Background

Recently, Mr. Michael R. Bromwich ("Bromwich"), provided additional detail regarding a new investigations unit that will target oil industry operations. Mr. Bromwich is the new director of the recently reorganized Minerals Management Service, now renamed Bureau of Ocean Energy Management, Regulation and Enforcement ("BOEMRE" or the "Bureau"). Mr. Bromwich had announced on June 23, 2010, the formation of a new "Investigations and Review Unit ("IRU") as a key component to the Bureau's efforts to spearhead a more robust enforcement program focused on offshore drilling companies.1 Mr. Bromwich's recent statements provide further insight showing that he is bringing traditional Department of Justice techniques, as well as DOJ resources, to bear on oil industry inquiries.

Purpose

The IRU's mission is threefold:

  • To promptly and credibly respond to allegations or evidence of misconduct, unethical behavior and unlawful activities by Bureau employees as well as by members of industries they regulate.
  • To oversee and coordinate the Bureau's internal auditing, regulatory oversight and enforcement systems and programs.
  • To assure that the Bureau responds swiftly to emerging issues and crises on a Bureau-wide level and assesses significant incidents, including spills, accidents and other crises. The unit will have a role in coordinating and managing the Bureau's initial response to significant events.2

Structure and Staffing

The IRU exists within the BOEMRE but separate and apart from the three organizations formed under the reorganized Bureau.3 The IRU reports directly to the director of the Bureau and will work closely with the Interior Department's Office of the Inspector General.

Mr. Bromwich has stated his intent to model the IRU after a similar unit he set up in the Justice Department's Office of the Inspector General called the Special Investigations and Review Unit.4 He described this unit as serving as his "SWAT team," addressing some of the most critical problems and issues that arose in the Justice Department during his tenure as Inspector General.5

To this end, Mr. Bromwich recently stated his goal to detail federal prosecutors and FBI agents to the IRU, with eight to ten people on staff over the next 60 days and ultimately a total of as many as 15 to 20 people in the unit.6 In addition to prosecutors and investigators, Mr. Bromwich intends to recruit scientists and other experts who can "handle the complex technical issues involved and be proactive in their pursuit of the facts."7

Heightened Enforcement Focus

Mr. Bromwich has said he aims to make "aggressive investigations of oil and gas companies" a "hallmark" of the Bureau.8 The IRU will "spearhead a heightened enforcement program that will be focused on oil and gas companies" and will launch "aggressive investigations" when there are allegations that the rules and regulations administered by the Bureau have been violated.9

Mr. Bromwich has also stated that "[i]f people fail to cooperate [with the IRU's investigations], they could be dismissed from their jobs or their company's drilling permits could be suspended."10 "In addition, the IRU will refer "serious wrongdoing" to the Justice Department for possible prosecution.11

Conclusion

The creation of the IRU and the appointment of a former Justice Department official as the BOEMRE's new director are indicative of a heightened enforcement environment for offshore drilling companies. Increasing political pressure to reform perceived corruption and misconduct in the oil and gas industry and Mr. Bromwich's strong public statements regarding the same suggest that oil and gas companies should expect increased scrutiny by the Bureau and specifically its new investigative arm. White & Case's White Collar Practice Group will continue to monitor developments associated with the IRU.