taliance by making the operator more fully aware of their daity responsibility with respect o
to.verifying safety system integrity and operating in a safe manner.

This performance-based strategy initially centered on MMS's challenge to industry to
develop a prototype for Safety and Environmental Management Programs or SEMP.

for the overall success of the safety and environmental management program and must
provide leadership in establishing goals and performance measures, demand
accountability, and provide resources,

The MMS is using two sets-of performance measures to gauge the safety of operations
on the OCS. The first one is comprised of MMS data and is a measure of
noncompliance and accident severity. The second is an outgrowth of API RP75 and is
@ voluntary and anonymous ‘accounting of data, which yields a comprehensive picture of
worker exposure, injuries, and pollution events for all those operators that, participated.

By publicly acknowledging safe operators and having a willingness to try altemative
compliance approaches with the safest operators, MMS is working to create an
environment that encourages operators to continually strive for safer operations.

Performance Tools fea! :
Sately end pane arsed Management Program (SEMP) _

ne MMS has developed a Sound regulatory program to protect the public's. interests in
the exploration and development of OCS oll and gas over the Course of more than.a
quarter. century.. MMS has based this prograrn, in large measure, on Standards and
recommended practices developed in association with OCS stakeholders that delimit
how bl oo and prudent” iter Bromned — Conduct its business. This prescriptive
regu program istori cused on hardware and engineer approaches to
resolve offshore Safety and operating issues. na nae

The SEMP concept was created to.address the role of human and organizational
factors in accidents. By Some estimates, human and organizational factors lie at the

were led by the traditional, prescriptive regulatory approach of the MMS: to focus more
on compliance with existing rules than in systematically identifying and mitigating alt
risks posed by their Operations. Implementation of SEMP squarely places the

22

00017604 BOEM-WDC-B01-00001-000014 Page 20 of 34


be able to'laave the facility with the knowledge that 100% of the most critical PINC’s —
have been checked, at least 90% of thé remaining less critical platform components ae

Risk-based Inspection Program
Not ail operations or operators require the same degree of oversight. Through our risk-

Program uses a statistical methodology arid inspector experience and knowledge to
prioritize the type and frequency of inspections in the districts.

The MMS developed a comprehensive list of risk factors regarding offshore oll-and-gas
operations. ‘These risk factors were used as the basis of a series of surveys given to

inspector/engineer workforce placed on these factors.

Two of the most significant factors were the history of noncompliance (i.e. INC's) and
accidents. These two factors are fairly accurate predictors of the likelihood of a facility

haying a future accident. This predictive Capability allows MMS to focus its inspection Ne
fesources on “higher probability” facilities and operations and reduces or changes the

type of oversight we place on “lower probability" facilities.

From the model's values, we place a facility in a low, medium or high risk category.
Each of these categories has a minimum inspection strategy. The following table shows.
the risk categories and their corresponding inspection strategy. .

Risk Category Inspection Frequency | “Type of Inspections
High Risk > 2 times per year Complete annual inspection and 2
on ae : unannounced sampling inspections. |
Medium Risk — 2 times per year Complete annual and 1
unarinounced. sampling inspection
Low Risk 1 time per year Announced sampling inspection

ince Second part of determining the final inspection strategy oF a facility Comes Fomine
inspector’ i Wd knowledge. Some of the risk factors that the ins,

00017604 BOEM-WDC-B01-00001-000014 Page 14 of 34


* _ Serious injury (one that prevents a worker from returning to normal duty for
at least 72 hours) :

oil spills greater than or equal to 1 barrel

+ fires ‘exceeding $25,000 in asset damage :
* collisions exceeding $25,000 in asset damage and due wholly, or in Part, to

operator error
* explosions
* blowouts

These accidents are weighted according to the Accident Severity Value Matrix on the
following page. The OS! formula uses the totat number of components available for
each operator to “normalize” the data for comparison purpeses. :

Finally, we add the two ratios together to form the final weighted Operator Safety Index,
This final index’ can then be rank-ordered Providing MMS with an initial relative look at
overall operator safety performance on the OCS.

Soe

00017604 BOEM-WDC-B01-00001-000014 Page 24 of 34


Introduction
The MMS Manual Part 650, Chapter 1, Offshore Inspection Program establishes both
inspection policy and broad program fesponsibility. This Inspection Policies and
Procedures Document (IPPD) further explains Minerals Management Service's (MMS)
Policy requirements and fully engages both nationwide and region-specific inspection
program strategies. The IPPD bridges the gap between the broad |

acti in the Manual and Regional policies and procedures that include detailed
procedures used by inspectors.

This document lays out policies and Procedures to be implemented consistently
nationwide. Regional policy documents clarify field office discretion in adapting and

The major purposes of the IPPD are to:
* clearly articulate an MMS nationwide inspection program strategy

* consolidate and update inspection program procedures for all interested
parties.

* provide a structure to develop and/or interpret new policies or procedures

This document not only provides the policy framework for the agency's traditionat
inspection approach to regulatory compliance, but it also provides context for new MMS
efforts in the area of performance-based Programs. MMS has developed these new
Programs, sometimes in concert with industry, to find innovative ways to increase OCS
operational safety and continual improvement efforts by industry.

00017604 BOEM-WDC-B01-00001-000014 Page 5 of 34


responsibility for protection of people, facilities, and the environment on the shoulders of
OGS operators.

The American Petroleum Institute (AP!) developed RP 75, Safety and Environmental
Management Program, to assist in the development of a management program that is

and gas and sulfur operations on the OCS. This RP addresses the identification and
management of safety and environmental hazards in. design, construction, start-up,
Operation, inspection and maintenance of new, existing, or modified drilling and
production facilities.

The RP 75 addresses the following 12 management elements.
* General management program elements and principles
Safety and environmental informe
Hazards analysis
Management of change
Operating procedures
Safe work practices
Training
Assurance of quality and mechanical integrity of critical equipment
Pre-startup review -
Emergency response and control
Investigation of incidents -
Audit of safety and environmental management program elements

Many accidents on the OCS have occurred due to the lack of a consistent, identifiable
responsible party imbued with the necessary authority to act. A valid SEMP plan
contains an organizational structure that the functional responsibilities, levels
of authority, and lines of communication for activities affecting the safety and
environmental management program. Identified organizations, positions, or personnel

ed

00017604 BOEM-WDC-B01-00001-000014 Page 21 of 34


The MMS Awards

In the 1980's, MMS c ited an award that was for the sole purpose of promoting interest
in anereciovar on Operational safety and environmental protection on the OCS. This
became the Safety Award for Excellence or SAFE Award. In 1999, MMS added two new
awards to recognize companies and individuals. The Corporate Citizen Award (Coren)
See eaks jeszees for both outstanding operating performance and fiscal responsiblity end is

they must be achieved by people workir her wi

but for the safety of others as weil. Specifically designed the SAFE Program to recognize
and call attention of others to Outstanding performance on the part of companies that excel in
Protecting the environment and/or maintaining a safe place to work on the OCS.

the National SAFE Award recipients from oil and gas operators who have proven to be the

Most outstanding in performance ratings, particular the annual MMS Safety Ranking: Three
awards are given at the national level: ; :

+ Moderate OCS activity operator
+ High OCS activity operator

+ Contractor, drilling

+ Contractor, production

To qualify in the Moderate OCS Activity category, an operator must have:
* Produced at least 1 milion BOE/year
. a total of at least 100 components available, and
* a total of at least 5 platforms in their inventory.
To qualify in the OCS Activity Category. A company must have:
“Oe pode ates 15 million BOE/ year sei
* a total of at least 1,500 components available, and
* a total of at least 50 platforms in their inventory

The Regions and the. District offices give the District SAFE Awards © companies displayi
the Most exemplary performance on a single platform, rig, field, unit, or throughout an ont.
district. Each district office may present Up to four District SAFE Awards annually. Categories

29

00017604 BOEM-WDC-B01-00001-000014 Page 27 of 34


Fire/explosion incident rate.

Blowout incident rate.

EPA NPDES (National Pollution Discharge Elimination System)
noncompliance rate.

Oil spill ineldent rate—number of spilts and volume greater or equal to 1
barrel.

Olt spilt incident rate—aumber of spills and volume lass than 1 barrel.
MMS production incidents of noncompliance rate.

MMS drilling, workover, completion, and weil Plugging and abandonment
incidents of noncompliance rate.

PLEV2 N SoD

For a further discussion of these measures including definitions and formulas, see the
feport Performance Measures for Safety and Environmental Management Systems at
OCS E&P Operations. :

is 2 vane o) @ 2Value of 1, a component shutin (C)is a value of 2, a facilly chatin (8)
's a value of 4, and any INC referred for a civil penalty (CP) is a value of 8. Muttiplying
the INC’s times their weights produces a “weighted INC* total. In order to compare

noncompliance.

The second part of the Osi formula evaluates accidents that occur on the OCS. The
MMS recognizes that minor accidents will occur and encourages reporting of even “near.

misses." These minor accidents are assigned a value of zero and are not counted in
the formula. The MMS accounts for the f ing accidents in the OSI formula.

25

00017604 BOEM-WDC-B01-00001-000014 Page 23 of 34


Designated Operator Disqualification Process

20

00017604 BOEM-WDC-B01-00001-000014 Page 18 of 34


jatforms. The inspections may include teviewing any operating or maintenance
records repeat areal a he se Se ao a Authorities for
inspections under this MOU stom from pipeline safety laws pursuant to 49 U.S.C 60101,
the Deepwater Port Act of 1974; the Federal Water Pollution Control Act as amended by
{h¢ Oil Pollution Act if 1990; and the Hazardous Materials Transportation Aer For
further information on DOI, DOT, and joint ee ratiilies, consult Appendix 3,

MOU on R DI Fix Fi
On December 16, 1998, the MMS and USCG signed an MOU outlining the

responsibilities for olf and naturat gas exploration, development, Production, and
transportation activities on the Outer Continental Sheif (OCS). The Mou updates a.
1989 MOU with USCG. The update was Necessary to:

* incorporate responsibilities for floating facilities such as SPARS,
semisubmersibles, and hybrids.

* include responsibilities obtained under the Oil Pollution Act of 1 990.

* clarify existing responsibilities by using plain language; and

+ include responsibilities for civil penalties and investigations.

the of ng eucloped this MOU by wérking cooperatively with the Coast Guard and with
the oil and gas industry. This new MOU provides a framework to improve the
procedures to conduct inspections, issue civil penalties, and conduct accident
investigations. By eliminating duplication of efforts between the two agencies, the MOU
hill simplify procedures for the oil and gas industry as wel, The complete copy of this
MOU can_be found in Appendix 4, of ling Between the
Minerals Management Service and the United States Coast Guard.

Program Organizatio in and Responsibility
Offshore Minerals Management headquarters is located in Washington D.C. and

lon, Virginia. The organization and Management of the offshore inspection
Program is decentralized with Rational policy development located in Herndon, Virginia:
There are three regional offices located in Jefferson, Louisiana; Camarilio, California;
and Anchorage, Alaska. The Guif of Mexico OCS Region has & districts and 1

Subdistrict. The Pacific OCS lon has 2 districts. The Alaska OCS R t
have any district offices. Rey sae ee he

Headquarters is responsible for inspection policy development and Management
Oversight of the nationwide Program while fagional Offices implement the inspection

00017604 BOEM-WDC-B01-00001-000014 Page 10 of 34


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* MMS must be a full participant in the review. MMS employees must be.team members

and participate at the same level as company employees,
* The effort should be a true audit. Briefings with little hands-on examination of the safety —

. Team members should have some training on audit techniques. This is particularly true
of MMS team members who may be involved with the inspection program.
. The MMS role during the audit as a regulator must be made clear prior to the audit. The

The company should provide MMS some assurance that other deficiencies that may

have merited an INC during a normal Inspection will be corrected, The audit team

may decide to include them in the report if these types of violations illustrate-a-

systematic weakness or show a pattern of deficiency in the company's SEMP plan.
+ The company must have a structured audit plan for the cooperative review.

This is to encourage open and frank communication and disclosure of information.

The audit process has three distinct phases: planning, audit activities, and reporting and
follow-up. These activities should be designed to allow the team to hit the ground running.
Since MMS is there by invitation, it may be Gifficult to insist that certain activities be included.
MMS may be able to persuade the company that an audit should follow certain principles if it

is to be successful and easy to conduct. ‘The following items should be discussed with the
company if they are not already part of the process. :

Planning : : : “iB Nw
* There should always be an audit plan. The plan should outline, at a minimum, the
objectives of the audit, the resources to be used, the division of labor, and the report
. ‘Temben seauites strong leadership. Team leaders should be a leader fist and a team
member second. Thi: 's particularly true if the audit plan is elementary. n .. The team
leader should be trained in basic audit qu s and ideally have conducted audits
previously. ‘The team needs to meet before the actual audit begins. .
. Work should be formally assigried. Everyone should have a clear understanding of who
is doing what. This will ensure that all the elements of the audit plan are covered and
jt.

will avoid treating any of it as an afte \

+ While it is helpful that the team be involved in developing the audit protocols, the team
should at least assess the quality and completeness of the protocols prior to the
eae audit, especially if this Is the company’s first audit. This is the.
Opportunity to understand the terminology and to identify sources of materials and
information. Even if the protocols have been used previously, a face-to-face.
understanding of its contents is éssential for any new team.

Audit Activities :
During the initial meeting, team members should get

nas the health, safety, and environment (HSE) activities. If
that shows the HSE function. The team should also und

Possible, get an organization chart
implemented SEMP.

lerstand how the company

»

00017604 BOEM-WDC-B01-00001-000014 Page 30 of 34


roa fas worked well for many years, it has become clear that this approach alone
"will net allow MMS to reach its ultimate. Of no spills and no accidents. An annual

MMS inspection is not enough ersight to. reach this goal. MMS does not have the

human or fiscal resources to maintain @ constant vigilant presence on all facilities.

Consistent and Fair . : . -
The MMS strives for Consistency and faimess in meeting our statutory Tmandate.. While
policies are Consistent from region to fegion and district to district, each of these
gani levels has some latitude to Implement these policies differently because

Of logistics, environmental concerns, and scope of operations. MMS forms inspector
“work groups to review and analyze the application of INCs to ensure that we have a
consistent approach. MMS meets with each operator at least annually to discuss the
Previous year’s operations and activities, and on other Occasions when any Safety or
regulatory issues need clarification or need to be discus:

00017604 BOEM-WDC-B01-00001-000014 Page 7 of 34


Chapter 1—OCS Inspection Program Goat and Objectives

The goal of the MMS Inspection Program is to ensure safe and clean operations. We
believe that regulatory compliance alone can not ensure safe and pollution free.
operations. The operators who are out there 24 hours a day must be fully involved with
a “safely first” approach to their activities to improve the OCS safety record. To this
snd, we have worked with the offshore oil and gas industry, through the American
Petroleum Institute (API) to develop and promote the use of Recommended Practice for
Development of a Safety and Environmental Management Program for Outer
Continental Shelf (OCS) Operations and Facilities (API RP-75), This RP outlines
Specific safety enhancing business principles related to inspections, such as hazards
analysis and verifying the integrity of critical safety and pollution prevention equipment.
The MMS has taken a more pro-active role in working with operators and

them to adopt continual improvement programs with regards to safety, Itis

efforts like these that MMS is trying to increase operator awareness of the need ta
commit to safe operations on the OCS. :

fe)

The MMS has adopted four principal objectives to direct the efforts of the inspection
Program in meeting this goal. These are:

Ensure operator compliance
Develop and implement performance-based Strategy
Apply regulations consistently and treat operators fairly

While the inspection program continues to rely heavily on operator compliance nce tesa
treslatvely mandated inspection requirements, we have broadened our strategy, “
and monitored field a, lications of safety management concepts. The MMS strategy is

eens

to move closer to a performance approach to safety.
Ensure Compliance

MMS inspectors perform onsite inspections to ensure that all drifting, completion,
workover, production, pipeline, oil Pollution prevention, production Measurement and

00017604 BOEM-WDC-B01-00001-000014 Page 6 of 34


following four things occur.
1. The Regional Director notifies the designated operator in writing th:
are on probation fora given period of ime and sends a colo al relevant”
additional leases for the period of their probation: ee,
The Sesignated Operator must submit a Performance Improvement Plan to
the Regional Director that wil address MMS’s performance concems and
detail how they will bring the inventory of facilities in question into

4. ‘The Regional S or Field Operations will have
- The Re: Supervisor for Field
increase the number of performance review meatings as nonce”

H
t
i
:

tegion-specific disquaiific
OCS-wide Isqualification as a designated operator.

MMS has the latitude to go to any disqualification step in any order. ve
depending on the seventy of the unateoptable women cone
deguet mnie Te pears the operator to prepare a new Performance Improveme nent
ee isqualification does not improve an operator's performance. th :
S may \o debar the operator from'doing any business with the Federal,

00017604 BOEM-WDC-B01-00001-000014 Page 19 of 34


on behalf DOI on February 3, 1994. This MOU is among at
DO}, EPA, and DOT for the purpose of dividing responsibilities associated with oll-spill
Pravention and control, response planning, and response equipment inspection for

contingency planning, and response equipment inspection for offshore facllities to DOI.
However, section 311(a)(11) of the CWA defines “offshore facility” to include facilities of
any kind located in, on, or under navigable waters of the United States. By using this
definition, the traditional DOI role of regulating facilities on the OCS is. expanded by the
E.O. fo include inland lakes, rivers, streams, and any other inland waters. As'many as
four Federal agencies could have overlapping Fesponsibilities for some coastal facilities.

This: MOU makes the following delegations.
* To EPA, DOI re-delegates fesponsibility for Non-transportation-retated
offshore facilities located landward of the coast ling. es :
* ToDOT, bot re-delegates. responsibility for transportation-related facilities,

except for deepwater ports and associated seaward pipelines. Ne

See Appendix 2 for the complete MOU, Memorandum of Understanding Among the
Secretary of the Interior, Secretary of Transp 1. and Administrator of the.
Environmental Protection Agency on Oi Spill Prevention and Control, f

00017604 BOEM-WDC-B01-00001-000014 Page 9 of 34


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00017604 BOEM-WDC-B01-00001-000014 Page 25 of 34


Attachment 8-D

United States Department of the Interior

MINERALS MANAGEMENT SER\ WE
Washingron, OC 20290

WAY =4 2000

To: Regional Director. Alaska OCS Region
Regional Director, Gulf of Mexico OCS.Region
Regional Director. Pacific OCS Region
Regional Supervisor for Field Operations, Alaska OCS Region
s Regional Supervisor for Field Operations, Gulf of Mexico OCS. Region rae
Regional Supervisor for Field Operations, Pacific OCS Region _ ASSN
Chief, Office of Safety Management, Gulf of Mexico Os Regie RECEIVED MS

From’ (ce CarolitaU. Kallaur Oona WIA
Associate Director for Offshore Minerals Management Servic

Subject National Outer Continental Shelf Inspection Program Policy and P,
Document

The attached document icts the national Perspective on the OCS Inspection Program: It
bridges the gap ‘between the Minerals. Management Setvice Manual Chapter, Part 650
Inspections, and the Regional Inspection Policies and Procedures Documents developed within
your Regions. The former provides very general policies and an overview of the inspection
Program while the latter provides detailed descriptions of the implementation of the inspection
Program, including regional and district variations based upon logistics and unique regional
considerations.

Please make an effort as soon as Practicable to review your own regional policies and procedures
documents regarding inspections to ensure continuity between these two documents.

c If you have

any further questions or concerns please contact Doug Slitor at 703-787. 1030.

Attachment

ce. Chief, Engineering and Operations Division 2
Chief, Performance and Safety Branch WAY 17

00017604 BOEM-WDC-B01-00001-000014 Page 1 of 34


yin spection . ie
the interpretation and enforcement of the PINC. See the National PING and Guideline
List publication or the MMS web site under Inspection and Enforcement for more detail.

The MMS has its nationwide inspection to fulfill
requirements for annual Scheduled and unannounced inspections Of facilities. MMS —_
inspectors a variety of announced and unannounced inspections of ocs
facilities where inspectors check : ts and records to ine if an operator is
in compliance with fegulations. Refer to the Regional Policies and Procedures
Document tor more detailed i ‘on inspections. MMS inspectors conduct the
following types of inspections.

* drilling operations "

* production operations : :

® oe measurement, verification, and site security

° pip :

* _ well completion ‘Operations

* well workover operations

* hydrogen sulfide (HeS) operations

* il spill preparedness

* air and water quality

abandonment operations :
These inspection types can either be complete or partial. ‘Duri @ complete inspection,

the inspector wilt examine or have the operator test each of the devices in service on
the facility, The inspector will also review ail records of testing and maintenance

00017604 BOEM-WDC-B01-00001-000014 Page 12 of 34


Chapter 3—Iinspection and Performance: Strategies and
Tools

Qverall Strateay

the ces ambloys a two-pronged approach to ensuring safe and clean operations on
the OCS. The MMS relies on monitoring industry compliance with OCS regulations and
also, through a variety of means, encourages industry to voluntarily adopt structured
safely management programs that promote the efficiency of operations while improving
safe practices.

The

Offshore ling and production is often a hazardous insta activity curing
very confined space several hours from emergency assistance. For the most part,
operators are very conscientious Fegarding operational safety for these very feasons.

Compliance Tools

National PINC and Guideline List

As mentioned above, MMS has developed a list of over 600 potentiat Incidents of
noncompliance (PINC’s) with the regulations governing offshore’ operations. This list
forms the inspector's checklist when visiting a Platform or drilling tig. These PINC’s are
broken into the following 10 categories.

Abandonment of platforms
Completion
Drilling operations
Environmental pollution
General activities, conditions, record keeping.
“Hydrogen sulfide
Measurement of liquids and gas
Pipelines”
Production operations
. Workover operations

S°PNOneona

00017604 BOEM-WDC-B01-00001-000014 Page 11 of 34


The following chart fepresents the current decision process for addressing alternative
compliance requests. These requests shall be evaluated to ensure that the alternative
compliance affords @ degree of protection, Safety, or performance equal to or better than that
intended to be achieved by the regulations currently in place, These requests should address
systems alternatives and should not be Considered departure or waiver requests.

00017604 BOEM-WDC-B01-00001-000014 Page 32 of 34


The Team = gader must allow adequate time for document and material raview and interviews
of office personnel. Team members should:

° review the SEMP plan and how it relates to any other programs.
. jaeewy any individual documents that implement the various elements,

. Srrertamnat the written safety management program is aligned with actual field
experience and understanding. This can be h record reviews,
interviews, and observation. :

. Seong.” interview with the supervisor of the facility where the onsite work
occurred.

. ‘inthe feign» neTePancies between what was learned inthe ofice and what was found
in the field

After the report has been written, MMS team members should give all working papers and
audit notes to the team. As a general rule, these are the property of the company. Some
company lega! counsels may request it as 4 Condition of participation, even for their own
employees. There are also instances where leads documented in the notes dead end and
without further annotation may be taken out of context by others, creating potentially

If possible, all team members should participate in writing the report. MMS team members
company vokntec cob of te daft report and should not aak fer the wens H the

A previously designated MMS team member should write an after action/lessons fearned
report within a month of his/her retum to the duty station, This report is for intemal use and

copies should be provided to the Regional Supervisor and the MMS SEMP. coordinator.
Appendix 8 contains additional information on cooperative reviews.

33

00017604 BOEM-WDC-B01-00001-000014 Page 31 of 34


Chapter 2—Legal Authorities and Organization

nd Pal eS.

i Management conducted the OCS leasing program and
collected royalties and rentals associated with Federal offshore properties while the
U.S. Geological Survey had responsibility for regulating OCS operations. Upon its
formation in 1982, MMS assumed these responsibilities under Secretarial Order No.
3071.

The MMS derives most of its inspection authority from the OCS Lands Act Amendments
of 1978 (OCSLAA) (43 U.S.C. 1347 (c)).. This section requires the Secretary of the
Interior to promulgate regulations to provide for Scheduled annual and periodic
unannounced inspections of Safety equipment designed to prevent or ameliorate
blowouts, fires, spills, and other major accidents. In response to this statutory
requirement, the MMS promulgated regulations at 30 CFR 250.

FOGRMA .

Additionally, the Federal Oitand Gas Royalty Management Act (FOGRMA) makes MMS
fesponsible for collecting royalties due to the Federal Government from the production
Of oil, gas, and other minerals on offshore and onshore federal lands. In connection
with F RMA, MMS conducts inspections to verify that offshore oll and gas Production
is measured accurately and all metering equipment is secure. Regulations regarding
these activities can be found in-30 CFR 250.180 to 250,183.

es Pollution Act of 1990 (OPA 90) and Executive Onder 12777 added to MMS’s
authority to inspect offshore facilities to assure the presence of oil spill containment and
cleanup equipment. In additio; , OPA 80 amended Section 24 of the OCSLAA and
MMS created additional regulations regarding Our ability to assess civil and criminal
Penalties. Regulations governing civil and criminal Penalties ean be found in.30 CFR
250, Subpart N. .

MOU on NPDES Requirements :
in May of 1984, the MMS entered into @ Memorandum of Understanding (MOU) with the
Environmental Protection Agency (EPA) to Conduct inspections associated with the
Clean Water Act of 1970. Through this MOU, MMS established, to the maximum extent
practicable, requirements for drilling procedures and equipment consistent with EPA’s
National Pollutant Discharge Elimination System (NPDES) effluent limitations and
permit conditions. MMS monitors and inspects offshore facilities for compliance with
NPDES permits. The complete copy of this MOU can be found in Appendix 1,
Memorandum of Understanding Between the Environmental Protection Agency and the
Department of the Interior Conceming the Coordination of NPDES Permit issuance,

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Contractor or service company personnal are knowledgeable of the operator's

The SEMP plan also contains procedures for identifying, ‘evaluating, reporting,
documenting, and instituting actions required to correct the nonconformance of a
Program element, activity, piece of equipment, or safety device. Additionally, it ;
contains procedures to identify, report, and correct unsafe operations and/or conditions,
in using a SEMP plan, accident prevention is an Ongoing effort and potential hazards,
unsafe acts, policies, or procedures should be corrected immediately. Procedures
Should provide for a clear opportunity for « to report such conditions, near
misses, or equipment upsets to management. Management will maintain records of
actions taken to implement recommendations as a result of the review and/or analysis,
and determine if the potential for similar types of situations exists in other related
operations or activities. All accidents will be investigated and results documented.
Management will determine the cause of an accident, and ravise company policies or
Procedures as needed. :

specific
Development of a Safety and v ital Management. ' Progrart for Outer
Continontal Shelf Operations sont nant ;

Joint Industry/MMS Performance Measures —

a et of 10 pore ec SO the MMS andindusty have cooperatively deveiped
@ Set of 10 performance measure Categories that resulted in 18 measures. Through this
voluntary effort, MMS gathers individual data from Operators and aggregates the results
for everyone's benefit. The MMS makes the aggregate data available in a format
measure” (eannat@® of data showing industry high, mean, and ioe relors (ore :
measure. IMS eran en Compare thelr own pertonmancs data with tet of act of
industry. MMS collects this data on an annual basis during the second quarter of each
year. Following is a list of the 10 performance categories. .

1. Production operation employees’ (company and contractor) total recordable

2. Driting operations employees’ (company and contractor) totat recordable
$ and lost workday incident i ae
. Construction operation employees’ (company and contractor) total
recordable and lost workday incident rates, )

00017604 BOEM-WDC-B01-00001-000014 Page 22 of 34


include large operators, small operators (generally hon-integrated, non-affiliated), and
contractors performing specific opera’ .

This award is given jointly by MMS Offshore Minerals Management and MMS
Management. An MMS Corporate Citizen Award recipient must be judged by MMS to be
among the top § OCS “citizens.” MMS bases the determination of who are among the top 5
2 pri considerations:
“pen ~ OporatonalSfey=must be ong the top 10 OCS lessees accoring we he ne
Safety Ranking formula. This formula uses incidents of noncompliance and accidents
attributed to the lessee during a calendar year.

. Financial Reporting—must be among the 10 best-performing OCS lessees in terms of -
royalty reporting and production reporting during a calendar year. The method used
to identify the top performers is similar to the method used to identify the MMS
Stewardship candidates.

During February of each year, MMS Offshore provides Royaity Management with its lit of the
10 safest offshore operators based on data covering the previous calendar year.

Management compares the safety ranking list with its list of Stewardship Award candidates for
the same time period. Royalty: Management identifies matches between Offshore's 10 best

from among the finaliste based on relatve ranking inthe offshore perfor ea ae —

must:

. peter an act or service that benefits either the Offshore or Royalty Management
Mission. :

. Vark directly with an MMS program office or employee.

* Volunteer to Perform the beneficial act or service.

; 9 year. In February, the
Committee selects award recipients from among the nominees. There is no limit on the

number of awards that be presented each year. In March, the Director Sends a letter to the
award recipients with an invitation to-attend the award presentation ceremony. Appendix 7 Ne
Contains full documentation on the MMS Awards Program.

30

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Appendices

+ Appendix 1 Memorandum of Understanding Between the Environmental
Protection Agency and the Department of the Interior
Conceming the Coordination of NPDES Permit Issuance
. with the Outer Continental Shelf Oil and Gas Lease Program
* Appendix 2 Memorandum of Understanding Among the Secretary of the

Environmental Protection Agency on Oil Spill Prevention and
Control

+ Appendix 3 Memorandum of Understanding Between the Department of
~ Transportation and the Department of the Interior Regarding

Outer Continental Shelf Pipelines

* Appendix 4 Memorandum of Understanding Between the Minerals
Management Service, U.S. Department of the Interior and
the United States Coast Guard; U.S. Department of
Transportation

° Appendix 5 Sampling Phase It Team Report, July 1997

* Appendix 6 MMS Risk-based Inspection Methodology Report, Phase 2,
July 1999 i 4 :

+ Appendix 7 MMS National SAFE Award: Program Procedures

° Appendix 8 Model Audit Summary for Cooperative Reviews

00017604 BOEM-WDC-B01-00001-000014 Page 4 of 34


An inspector may know of some contractors that seem to be involved in more INC's
than others. This “knowledge” may be enough for the District Supervisor to change the
relative risk category of the facility and increase the frequency or type of inspections.
Or an inspector may have reason to believe that an operator or contractor does not
have a fim grasp of OCS regulations causing the inspector to want to increase a
inspection frequency. Furthermore, an operator may apply to MMS to conduct certain
types of short-term operations, such ag welding. inspectors consider this activity to be a
higher risk. The knowledge that this activity is occurring in conjunction with other
information may change the inspection frequency or type. The District Supervisor _
determines the final inspection strategy for each facility in thelr respective district. For
a more detailed discussion on this topic, see Appendix 6, MMS Risk-based Inspection
Methodology Report, Phase 2, July 1999. ve

Civil and Criminal Penalty

The Ol Pollution Act (OPA 90) of 1990 strengthened section 24 of the OCS Lands Act
Amendments of 1978. Subtitle B of OPA 90, entitled “Penalties.” increased the amount
of the civil penaity from a maximum of $10,000 to a maximum of $20,000 per violation

applicable regulations constitutes or constituted a threat of serious, irreparable, or
immediate harm or damage to life (including fish and other aquatic life); property; any
mineral deposit; or the marine, coastal, or human environment: OPA 90 provided the
Secretary of the Interior with the authority to assess a civil Penalty without regard to the
requirement of expiration of a period of time allowed for corrective action, :

Not all regulatoty violations wasrant review for initiation of civil penalty proceedings.
However, violations that cause Injury, death, or environmental damage, or pose a threat
to human life or the environment will trigger such a review. Ata minimum, MMS
reviews the following violations for civil penalties, :

. pier unworkmanlike operations involving injury to humans or
lution. . . -
. Safety devices which are bypassed or removed without a valid reason: prior
approval; or lockout-tagout, flagging or monitoring.
* _ inoperable safety devices that are left in service without repair.

met, the Reviewing Officer will notify the person who committed the Violation of this fact
and the proposed penalty. The notification letter will contain the following information.

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Disqualification Flow Chart Legend

Performance Analysis

Agency Decision

~ Notification of MMS
Management

Path of Good Performance
Path of Neutral Performance

Path of Poor Performance

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Table of Contents

Introduction

Chapter 1—OCS Inspection Program Goal and Objectives
* Goal
¢ Objectives

Chapter 2—Legal Authorities and Organization
* Statutory and Regulatory Inspection Authorities
* _ Program Organization and Responsibility:

Chapter 3—Inspection and Performance: Strategies and Tools

* The Compliance Strategy
+ Compliance Tools.
1. National PING and Guideline List
2. Compliance h
3. Risk-based Inspection Program
4. Civil and Criminal Penalty Program
5. Disqualification of Operators
* The Performance Strategy
+ Performance Tools
Safety and Environmental Management Pi m
Joint Industy/MMS Performance Measures
MMS Safety Ranking
Annual Performance Reviews
Cooperative Reviews
Altemative Compliance
Regional Policies and Procedures Documents

NOAA PWN a

00017604 BOEM-WDC-B01-00001-000014 Page 3 of 34


Reviews. : :
The MMS believes it is important to take a pro-active stance and meet with every operator at \_-
least once 3 year to discuss their performancé, As'mentioned above, MMS uses the Safety
Ranking formula as a first step in prioritizing annual performance review meetings. The
regions and districts add more detailed information, such aS company maintenance and
training data, to form a total Performance picture,

From operators performing at the highest levels, MMS solicits their ideas for best operating
practices. MMS seeks to share these success’ stories with other operators through
workshops, conferences, and other Hd meeting: Operators who perform in the

i may § ing a | 'y continue to monitor their performance.
Finally, for the operators that may have unacceptable Performance, MMS May initlate adverse
actions through the disqualification process thatmay ultimately lead to their removal as an

in the Pacific Region, the district offices handle the annual performance review meetings. In
the Gulf of Mexico Region, MMS divides the responsibility for conducting the annual
pérformance review meetings between the districts and the regional office as follows.

Annual Performance Review meetings.
MMS captures annual Performance review information in Special TIMS module under the
Civil Penalties component. Special reports have heen desigh ‘to query the MMS TIMS

'n general, the Annual Perfo Review ill adh i
MMS wi ‘ mance Meetings wil ere to the following format. The

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U.S. Department of the Interior
Minerals Management Service

National OCS
Inspection Program

Policies and Procedures Document

April 2000

00017604 BOEM-WDC-B01-00001-000014 Page 2 of 34


Regional Policies and Procedures Documents

The National Policies and Procedures docum:

ent provides the overall structure for the MMS

Inspection Program. While the regions subscribe to these policies, and in general, these Le
procedures, each region is unique in many important ways. Itis these unique characteristics "
that require the regions and their districts to implement these policies in different ways
according to geographic considerations, transportation logistics, funding, environmental
considerations, magnitude of operations, and complexity of operations. To find details on
region-specific inspection policies and Procedures, refer to the appropriate Regional Policies
and Procedures document available through the regional offices.

37

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t hais lead for assembling an accident inv and
Pp the findings in a report. in the Pacific OCS Region, the Regional Supervisor for Field
Operations hes Gre for assigni ing a team to an accident in .
Procedures for conducting an accident inves tion are available in. the Regional Policies and
Cooperative Reviews

A cooperative review is an operator-led audit that evaluates how well the operator has
implemented AP! RP75 or @ Safety and environmental management system that equates to the
concepts and requirements in RP75.

Principal MMS objectives for conducting cooperative reviews are to

order to ber z and to identify successes.
. ocean auditing earty in the Implementation stage to identify and build on

* collect determining whether and how MMS may integrate safety auditing
into its i i program, 2 ;

. encourage greater cooperation between the Regions and Headquarters on SEMP
efforts,

. lo ciscer specific information regarding a particular company that MMS may not know
tere For example, the size of the Company and the types of facilities in
ieir inventory. : : ms

Ifa company is interested ina cooperative review, they should send a letter to MMS Stati

that they have implemented SEMP or RP7S5 and would like to be considered for a coopera
review. Companies should be encouraged to begin auditing as Soon a6 possible; they should
not wait until their plans are “perfect.” Doing an audit early in the implementation Stage gives

The following are. Prerequisites that must be met for an operator and MMS to conduct a
Cooperative review,

00017604 BOEM-WDC-B01-00001-000014 Page 29 of 34


systemic nature, is intended to go beyond standard inspections and Issuance of INC’s,

but MMS can still issue INC's if the Operator does not resolve identified systems out of
compliance. MMS can also make referrals to other agencies.

In the Gulf of Mexico Region, MS siemccruhicts sampling inspections on rate
facilities. A sampling inspection uses a subset of components that is a statistically val
Subset of a complete inspection. Three confidence levels or tiers form the structure of

presence and testing of subsurface Safety valves
fire fighting equipment and.sensors

Platform emergency shut down ‘equipment
pollution prevention equipment

electrical installations, and :
maintenance of safe and workmanlike conditions

Since MMS inspects and tests al of these cilical PINC’s, the inspector leaves the
platform with a 100% confidence level that these items ara working correctly uniess

see eee

All of the remaining Components form the second tier. ‘Here, MMS uses a 90%

The third tier is comprised of non-component PINC’s, which are generally record
keeping items. MMS. has lowered the confidence level on these PINC's from 90% to
70% since these are the least critical Of all PINC’s. This sequential Sampling inspection
methodology allows MMS inspectors to spend less time on complete inspections but still

00017604 BOEM-WDC-B01-00001-000014 Page 13 of 34


o. the fact that the party has a right to a meeting ith the Reviewing Officer
Prior to any finding of fact regarding the proposed penalty. :
. the party's right to be represented by counsel.

Cuigebook, for a complete discussion on conditions that warrant civil or criminal penalty
consideration; determining the amount of a penalty; the MMS Internal review procedure,
and payment and collection procedures.

Disqualification of Operators

In 1989, MMS. amended 30 CFR Subpart A to include Section 250.12 on
Disqualification and Appeals. This section states that MMS may disqualify a company

from acting as the Operator on an OCS facility or facilities, if their
Performance is unacceptable. In making this décision, MMS will consider, individually

* accidents and their nature; ee A :
* pollution events, environmental damages and their nature:

* . incidents of noncompliance; —

* .. civil penatties; “

+ failure to adhere to OCS lease obligations; or

any other relevant factors.

At the conclusion of every calendar year, the MMS t s data.on operators
regarding their compliance and accident histories. MMS weight: I :
upon severity, Because this data is normalized, it allows MMS to compare operators
and to evaluate their overall performance over the Course of time as well as determine

Two general categories of performance-can trigger MMS taking actions that could
ultimately lead to an operator disqualification. Through periodic performance ai .
in particular the annual performance reviews, or as a result of a safety meeting that was
triggered by an event that posed late threat or harm to the human or marine
environment, MMS may find that an Operator has performed at an unacceptable level.

GY either method of determination, MMS will meet with the operator and counsel them
graduated series of adverse actions or MMS. may choose to immediately disqualify an
operator if the situation merits that kind of action. See the Designated Curae

Disqualification Process flow Chart on the following Page. Usually, MMS will take an
incremental approach, wheraby intermediate steps are taken in an effort to allow an

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