OFFSHORE DRILLING:

Interior issues new rules, holds firm on moratorium

This story was updated at 1:10 p.m. EDT.

The Obama administration today imposed new offshore drilling safety regulations, a move needed to end its moratorium on deepwater exploratory drilling, but it gave no indication of when that ban would be lifted.

Instead, Interior Secretary Ken Salazar promised the industry would face a "dynamic regulatory environment" in the weeks and months to come, as his department refines and further tightens its safety and environmental standards for offshore drilling.

"These new rules and the aggressive reform agenda we have undertaken are raising the bar for the oil and gas industry's safety and environmental practices on the outer continental shelf," Salazar said during a speech at the Woodrow Wilson International Center for Scholars in Washington, D.C. "Under these new rules, operators will need to comply with tougher requirements for everything from well design and cementing practices to blowout preventers and employee training."

The new rules come in the wake of the blowout of a BP PLC well in the Gulf of Mexico in April that sparked the largest oil spill in U.S. history. Following the spill, Interior cracked down on drilling safety and regulation and imposed a temporary freeze on deepwater drilling operations. Today's rules will guide drillers on how they can operate after the moratorium ends.

The department had already spelled out some of the new regulatory conditions in a safety report issued in May and in two notices to lessees in June. The new regulations add to that suite of requirements, making mandatory several of the recommendations outlined in the May report.

The drilling safety rule details the proper cementing, casing and drilling fluid procedures that drillers should use in order to maintain wellbore integrity while drilling. The new rule also strengthens oversight of equipment, like blowout preventers, used to shut off the flow of oil and gas.

The workplace safety rule requires operators to have a comprehensive safety and environmental impact program in place to reduce organizational errors that could cause accidents or spills. The rule makes mandatory a practice recommended by the American Petroleum Institute (API) to its members. That voluntary program will help companies identify, address and manage safety hazards and environmental impacts.

Erik Milito, API's upstream director, said Interior's rules should balance safety improvements and a framework for government approval for exploration and development projects.

"The rule must serve the interests of improved safety and energy development," Milito said in a statement. "There has to be a clear, practical and certain process for project review that will protect the environment. We cannot have an approval process that creates unpredictable delays that could place at risk the flow of domestic energy in our country."

And Milito urged the administration to lift its moratorium on deepwater drilling.

"Every day the moratorium remains exacts an economic penalty on the people of the Gulf and on our nation. The costs are already too high. We continue to urge the government to end it as soon as possible," Milito said.

Salazar defends ban

Salazar had said the long-awaited rules were necessary before he would ease off the drilling ban. Still, he gave no indication of when the freeze would end during his remarks today.

"There will always be risks in offshore drilling," Salazar said. "We will only lift the moratorium when I as secretary of the Interior am confident that we have significantly lessened those risks."

Salazar continued to defend his decision to freeze offshore drilling following the Deepwater Horizon explosion, saying the accident and ensuing spill had exposed the oil and gas industry's lack of safety standards and preparedness to deal with spills.

He also took aim at the moratorium's many critics -- including industry organizations and oil state legislators -- who have called the moratorium a job-killer and fought to lift it.

"The same people who have fought to weaken regulation and oversight of the oil and gas industry have protested from the start," he said. "They wanted to go back to business as usual and forget that anything happened this summer."

Salazar also defended his coming decision to lift the ban, saying it would only be done after he was confident that industry met a "gold standard" for worker and environmental protection.

"When we do lift the suspension, some will say it is too soon, they will say there are still risks involved," the secretary said. "We need that oil and gas to power our cars, our homes and our industry, but we can make -- and are making -- drilling safer.”

'Turning point' for energy policy?

He added that the oil spill should be a "turning point" toward a national push to develop wind, solar, geothermal and other renewable energy sources. The administration will announce permitting for the world's largest solar developments in the next few weeks or months, Salazar said.

"Our energy policy, frankly, has failed us time and time again for many decades," Salazar said. "We rely too much on foreign oil. We are falling behind India and China in the race for clean energy technologies and clean energy jobs, and our oceans, coasts and climate are at risk. We need to change the game."

Salazar also touted the Obama administration's efforts thus far to improve drilling enforcement. The administration has committed additional resources to oversight and reorganized the Bureau of Ocean Energy Management, Regulation and Enforcement, Interior's offshore drilling oversight agency that was previously known as the Minerals Management Service.

Tomorrow, Salazar will be in Colorado to formally establish Interior's Office of Natural Resources Revenue, which will collect royalties from onshore and offshore energy development. Salazar said the agency was necessary to eliminate BOEMRE's conflicting mandate of regulating offshore energy and collecting revenue from it.

Reactions

Environmentalists say they are encouraged by the safety crackdown.

David Pettit, a senior attorney with the Natural Resources Defense Council, praised the rules as an "extremely positive step forward."

The drilling safety rule addresses some of the mistakes BP made on the Deepwater Horizon platform by requiring third-party verification of platforms casing and cementing, Pettit said.

The workplace safety rule's requirement for an environmental management system has been a longtime priority of the environmental advocates, but industry groups have argued the systems should be voluntary, he said.

"That discussion is over, but the secretary just mandated it," Pettit said.

Adam Kolton, senior director of congressional and federal affairs at the National Wildlife Federation, agreed that the rules are a positive step forward.

"Secretary Salazar has laid out the right vision -- to restore the Gulf, to strengthen oil and gas regulations in ways that better protect workers and the environment and most critically to advance a clean energy future," Kolton said in a statement.

Kolton said the group is pleased Interior has not lifted the moratorium yet.

"As we've seen in the Gulf oil disaster, the stakes are too great to proceed hastily," he said.

But Rep. Doc Hastings (R-Wash.), ranking member of the House Natural Resources Committee, does not agree.

"The Interior Department today announced new rules on drilling but still refuses to say when the arbitrary, non-science-based moratorium will be lifted," Hastings said in a statement. "When will the administration actually begin issuing permits? When will people in the Gulf be allowed to return to work?"

Hastings urged the administration to make the rules "clear, concise, enforceable, and, most importantly, enable energy production to immediately resume in the Gulf."

"Otherwise a de facto moratorium could remain in place for years that will cause more American job losses and more companies moving operations overseas," Hastings added.