarily follow that the performance-based Safety Case system currently used in
Norway, Canada, the UK, and Australia is appropriate for our current situation in the
immediate aftermath of the Deepwater Horizon blowout and spill. I do not see how the
Safety Case process can assure that safety risks are adequately assessed and addressed by
operators better than a strengthened and focused prescriptive regulatory regime in the
Gulf of Mexico, perhaps with a mixture of some of the principles of a Safety and
Environmental Management System (SEMS).

I have been exposed to some very limited dialogue among a few petroleum engineers and
risk analysis specialists about the Safety Case process as it has evolved in the North Sea
following the Piper Alpha disaster. My sense is that there are differences of opinion
about the relevance of the Piper Alpha tragedy to what happened on April 20, 2010 on
the Macondo well in the GOM. Consequently, those with far better technical
backgrounds than I should assess what lessons can be learned from the Piper Alpha
disaster with respect to the most effective regulatory system for the GOM in view of the
Deepwater Horizon blowout before moving toward a full and complete Safety Case
process.
The immediate steps taken by the recently established Bureau of Ocean Energy
Management, Regulation and Enforcement (BOEMRE) are appropriate in the wake of the
BP spill. Both the proposed Drilling and Workplace Safety rules proposed by BOEMRE,
in conjunction with the implementation of the ten new safety requirements in NTL-05, to
the extent such requirements are not duplicative of the proposed new final rules nor held
up by judicial restraint, are solid starting points to be complied with before exploratory
drilling activity should proceed. Clearly, new and verifiable (third party) regulations
addressing blowout preventers, redundant blind-shear rams, and casing and cement
design requirements are needed and, as I understand it, are part of the BOEMRE
proposals.

The highest risk wells – deepwater high pressure wells – may well require different levels
of regulations and risk assessments. The BOEMRE will need to analyze this and myriad
other factors as time goes on and deepwater exploration and production proceeds -- as
seems inevitable. As the OCS regulatory process evolves over time and as a dramatically
improved safety culture is integrated in the government regulatory agency and all private
offshore operators, we may find that a mixture of prescriptive based regulations in
combination with performance-based goals of the Safety Case system will be the most
effective process for managing oil and gas development on the U.S. OCS.

In other words, we should strive to make our offshore regulatory regime as dynamic in its
safety and environmental protection systems as industry is in “constantly advancing the
barriers of what is possible and safe” in meeting the increasing global demand for oil.

Finally, I would refer you to my testimony before the Commission in which I discussed
language in the first conference report amending the OCSLA, considered by Congress in
1976, that would have arguably authorized some type of federal offshore exploratory
program. As noted, the conference report was defeated largely because of that provision
and today’s political and regulatory environment is probably not any more conducive
than the mid-1970’s to the establishment of such a major governmental exploratory
program. Nevertheless, I would argue that the federal government should at least assess
its current capability for direct wild-well interventions in emergency situations such as
the BP Deepwater Horizon oil spill, and perhaps develop a plan to enhance such
capabilities, particularly in deep water.

2. During your tenure, how were interagency comments incorporated into MMS
environmental analyses conducted under NEPA and during 5-Year Program
development? Do you believe that MMS consistently and adequately addressed
interagency concerns or comments in these processes? Did you ever change
decisions or analyses based on the comments of other agencies? Under your
direction, how did MMS respond to interagency comments (e.g., formal response in
writing, interagency discussions)?

While I was at MMS, interagency comments were incorporated into the agency’s
environmental analyses throughout the NEPA process and during the various phases of
the development of the five-year leasing program under section 18 of the OCSLA. Such

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incorporations occurred through the formal comment and response processes provided in
law and CEQ guidelines -- but also through the informal exchanges between and among
agencies which are the lubrication that keeps the machinery of NEPA operating.

Specifically, at the beginning of the NEPA process, during scoping, agencies were
invited to submit information on resources, potential effects from the proposed action,
alternatives to the proposed action, and mitigation measures. Agencies with specialized
expertise or jurisdiction by law were invited to be cooperating agencies which gave them
a more direct and influential role in developing the NEPA analysis. If the scoping input
was not carried into the analysis, my recollection is that MMS was directed to explain
why this was the case in the document. During the public comment period on any draft
EIS, agencies formally submitted substantive comments which MMS was obligated to
respond to in the EIS and incorporate into the analysis, if warranted. In many instances,
MMS provided a comment-by-comment response in the EIS.

Finally, the EIS served as the consultation document for MMS interaction with other
agencies, such as Endangered Species Act Section 7 consultation, National Historic
Preservation Act Section 106 consultation, Magnuson-Stevens Fisheries Management
Act Essential Fish Habitat consultation, and Coastal Zone Management Act consistency
review with affected states -- all of which can and did result in many cases in comments
being incorporated into the EIS analysis.

Although I cannot recall a specific example, I believe that comments from other agencies
did result in some analysis and decisions being changed. For example, based on input of
other agencies, alternatives other than the proposed action were recommended to the
Secretary for his consideration when setting the terms and conditions for the five-year
program and certain lease sales conducted under it.

Finally – and importantly – it should be noted that I served most of my years at MMS
during the Administration of President Clinton. By the time I settled into the position of
deputy director in 1998 and acting director for a short period in 1999, the political
controversy over the 5-year leasing program had pretty well been settled for that
particular time. The Clinton Administration had inherited the Bush ’41 program covering
1992-1997 and later adopted its own five year program (1997-2002). These programs
were shaped to correspond only to the offshore areas left open to leasing by the annual
congressional moratoria carried in Interior Department appropriations bills or in
continuing resolutions. President Clinton then took the further step at the Oceans
Conference in Monterey, California in 1998 of exercising his authority under section 12(a)
of the OCSLA by withdrawing from leasing until 2012 all areas covered by the
congressional moratoria. The George W. Bush Administration, in its first term during
which I served as acting director of the agency for the first nine months, inherited the
Clinton 5-year program and presidential withdrawal directive and thus the issue of
leasing was not on the table at that time – except for an area off of Florida that was still
exposed to possible sales. Consequently, there were virtually no interagency disputes
about the five-year program while I was at MMS – in contrast to what I understand may

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have been the case in the development of the proposed OCS schedule put forward by
Secretary Salazar at the end of March of this year.

3. The most recent version of the CLEAR Act (H.R. 3534) includes provisions
intended to strengthen independent science at BOEM. Do you believe that BOEM is
able to conduct independent science and environmental analyses, or should
Congress and the Administration consider shifting scientific research functions to
other agencies in order to avoid a conflict of interest? What recommendations do
you have to strengthen BOEM environmental analyses and the environmental
studies program?

It is imperative that BOEM have authority to carry out its own independent and vigorous
science program to inform the bureau’s various decisions regarding offshore conventional
and alternative energy and minerals activities. I believe that the agency is well able to
conduct independent science and environmental analyses and that the OCS Safety and
Environmental Advisory Board that is established under H.R. 3534 would provide
guidance and oversight to the bureau’s science and environmental program and be in a
position to address any perceived conflict of interest regarding such analyses and the
leasing program. Additionally, the bill’s proposed amendment to Section 20 of the
OCSLA addressing the impacts of deepwater spills is a much needed directive to the
Department and the strengthening of the safety regulations regime in Section 21 of
current law will be helpful.

Having said that, I note that some testimony presented to the Commission -- in addition
to certain sections of H.R. 3534 -- call for greater involvement in the OCS program by
other agencies, particularly NOAA. I believe that our lead civilian “oceans agency” must
play an important role in the OCS program and there are sections of the basic statute that
should clearly recognize the need for consultation with NOAA by DOI. I have worked
for each agency at various times and recognize the expertise of each. In the OCS
environmental program, BOEM must reach out to the agency that specializes in
understanding the marine ecosystem. The National Ocean Council recently established
by President Obama is set up to help in the coordination of our ocean policy and can be
an important institution for bringing the two agencies together to cooperate. At the same
time, it is important to have one agency have clear statutory authority to carry out a
program as complex as OCS energy development.

The last part of this question, regarding recommendations I may have for BOEM’s
environmental programs, is an issue that I address in question #5 below.

4. How would you characterize the relationship between NOAA and MMS during
your tenure?

My observation is that most federal agencies that have some overlapping responsibilities
have reasonably cordial relationships at the top, but some tensions at the working level.

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So, I think, this was true for NOAA and MMS while I was at the latter agency. I have
already addressed some of these relationships in prior questions regarding the NEPA
process and the development of the 5-year OCS leasing schedule, primarily during the
Clinton Administration.

Although recently there have apparently been some difference between the agencies
regarding the impact of the OCS program on the broader marine environment,
particularly in Alaska, historically most of the conflict between NOAA and MMS has
been over the role of states under the Coastal Zone Management Act. The federal
consistency provision (section 307) of the CZMA has been at the center of the debate
between the two agencies. In general, federal agency activities or private activities for
which a federal authorization is required that affect the land or water use of the coastal
zone of a state with an approved CZM program shall be carried out in a manner that is
consistent with the enforceable policies of such state program.

With respect to offshore oil and gas activities, the application of the consistency
provision to OCS leases, and exploration and development-production plans has been one
of the most contentious issues among the agencies, coastal states, and the oil and gas
industry. It was the subject of a Supreme Court decision and a ten-year interval in which
NOAA wrote regulations implementing a 1990 congressional action that was intended to
reverse the effect of the Court’s decision. While I was at MMS, the promulgation of
those NOAA regulations carrying out the revised federal consistency provision –
regulations that took effect in 2000 -- was at the center of some difficult meetings
between the two agencies. (A more complete discussion of the federal consistency
provision of the CZMA and offshore oil and gas development can be found in the report
of U.S. Commission on Ocean Policy: An Ocean Blueprint for the 21st Century, Final
Report, Washington, D.C. 2004, p. 362.)

5. The Department of the Interior has proposed dividing the MMS offshore
responsibilities into separate entities - the Bureau of Ocean Energy Management
responsible for planning, leasing and permitting and the Bureau of Safety and
Environmental Enforcement responsible for setting technical standards safety and
environmental protection, carrying out inspection and enforcement. As proposed,
both Bureaus report to the Assistant Secretary for Land and Minerals Management.
The House passed bill, H.R. 3534, has a similar reorganization structure. Do you
believe separating the two functions but keeping them as sister agencies within the
Department is sufficient to ensure objective and rigorous oversight and enforcement?

During the Question and Answer period following our panel’s formal presentations we
were asked about the advisability of separating the leasing (in BOEM) from the
environmental and safety functions (in BSEE) of the agency. I noted how crucial I
thought such separation was to ensure the independence and integrity of each function.
The report of the Department of the Interior’s Safety Oversight Board recently submitted
to Secretary Salazar specifically documents problems between some environmental staff

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and Office of Field Operation leasing coordinators. (See Section V. of OCS Safety
Oversight Board, Report to Secretary of the Interior Ken Salazar, September 1, 2010).

This follow-up question addresses an issue that we were not asked – whether BOEM and
BSEE can each remain under the Assistant Secretary for Land and Minerals Management
(ASLM) and still maintain objective and rigorous oversight and enforcement. I believe
that each bureau should remain under ASLM, as sister agencies in DOI.

Before going to MMS, I worked for the ASLM during the Clinton Administration and
have a general sense how individual bureaus are administered in that office. The ASLM
has the Bureau of Land Management, the Office of Surface Mining, and the new
BOEMRE within its jurisdiction in the Department. Each bureau had complete
independence from the other when I was there and, although the current situation presents
a different set of circumstances, I have little doubt that BOEM and BSEE can and will
thrive well and independently in the same department and under a single assistant
secretary.

At the beginning of this decade, two commissions were established to examine ocean
policy and make recommendations on improving our national effort in developing and
carrying out such policy. One of the key findings made by both commissions – one
private (PEW Oceans Commission) and one established by Congress (U.S. Commission
on Ocean Policy) – was that ocean policy was far too fragmented among a host of federal
departments and agencies (the “stovepipe phenomenon”) and that some consolidation and
much coordination was essential in finding a balanced approach to managing our oceans.
This is not the time to further fragment the ocean energy program by moving one of these
functions into a new department, notwithstanding that the separation of the leasing and
safety/environmental function into separate bureaus is essential.

Each of these bureaus should have organic acts with clear mission statements and a
specification of functions under the ASLM. There should also be a memorandum of
understanding or agreement between the two agencies recognizing the overlap between
such functions. The leasing bureau will not operate effectively if it does not have some
staff with strong environmental, NEPA analytical, and marine science backgrounds – and
the safety and environmental enforcement agency will need leasing coordinators with
expertise in the development of the five year program and individual lease sales. The
synergy between thee two bureaus will be enhanced by organic acts with clear
specifications of functions, some redundancy with regard to staff skills and backgrounds,
and organizational location under the same assistant secretary. Nevertheless, the legal
and organizational separation of these functions into two distinct and independent
bureaus will significantly address some of the problems identified by the Interior
Department’s Safety Oversight Board in the immediate aftermath of the Deepwater
Horizon tragedy.