[Federal Register Volume 62, Number 191 (Thursday, October 2, 1997)]
[Proposed Rules]
[Pages 51614-51618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26073]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

RIN 1010-AC39


Oil and Gas and Sulphur Operations in the Outer Continental Shelf

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a provision of the December 
10, 1996, Memorandum of Understanding (MOU) between the Department of 
the Interior (DOI) and the Department of Transportation (DOT) Regarding 
Outer Continental Shelf (OCS) Pipelines. Under this MOU, the two 
departments jointly regulate OCS pipelines. As specified in the MOU, 
MMS regulations would pertain to all OCS oil or gas pipelines located 
upstream of the points at which operating responsibility for the 
pipelines transfer from a producing operator to a transporting 
operator.

DATES: MMS will consider all comments we receive by December 1, 1997. 
We will begin reviewing comments then and may not fully consider 
comments we receive after December 1, 1997.

ADDRESSES: Mail or hand-carry comments to the Department of the 
Interior; Minerals Management Service; Mail Stop 4020; 381 Elden 
Street; Herndon, Virginia 20170-4817; Attention: Rules Processing Team.

FOR FURTHER INFORMATION CONTACT: Carl W. Anderson, Operations Analysis 
Branch, at (703) 787-1608; e-mail Carl__A<a href="/cdn-cgi/l/email-protection#b5dbd1d0c7c6dadbf5d8d8c69bd2dac3"><span class="__cf_email__" data-cfemail="f09e949582839f9eb09d9d83de979f86">[email protected]</span></a>.

[[Page 51615]]

SUPPLEMENTARY INFORMATION:

Background

    MMS, through delegations from the Secretary of the Interior, has 
authority to promulgate and enforce regulations for the promotion of 
safe operations, protection of the environment, and conservation of the 
natural resources of the OCS, as that area is defined in the OCS Lands 
Act (43 U.S.C. 1331 et seq.). The scope of this authority includes the 
pipeline transportation of mineral production and the approval and 
granting of rights-of-way for the construction of pipelines and 
associated facilities on the OCS. MMS also administers the following 
laws as they relate to OCS pipelines: (1) the Federal Oil and Gas 
Royalty Management Act of 1982 (FOGRMA) for oil and gas production 
measurement, and (2) the Federal Water Pollution Control Act, as 
amended by the Oil Pollution Act of 1990 (OPA) and implemented under 
Executive Order 12777. (Under a February 3, 1994, MOU to implement OPA, 
DOI, DOT, and the U.S. Environmental Protection Agency divided their 
respective responsibilities for oil spill prevention and response 
according to the definition of ``coast line'' contained in the 
Submerged Lands Act, 43 U.S.C. 1301(c) (59 FR 9494-9495).) Nothing in 
this proposed regulation will affect MMS' authority under either FOGRMA 
or OPA.
    Under an MOU between DOI and DOT dated May 6, 1976, MMS regulated 
oil and gas pipelines located upstream of the outlet flange of each 
facility where hydrocarbons were first produced or where produced 
hydrocarbons were first separated, dehydrated or otherwise processed, 
whichever facility was farther upstream. The Departments agreed to 
change this regulatory boundary with the signing of the December 10, 
1996, MOU. The 1996 MOU was the result of negotiations that began in 
the summer of 1993 and included a high degree of participation from the 
regulated industry. MMS and DOT's Research and Special Programs 
Administration (RSPA) solicited public comments on a draft MOU through 
a joint MMS and DOT Federal Register Notice of May 24, 1995 (60 FR 
27546-27549). The Notice announced a public meeting at the MMS Gulf of 
Mexico OCS regional office in New Orleans, Louisiana, on August 1, 
1995, to discuss the proposal. Over 70 people attended the meeting 
which generated over 100 pages of transcribed comments from natural gas 
and petroleum trade organizations, natural gas and oil exploration and 
production companies, transmission companies, offshore construction 
companies, and industry consultants. A transcript of this meeting is 
available through the agency representative listed in the For Further 
Information section of this notice. Twenty-three individuals and 
organizations submitted written comments on the Federal Register 
notice.
    In May 1996, MMS and RSPA met with a joint industry workgroup 
representing OCS oil and natural gas producers and transmission 
pipeline operators led by the American Petroleum Institute. (The 
Interstate Natural Gas Association of America also participated on the 
workgroup.) The industry workgroup proposed that the agencies rely upon 
individual operators of production and transportation facilities to 
identify the boundaries of their respective facilities, since producers 
and transporters can best make such decisions based on the operating 
characteristics peculiar to each facility. The two agencies agreed with 
the industry proposal. Under the proposal, MMS would have primary 
regulatory responsibility for producer-operated facilities and 
pipelines on the OCS, while RSPA would have primary regulatory 
responsibility for transporter-operated pipelines and associated 
pumping or compressor facilities. Producing operators are companies 
which are engaged in the extraction and processing of hydrocarbons on 
the OCS. Transporting operators are companies which are engaged in the 
transportation of those hydrocarbons.

The Purpose of This Proposed Rule

    The purpose of this proposed rule is to require OCS producing and 
transporting operators to designate the specific points on their 
pipelines where operating responsibility transfers from a producing 
operator to an adjoining transporting operator. The rule would amend 30 
CFR Part 250, Subpart J--Pipelines and Pipeline Rights-of-Way, section 
250.150, ``General Requirements,'' Sec. 250.151, ``Definitions,'' and 
Sec. 250.157, ``Applications.'' Operators would have until 60 days 
after the date the rule becomes final to identify the specific points 
at which operating responsibility transfers. In most cases, the 
specific transfer points would be easily identifiable either because of 
specific valves or flanges where the adjoining operations connect, or 
because of differences in paint colors that adjoining operators use to 
protect and maintain pipeline coatings or surfaces. For those instances 
in which the transfer points would not be identifiable by a durable 
marking, each operator would have until 180 days after the final rule 
becomes effective to mark the transfer points. (The 180-day period 
would give operators time to mark the transfer points during customary 
maintenance routines.) The operator would be required to durably mark 
each transfer point directly on the pipeline (usually at a valve or 
flange). If it were not practicable to durably mark a transfer point, 
and the transfer point were located above water, then the operator 
would be required to depict the transfer point on a schematic located 
on the facility. Some transfer points could be located subsea. In such 
cases, the operators also would be required to identify the transfer 
points on schematics which would be provided to MMS upon request.
    For those instances in which adjoining operators could not agree on 
a transfer point, MMS and RSPA's Office of Pipeline Safety (OPS) would 
make a joint determination of the boundary.
    MMS and OPS could, through their enforcement agencies and in 
consultation with the affected parties, agree to exceptions to the 
general boundary description (operations transfer point) on a facility-
by-facility or area-by-area basis. Operators also could petition, by 
letter, MMS and OPS for exceptions to the general boundary description.
    For existing lease term pipelines, the current designated operator 
of the associated lease(s) would have the operating responsibility for 
the pipeline(s). For right-of-way pipelines, MMS would assume that the 
current right-of-way grant holder had the operating responsibility, 
unless the right-of-way grant holder informed MMS otherwise within 60 
days after the effective date of this rule. (There are up to 160 
designated operators of leases and 70 operators of transportation 
pipelines on the OCS.)
    Applications for new right-of-way pipelines would be required to 
include an identification of the operator and a boundary demarcation 
point on the flow schematic submitted in accordance with 30 CFR 
250.157(a)(2).
    A pipeline segment originally operated under DOT regulations but 
later transferred under MMS regulatory responsibility as a result of 
this proposed rulemaking could continue to be operated under DOT 
requirements, unless the MMS Regional Supervisor determined, based on 
an MMS safety assessment, that a pipeline segment or component is 
unsafe. The Regional Supervisor would then notify the operator that MMS 
regulations apply to that segment or component.

[[Page 51616]]

    Under 30 CFR 250.3, the MMS Supervisor for Field Operations may 
approve alternative techniques, procedures, equipment, or activities an 
operator proposed if such techniques, procedures, equipment, or 
activities afford a degree of protection, safety, or performance equal 
to or better than that intended to be achieved by MMS regulations.
    Various laws enacted since 1976 have contributed to ambiguity 
concerning MMS' and OPS' respective responsibilities concerning the 
approximately 20,000 miles of active OCS oil and gas pipelines and 
production facilities that were regulated under the May 6, 1976, MOU. 
The most notable legislative changes included the 1978 OCS Lands Act 
Amendments; the Hazardous Liquid Pipeline Safety Act of 1979; the OPA 
of 1990; and the Pipeline Safety Act amendments of 1990, 1992, 1995, 
and 1996.
    The December 1996 MOU would re-define MMS-OPS regulatory boundary 
from the OCS facility where hydrocarbons are first produced, separated, 
dehydrated, or otherwise processed to the point at which operating 
responsibility for the pipeline transfers from a producing operator to 
a transporting operator. The MOU would place, to the greatest extent 
practicable, producer-operated pipelines under DOI regulation and 
transporter-operated pipelines under DOT regulation.
    In its 1994 report ``Improving the Safety of Marine Pipelines,'' 
the National Academy of Sciences Marine Board recommended: ``To make 
better use of inspection resources and help integrate enforcement of 
MMS and OPS marine pipeline safety regulations, the committee 
recommends that enforcement of OPS regulations offshore be performed by 
MMS, through an interagency agreement or redefinition of the memorandum 
of understanding that defines the jurisdictional division between OPS 
and MMS * * *.'' In response to this recommendation, the 1996 MOU 
provides for DOI to act as an agent for the DOT in identifying and 
reporting potential violations of DOT regulations at platforms on the 
OCS. As an agent, DOI may inspect all DOT-regulated pipeline facilities 
on production platforms during DOI inspections. DOI may also perform 
coordinated DOI/DOT inspections of pipeline facilities on DOT-regulated 
platforms. The inspections may include reviewing any operating or 
maintenance records or reports that are located at the inspected OCS 
platform facility.

Executive Order (E.O.) 12866

    This is not a significant rule under E.O. 12866 and does not 
require review by the Office of Management and Budget (OMB). An 
analysis of the proposed rule indicates that the direct costs to 
industry for the entire proposed rule total approximately $360,000 for 
the first year, and that in succeeding years, the cost of the rule to 
industry would not likely exceed $255,000.

Regulatory Flexibility Act

    DOI has determined that this rule will not have a significant 
economic effect on a substantial number of small entities. While this 
rule would affect a substantial number of ``small entities,'' the 
economic effects of the rule would not be significant. There are many 
companies on the OCS that are ``small businesses'' as defined by the 
Small Business Administration. However, the technology necessary for 
conducting offshore oil and gas exploration and development activities 
is very complex and costly, and most entities that engage in offshore 
activities have considerable financial resources disproportionate to 
their numbers of employees and well beyond what would normally be 
considered ``small business.''
    DOI's analysis of the economic impacts indicates that direct costs 
to industry for the entire proposed rule total approximately $360,000 
for the first year, and in succeeding years, the cost of the rule to 
industry would not likely exceed $255,000 annually. These annual costs 
would not persist for long, because all pipelines converted to MMS 
regulation eventually would come into compliance with MMS safety valve 
requirements. There are up to 160 designated operators of leases and 70 
operators of transportation pipelines on the OCS (both large and small 
operators), and the economic impacts on the oil and gas production and 
transportation companies directly affected would be minor. Not all 
operators affected would be small businesses, but much of their 
modification costs may be paid to offshore service contractors who may 
be classified as small businesses. Operators having to install new 
automatic shutdown valves as a result of transferring under MMS 
regulations would sustain the greatest economic impact from this rule. 
It is impractical, however, to determine in advance which operators 
would be affected, because the operators themselves will determine the 
transfer points between producers and transporters.
    To the extent that this rule might eventually cause some of the 
relatively larger OCS operators to make modifications to their 
pipelines, it may have a minor beneficial effect of increasing demand 
for the services and equipment of smaller service companies and 
manufacturers. This rule would not impose any new restrictions on small 
pipeline service companies or manufacturers, nor will it cause their 
business practices to change.

Paperwork Reduction Act

    This proposed rule contains a collection of information which we 
have submitted to the OMB for review and approval under section 3507(d) 
of the Paperwork Reduction Act of 1995. As part of our continuing 
effort to reduce paperwork and respondent burdens, MMS invites the 
public and other Federal agencies to comment on any aspect of the 
reporting burden imposed by this proposed rule. Submit your comments to 
the Office of Information and Regulatory Affairs, OMB; Attention: Desk 
Officer for the Department of the Interior (OMB control number 1010-
XXXX); Washington, DC 20503. Send a copy of your comments to the Rules 
Processing Team; Mail Stop 4020; 381 Elden Street; Herndon, Virginia 
20170-4817. You may obtain a copy of the supporting statement for the 
collection of information by contacting the Bureau's Information 
Collection Clearance Officer at (202) 208-7744.
    The Paperwork Reduction Act of 1995 provides that an agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number. OMB has up to 60 days to approve or disapprove this 
collection of information but may respond after 30 days from receipt of 
our request. Therefore, your comments are best assured of being 
considered by OMB if OMB receives them within 30 days of publication of 
this notice. However, MMS will consider all comments received during 
the comment period for this notice of proposed rulemaking.
    The title of this collection of information is ``Implementation of 
Memorandum of Understanding Between the Departments of the Interior and 
Transportation.''
    The collection of information in the proposed rule consists of (1) 
reviewing existing pipeline maps, conferring and agreeing with 
operators of adjoining transportation pipeline segments concerning the 
locations of specific transfer points, and either marking directly on 
each pipeline or depicting on a schematic the specific point on each 
pipeline where operating responsibility transfers from the

[[Page 51617]]

producing operator to a transporting operator; (2) identifying the 
operator of right-of-way pipelines if different from the grant holder; 
and (3) allowing for petitions for exceptions to general operations 
transfer points. As stated above under the ``Intent of the Proposed 
Rule'' section, specific transfer points will be easily identifiable in 
most cases, either because of specific valves or flanges where the 
adjoining operations connect, or because of differences in paint that 
adjoining operators use to protect and maintain pipeline coatings or 
surfaces.
    The requirement to respond is mandatory. MMS uses the information 
to determine the demarcation where pipelines are subject to MMS design, 
construction, operation, and maintenance requirements, as distinguished 
from similar OPS requirements.
    The regulated community consists of up to 160 Federal OCS oil and 
gas lease designated operators and 70 transportation pipeline 
operators. There are approximately 3,000 points where operating 
responsibility for pipelines transfers from a producer to a 
transporter. MMS assumes that about 2,400 (representing 80 percent) of 
these transfer points are already marked. Therefore, this rulemaking 
would require a one-time identification and marking of about 600 points 
where operating responsibility for pipelines transfers from a producer 
to a transporter. For the 2,400 transfer points that are clearly 
marked, there would be no information burden. The 600 unmarked transfer 
points, on the other hand, would require widely-varying times for 
marking depending on whether a painted line or a schematic was used to 
mark the transfer point.
    The public reporting burden for this proposed information 
collection requirement is estimated to average 5 hours per response. 
This includes the time for reviewing instructions, searching existing 
data sources, gathering and maintaining the data needed, and completing 
the required marking. The average annualized burden over a 3-year 
period would be 1,051 hours.
    MMS will summarize written responses to this notice and address 
them in the final rule. All comments will become a matter of public 
record.
    1. MMS specifically solicits comments on the following questions:
    (a) Is the proposed collection of information necessary for the 
proper performance of MMS's functions, and will it be useful?
    (b) Are the estimates of the burden hours of the proposed 
collection reasonable?
    (c) Do you have any suggestions that would enhance the quality, 
clarity, or usefulness of the information to be collected?
    (d) Is there a way to minimize the information collection burden on 
those who are to respond, including through the use of appropriate 
automated electronic, mechanical, or other forms of information 
technology?
    2. In addition, the Paperwork Reduction Act of 1995 requires 
agencies to estimate the total annual cost burden to respondents or 
record keepers resulting from the collection of information. MMS needs 
your comments on this item. Your response should split the cost 
estimate into two components: (a) Total capital and startup cost, and 
(b) annual operation, maintenance, and purchase of services. Your 
estimates should consider the costs to generate, maintain, and disclose 
or provide the information. You should describe the methods you use to 
estimate major cost factors, including system and technology 
acquisition, expected useful life of capital equipment, discount 
rate(s), and the period over which you incur costs. Capital and startup 
costs include, among other items, computers and software you purchase 
to prepare for collecting information; monitoring, sampling, drilling, 
and testing equipment; and record storage facilities. Generally, your 
estimates should not include equipment or services purchased: before 
October 1, 1995; to comply with requirements not associated with the 
information collection; for reasons other than to provide information 
or keep records for the Government; or as part of customary and usual 
business or private practices.

Takings Implication Assessment

    DOI certifies that the proposed rule does not represent a 
governmental action capable of interference with constitutionally 
protected property rights. Thus, a Takings Implication Assessment need 
not be prepared pursuant to E.O. 12630, Governmental Actions and 
Interference with Constitutionally Protected Property Rights.

Unfunded Mandates Reform Act of 1995

    This rule does not contain any unfunded mandates to State, local, 
or tribal governments, nor would it impose significant regulatory costs 
on the private sector. Anticipated costs to the private sector will be 
far below the $100 million threshold for any year that was established 
by the Unfunded Mandates Reform Act.

E.O. 12988

    DOI has certified to OMB that this proposed regulation meets the 
applicable civil justice reform standards provided in sections 3(a) and 
3(b)(2) of E.O. 12988.

National Environmental Policy Act

    Under 516 DM 6, Appendix 10.4, ``issuance and/or modification of 
regulations'' is considered a categorically excluded action causing no 
significant effects on the environment and, therefore, does not require 
preparation of an environmental assessment or impact statement. DOI 
completed a Categorical Exclusion Review for this action on April 22, 
1997, and concluded: ``The proposed rulemaking does not represent an 
exception to the established criteria for categorical exclusion.''

List of Subjects in 30 CFR Part 250

    Continental shelf, Environmental impact statements, Environmental 
protection, Government contracts, Incorporation by reference, 
Investigations, Mineral royalties, Oil and gas development and 
production, Oil and gas exploration, Oil and gas reserves, Penalties, 
Pipelines, Public lands--mineral resources, Public lands--rights-of-
way, Reporting and recordkeeping requirements, Sulphur development and 
production, Sulphur exploration, Surety bonds.

    Dated: September 22, 1997.
Sylvia V. Baca,
Assistant Secretary, Land and Minerals Management.

    For the reasons stated in the preamble, Minerals Management Service 
proposes to amend 30 CFR part 250 as follows:

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

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

    Authority: 43 U.S.C. 1331, et seq.

    2. In Sec. 250.150, paragraph (c) is revised to read as follows:


Sec. 250.150  General requirements.

* * * * *
    (c)(1) Department of the Interior (DOI) pipelines, as defined in 
Sec. 250.151 of this subpart, must meet the requirements for design, 
construction, operation, maintenance, and abandonment contained in 
Secs. 250.150 through 250.158 of this subpart.

[[Page 51618]]

    (2) A pipeline right-of-way grant holder must identify in writing 
to the Regional Supervisor the operator of any pipeline located on its 
right-of-way if the operator is different from the right-of-way grant 
holder.
    (3) A producing operator must identify on all existing pipelines 
located on its lease or right-of-way the specific points at which 
operating responsibility transfers to a transporting operator.
    (i) If the transfer points are not identifiable by a durable 
marking, each producing operator must mark all above-water transfer 
points by (insert date 180 days after the final rule is published). The 
operators of new pipelines also must durably mark all above-water 
transfer points directly on each pipeline.
    (ii) If it is not practical to durably mark a transfer point, and 
the transfer point is located above water, then the operator must 
depict the transfer point on a schematic located on the facility.
    (iii) If a transfer point is located subsea, then the operator also 
must identify the transfer point on a schematic. The operator must 
provide the schematic to MMS upon request.
    (iv) If a producing and an adjoining transporting operator cannot 
agree on a transfer point by the date specified in paragraph (c)(3)(i) 
of this section, the MMS Regional Supervisor and the Department of 
Transportation (DOT) Office of Pipeline Safety (OPS) Regional Director 
may jointly determine the transfer point.
    (4) Operators may petition, by letter, the MMS Regional Supervisor 
for exceptions to the general operations transfer point description on 
a facility-by-facility or an area-by-area basis. The Regional 
Supervisor, in consultation with the OPS Regional Director and affected 
parties, may grant such exceptions.
    (5) Pipeline segments designed and constructed under DOT 
regulations before (INSERT THE EFFECTIVE DATE OF THE FINAL RULE), may 
continue to operate under DOT design and construction requirements 
until significant modifications or repairs are made to those segments. 
After (INSERT THE EFFECTIVE DATE OF THE FINAL RULE), MMS operational 
and maintenance requirements will apply to those segments.
* * * * *
    3. In Sec. 250.151, a definition for the term ``DOI pipelines'' is 
added in alphabetical order as follows:


Sec. 250.151  Definitions.

* * * * *
    DOI pipelines are those pipelines extending upstream from each 
point on the OCS at which operating responsibility transfers from a 
producing operator to a transporting operator.
* * * * *
    4. Section 250.157 is amended by revising the title, revising 
paragraph (a) introductory text, and adding a new sentence at the end 
of paragraph (a)(2) to read as follows:


Sec. 250.157  What to include in applications.

    (a) Applications to install a lease term pipeline or for a pipeline 
right-of-way grant must be submitted in quadruplicate to the Regional 
Supervisor. Right-of-way grant applications must include an 
identification of the operator of the pipeline. Each application must 
include the following:
* * * * *
    (2) * * * The schematic must indicate the point on the OCS at which 
operating responsibility transfers from a producing operator to a 
transporting operator.
* * * * *
[FR Doc. 97-26073 Filed 10-1-97; 8:45 am]
BILLING CODE 4310-MR-P


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