 Good morning and welcome. I'm Frank Verastrom, Director of the Energy and National Security Program here at CSIS and it's my pleasure to welcome you here this morning. A couple of administrative announcements to the extent that you have your cell phones on including myself. This would be a great time to turn them off. There we go. And then since we're on safety in the unlikely event of an evacuation you all know where the exits are as you go out to the right. One stairway going up brings you up to the K Street, the foyer entrance. If you go down brings you into the garage brings you out the 18 Street entrance. Okay, so we're good. It's my great pleasure to welcome back this morning Michael Bromwich who all of you know Michael is the Director of the Bureau of Ocean Energy Management, Regulation and Enforcement, BOMR as it's called. In the wake of the Macondo Strategy he was sworn in as the Director of what used to be Minerals Management Service in June 21st of last year. And in the intervening 15 months he has undertaken and completed a laundry list of major reforms and accomplishments that I think are truly astonishing. Under his leadership the Bureau has undertaken an aggressive overhaul of the offshore oil and gas and regulatory process with an emphasis on enhanced safety and environmentally responsible development. They revised inspection procedures, developed performance based standards for offshore drilling, including equipment, safety practices and management, oversight of operations and contractors, developed plans for a comprehensive reorganization of the Bureau which I'm sure we'll hear more about today, established a new investigation review unit, launched a leasing process for commercial wind energy in the offshore, established the Ocean Energy Safety Advisory Committee and embarked on a major recruitment campaign to enhance the Bureau's capability. This is in addition to the Bureau's normal activity of permitting offshore activity and preparing for upcoming lease sales which have also been announced. This is Mike's third time with us here at CSIS and on each of the previous occasions we've always found his presentations to be content rich for sure, articulate in terms of specifics and always thoughtful. In addition he delivers this message with candor in clarity and so it's no wonder why we keep inviting him back. His bio is included in the announcement of materials so I won't go into that in great detail, but if you'll all join me in welcoming Michael Bromwich to the podium. Thanks very much. Well, thank you very much for that very kind and generous introduction, Frank. It is a pleasure to be back. Good morning. Thank you for the opportunity to speak to you today about our efforts over the past 15 months to design and implement our comprehensive overhaul of the former Minerals Management Service. As Frank noted, this is my third appearance at CSIS since President Obama and Secretary Salazar asked me to lead the Bureau of Ocean Energy Management Regulation and Enforcement in June of 2010. When I was here the first time in January, we discussed the President's commission report on the Deep Water Horizon explosion and oil spill, which had just been released and we focused on the important new safety requirements Bomer had developed and at that time was implementing. I also outlined in broad terms how we planned to separate and clarify the agency's multiple missions of energy development, revenue management, and safety and environmental enforcement. And when I was here in April, I addressed the not so narrow topic of the future of offshore oil and gas development, but also outlined what we were planning for the two new agencies that were going to result from the reorganization, the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement. I also discussed the regulatory reforms that we continued to implement and our full engagement with the international regulatory community. Today, I am extremely pleased to report that we have accomplished what we set out to do. 17 days from now, Bomer will cease to exist and in its place, Bomer and Bessie will open their doors. Together, they embody our collective efforts to institutionalize a set of structural and substantive reforms that will do several important things. They will greatly enhance our nation's ability to responsibly develop our offshore energy resources and reduce our dependence on foreign sources. They will improve the safety of operations and they will provide greater environmental protection. We have done all of this at the same time as we have continued to move forward with our day-to-day operations. We have undertaken more rigorous environmental reviews. We have continued to approve plans and permits that comply with our new safety and environmental requirements. And we are preparing right now, as Frank noted, for an important upcoming oil and gas lease sale. And this doesn't even touch on the hard work we have done in promoting offshore renewable energy development, which is an important story we will leave largely for another day. Now, when the Government Accountability Office placed the Department of the Interior on the 2011 high-risk list with respect to oil and gas oversight, it stated that the Bureau must, quote, meet its routine responsibilities to manage these resources in the public interest while managing a major reorganization that has the potential to distract agency management from other important tasks and put additional strain on Interior staff. It must also do this in a constrained resource environment, unquote. Well, despite the concern of GAO and many others, we have met this enormous challenge. I am extraordinarily proud of what we have accomplished. I have been impressed each day by the dedication demonstrated by Boomer employees. I am confident that we have selected the personnel and created the organizational structures that will enable the nation to move forward with responsible domestic energy exploration, development, and production. Now, the Deepwater Horizon explosion in oil spill highlighted a number of problems and weaknesses in the way that MMS had historically carried out its business. Those weaknesses included the adequacy of the agency's regulations, especially as they related to offshore safety and environmental protection. But they also included the excessively broad focus of the agency that was charged with multiple important and complex missions and the enormous shortfall in resources that had historically been made available to that agency. In the immediate aftermath of the spill, we found that existing regulations had not kept up with the advancements in technology used in Deepwater drilling. In response, we quickly issued new rigorous regulations that bolstered offshore drilling safety, and we also ratcheted up our efforts to evaluate and mitigate environmental risks. We introduced for the first time performance-based standards similar to those used by regulators in the North Sea to make operators responsible for identifying and minimizing the risks associated with drilling operations. We did this through development and implementation of two new rules that raised standards for the oil and gas industry's operations on the OCS. Even before the various reports on the Deepwater Horizon tragedy were completed, we knew that we needed to address drilling safety issues. We did this last October, as many of you know, through our emergency drilling safety rule, which created tough new standards for well-designed casing and cementing and well-controlled procedures and equipment, including blowout preventers. This rule requires operators to have a professional engineer certify the adequacy of the proposed drilling program. And in addition, the new drilling safety rule requires an engineer to certify that the blowout preventer to be used in a drilling operation meets new standards for testing, maintenance, and performance. The second rule was our workplace safety rule. That rule requires operators to systematically identify risks and establish barriers to those risks. It seeks to reduce the human and organizational errors that cause many accidents and oil spills. Under the rule, also known as the SEMS rule, operators must develop a comprehensive safety and environmental management program that identifies the potential hazards and risk reduction strategies for all phases of activity from well-designed in construction through the decommissioning of platforms. Many companies had developed such SEMS systems on a voluntary basis in the past, but many had not. Because the rule required substantial work by many operators, we delayed enforcement of the rule for a year. But starting in November, we will begin to enforce compliance. Based on my discussions with our own personnel who have been gearing up to ensure compliance with the SEMS rules and my meetings with individual operators and groups of operators, I am confident that the vast majority of operators will be ready with their SEMS programs by that day. Today, as you know, about an hour ago, we proposed a follow-up rule that further advances the purposes of the SEMS rule. It addresses additional safety concerns not covered by the original rule and applies to all oil and natural gas activities and facilities on the OCS. Now, we first announced that this rule would be forthcoming at the time we announced the original SEMS rule, so it comes as no surprise to anyone. The proposed SEMS II rule includes procedures that authorize any employee on a facility to cause the stoppage of work, frequently called stopwork authority, in the face of an activity or event that poses a threat to an individual, to property, or to the environment. The proposed rule also establishes requirements relating to the clear delineation of who possesses ultimate authority on each facility for operational safety, establishes guidelines for reporting unsafe work conditions that give all employees the right to report a possible safety or environmental violation and to request a bone or investigation of the facility and requires third-party independent audits of operator SEMS programs. We believe these are reasonable, appropriate, and logical extensions of our original SEMS rule, and we look forward to the comments and suggestions of operators and other interested stakeholders as this proposed rule moves through the rulemaking process. As you all know, we're in the final stages of completing our own investigation into the Deep Water Horizon tragedy. That report is the result of a collaborative effort between Boemer and the Coast Guard. Following the issuance of that report, which is imminent, we expect to make available for public comment additional proposals that will further enhance drilling safety and environmental protection. In order to ensure that we incorporate the very best ideas and best practices of the offshore industry and other interested stakeholders in offshore exploration, development, and production, we will proceed through a notice and comment rulemaking process that will begin with an advanced notice of proposed rulemaking. It is our hope and our expectation that at the end of this process we will develop consensus proposals that will significantly enhance safety and environmental protection. Again, this is not a new announcement. It's not new because we've been discussing our intention to further enhance offshore safety regulation for the past year. We have waited this long because we thought it was important to wait until we were in a position to benefit from the insights and lessons learned from the joint investigation. Now, on previous occasions I have mentioned other steps that we have taken to enhance offshore safety and environmental protections. These include elaborating on requirements that oil spill response plans include a well specific blowout and worst case discharge scenario, and then operators demonstrate that they have access to and can deploy subsea containment resources that would be sufficient to promptly respond to a deep water blowout or other loss of well control. These enhanced requirements are substantial and necessary, and many of them were long overdue. They have made the important enterprise of offshore exploration development and production safer and more environmentally responsible than ever before. And the new regulations we are proposing and will propose are limited and common sense elaborations of the rules we have already put in place. We believe that they will have the support of the operator community which shares our interest in promoting safe and responsible operations. In addition, we have developed an entirely new mechanism that will assist us in making sure that our efforts to enhance safety will not languish in the future as they have at times in the past. In January, Secretary Salazar established the Ocean Energy Safety Advisory Committee to advise us on a broad range of issues related to offshore energy safety. I have met with the committee led by former Sandia Labs Director Tom Hunter on two occasions and am very pleased and impressed with their commitment to helping us address these challenges. The advisory committee will assist Bessie and we expect to receive the first set of recommendations from its subcommittees by the end of this year. One of the fundamental weaknesses highlighted by the Deepwater Horizon tragedy was the fact that the agency charged with enforcing federal regulations had three competing missions. Revenue generation, responsible energy development and safety and environmental enforcement. Through no fault of the agency's employees, the agency lacked the necessary resources, the leadership and the vision to effectively fulfill all of its responsibilities. For decades and across administrations, the prevailing focus was on revenue generation and energy development. The inspector workforce fell further and further behind as it tried to keep pace with the rapid growth in the number of facilities they were responsible for overseeing. In addition, industries advances in technology significantly outpaced the agency and its development of regulations. It became clear that the agency had simply been asked to do too much with too little and that there was inherent tension among the multiple missions it had been asked to fulfill. The president's commission found that the top priority of all of the prior MMS directors it interviewed was the generation of maximum revenues for the federal treasury through royalty and rental collections. It was inevitable that setting this as the top priority would have an effect on the ability to arrive at responsible and balanced decisions concerning the development of our offshore resources. And it was also inevitable that the priority assigned to revenue collection would have an even greater adverse impact on the agency's ability to ensure that the appropriate rules were in place and to aggressively enforce the rules that were in place. Therefore, it became apparent that those three missions had to be separated and made independent of each other to ensure that all three missions had the appropriate focus and adequate resources. So on May 19, 2010, a month before I arrived at Interior, Secretary Salazar signed a secretarial order announcing his intention to separate the former MMS into three separate organizations with the goal of separating these functions and enhancing the ability of our personnel to accomplish these important but quite different missions. And my job then was to lead this reorganization and make real the creation of three new entities, each with specific and independent missions, and each with the authority and resources necessary to effectively carry them out. Last summer, we began a thorough review of all of our programs and processes. We took a very close look at the organizational structure and culture of the former MMS. We took prompt action to address conflicts of interest real and perceived by implementing a strict recusal policy and setting up an internal investigation and review unit. We reinvigorated ethics training and made that training specific to the situations our employees encounter in their day-to-day jobs and issued updated and more stringent guidance on the acceptance of gifts. We also addressed the lack of resources that had played the agency for decades. The President submitted a substantial supplemental budget request in the summer of 2010, which was partially funded, and that enabled us to begin hiring additional staff. We launched an aggressive nationwide recruitment campaign, and I personally visited college campuses across the country to talk about the rewarding and challenging careers awaiting engineers and scientists in Boemer. We have since hired 122 new employees across various disciplines and specialties, but we need many more. The creation of Boemer and Bessie initially announced more than a year ago separates resource management from safety and environmental oversight. This allows our permitting engineers and inspectors who are central to overseeing safe offshore operations greater independence, more budgetary autonomy, and clearer focus. Our goal has been to create a tough-minded but fair regulator that can effectively keep pace with the risks of offshore drilling and will promote the development of safety cultures in offshore operations. In Bohem, we have created a structure that ensures that sound environmental reviews are conducted and that the potential environmental effects of proposed operations are given appropriate weight during decision-making related to resource management. This is to ensure that leasing and plan approval activities are properly balanced. These processes must be rigorous and efficient so that operations can go forward in a timely way based on a thorough understanding of their potential environmental impacts and the confidence that appropriate mitigation against those potential environmental effects are in place. We have renewed and reaffirmed our commitment to develop thorough, credible, and unfiltered scientific data to serve as the basis for our resource development decisions. To that end, we have established the position of a chief environmental officer in Bohem. This person will be empowered at the national level to make decisions and final recommendations when leasing and environmental program directors cannot reach agreement. This individual will also be a major participant in setting the scientific agenda for the nation's oceans. I have selected this first-ever chief environmental officer and hope to be able to announce it publicly in the very near future. Now, Bohem and its predecessor agencies have long maintained a robust scientific studies program, as many of you know. However, in the past, there was little effort to disseminate and promote the important work that was being performed. Further, there was insufficient attention paid to the program by senior leadership, again, because of the emphasis given to revenue generation. We are refocusing our efforts to showcase the world-class research being conducted and directed by our scientists, and we are taking institutional steps to ensure that their research is given appropriate weight in the decision-making process. To ensure adequate environmental reviews, we have launched a review of our historical policies on the use of categorical exclusions as suggested by the Council on Environmental Quality. And during the pendency of that review, we have been conducting site-specific environmental reviews for exploration plans submitted by operators in deep water. And even though we are doing more rigorous and more extensive environmental reviews, so far, we have managed to make decisions on those plans within the 30-day time frame set by Congress. In shaping BESI, we took a broad look at the best practices of domestic and international regulators to create strong enforcement mechanisms across the Bureau. We have established for the first time an environmental enforcement division in BESI. This division will provide sustained regulatory oversight that is focused on compliance by operators with all applicable environmental regulations, as well as making sure that operators keep the promises they have made at the time they obtain their leases, submit their plans, and apply for their permits. Our new chief of this division, recruited from outside the agency, started work yesterday. In BESI, we have already established multi-person inspection teams that are being equipped with better and more advanced tools than ever or more to do their jobs. Our new inspections process and protocols will allow teams to inspect multiple operations simultaneously, and will enhance the quality of our inspections, especially of larger facilities. We've established a national training center in BESI whose initial focus will be on keeping our experienced inspectors current on new technologies and processes and ensuring that our new inspectors are given the proper foundation for carrying out their duties rigorously and effectively. We have already run two sets of our newest inspectors through the initial inspector training curriculum. And I have selected the first ever director of our national training center from outside the agency, and he too came on board yesterday. As I've discussed on several occasions over the past several months, we will be extending our regulatory reach to include contractors as well as operators. We have not done so in the past, but we clearly have the legal authority to exercise that power. And there's no compelling reason in law or logic not to do so. In my judgment, it is simply inappropriate to voluntarily limit our authority to operators if in fact we have authority that reaches more broadly to the activities of all entities involved in developing offshore leases. I am convinced that we can fully preserve the principle of holding operators fully accountable, and in most cases solely responsible without sacrificing the ability to pursue regulatory actions against contractors for serious violations. We will be careful and we will be measured in applying our regulatory authority to contractors. As we consider changes in how we do business, we work to strengthen our collaboration with our international counterparts. Offshore regulators and senior policy officials have much to learn for regulators in other countries to improve safety and environmental protection. And in this spirit last April, the Department of the Interior hosted ministers and senior energy officials from 12 countries and the European Union for the ministerial forum on offshore drilling containment. This historic meeting led to fruitful dialogue about best practices and how to develop cutting edge effective safety and containment technologies. We're currently working with these other nations to make this forum permanent. We're also continuing to work through existing channels for international cooperation and the sharing of best practices across regulatory regimes, such as the International Regulators Forum, an organization Boomer helped to found in 1994, and in which Bessie will continue to play an active role. Throughout this process, we have been open and transparent with our intentions and our plans for regulatory reform and the reorganization of the former MMS. Our goal has been to do everything possible not to disturb the day-to-day operations of the Bureau. We have worked very hard to ensure those in industry and all interested parties are aware of the changes being considered and made, that they have a voice in the discussion, and that the reforms we have implemented make sense and are appropriate to the goals we wish to achieve. Now in the midst of all this activity, we have continued to move forward with a full range of our important day-to-day activities, conducting environmental studies, performing environmental analyses, reviewing and approving plans, reviewing and approving permits, and conducting inspections. This has taken dedication and commitment, and our personnel have shown this to a truly impressive degree. More specifically, we are reviewing and approving exploration and development plans and applications for permits to drill. We are conducting environmental reviews and making preparations for a Western Gulf of Mexico lease sale this December, and for a large consolidated central Gulf sale late next spring. We continue to review proposals to drill in the Arctic next summer, and we are aggressively working toward offshore wind energy development in the Atlantic and working with states on the Pacific Coast toward their renewable energy goals. The amount of work being accomplished every day by this relatively small Bureau is quite remarkable. We've made special efforts to ensure that offshore operators understand the new standards and that they have the tools and information needed to fully comply with those requirements. Our staff and I personally have participated in scores of meetings with individual operators, groups of operators, and trade associations to explain the requirements, answer questions, and address concerns. And as we approach October 1, we are focusing substantial energy on making sure that those in industry, the conservation community, and our sister federal agencies understand the coming changes so there will be no interruptions in our operations. Not everyone, however, is willing to see the facts as they are, nor to appreciate the level of effort of our personnel, nor to recognize that additional requirements designed to enhance the safety of offshore operations and protection of offshore operations mean that plan and permit approvals do not proceed at the same pace as they did in the past. I continue to be disappointed to see politically motivated erroneous reports and commentaries sponsored by various industry associations and groups criticizing the Bureau for allegedly slow walking permits and plans. That is a phrase we see repeated over and over again and it is simply not true. One trade association representative recently said, quote, while the industry has met every requirement for resuming operations in the Gulf, permits and leases have been issued too slowly, which is costing jobs, hurting the Gulf Coast, the national economy, and reducing energy security, end quote. Another described the rate of permitting in this way, quote, it's like leasing an apartment from the government for $20 million and the government refuses to give you the key, unquote. These groups continue to distort the facts and in some cases use undisclosed or incomprehensible methodologies to suggest that the slower pace of plan and permit approval is part of a strategy to slow down offshore energy instead of the predictable product of more searching and rigorous reviews and analyses conducted by a small staff. Last week in a publicly released letter to President Obama, 20 representatives from various industry associations again used incorrect and misleading statistics to make a case for returning permitting levels to a pace commensurate with the industry's ability to invest. In the letter, the group stated, quote, some in your administration dispute the actual rate of permitting in the Gulf of Mexico, we would prefer less dispute on numbers and more action on permits, end quote. I fully understand why these groups are becoming increasingly uncomfortable about discussing our plan approval and permit approval numbers. It is because we have demonstrated that they are using flawed and frequently unstated methodologies and numbers that in many cases are created out of thin air. As of the close of business yesterday, September 12th, the real statistics, the real numbers are as follows. In shallow water, to date we have issued 74 new shallow water well permits since the implementation of new safety and environmental standards on June 8th, 2010. Just 13 of these permits are currently pending. 10 have been returned to the operator for additional information. In deep water, since an applicant first successfully demonstrated containment capabilities in mid-February, we have approved 129 permits for 40 unique wells requiring subsea containment. With 12 permits pending and 23 permits returned to the operator with requests for additional information, particularly information regarding containment. Also in deep water, we have approved 45 permits with one permit pending and one permit returned to the operator with requests for additional information for those activities that include water injection wells and procedures using surface blowout preventers. The simple fact is we are reviewing and approving permits as expeditiously as we can given our current resources. Another fact that should not be overlooked is that our employees have put in more than 1,350 hours of overtime, reviewing plans and permits in the past six months alone. In light of that, it is unfair and it is inappropriate to accuse this bureau of slow walking anything. I was pleased to see that for the first time last week, the CEO of one of the major oil and gas companies said he thought the claim that we have been slow walking permits was false. It was about time that we heard an oil company executive say publicly what many had been saying privately to us for many, many months. We understand that operators would like the permitting process to move more quickly, but that's very different from suggesting that there have been concerted efforts to slow things down. And the truth is that industry needs to step up its game if it is genuinely interested in a more efficient process. Instead of commissioning studies that don't bother to understand how the process actually works, they would be better served by devoting more resources to improving the quality of their applications. The fact is that flawed and incomplete applications are a significant source of delays in the process. Operators need to stop turning in applications with missing or incomplete information or that completely lack information about subsea containment. We are still receiving applications that use cookie cutter templates. For example, we've had cases in which we received an application from an operator that details their plans to drill well A. The operator then submitted another application to drill well B, except that the application included the specifications for well A. They simply cut and pasted the information. This is clearly unacceptable and we will simply not approve an application with such blatant errors. We're not talking here about simple typographical errors. We're talking about applications with completely incorrect data or that are missing key data or that contain completely inconsistent data. We see this day in and day out and then we face criticism for the high rate of drilling applications that are returned to operators. Despite much unfair, inaccurate and misplaced criticism, we have been doing our very best to assist industry consulting with operators individually and in groups and holding workshops to clarify what may remain unclear or legitimately confusing to operators. For example, in March 2011, we held a day long workshop on exploration and development plans led by our personnel who are actively involved in reviewing and analyzing plans. More than 200 industry representatives attended the workshop which focused on the many aspects of plan submissions. Much of the discussion from the workshop was subsequently incorporated into a webpage focusing on submitting complete exploration and development plans. And thanks to the input we received from that workshop as well as other meetings and conversations, the page includes helpful information such as a checklist of required information for plans, frequently asked questions and a guidance document recently added that is entitled Top Ways Operators Can Submit Stronger Plan Applications. And we've made similar efforts regarding drilling permits. We have met regularly with oil and gas operators both individually and in groups to discuss their concerns and respond to requests for additional information and additional clarity regarding our permit review process. We have created a completeness checklist for our drilling engineers to use and ensuring a more efficient analysis and to aid in setting priorities for reviews. And we have shared the checklist with operators. We have developed an online tracking system for the first time that enables operators to track the status of their individual permits as they move through the review and approval process. Late last month, the Gulf of Mexico regional staff and the agency presented a full day permitting workshop for approximately 200 industry representatives. The workshop included a discussion of common errors and omissions found in the submission of permit applications and overviews and updates on subsea containment and the software screening tool that we used and developed in conjunction with industry and that we used to evaluate permit applications. A panel of operators very helpfully discussed proven methods and strategies for the completion of fully compliant permit applications. Now, we will continue to engage industry to ensure they understand the requirements. It's important and it's a central part of our job. Many operators have demonstrated that they do understand the requirements and that they are able to comply with them. Their permit applications are being approved in many cases very promptly. The two ingredients we need to speed up the review and approval of permits are applications that contain all of the elements of a fully compliant application and obviously additional agency resources. The drumbeat of criticism that urges us to approve plans and issue permits more rapidly will simply not cause us to cut corners or compromise safety to speed the process. All of us involved in creating our two new agencies, Bo and Bessie, have worked to create the structure, select the leadership and work to obtain the resources needed to fulfill our responsibilities to the American people. We need our people to approach environmental reviews and regulatory enforcement in a way that is tough, but fair, which places safety above all else, which promotes the responsible development of our nation's energy resources and ensures that all reasonable steps are taken to protect the fragile coastal and marine environment. We need everyone to embrace those goals and to recognize their importance. We cannot afford to have critics take liberties with the facts and act as though the only things that matter are the rapid approval of plans and permits, whether or not they comply with the standards and requirements that help ensure safety and environmental protection. Some may have forgotten Deepwater Horizon or wished to pretend it either did not happen or that it was a singular event that should not have a lasting impact on the way we do business. Well, we recognize it as a seminal event in the history of offshore drilling in the United States. It has driven much of what we have done over the past 15 months and much of the agenda we will be pursuing in Boa Mimbasi as we move forward. It's been a difficult and challenging year and a half for everyone involved with offshore energy development in the United States. As I look back, I'm extremely proud of what we've accomplished and I'm very optimistic and excited about what lies ahead. I firmly believe we can move forward safely and responsibly and continue to work toward energy independence for our nation together. Thank you very much for your time and attention and I'm happy to take questions to the extent we have time. Well, thank this. That was terrific. Since we started a bit late, we're going to continue a little past 11 so we'll try to incorporate and answer all the questions that get posed by the audience. So if you want to start with that, we have three simple rules here, wait for the microphone, identify yourselves and your affiliation and then to the extent you can, pose your question in the form of a question instead of just a comment. And we'll start on this side. Hi, Ayesha Roscoe with Reuters. I had a question. I mean, you said that you feel like you've accomplished all that or that Boemer has accomplished all that you've set out to do or... And so I wonder, do you feel like your work is done, is complete? Do you plan on staying on or do you feel like you've done what you set out to do, what you were hired to do? Well, we've accomplished a lot as Frank generously noted in his introduction and I detailed in my talk. Certainly the central tasks that I faced when I came on board were to deal with the immediate aftermath of Deepwater Horizon and the spill as well as head up this important reorganization. So we've accomplished a lot and we'll all be thrilled 17 days from now when we see the culmination of our work and the creation of two new agencies. Our work will never be done. I mean, that's part of the lesson that we've learned from Deepwater Horizon. The agency unfortunately had stood still in developing both its environmental protection regime and in terms of developing its safety regulations. And so one of the things that we've been working very hard to do is create the culture in which it's recognized that this is an ongoing set of tasks. And I think people in the agency and both of the new agencies very much get that in the way that some may not have in the past. So the work will never be done and obviously I will not be around forever but I'm very optimistic in terms of both successfully opening the two doors of the new agencies on October one and having the work that we've been involved in over the last 15 months continue. So Michael, you obviously understand and appreciate that resource development is a politically hot topic. But from what I can gather from your presentation, the notion of comparing premacondo permit application approval rates to post, that's not the standard. The standard is safer development, better technology, enhanced capability. That's not the standard and it shouldn't be the standard. I mean, the reality is that we have more robust and rigorous requirements than we had before on the environmental side but particularly on the safety side. I think that's what everyone anticipated as the appropriate aftermath and sequel to Deepwater Horizon. So we've done that. And so it was predictable I think that the pace of plan approval with the site specific environmental assessments we're doing in Deepwater and permit approval with all of the need to comply with all of the new requirements would be slowed. I think part of the issue was having our people absorbed fully all of the changes and having industry fully absorb all the changes. That's why we've held many meetings and discussions. That's why we've had the plan workshop. That's why we've had the permitting workshop. I'm confident that we will continue to become more efficient as time goes by. We would obviously be able to process both plans and permits even more quickly if we had additional resources. And I'm certainly hopeful that the agency, the two new agencies will get the resources they need respectively to try to attain that goal. But simple numerical comparisons between years before Macondo and the 15 months since really dramatically missed the mark and I think are deeply flawed and in many cases disingenuous. The, if you track how many permits we approve per month it is not linear. It doesn't go straight up. It goes up and down and that relates largely to the specific characteristics of the particular wells that we are reviewing and that we're being asked to permit. So I would discourage anyone from saying, okay, we've now gotten back to a terrific pace and that will necessarily continue. Most of the wells in deep water that we've permitted have been those that according to the work we've done with our software tool are ones that containment can be achieved through capping alone. My understanding is that many of the new permit applications that we are reviewing now are gonna require what's called cap and flow where a capping stack would not be sufficient based on all the calculations to deal with a subsea blowout. And so that will be more complicated. It will be a more complicated exercise that our drilling engineers have to perform. So I don't know what the pace will be in the future but I think efforts to extrapolate from the prior month which you're quite right was a particularly productive month are probably misleading. What I can assure everyone though is that we're doing this as expeditiously and efficiently as we can given our limited resources but if the number snaps back to a smaller number for September, I don't think people should be alarmed. It really reflects the specific characteristics of the inventory of applications that we have at any particular time. Janine Hall from Strategic Energy Advisors. I was very interested that you use the term safety culture many times in your speech and I was very glad to hear that. I would appreciate if you could describe a bit what it means to you, what the critical elements of it are and if you could give an idea of how deep you believe that safety culture is in the agency and in industry. It's a very good and complicated question. Safety is important to operators. We all hear that and I frankly believe it but it's one thing to say that it's important and it's another thing to act intelligently on that insight and really try to embed safety cultures in companies. So it's not just a matter of the rhetoric, it's a matter of the reality. And we deal with a lot of operators that have made truly impressive efforts to embed safety cultures in their organizations through detailed and complex sets of internal rules to assure safety. Many of the operators we deal with already have the stop work authority that is part of CEMS-2. So I think what it requires is a sustained and continuing focus on safety. That's what it means to have a safety culture. It's not something that you do it once and you put it on the shelf. You don't have a compliance program and sit it on the shelf. It needs to be a living, breathing system as well as a series of documents. And so that needs to come down from top management. There needs to be continuing emphasis on the importance of safety, that it's the highest priority of an organization of operators. And I think just the repeated harping on it, if you will, is an important part of the process as well as a ongoing internal review of what can be improved, what can be learned from other operators, what can be learned from other parts of the world. It is not a process that ends. It is a process that continues. I think the truth is that although our agency historically has been very concerned with safety, that we lack the tools to act on that insight. Now with the CEMS rule and today with CEMS tool, we're in a much better position to spend more of our time trying to cultivate and ensure safety cultures in operators and working with operators to raise the level of safety. So further work needs to be done in industry and significant further work needs to be done in our agency. And I wanna emphasize, you will never arrive at an endpoint. There is no endpoint to the process. It's something that needs to be focused on all the time and to have some of the best minds in the companies and the best minds in our agency focus on it and try to figure out what can be done to improve the safety of operations. Hi, this is Lauren O'Neill with Oil Daily. I was wondering if you could talk about what operators can expect after November 1st when the workplace safety rule goes into force. Can they expect new inspections or have they been preparing a lot in advance? I think operators have been preparing a lot in advance. For some operators, particularly those that have operated around the world, many of them were quite prepared to deal with the CEMS rule. And I think there are some that probably didn't have to do all that much in order to get ready for the CEMS rule. Others, I think, it took a more substantial lift, which is why we recognized that and didn't begin to enforce compliance until a full year after the rule was made effective. We will begin the process of reviewing and inspecting operators CEMS programs. We've held CEMS workshop with industry. I know the Industry Center for Offshore Safety has been concentrating on CEMS-related matters. So I'm certainly hopeful that we will find, when we begin to go out and look at companies CEMS programs, operator CEMS programs, that we'll find very well-developed, carefully thought out and complete programs. That's our hope. It's a new area, so I don't know what our expectations are. We really don't have anything to base those expectations. But I have been impressed that operators seem to have taken it seriously and are devoting appropriate efforts and resources to making sure they comply. Thank you very much. David Ivanovich with Argus Media. Political statements from trade associations are one thing. Improper applications for permits to drill are a completely different animal. What is happening? What's going on? Are operators just that confused? Are they being sloppy? Do you have a sense as to what's causing these problems with their applications? Well, I don't think they are completely separate because it takes us additional time to review applications that are flawed, which in turn slows down the rate at which we can approve plans and approve permits. I think it's a combination. I think there is some confusion. I think there is, in many cases, a lack of care and attention to detail. I think, certainly, our people on staff and in the field think that there is sort of an effort to see what some operators can get by with and not to pitch their game at the highest levels and to submit something in the first instance that they know will pass muster, but instead to see if something less will suffice and that may become the new model of what they do in the future. So I think it's a combination of things. I do think that certainly at the outset there was a legitimate lack of clarity and certainty. I think the fact that we are still, until very recently and still today, getting deeply flawed applications to drill with huge sections missing, including in some cases no containment section at all, even though it's a well in deep water, suggests that the companies are not in every case bringing their A-game. And I don't know what all the causes are for that, whether it's sloppiness or whether it's an effort to see if they can get by without a fully compliant application. I don't know and I don't wanna pretend that I can read the minds of the operators. I know it is a major source of frustration to our personnel who would love nothing better than to see fully compliant application submitted in the first instance rather than to go through an application and see gaping holes in the application such that they have no choice but to return the application. It's getting better though. It's getting better, I think it was already getting somewhat better and I think the permit workshop that we had the last few days of August, we think and hope will significantly help. We had a detailed set of presentations that our personnel gave during that workshop that are posted online for operators to continue to refer to. And as I mentioned during my talk, we had a very instructive panel from industry operators explaining what they do to ensure a fully compliant application. And so I think with those combinations of attention from us and more productive discussion amongst and across operators, I think we'll continue to see an improvement in the quality of applications. I certainly hope so. Can I ask you a question on rig redeployment? So when the moratorium first took effect, there was concern initially on the length of the moratorium when the leases for this equipment is really expensive, whether to be a mass exodus out of the Gulf. And in fact, that didn't happen. There was a handful of rigs that left. As a result of kind of constructive and creative use of these rigs though, during the period, a lot of the maintenance and workover activity that kept them busy has been done now. So there seems to be increasing noise at least that you hear in the trade press that unless the permitting pace picks up that you could see some of these actually moving again because the applications just don't get done. Have you picked up any of that same? Yeah, a little bit, Frank. But I really do think that things are getting better. I think the quality of the applications is increasing. And certainly in the conversations that I've had recently with industry executives, they've quite consistently expressed optimism about the future of Gulf of Mexico and deep water in the Gulf of Mexico in particular. So I'm very glad that that is their attitude. I think it is justified. And I think with the improvement of quality of applications and the infusion of additional resources, which we all need for us to have, I think we will be able to prevent a significant exodus of rigs from the Gulf. Okay, and I got a note here to ask you a question about Cuba. So for those senators concerned about drilling on the west coast of Florida, the notion of the international cooperation on the east coast of Florida, has there been contact with the Cuban government or when you look at offshore development in the Atlantic Basin? I'm not aware of any direct contact with Cuba. It's obviously something that we're monitoring and that we're concerned about. There are discussions at high levels of the administration about what to do about it. I do want to add that Repsol, which is the company that's proposing to drill initially, has been quite responsive and cooperative with us. So I do want to assure people that there are obviously significant issues there, but they're certainly not being ignored. Okay, great. Environmental compliance officer. Considering that oil is the black gold that drives the global economy, I wonder if you could comment on the irony that the very agencies that's supposed to regulate the activity is deficient and starving for resources. I couldn't think of a better word to describe it than irony. Irony is one word, tragedy is another, that the agency has been chronically underfunded since its creation in the early 1980s. And again, I think that largely traces back to the fact that the old MMS was viewed primarily through the lens of how much revenue can be generated. That that was the focus of a series of MMS directors over the years. And that led to varying degrees of neglect of the resource development process and even greater neglect of the regulatory process, both with respect to safety and with respect to environmental protection. Those functions were simply undervalued over time and there were not strong enough advocates of ensuring safety and environmental protection either inside the agency, inside the government or in the outside world. So it's tragic, not just ironic tragic that it took something like Deepwater Horizon to serve as an alarm bell, a wake up call that these functions had been significantly neglected over time and to send the message to people in the agency and the Department of the Interior, to Congress and to the public that that needs to be repaired. So we've done a lot and we've gotten some significant additional resources and we're obviously grateful for that. But we're working out of a 28 year deficit, a 28 year hole. And so I think people need to understand that this is an ongoing growth development and building process that we need to go through in order to make sure that the decisions that are made in both of the two new agencies are balanced and appropriate and that safety and environmental protection are adequately valued in a way that they haven't been in the past. Well, my name is James Woods, I represent FBR. Just a quick question on, I guess, the new rulemaking that we respect to new rules being implemented or announced. The, I assume you're not talking about SEMS II, which we proposed today and so is already out there, but the advance notice of proposed rulemaking, we've said really from for a year now, at the same time as we put out the drilling safety rule, that that was our best quick shot at enhancing safety, enhancing drilling safety. But there would need to be continued focus on it. And I think it was several months later that we said for the first time that unlike the interim safety rule, which was an emergency rule effective immediately put in place under emergency conditions, that the new generation of safety rules would proceed at a very different pace. In part because we thought that the interim rule had done a lot of good in terms of raising the bar on safety. So as you probably know, in many rulemaking processes, you don't have the advance notice of proposed rulemaking. There's no requirement that you do so. And the fact that we are doing so should be a signal that we are truly interested in gathering the best ideas that everyone has, stakeholders have, operators have, academics have, so that we have a really sound, strong and balanced set of proposals to eventually incorporate into a rule. So we're talking about a process that is not gonna be six months, not gonna be a year. It's gonna be longer than that. Not because we think it's critical to get everything in this new rule and to get it right. Because as I said before and answered other questions, it's an ongoing evolutionary process you're never gonna get there. But we understand the turmoil that's been created by the emergency rule. And we don't think that we pay a cost, a significant cost in safety by taking the time to make this rulemaking process a more deliberate one. And as I said in the talk, my hope is that we are able to develop consensus new rules that industry, other stakeholders and we as the safety authority agree are necessary and appropriate to further enhance safety. That's our objective and I hope we can get there. One or two more questions. And the back here on the right. Yeah, hi, I'm Dave Diamond from the Department of Energy. I was wondering what type of either formal or informal coordination mechanisms are gonna exist between Bohm and Bessie once they split off? It's a very good question. One of the challenges and difficulties of creating two agencies out of one has been identifying the links, the connections, the interdependencies that exist or that will exist between the two new agencies. So we have focused on that for months and in fact have put together an interdependencies team whose sole job has been to focus on those interdependencies and figure out how to address them. So institutionally we will have various memoranda of agreement and memoranda of understanding that will clarify the structure of the relationship between the two new agencies as well as standard operating procedures in order to implement those MOAs and MOUs. So tremendous amount of work has been done by our staff in both identifying those issues and addressing those issues. I'm sure it's inevitable that there are some things we haven't anticipated. We've looked around the corner as far as we can but there may be some things that we've missed. But we're gonna set up a coordinating mechanism in the first few months after the split to make sure that we have an institutional mechanism to identify and address any additional issues that may not have been sufficiently identified during the planning process. So I feel very good about the process we put in place to do exactly what your question is aimed at. So with the dissolution of Boemer and the split between Boemer and Bessie, what's next for Michael Bromwich? We don't know what's next for Michael Bromwich but I really have not had a whole lot of time to think about what's next for me. We will have an announcement sometime in the near future that we'll bear on that either later this week or early next week. We can tape delay this. No. So I have not really given a lot of thought to what I'm gonna do long term. So there's very few times in history where you confront it with a crisis that people approach it methodically, comprehensively, thoughtfully without panic. And I've gotta tell you, I've been around this industry a long, long time, longer sometimes than I care to remember. And I actually think the approach that was taken here while there was a lot of fluttering at the beginning and a lot of people were very displeased at the end of the day. You've done an excellent job. And you ought to be commended both for the country, for the industry and for making things safe and more efficient going forward. Thank you very much, Frank. I very much appreciate that. Thank you Michael Bromwich.