 So, good morning and welcome. I'm Frank Verastro. I'm the Director of the Energy and National Security Program here at CSIS. And it's our pleasure to take to, this is our eighth installment on the Gulf Oil series. We actually started it last June. I think it was two days after Director Bromwich was sworn into his new job. Over that period, we've held consecutive sessions that looked at energy technology, looked at well-designed, looked at international standards and best practices. At one point, we looked at the environmental impacts, what we can do better. We thought what we'd do today, though, is devote since we're almost at the anniversary of Macondo, a tragic accident that it was, but we want to look forward. So what's the path forward? When you look at rising prices unrest in the Middle East, higher gasoline, it's no question, at least in our mind, that we need to get back to the work in the Gulf of Mexico, but we need to do it better, smarter, and safer. So today, what we've assembled for you, we think, is Director Bromwich is going to speak first, then we've got a panel discussion, and we're going to take you through energy research and technology, what's been done on the industry side in terms of the task force and the Safety Institute. We've got Mike Wallace, former COO of Constellation Energy, which you might find a little unusual in this setting, but he was there. There's been so much discussion of INPO and whether that's safety case and as a safety organization, regulatory organization, that's a good model for the offshore. And I think in principle it is on the nuclear side, but there are some real differences with the oil and gas industry offshore. And then Robin West is going to join us this morning as well. We're going to divide the session into two separate segments, so that Director Bromwich will speak first and we'll take questions after that, and then we will reconvene with the panel discussions all the presentations with the permission of our speakers. We'll be available on our website. A couple of administrative things, since we're talking about safety, where we have low probability but potentially high impact events in the event that we have to evacuate, because it's already very warm in here. The stairwells on exit signs are out the doors to your left, my right. Once you're in the stairwell, you have two choices. You can go upstairs or downstairs, one level down, bring you to the garage, follow up the ramp, you're on 18th Street. If you take one level up, you're in the foyer on K Street and exit through the front of CSIS. This would be a great time to turn off your cell phones before we get started. And it's my real pleasure to have Director Bromwich here today. He was here earlier when we talked about, actually earlier this year, when we talked about getting back to the Gulf and we were taking bets on whether or not we'd be in the first or second quarter before activity got started again and now permits are being let. The Safety Institute is being proposed. Bessie is up and running or being organized. So a lot of activity has occurred. There's still a lot more work to do and we actually think this will be a work in progress. Hey, Chris. And that's a good thing because this is an evolution. This is a one-time event that you need to react to, but hopefully if you get things better, it won't occur again or you can minimize the danger that it occurs again. Director Bromwich, for those of you that don't know, has a distinguished career both in the public and private sector. He was on the litigation team at Fried Frank and Mayor Brown and Platt. He's been a former Inspector General of the Department of Justice. And in June of last year, he was sworn into his new job as Director of the Bureau of Ocean Energy Management, Regulation and Enforcement. I got that right this time. And since we have a full agenda, ladies and gentlemen, it's my pleasure to give you Michael Bromwich. Thanks very much, Frank and good morning. Is that better? More. Is that better? Okay, okay. Thanks for inviting me back to CSIS and to speak about the future of offshore oil and gas development in the U.S. When I was here three months ago in mid-January to participate in the same Gulf oil series, the National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling, the President's Commission, had just issued its final report. It was a time when no new deepwater exploratory or development drilling permits had been approved since Deepwater Horizon. Most of the questions here and elsewhere at that time involved whether and when deepwater drilling would resume. Well, much has happened since then. We have further elaborated and implemented rules and regulations that substantially enhance drilling and workplace safety and strengthen environmental protection. In addition, unlike a year ago when we watched in agony as BP attempted to improvise a response to contain the Macondo blowout, operators must now have a plan and the demonstrated ability to shut in a deepwater blowout and capture oil flowing from a wild well. That is a huge advance. And so as we approach the first anniversary of Deepwater Horizon, which comes tomorrow, many people are asking the perfectly appropriate question, what has changed since last April? The answer is these new safety regulations, the new containment requirements, and much, much more. These are some of the elements of the picture I wanna paint today of the future of offshore energy development. But to talk intelligently about the future, I have to anchor it in the recent past and in the present. And I'll do so by focusing first on the progress of our agency reorganization, which Frank mentioned and which I began outlining for you in January. Second, I'll bring you up to date on the status of offshore drilling in U.S. waters focusing specifically on the Gulf of Mexico and the developments over the past few months. Third, I'll describe some important recent international developments that suggest the value and importance of international cooperation and collaboration in the realm of offshore drilling. And finally, I will outline a comprehensive set of guiding principles relating to the future of offshore drilling. A year ago tomorrow, the Deepwater Horizon tragedy began to unfold in all its human and environmental horror. The explosions and fire on the rig took the lives of 11 men on the rig, injured many others, and resulted in the spill of close to five million barrels of oil into the Gulf of Mexico. In some ways, these events seem like they took place a long time ago. But in other ways, they seem to have occurred far more recently. At the time and in the immediate aftermath, Deepwater Horizon served like an electric current, jolting the industry out of a complacency and overconfidence that had developed over the preceding decades, while also serving as a clear message that both industry and government had to re-examine their practices. The memories of the 11 crew members have guided our work, and I think the work of industry, and have reinforced our determination to diminish the risks that such a catastrophic blowout can occur again. Now, when I was here last time, on January 13th, I outlined in Broadstrokes the blueprint for reorganizing the former minerals management service into three strong separate agencies within the Department of the Interior. A week later on January 19th, Secretary Salazar and I outlined more specifics about the reorganization. We described how the new structure would eliminate the inherent conflicts that existed when MMS was responsible for promoting resource development and forcing safety regulations and maximizing revenues from offshore operations. The President's Commission found that these conflicts resulted in an agency that was guided for decades by a predominant interest in maximizing revenues for the U.S. Treasury rather than promoting safety and rigorous oversight. That was unacceptable. And that is why one of our guiding principles has been to eliminate those conflicts by separating and clearly delineating missions across the three new agencies. The first stage of reorganization took effect on October 1st of last year, when the revenue collection arm of the former MMS became the Office of Natural Resources Revenue, now located in a separate part of Interior reporting through a completely separate chain of command. We're in the midst of implementing the second and critically important stage of the reorganization, separating the offshore resource management from the safety and enforcement programs. The steps we're now taking are more difficult, but they're extremely important. On October 1 of this year, Bomer will cease to exist. In its place, we will have two brand new agencies. We're creating the Bureau of Ocean Energy Management, BOEM, which will be responsible for managing development of the nation's offshore resources in an environmentally and economically responsible way. We're also creating the new Bureau of Safety and Environmental Enforcement, or BESI, which will enforce safety and environmental regulations. In making the important structural and design decisions that are shaping these two new agencies, we have relied on several guiding principles. These included first, separating resource management from safety oversight, to allow our permitting engineers and inspectors greater independence, more budgetary autonomy, and clearer senior leadership focus. For BESI, the goal is to create an aggressive, tough-minded, but fair regulator that can effectively evaluate the risks of offshore drilling, promote the development of safety cultures in offshore operators, and keep pace with technological advances. Second, ensuring that we create a sufficiently strong and effective BESI so that it can properly carry out the critical safety and environmental protection functions that are central to its mission and that have been historically slighted and underfunded within MMS. Third, providing an organizational structure that ensures that thorough environmental analyses are conducted and that the potential environmental effects of proposed operations are given appropriate weight during decision-making related to resource management. Now, we're placing the balance of our environmental science and environmental analysis resources in BOEM to ensure that leasing and plan approval activities are properly balanced and that environmental considerations are fully taken into account at early stages of the process, not after important resource decisions have already been made. But it takes more than good intentions to address some of the institutional weaknesses of the past. It takes concrete and specific actions and that's what we're taking. To provide you with a few important examples, we are strengthening the role of environmental analysis and enforcement. Many of the investigations and reviews of the MMS over the past year, whether by the President's commission, the Safety Oversight Board commissioned by Secretary Salazar, the Department of Interior's Inspector General and the Council on Environmental Quality, came to the conclusion that in the rush to maximize revenues, the agency had given short shrift to environmental considerations. In response, and among other things, we are creating the brand new position of Chief Environmental Officer in BOEM to provide institutional assurance that environmental considerations will be given adequate consideration in resource development decisions, including the development of five-year plans, leasing decisions, exploration and development plan reviews, and other decisions that bear on resource management. We are recruiting nationally to fill this important new position now and hope to attract an environmental scientist of national reputation who will serve as an important voice for environmental considerations in the agency and be a key player in developing the nation's oceans policies while at the same time recognizing that the role is not to arrest offshore energy development. We are also creating in BESI a new dedicated environmental enforcement and compliance program. When we lease offshore, operators agree to certain stipulations to minimize adverse impact on the environment. Later on in the process, when operators submit their exploration and development plans, they undertake to mitigate environmental effects produced by their activities. Historically, our overwork personnel have tried from time to time to determine whether those commitments in the form of stipulations and mitigations have been fulfilled. But the agency has never had personnel specifically dedicated to that task. Now we will. We think this will make offshore energy development more environmentally responsible and provide opportunities for dedicated professionals interested in ensuring that the ocean and coastal environments are protected. As to our inspections program, which has been under-resourced and outmatched by industry, we are creating for the first time a national training center led by a training director whom we are also seeking through a nationwide search. Our inspectors have generally learned how to do their jobs through a combination of on-the-job training and industry-sponsored courses aimed at teaching how certain types of equipment work. The agency has never had a training center dedicated to training inspectors on how to do their jobs. Now we will. Let me briefly discuss the important substantive work that is going on within the agency to provide the tools, the training, and the changes to the culture to make sure that the reorganization will have the results that we are aiming for. As part of our broad and continuing reform efforts, we created last fall a number of implementation teams which have been hard at work for several months. They are the central focus of our efforts to analyze critical aspects of boomers' structures, functions, and processes, and implement needed changes. These teams are integral to our reorganization and reform efforts. They are considering the various recommendations for improvement that we have received from numerous sources, including the investigations I mentioned earlier. Through their work, these teams are laying the foundation for lasting change in the way Boomer currently does business and the way its successor agencies, Boem and Bessie, will do business in the future. We're also in the midst of reviewing our application of the National Environmental Policy Act, or NEPA, including in particular the use of categorical exclusions. We have obtained public comments on our NEPA policy and are reviewing and analyzing these comments while working with CEQ to develop a new framework designed to ensure that environmental risks are thoroughly analyzed and appropriate protective measures are implemented. In the meantime, we are requiring that site-specific environmental assessments as opposed to the categorical exclusion reviews performed in the past be conducted for all new and revised exploration and development plans in deep water. Now, to address conflicts of interest, we have issued a tough new recusal policy that will reduce the potential for real or perceived conflicts of interest in our enforcement programs. Employees in our district offices, including our permitting engineers and inspectors, most notify their supervisors about any potential conflict of interest and request to be excused from performing any official duty in which such a conflict exists. Thus, our inspectors are required to recuse themselves from performing inspections of the facilities of former employers. Also, our inspectors must report any attempt by industry or by other Bomer personnel to inappropriately influence pressure or interfere with his or her official duties. Soon, we will be issuing a broader version of the policy that applies these ethical standards across the agency. I know that this is presenting some operational challenges for some of our district offices in the Gulf region, which are located in small communities where the primary employers are offshore companies. But the need for tough rules defining the boundaries between regulators and the regulated is necessary and it's compelling. These rules are necessary to assure the public that our inspections and enforcement programs are effective, that they're aggressive and that they're independent. Finally, we are continuing to staff our Investigations and Review Unit, a unit I created immediately on taking over the agency. This unit, which is currently composed of professionals with law enforcement backgrounds, promptly responds to allegations or evidence of misconduct and unethical behavior by bureau employees. But it also pursues allegations of misconduct against oil and gas companies involved in offshore energy projects when there is credible evidence that rules and regulations have been violated. Earlier this year, we issued the first major report to come out of the IRU which focused on alleged flaws with BP's Atlantis production platform in the Gulf of Mexico. Now when I was here in January, I discussed the reforms that we were pursuing to improve the effectiveness of government oversight of offshore energy development and drilling. These changes in safety and accident prevention, blower containment and spill response were and continue to be both substantial and necessary. However, as the report of the President's commission makes abundantly clear, industry must change as well. Some of this work must be initiated and implemented by industry, but our agency has a clear and an important role in helping to spur that change. And we're doing so through the issuance of tough new regulations to bolster safety and to enhance the evaluation and mitigation of environmental risks. And we've also introduced for the first time performance based standards similar to those used by regulators in the North Sea where operators are responsible for identifying and minimizing the risks associated with drilling operations. We have done all this through the development and implementation of the two new rules announced last fall that raise standards for the oil and gas industries operations on the outer continental shelf. The first rule, the drilling safety rules and emergency rule prompted by Deepwater Horizon. And it creates tough new standards for well-designed casing and cementing and well-controlled procedures and equipment including blowout preventers. For the first time, operators are now required to obtain independent third-party inspection and certification of the proposed drilling program and process. In addition, an engineer must certify that blowout preventers meet new standards for testing and maintenance and are capable of severing the drill pipe under anticipated well pressures. The second rule we issued is the Workplace Safety Rule which requires operators to systematically identify risks in a step.