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[Federal Register Volume 76, Number 126 (Thursday, June 30, 2011)]
[Rules and Regulations]
[Pages 38294-38296]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16288]

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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management, Regulation and Enforcement

30 CFR Parts 250 and 253

[Docket ID: BOEM-2010-0070]
RIN 1010-AD74

Oil and Gas and Sulphur Operations in the Outer Continental 
Shelf--Civil Penalties

AGENCY: Bureau of Ocean Energy Management, Regulation and Enforcement 
(BOEMRE), Interior.

ACTION: Final rule.

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SUMMARY: The Outer Continental Shelf Lands Act (OCSLA) requires the 
Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) 
to review the maximum daily civil penalty assessment for violations of 
regulations implementing the OCSLA at least once every 3 years (43 
U.S.C. 1350). Similarly, a review and adjustment process is required at 
least once every 4 years for the maximum daily civil penalty assessment 
allowable under the Oil Pollution Act (OPA) of 1990 for violations of 
regulations governing financial responsibility (28 U.S.C. 2461). These 
reviews ensure that the maximum penalty assessments reflect any 
increases in the Consumer Price Index (CPI) as prepared by the Bureau 
of Labor Statistics, U.S. Department of Labor, and therefore keep up 
with inflation. BOEMRE conducted these reviews in October 2010 for the 
OCSLA regulations and in January 2011 for the OPA regulations. BOEMRE 
determined that the maximum daily civil penalty assessment for 
violations of its OCSLA regulations should be increased to $40,000, and 
the maximum daily civil penalty assessment for violations of its 
financial responsibility regulations should be increased to $30,000.

DATES: Effective Date: This rule becomes effective on August 1, 2011.

FOR FURTHER INFORMATION CONTACT: Joanne McCammon, Safety and 
Enforcement Branch at (703) 787-1292 or email at 
Joanne.McCammon@boemre.gov.

SUPPLEMENTARY INFORMATION:

Background

    The goal of BOEMRE's Outer Continental Shelf (OCS) Civil Penalty 
Program is to help promote safe and environmentally sound operations on 
the OCS. The program is designed to encourage compliance with statutes 
and regulations that apply to activities on the OCS by facilitating the 
assessment and collection of civil penalties. OCSLA authorizes the 
Secretary of the Interior to assess civil penalties under certain 
conditions for violations of any provision of OCSLA; any term of a 
lease, license, or permit; or any regulation or order implementing 
OCSLA.
    Not all violations warrant a review to initiate civil penalty 
proceedings. Review is only triggered by violations that an operator 
fails to correct after notice and an opportunity to correct, or 
violations that constitute a threat of serious, irreparable, or 
immediate harm or damage to life, property, any mineral

[[Page 38295]]

deposit, or the marine, coastal, or human environment. The Secretary of 
the Interior delegated the authority to assess civil penalties to 
BOEMRE.
    OCSLA directs the Secretary of the Interior to adjust the maximum 
civil penalty amount at least once every 3 years to reflect any 
increase in the CPI prepared by the U.S. Department of Labor (43 U.S.C. 
1350). The purpose of this adjustment is to ensure that punitive 
assessments keep up with inflation. If an adjustment is necessary, 
BOEMRE informs the public through the Federal Register of the new 
maximum civil penalty amount. BOEMRE uses Office of Management and 
Budget (OMB) guidelines for determining how penalty amounts should be 
rounded and when an adjustment is necessary.
    In August 2009, BOEMRE performed computations to determine if it 
should increase the current maximum civil penalty amount of $35,000 per 
violation per day. After running the computations, BOEMRE determined 
that the CPI did not increase enough to warrant raising the maximum 
civil penalty amount at that time. BOEMRE has been monitoring the CPI, 
and the computations now justify raising the maximum civil penalty 
amount.
    In computing the new maximum civil penalty amount, BOEMRE divided 
the October 2010 CPI of 218.9 by the previously used August 2006 CPI of 
203.7. This resulted in a multiplying factor of 1.075. The previous 
maximum amount of $35,000 per violation per day was multiplied by the 
1.075 factor and resulted in a new maximum penalty amount of $37,625. 
This amount is rounded to $40,000 as per OMB guidelines. The new 
maximum civil penalty amount is now $40,000 per violation per day.
    BOEMRE is also authorized to impose civil penalties for failure to 
comply with financial responsibility regulations that implement OPA. 
OPA sets the maximum civil penalty amount per day per violation at 
$25,000. However, the Federal Civil Penalties Inflation Adjustment Act, 
as amended, established a 4-year cycle for review and adjustment of 
federally imposed civil monetary penalties to maintain the deterrent 
effect of such penalties and promote compliance with the law (28 U.S.C. 
2461 note). The CPI adjustment for these penalties is calculated in the 
same manner as the CPI adjustment for the OCSLA penalties.
    The OPA maximum civil penalty amount was last raised in 2006 to 
$27,500. In computing the new OPA maximum civil penalty amount, BOEMRE 
divided the June 2010 CPI of 216.9 by the previously used August 2006 
CPI of 203.7. This resulted in a multiplying factor of 1.065. The 
previous maximum amount of $27,500 per violation per day was multiplied 
by the 1.065 factor and resulted in a new maximum penalty amount of 
$29,287. This amount is rounded to $30,000 as directed by the Federal 
Civil Penalties Inflation Adjustment Act. The new maximum civil penalty 
amount is now $30,000 per violation per day.
    BOEMRE finds that good cause exists under the Administrative 
Procedure Act, 5 U.S.C. 553(b)(B), to implement this final rule without 
prior notice and comment for these mandatory adjustments. The periodic 
adjustments to the maximum penalty amount reflected in this final rule 
are required by statute and OMB guidelines. Similarly, the calculation 
of these adjustments follows the mathematical formulas set forth in 
OCSLA and the requirements of the Federal Civil Penalties Inflation 
Adjustment Act, as amended, so that the amount of the adjustment is not 
within BOEMRE's discretion. Accordingly, notice and comment procedures 
are unnecessary and contrary to the public interest.

Procedural Matters

Regulatory Planning and Review (Executive Order 12866)

    OMB has not designated this final rule as significant under 
Executive Order 12866.
    (1) These amendments are administrative and procedural. This rule 
would not have an effect of $100 million or more on the economy. It 
would not adversely affect in a material way the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or tribal governments or communities. A cost-benefit and 
economic analysis is not required.
    (2) This rule would not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency.
    (3) This rule would not alter the budgetary effects of 
entitlements, grants, user fees, or loan programs or the rights or 
obligations of their recipients.
    (4) This rule does not raise novel legal or policy issues.

Regulatory Flexibility Act

    The Department of the Interior certifies that this final rule will 
not have a significant economic effect on a substantial number of small 
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
    The changes in the rule will affect lessees and operators of leases 
and pipeline right-of-way holders in the OCS. This could include about 
130 active Federal oil and gas lessees. Small lessees that operate 
under this rule fall under the Small Business Administration's (SBA) 
North American Industry Classification System (NAICS) codes 211111, 
Crude Petroleum and Natural Gas Extraction, and 213111, Drilling Oil 
and Gas Wells. For these NAICS code classifications, a small company is 
one with fewer than 500 employees. Based on these criteria, an 
estimated 65 percent of these companies are considered small. This 
final rule, therefore, will affect a substantial number of small 
entities, but it will not have a significant economic effect on those 
entities.
    This rule will have no impact on the oil and gas industry operators 
that comply with Federal OCS regulations. For those operators whose 
noncompliance results in a civil penalty, the increase resulting from 
the inflation factor of 1.075 amounts to an increase of less than 
$241,000 spread over an average of 32 cases per year or slightly over 
$15,500 additional per case. This is using data over the past 10 years 
and averaging civil penalties paid and number of cases paid per year. 
This dollar amount is relatively insignificant as compared to the 
considerable operational costs and liability risks associated with 
activities on the OCS. This is true for even the smallest of OCS 
operators.
    Your comments are important. The Small Business and Agriculture 
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were 
established to receive comments from small businesses about Federal 
agency enforcement actions. The Ombudsman will annually evaluate the 
enforcement activities and rate each agency's responsiveness to small 
business. If you wish to comment on the actions of BOEMRE, call 1-888-
734-3247. You may comment to the Small Business Administration without 
fear of retaliation. Allegations of discrimination/retaliation filed 
with the Small Business Administration will be investigated for 
appropriate action.

Small Business Regulatory Enforcement Fairness Act

    This rule is not a major rule under the Small Business Regulatory 
Enforcement Fairness Act (5 U.S.C. 804(2)). This rule:
    a. Will not have an annual effect on the economy of $100 million or 
more.
    b. Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.

[[Page 38296]]

    c. Will not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises. The 
requirements will apply to all entities operating on the OCS.

Unfunded Mandates Reform Act of 1995

    This final rule will not impose an unfunded mandate on State, 
local, or tribal governments or the private sector of more than $100 
million per year. The final rule will not have a significant or unique 
effect on State, local, or tribal governments or the private sector. A 
statement containing the information required by the Unfunded Mandates 
Reform Act (2 U.S.C. 1501 et seq.) is not required.

Takings Implication Assessment (Executive Order 12630)

    According to Executive Order 12630, the rule does not have 
significant takings implications. The rulemaking is not a governmental 
action capable of interfering with constitutionally protected property 
rights. A Takings Implication Assessment is not required.

Federalism (Executive Order 13132)

    Under the criteria in E.O. 13132, this final rule does not have 
federalism implications. This final rule will not substantially and 
directly affect the relationship between the Federal and State 
governments. To the extent that State and local governments have a role 
in OCS activities, this final rule will not affect that role. A 
Federalism Assessment is not required.

Civil Justice Reform (Executive Order 12988)

    This rule complies with the requirements of E.O. 12988. 
Specifically, this rule:
    (a) Meets the criteria of section 3(a) requiring that all 
regulations be reviewed to eliminate errors and ambiguity and be 
written to minimize litigation; and
    (b) Meets the criteria of section 3(b)(2) requiring that all 
regulations be written in clear language and contain clear legal 
standards.

Consultation and Coordination With Indian Tribal Governments (E.O. 
13175)

    Under the criteria in E.O. 13175, we evaluated this final rule and 
determined that it has no substantial effects on federally recognized 
Indian tribes.

Paperwork Reduction Act (PRA) of 1995

    This final rule does not contain new information collection 
requirements, and a submission under the PRA is not required. 
Therefore, an information collection request is not being submitted to 
OMB for review and approval under the PRA (44 U.S.C. 3501 et seq.).

National Environmental Policy Act of 1969

    This final rule does not constitute a major Federal action 
significantly affecting the quality of the human environment. BOEMRE 
has analyzed this proposed rule under the criteria of the National 
Environmental Policy Act (NEPA) and the Department's regulations 
implementing NEPA. This proposed rule meets the criteria set forth at 
43 CFR 46.210(i) for a Departmental Categorical Exclusion in that this 
proposed rule is ``* * * of an administrative, financial, legal, 
technical, or procedural nature * * *'' Further, BOEMRE has analyzed 
this proposed rule to determine if it meets any of the extraordinary 
circumstances that would require an environmental assessment or an 
environmental impact statement as set forth in 43 CFR 46.215 and 
concluded that this proposed rule, being purely procedural, does not 
meet any of the criteria for extraordinary circumstances.

Data Quality Act

    In developing this rule, we did not conduct or use a study, 
experiment, or survey requiring peer review under the Data Quality Act 
(Pub. L. 106-554, app. C Sec.  515, 114 Stat. 2763, 2763A-153-154).

Effects on the Nation's Energy Supply (E.O. 13211)

    This rule is not a significant energy action under the definition 
in E.O. 13211. A Statement of Energy Effects is not required.

List of Subjects

30 CFR Part 250

    Continental shelf, Investigations, Penalties, Public lands--mineral 
resources, Public lands--rights-of-way, Reporting and recordkeeping 
requirements, Sulphur development and production.

30 CFR Part 250

    Administrative practice and procedure, Continental shelf, 
Environmental impact statements, Environmental protection, Government 
contracts, Investigations, Oil and gas exploration, Penalties, 
Pipelines, Public lands--mineral resources, Public lands--rights-of-
way, Reporting and recordkeeping requirements, Sulfur.

30 CFR Part 253

    Continental shelf, Environmental protection, Intergovernmental 
relations, Oil and gas exploration, Oil pollution, Penalties, 
Pipelines, Public lands--mineral resources, Reporting and recordkeeping 
requirements, Surety bonds.

    Dated: June 22, 2011.
Wilma A. Lewis,
Assistant Secretary--Land and Minerals Management.
    For the reasons stated in the preamble, Bureau of Ocean Energy 
Management, Regulation and Enforcement (BOEMRE) amends 30 CFR parts 250 
and 253 as follows:

PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER 
CONTINENTAL SHELF

0
1. The authority citation for part 250 continues to read as follows:

    Authority:  31 U.S.C. 9701, 43 U.S.C. 1334.

0
2. Revise Sec.  250.1403 to read as follows:

Sec.  250.1403  What is the maximum civil penalty?

    The maximum civil penalty is $40,000 per day per violation.

PART 253--OIL SPILL FINANCIAL RESPONSIBILITY FOR OFFSHORE 
FACILITIES

0
3. The authority citation for part 253 is revised to read as follows:

    Authority:  28 U.S.C. 2461 note, 33 U.S.C. 2716.

0
4. In Sec.  253.51, revise paragraph (a) to read as follows:

Sec.  253.51  What are the penalties for not complying with this part?

    (a) If you fail to comply with the financial responsibility 
requirements of OPA at 33 U.S.C. 2716 or with the requirements of this 
part, then you may be liable for a civil penalty of up to $30,000 per 
COF per day of violation (that is, each day a COF is operated without 
acceptable evidence of OSFR).
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[FR Doc. 2011-16288 Filed 6-29-11; 8:45 am]
BILLING CODE 4310-MR-P
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