### Regulatory Impact Analysis for **RIN 101 4**  **AD 04**  **, Final**  **Rule Oil and Gas and Sulphur Operations in the Outer Continental Shelf** 
**- Revisions to Safety and Environmental Management Systems**  **Bureau of Safety**  **and Environmental**  **Enforcement ( B**  **SE E**  **), Department of the Interior**  **August 10 , 201**  **2**2 

### Table of Contents **Executive Summary ................................**  **................................ ................................**  **.......... 3**  **Need for Regulatory Action and the Reasons that Action is being Considered ..........**  **4** How this rule will mee t the need for regulatory action

................................ ............................... 5 Baseline: the world without the regulation

................................ ................................ ................ 6 **New Regulatory Provisions and Alternatives ................................**  **................................ .**  **6** Additional requirements for conducting a Job Safety Analysis (JSA) (§ 250.1911)

.................. 7 SEMS Training (§ 250.1915)

................................ ................................ ................................ ...... 8 Auditing Requirments (§§ 250.1920, 250.1921, 250.1 922)

................................ ........................ 9 Stop Work Authority (§ 250.1930)

................................ ................................ ........................... 10 Ultimate Work Authority (§250.1931)

................................ ................................ ..................... 10 Employee Participation Plan (§ 250.1932) ...................................................... ......11 Reporting Unsafe Working Conditions (§§ 250.1933. 250.193)

................................ .............. 12 **Regulation’s Compliance Costs ................................**  **................................ .....................**  **13** Recordkeeping, Implementation , and Auditing Costs

................................ .............................. 13 Executive Order 13563 Analysis

– Total Ongoing Estimated SEMS Recordkeeping and Implementation Costs

................................ ................................ ................................ ............... 16 **Bene fits of a SEMS Program and this Regulation**  **................................ .......................**  **16** Benefits of the Regulation

................................ ................................ ................................ ......... 17 Measuring the Future Benefits of SEMS

................................ ................................ .................. 18 **Net Benefits ................................**  **................................ ................................**  **...................... 18**  **Analysis Specific to the Regulatory Flexibility Act ................................**  **...................... 19**  Small Entities Estimated to be Impacted by this Rulemaking

................................ .................. 19 The Estimated Breakdown of Large and Small Company Compliance Costs

.......................... 21 Identification, to the extent practicable, of all relevant F ederal rules that may duplicate, overlap , or conflict with the rule.

................................ ................................ .............................. 23 Small Business Alternatives

................................ ................................ ................................ ...... 233 **SEMS**
**- II Regulatory Impact Analysis**  **1 Executive Summary**  This rule is a significant rule , as determined b y the Office of Management and Budget (OMB), which might raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in Executive Order 12866

. It is not a significant rule due to its annual economic impact. The Safety and Environmental Mana gement S ys tems (SEMS) program is a risk

- based performance safety management sy stem . The existing SEMS regulations were effective on November 15, 2010 , and O uter C ontinental S helf ( OCS ) operators were required to implement a SEMS program by Novembe r 15, 2011 . The provisions in this final rulemaking are designed to fill the gaps in the existing SEMS regulations and are consistent with the recommendations of work groups, panels , or commis sions established following the Deepwater Horizon (DWH) e xplosion and oil spill

. The proposed rule was published o n September 14, 2011 (76 FR 56683) with the comment period closing on November 14, 2011. The BSEE (Bureau of Safety and Environmental Enforc ement) considered c omments that were received during the proposed rule comment period. The final rulemaking preamble includes explanations of changes from the proposed rule, and responses to comments. The BSEE estimates the average annual cost of complying with this rulemaking is $ 17 million, spread across all OCS oil and gas operators with active operations. The benefits of the SEMS provisions in this rulemaking will come from enhanced safety for offshore wor kers and greater protection of the marine environment. These benefits will be realized through additional employee participation in safety procedures, training programs, notification obligations as well as strengthened safety and SEMS auditing procedures. Approximately 4 3 percent of the costs for this rulemaking will fall on small entities. Small entities are represented in all activity levels of OCS operations (high, moderate , and low based on the number of offshore complexes the entity operates). Th e operating risk for these small entities of experiencing safety or environmental accidents is not lower than it is for larger

- sized companies. Offshore operations are highl y technical and can be hazardous. The risk level along with the adverse consequen ces in the event of incidents is the same regardless of the operator’s size. We have evaluated a number of alternatives including those provided through comments , but were unable to identify provisions that will achieve the same safety objectives.

1 This Regulatory Impact Analysis (RIA) includes both the economic analysis under Executive O rder s 12866 , 13563, and the small business analysis under the Regulatory Flexibly Act.4

**Need for Regulatory** 

**A ction and the Reasons that A** **ction is being Considered**  The importance of this rule is highlighted b y the DWH e xplosion and oil spill on April 20, 2010. The blowout of the BP Macondo well, and the resulting explosion on the Deepwater Horiz on, resulted in the deaths of 11 workers, an oil spill of national significance, and the loss of the Deepwater Horizon M obile O ffshore D rilling Unit (MODU)

. The grave consequences of this catastrophe underline the importance of additional measures to ensure safe operations on the OCS. In consideration of issues raised b y the testimony, hearings, and reports being released about the DWH explosion and oil spill, B SE E is expanding , revis ing , and adding new requirements necessary for an improved SEMS program The role of SEMS was specificall y mentioned b y the Presidential Oil Spill Commission. The commission recommended the existing SEMS regulations be updated. This rule includes those provisions that B SE E believes are most necessary , at reasonable cost , to improve the existing SEMS program for OCS operators. The commission recommendation related to SEMS is found in the following summary : The Safety and Environmental Management Program Recommended Prac tice 75 (API RP 75) developed in 1993 by the API and incorporated by reference in the Department of the Interior’s new workplace safety rules, adopted in October 2010, is a reasonable starting point. Updates to those safety rules are needed immediately, b ut a new industry safety institution could make a credible start by requiring members to adopt all safety standards promptly

—and mandating that the companies, in turn, require that their contractors and service providers comply with the new safety rules. 2
The commission also specificall y recommended that B SE E p rovide protection for “whistleblowers” that notify authorities about lapses in safet y 3 and expand S EMS requirements to include regular third

- party audits at 3

- to 5

- year intervals and certification s . 4 Rulemaking provisions include contact information for people to inform BSEE of safety or other lapses, and independent audits conducted by an audit service provider (ASP) will be required every 3 years.

2 Report of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling , Part III, Lessons Learned: Industry, Government, Energy Policy http://www.oilspillcommission.gov/sites/default/files/documents/FinalReportPartIII.pdf , page 242. 3 Ibid, page 254. 4 Ibid, page 2535

The USCG joint investigation report emphasized the importance of exercising stop work authority (SWA) when an unsafe condition is identified

. 5 While most , if not all operators and contractors provide their workers SWA , The B SE E believes SWA needs to be formally integrated to the SEMS program. The effectiveness of SEMS was anal yz ed in the June 2012 report b y the Committee on the Effectiveness of Safety and Environmental Management S ys tems for the Outer Continental Shelf Oil and Gas Operations from the Transportation Research Board of the National Ac ademies

- National Research Council 6 . The Transportation Research Board endorsed the SEMS framework and the components added to the OCS SEMS program in this rulemaking. **How this rule will meet the need for regulatory action** Under OCSLA, BSEE has the res ponsibility to assure that operations on the OCS are conducted in the following manner:
 Safely by well

- trained personnel;
 Using appropriate technology , precautions, and techniques sufficient to prevent or minimize the likelihood of :  loss of well control, fires, or spillage;
 occurrences that cause or threaten to cause damage to the environment or to property; or  occurrences that endanger life or health. A SEMS program is a comprehensive s ys tem to reduce human error and organizational failures. The 30 CFR 250 , s ubpart S , revisions will strengthen the existing SEMS framework built around APIRP 75. Many of the provisions in this rulemaking are already being implemented by safety conscious OCS operating companies. However, as the safe ty regulator for OCS operations, B SE E needs to ensure that all companies are implementing best practices and this regulation will help achieve that outcome. In addition to those in APIRP 75, these additional provisions are necessary for a well

functionin g SEMS program: 1. **Job Safety Analysis (JSA)**

**–** Provides a dditional requirements for conducting a JSA

. 2. **Auditing**
**-** Require s ASPs to conduct all SEMS audits. The ASP must be accredited b y a BSEE

- approved accreditation body (AB)

. 3. **Stop Work Authority (SWA)** 
**-** Procedures that establish SWA and make responsible an y and all personnel who witness an activity that is creating imminent risk or danger to stop work

.

5 USCG Report of Investigation into the Circumst ances Surrounding the Explosion, Fire, Sinking, and Loss of Eleven Crew Members Aboard the Mobile Offshore Drilling Unit Deepwater Horizon, Appendix M, April 22, 2011. 6 Effectiveness of Safety and Environmental Management Systems for Outer Continental Shel f Oil and Gas Operations, Committee on Offshore Oil and Gas Facility Inspection Program of the Minerals Management Service: A Review, TRB

- SSP

- 09

- 03 http://www8.nationalacademie s.org/cp/projectview .aspx?key=491656

4. **Ultimate Work Authority (UWA)**
**-** Clearl y define s requirements establishing who has the UWA on the facility for operational safety and decision

- making at any given time

. 5. **Employee Participation Plan (EPP)**
**-** Provides a participatory environment between employees and management in order to eliminate or mitigate hazards on the OCS

. 6. **Reporting Unsafe Work** **ing Conditions** 
**-** Empowers all personnel to report to BSEE a ll possible safety or environmental violation(s) , threats of danger, as well as possible violations of any other regulation. The BSEE believes that integrating these additio nal provisions into existing operators ’ SEMS programs will facilitate a positive safety culture and provide greater protection to OCS workers and the environment. This belief is based largely on the DWH explosion and oil spill. The investigations into th at event resulted in recommend ations to include several elements that are not included in the existing SEMS regulations

. Additionally , BSEE , with the consultation of outside experts , has determined that these additional provisions are important for a well

- functioning SEMS program. T he Regulatory Alternatives section review s how each of the provisions would improv e OCS safety

. **Baseline: the world without the regulation**  M any compan ies have used a safety management sy stem such as SEMP (Safet y and Environmental Management Program) or SEMS for many years. However, SEMS only became mandatory

for OCS operating companies with the publication of the final rule Safety and Environmental Management Sy stems . Per 30 CFR 250.1900(a), full implementation of all 13 elements of the SEMS program and compliance with the requirements of 30 C FR 250 , s ubpart S , and API RP 75 was required before November 15, 2011. The regulatory provisions in this rulemaking enhance existing provisions or strengthen the existing SEMS program

. T he mandatory SEMS program is too new to compile needed data

. There fore, B SE E is unable to establish a regulatory baseline to anal yz e this rule making enhancement to Subpart S

. **New Regulatory**

**Provisions and A lternatives**  The BSEE has determined that six additional regulatory provisions are necessary for a comprehensive SEMS program

. These provisions are consistent with the recommendations of work groups, panels , or commissions established following the Deepwater Horizon event. The regulatory requirements should easily fit into existing or developing SEMS programs

. The y are designed to fill the gaps in the existing SEMS regulations in way s that independent experts agree will promote worker safety and environment al protection. For example, man y companies already include employees in SEMS program development, hazards ana ly sis , and JSA development. The SWA and reporting unsafe working conditions are also components of safety and SEMS programs at many OCS companies. While the UWA and ASP audits of companies ’ SEMS programs will be new to most operators, the se requirements should not be difficult to implement for companies committed to a robust SEMS program.7

Operators retain flexibility to implement these requirements in a manner that fits with the operational cultur e in their individual companies. For example, the rule allows the operator to designate the individual on the facility with UWA rather than prescribing to the operator who the individual should be or the position title . The following sections outline how the new requirements contribute to the safety of OCS wo rkers and summarize B SE E’s evaluation of alternatives for the new regulatory provisions in 30 CFR 250, subpart S. **Additional requirements for conducting a Job Safety Analysis (JSA) (§ 250.1911)**  The rule requires the operator to prepare, conduct, and app rove JSAs for OCS activities identified or discussed in their SEMS program. The JSA is a technique used to identify risks to personnel associated with their job activities. The JSAs are also used to determine the appropriate mitigation measures needed to reduce personnel job risks. The revisions made in this final rule make the JSA requirement more performance

- based by allowing the operator to apply the JSA to recurring events, provided that no changes were made to the personnel, procedures, equipment, or environmental conditions associated with the job

. The rule requires JSAs to include all personnel involved with conducting the applicable activity . In accordance with § 250.1915, all personnel must be trained in how to recognize and identif y hazards and how to develop and implement JSAs prior to performing a job on the facility

. T he operator must document this training for contractors. The training focused on JSA development and implementation should improve an operator’s and contractor’ s ability to perform an activity

in a safe manner. In addition, training will provide personnel a better understanding of how a SEMS program addresses particular hazards. The final rule require s the JSA to include all personnel involved with the applic able job activity . The personnel performing the job must be aware of the hazards and sign the JSA. The immediate supervisor of the crew actually performing the job needs to conduct the JSA, sign the JSA, and make sure all personnel participating in the j ob sign the JSA. The individual designated as being in charge of the facility b y the operator must approve and sign all JSAs. Having dual levels of involvement/approval in the JSA process prov ides an extra level of safety. Requiring signatures is an ind ication by the individuals signing the JSA that they are aware of the hazards and will adhere to the recommended mitigations while performing and/or supervising the job. This will help minimize the possibility of safety or environmental issues. Requiring signatures from all parties is appropriate . T he bureau has found that not performing a JSA, conducting an incomplete JSA, or not having all parties involved in the task participate in the JSA process, have all contributed to accidents or Incidents of No ncompliance (INCs). There is no guarantee that requiring signatures on the JSA will ensure a better understanding of the proper way to perform the8

operation. However, we believe that this process clearl y articulates that all personnel involved in the job must fully understand the risks, procedures, and expectations of the task at hand before initiating work. These additional requirements for conducting JSAs will emphasize the hazard and risk factors identified for a pending operation. The review and sign - off b y employees performing the operations will also facilitate communication about the risks for a pending action among its participants and contribute to a positive safety culture. **Less Stringent A lternative**  : A less comprehensive alternative is to co ntinue with the existing S ubpart S requirements in § 250.1911. This approach does not require mandatory

training

. While many

companies routinely

train their employees on hazards anal ys is, hazards anal ys is training is not currently a SEMS training requirement in B SE E regulations. **More Stringent A lternative**  : A stricter alternative would be for B SE E to require all workers t o use a standard JSA template and to sign the JSA. The JSA template would c over all of the basic areas of concern. This alternative would eliminate important regulatory flexibility and prevent operators from design ing their JSA in the manner most appropriate for the job and their SEMS program. **SEMS Training (§ 250.1915)** The BSEE is specifying additional training requirements so that all OCS personnel are trained in accordance with their duties and responsibilities to work safely and are aware of environmental impacts . The training requirements included in this rulemaking are :  How to recognize and identify hazards and the creation and implementation of JSAs (§250.1911)
 SWA (§ 250.19 30 )
 UWA (§ 250.1931)
 EPP (§ 250.1932)
 Reporting unsafe working conditions (§ 250.1933) The final rule removes the annual frequency requirement from the regulation and only specifies that personnel must be trained in accordance with § 250.19 15 . This less prescriptive approach allows companies to determine the specific training and frequency need ed for their operations . To estimate the cost compliance, BSEE is estimating that refresher training on these elements will take about 1 hour and be conducted every 3 ye ars for OCS employees working over the water. The proposed rule only

estimated these training costs in the RIA ; the compliance costs were not included in the PRA analy sis. In the final rule, the training costs are included in the burden table as part of the PRA anal ys is and not calculated separately

. The BSEE opted for a less stringent approach in the final rule by not specifying the training frequency

.9

**Auditing Requirements**  **(§ §**  **250.1920 , 250.1921, 250.1922** 

**)** The rulemaking removes the proposed rule option for the operator to use designated and qualified operator personnel to perform an audit of the SEMS program. The BSEE has removed the definition of designated and qualified personnel from § 250.1903, its reference from § 250.1920, and any other location within Subpart S. Operators are now required to have their SEMS program audited b y an accredited audit s ervice provider (ASP). These ASPs, and their personnel, must meet requirements issued by the Center for Offshore Safety (COS

- 02

- 01 and COS

- 02

- 03)

. We must approve the accreditation board (AB) that accredits the ASP. These ABs must meet requirements set forth in ISO/IEC 17011 and COS

- 02

- 04. The regulation requires that audits be conducted by an accredited ASP rather than providing operators the option of conducting an audit in

- house. The BSEE requir es that the audit team lead be an employee, representative, or agent of the ASP, and must not have an y affiliation with the operator . This step provides greater assurance that the audit results are objective. N o longer allowing a company to lead the audit themselves help s ensure audit objectivity

. S ome companies , through their culture and s ys tems of internal controls , may provide a truly independent assessment of their own company ’s SEMS program

. However, B SE E has not identified an y obvious metrics to validate that independence. The BSEE reserves the right to audit an operator’s SEMS program at any time. The BSEE will make staff available to initiate audits when a potential weakness in an operator’s SEMS program is identified. Weakness identification could occur either through an incident or other information received. Additionally , B SE E will be reviewing the ASP audits to confirm and learn from SEMS program assessment s . The biggest change between the proposed and final rule concerns the qualification and certification of independent third parties performing SEMS audits or serving as audit leads. The BSEE eliminated the independent third party process and implement ed a ne w process to handle approving auditor teams. We will now approve accreditation bodies (AB s ) which will accredit ASPs that have the necessary expertise and training to perform SEMS audits. Accreditation bodies and ASPs are both required to satisfy various industry and internationally

recognized standards. **Less Stringent A lternative**  : Several comments favored allowing companies to conduct in

- house audit s at their discretion. However, this approach creates a potential conflict of interest within the comp an y and is not a feature that is conducive to the long

term health and objectivity of SEMS programs. **More Stringent A lternative**  : A more restrictive approach is to have the Federal government conduct all audits. The government is already authorized to conduct audits, reviews or visits when it deems they are necessary . We do this in order to determine whether a SEMS program addresses all required ele ments and is effective in protecting10

the safety and health of workers, the environment, and preventing incidents. E valuations or visits may

be random , or based upon the OCS lease operator’s or contractor’s performance. However, having an ASP conduct the audit with periodic B SE E reviews or visits will allow a larger number of SEMS audits to be conducted than would be possible with the limited resources available for government only audits. **Stop Work Authority (§ 250.1930)**  The rule adds a new section requiring operators to create and implement SWA procedures . Incorporating SWA into a SEMS program will contribute to a positive safety culture because all employees will have both the responsibility and authority

to halt work when unsafe conditions are identified. This provision ensure s that all personnel are given the responsibility and authority

to stop work when they

witness an activity

that creates an imminent risk or danger to the health or safety of an individual, to th e public, or to the environment. When a SWA occurs, the rule stipulate s that the person in charge of the conducted activity is responsible for ensuring the work is stopped in an orderly and safe manner. The rule provide s that work may be resumed when the individual on the facility with UWA determines that the imminent danger or risk does not exist or no longer exists. The decision to resume activities would have to be documented in writing as soon as practicable. **A Less Stringent A**  **lternative** : A more le nient option is to continue the current situation where SWA, even if it is company policy, may

not alway s be clearly

and repeatedly

communicated and implemented by all OCS workers. Man y accident reports over the ye ars show that injuries, deaths , and pollution events could have been avoided if someone at the scene had called for a work stoppage. The B SE E believes that experience warrants a universal SEMS SWA component. **More Stringent A lternative**  : In the case of SWA, in addition to existing requirements, B SE E could propose very rigid standards that include redundant reminders about workers’ SWA responsibility to stop work if there is any imminent safety risk or danger. However, there is no basis for expecting this alternative to meaningfull y improve aware ness over that achieved during routine training and safety meetings. **Ultimate Work Authority (§ 250.1931)**  With this rule, B SE E requires that the operators’ SEMS specify who has the UWA on their facilities. The individual with UWA will be the individual on the facility with the final responsibility

for making decisions. Further, the o perator needs to ensure that all personnel know who is in charge at all times , including when that responsibility shifts to a different individual . This could be done, for instance , by posting a notice in a public and easil y accessible location. Section 250.1931( c ) require s the SEMS to provide that if an emergency occurs that creates an imminent risk or danger to the health or safety of an individual, the public, or11

to the environment (as specified in proposed § 250.1930(a)), the individual with the UWA is authorized to pursue the most effective action necessary in that individual’s judgment for mitigating and abating the conditions or practices causing the emergency

. T his grant of authority assure s that necessary actions can and will be taken to deal with a serious emergency

. Clarifying UWA on OCS facilities contribute s to a positive safety culture by

ensuring that all employees know and understand the decision

- making chain , both during routine operations and in the case of an emergency . The UWA requirement also ensure s that all OCS facilities have a designated individual that has the ultimate authority to make safety or other critical operational decisions. The operator has discretion to identify an individual. **A Less Stringent A**  **lternative** : Again, the less stringent alternative is to continue the current situation where the lines of authority may not alway s be clearl y communicated to all OCS workers. During normal routine operations, this may not be a significant problem, but during emergency operations such as the DWH explosion and oil spill , confusion about lines of authority can cause inappropriate responses and contribute to delays in decision

- making. T his risk is no longer acceptable. **More Stringent A lternative**  : A more rigorous approach is to require that the operator or “compan y man” always be onsite and be designated as the ultimate work authority

. The BSEE believes that this prescriptive requirement is overly intrusive because among other things , it would prevent operators from making contractual arrangements with their service providers in which a representative of the service provider is assigned ultimate work authority . We do not believe that re quiring redundant oversight in this manner is necessary to ensure safety , and it could cause confusion, inadvertently compromis ing safety and operating efficiency

. **Employee Participation Plan**  **(§ 250.1932)** The EPP p rovides a participatory environment between emplo ye es and management in order to eliminate or mitigate hazards on the OCS

. This rule requires the operator to consult with its employees on the development , implementation , and modification of its SEMS program. The SEMS is a dy namic program. Requiring the operator to have an EPP will ensure that all employees are involved in updating the SEMS program on an ongoing basis. Management must develop a written plan of action regarding how appropriate employees, in both an operator’s office and those working on offshore facilities, will participate in the SEMS program development and implementation. The operator would have to provide personnel acc ess to relevant sections of its SEMS program. Management must provide BSEE a copy of the EPP upon request and make it available during an audit. The intent of this p lan is to foster broad and active employee cooperation and participation in order to make the workplace safer. The EPP adds value to the overall saf ety of OCS operations because this plan provides employees a stake in the development and implementation of an operator’s SEMS12

program. This p lan engages employees in the field and in the office, bridging a significant gap between personnel actually perfo rming OCS operations and those planning, managing, and/or monitoring these operations in an onshore office. The EPP requirements provide the operator with a significant amount of flexibility to tailor this plan to their specific needs. The final rule grants operator s 1 year after the effective date to modify their recordkeeping policies to capture EPP information and have such information available to BSEE upon request or in response to an audit

. **Less Stringent A lternative**  : A less burdensome alternative is to allow companies to outsource SEMS development or develop it in

- house without employee participation. M ost companies would not implement SEMS in this manner

. However, it is possibl e that some companies would seek out th is alternative in an effort to only minimally support the spirit of SEMS. T his alternative is unlikely to be effective since it would not allow the employees who are actively engaged in OCS activities to identify workplace issues that directly impact them

. **More Stringent A lternative**  : A stricter alternative is to require operator s to document how each element of their SEMS program ( including hazards anal ys is and JSAs ) incorporates their employees’ input. The BSEE does not believe that this very prescript ive approach would improve employee acceptance and adoption of a positive safety culture

. **Reporting Unsafe Working Conditions (§ §**  **250.1933 and**  **250.193 )**  The rule has a r eporting unsafe w orking c onditions provision which requires that the operator’s SEMS program must include procedures for all personnel to report unsafe working conditions in accordance with § 250.193. Any person may

report to BSEE any possible violations of an order , regulation, or an y other provision of Federal law relating to offshore safety .

 A person is not required to know whether a specific order or regulation has been violated.
 All operators must post a notice at the place of employ ment in a visible location frequentl y visi ted b y personnel that contains the reporting information in § 250.193

. This provision will contribute to a positive safety culture by providing OCS workers an avenue outside their company to report unsafe working conditions if they do not feel comfortable reporting the situation to authorities in their own operational chain. **A Less Stringent A**  **lternative** : A more flexible approach is to continue the current situation where the option of reporting unsafe working conditions to B SE E exists, but relevant information about filing a report is not required to be routinel y communicated to employees working offshore. Many companies have their own ombudsman to act as a trusted intermediary

within the company

for safety or other grievances . While this practice may

work for some operators, we believe that advertising the option to report to13

B SE E is necessary so that every offshore worker is reminded they have the ability to report unsafe working conditions to the regulator. **More Stringent Al**  **ternative** : In the case of reporting unsafe working conditions, we could propose very dogmatic standards , including repeated reminders and redundant postings about the workers’ opportunity to report unsafe working conditions to B SE E. We do n o t believe such overload would provide a meaningful improvement in awareness, and therefore conclude that these more stringent requirements are n ot reasonable. **Regulation’s Compliance Costs** The BSEE determined the annual compliance costs of this regulation by summing the Paperwork Reduction Act (PRA) burden estimate of 186,629 hours at $86/hour ( $ 16 , 050 , 094 ) and charges of $ 1 ,25 0 ,000 for audits for a total of **$ 17**  **. 3**  **million** for recordkeeping, administration , training , auditing , and related costs

. This is a de cr ease of $ 9

. 6 million from the $26.9 million estimated in the proposed rule. This reduction in compliance costs is primarily due to the removal of the ‘ annual ’ training requirement for JSA’s and the other SEMS provisions.

**Table 1**  **AD73 Compliance Cost Summary (million$)**  **Recordkeeping , Training**  **, and Implementation**  $ 16

. 05 **Audit Service Provider**  **(ASP)** $ 1.25

**TOTAL: $**  **17 .**  **30** The BSEE received comments claiming the estimated compliance costs for the regulation are underestimated including the following comment from industry trade groups: “BOEMRE/BSEE has significantly underestimated the cost impacts and available resources to implement this proposed rule and the initial SEMS rule. Further, operators with existing SEMS in place and proven effective have had to make significant modifications to meet the new prescriptive requirements of SEMS.” The BSEE acknowledge s that some of the required provisions are prescriptive and will cost companies additional resources , but c ommenters di d not provide an y s pecific examples of underestimate s of the implementation costs for this rulemaking. Absent improved information , we have not materially adjusted the compliance cost estimates for this rulemaking. **Recordkeeping**

**, Implementation**  **, and Au**  **diting Costs**  The burden table below portray s the expanded , revised, and **new** requirements added to those already approved by OMB

. Italics show expansion or revision of existing requirements; **bold** indicates new requirements.14

The BSEE is not estimating costs for actual work stoppages if an SWA is employed. Most operators already have SWA procedures in place , and prudent operators will stop work in the event of an actual hazardous situation with or without the regulatory requirement

. While BSEE added this requirement to the rule to ensure that all operators adopt SWA procedures , we expect that the cost of this requirement will be minimal. We acknowledge, h owever, that SWA may be emplo yed by a worker and the resulting work stoppage cou ld be a “false alarm.” The BSEE has no method to estimate the cost or frequency of an occasional “false alarm” work stoppage

. Nevertheless, repeated false alarms signal operating or management problems that SEMS is intended to reveal

. Therefore, an y ass ociated understatement of compliance costs should be minor

. Please see either Table 2 for the PRA burden breakout , the rule preamble , or the Supporting Statement for a more in

- depth discussion about the PRA costs.

**Table 2**  **Burden Table from AA04**  **Fina l**  **Rule ,**  **PRA Section** [Expanded/revised in Italics ; **New in BOLD** ; and current in normal font] **Citation 30 CFR**  **250 Subpart**  **A Reporting and Recordkeeping Requirement**  **Hour Burden**  **Average**

**No. of Annual**  **Responses Additional** 

**Annual Burden**  **Hours** 193 Report possible hazardous, unsafe working

conditions, violations, or non

- compliance issues; if possible submit information/supporting documentation. Burden included under 30 CFR 250, Subpart A

– 1010

- 0114. 0

**Citation 30 CFR**  **250 Subpart**  **S Reporting and Recordkeeping Requirement**  **Hour Burden**  **Average**

**No. of Annual**  **Responses Additional** 

**Annual Burden**  **Hours** 1900

- 1933 Expanded High Activity Operator: Have a SEMS program, and

maintain all documentation and records pertaining to yo ur SEMS program, according to API RP 75, ISO 17011 in their entirety

, the COS

- 2

- 01, 03, and 04 documents as listed in § 250.198, and all the requirements as detailed in 30 CFR 250, Subpart S. Make your SEMS available to BSEE upon request. 18,708
13 operators 243,204
3,656 47,528

1900

- 1933 Expanded Moderate Activity Operator: Have a SEMS program,

and maintain all documentation and records pertaining to your SEMS program, according to API RP 75 , the three COS documents in their entirety , and all the requirements as detailed in 30 CFR 250, Subpart S. Make your SEMS available to BSEE upon request. 2,528 41 operators 103,648
2,393 98,113

1900

- 1933 Expanded Lo w Activity Operator: Have a SEMS program, and

maintain all documentation and records pertaining to yo ur SEMS program, according to API RP 75 , the three COS documents in their entirety , and all the requirements as detailed in 30 CFR 250, Subpart S

. Make your SEMS available to BSEE upon request. 899 76 operators 68,324

128 9,728 1928(d), (e); 1929 Submit Form BSEE

- 0131. Maintain a contractor

em ployee injury/illness log in the operation area, 10 130 operators 1,30015 retain for 2 years, and make available to BSEE upon request (this requirement is included in the form burden). Inform contractors of hazards. 1911(b) Expanded Immediate supervisor must conduct a JSA, sign the

JSA, and ensure all personnel participating sign the JSA. The individual designated as being in charge of facility approves and signs all JSAs before job starts. NOTE: If activity is repeated, the 1 st signed JSA is allowed. 10 mins. 130

operators x 365 days x 6= 284,700* 47,450

1 min. 4,745
1920(a), (b); 1921 Revised ASP audit for High Activity Operator

ASP audit for Moderate Activity Operator ASP audit for Low Activity Operator NOTE: An audit once every 3 years. 13 operators x $60,000 audit = $780,000 / 3 = $260,000 4l operators x $30,000 audit = $1,230,000 / 3 = $410,000 76 operators x $12,000 audit = $912,000 / 3 = $304,000 1920 Notify BSEE with audit schedule 30 days prior to

conducting your audit. 1 130 operators /once every 3 years=43 43

(rounded)
1920(c); 1925(a), (c); Submit to BSEE after completed audit, an audit report

of findings and conclusions, including deficiencies and required supporting information/documentation. 3 44 operators 132
1920(d); 1925(c); Submit/resubm it a copy of your CAP that will address

defic iencies identified in audit. 4 10 submissions 40 **1922 NEW**  **Organization requests approval for AB; submits**

**documentation for assessing, approving, maintaining, and withdrawing accreditation of**  **ASP. 16**  **3 48** 

**1922 NEW**  **Make available to BSEE upon request, conflict of** 

**interest procedures. 15**  **mi ns.**  **12**

**requests 3**  1924(b) Make available to BSEE upon request, evaluation

documentation and supporting information relating to yo ur SEMS. 2 130 operators 260
1924(c) Explain and demonstrate your SEMS during site visit

if required; provide evidence supporting your SEMS im plementation. 8 6 explanation s 48
1925(a); Pay for all costs associated with BSEE directed ASP

audit approximately 10 percent per operator per category: 1 required audit for high operator ($60,00 0 per audit x 1 audit = $60,000); 4 required audits for mo derate operator ($30,000 per audit x 4 audits = $120,000; and 8 required audits for low operator ($12,000 per audit per 8 audits = $96,000) = 13 required audits per year. 13 BSEE directed ASP audits

– for a total of $276,000.

1928 Expanded (1) Document and keep all SEMS audits for 6 years

(at least 2 full audit cycles) at an onshore location. (2) JSAs must have documented results in writing and kept onsite for 30 days , or unti l release of the MODU , retain records for 2 years. (3) All MOC records (API RP Sec 4) must be documented, dated, and retained for 2 years. (4) SWA documentation must be kept onsite for 30 days; retain records for 2 years. (5) Documentation of employee participation must be retained for 2 years. (6) All documentation included in this requirement must be made available to BSEE upon request. 5 130 operators 650

2hrs/mo x 12 mos/ yr = 24 hrs 1,007

manned facilities 24,168

30 mins. 2,447

unmanned facilities 1,224

(rounded)16

**1930(c) NEW**  **Document decision to resume SWA activities. 8**  **Once every 2 wks = 26**  **208 1933(a)**  **NEW Procedures for p**  **ersonnel reports unsafe practices**

**and/or possible**  **violations. Burden covered**  **under 30 CFR 250, Subpart A**  **1010**
**- 0114.**  **0**

**1933( b**  **) NEW**  **Post notice where personnel can view reporting** 

**inform ation**  **pertaining to possible violations .**  **15 mi**  **ns. 3,454** 

**facilities 864** 

CURRENT SUBPART S BURDEN 285,469 Responses 465,099

Hours $12,933,000 Non

- Hour Cost Burdens [removed] **NEW and EXPANDED BURDEN added to 30 CFR 250, Subpart S 6,946**  **responses 186,629** 

**hours $**  **1,250 ,000 non** 
**- hour**  **cost burdens COMBINED [current, new, and expanded] TOTAL SUBPART S**  **292,415 Responses**  **651,728**

**Hours $1,250,000 Non** 
**- Hour**  **Cost Burdens** *W e calculated operators conducting six JSAs a day (3 JSAs for each 12

- hour shift). Some contractors may perform none for a particular day, whereas others may conduct more than six per day. This estimate is an average. **Executive Order 13563 Analysis**
**– Total Ongoing**  **Estimated SEMS**  **Recordkeeping and Implementation Costs** Executive Order 13563 requires each agency to account for “among other things, and to the extent practicable, the costs of cumulative regulations.” The BSEE is using the PRA b urden t able for Subpart S to estimate the cumulative cost of SEMS regulations

. Due to this rulemaking, BSEE estimates a program increase of 186 , 629 burden hours imposed on private sector operators and a non

- hour cost burden of $1,250,000

. The total PRA hour burden inventory for the SEMS program required in 3 0 CFR 250 , s ubpart S , is estimated to be 651 , 728 hours inclusive of this rulemaking

. The total non

- hour burden is estimated to be $ 1,250 ,000 for the cost of paying ASPs to audit SEMS

. The full annual Execut ive Order 13563 anal ys is costs of the SEMS requirements in Subpart S (this rulemaking and exi s ting requirements) is summarized in Table 3. **Table 3**  **E.O. 13 5**  **63 Summary Cost**

**Burden Hours**  **Est. Annual**

**Cost PRA @ $86/hr.**  651 , 728 $ 56,048,608 **Non**
**- Hour**  **Cost Burden**  $ 1 , 250 ,000

**TOTAL: $**  **57 ,**  **298 ,**  **608 Benefits of a SEMS Program and this Regulation** 17

The goal of SEMS and this rule is to promote safety and environmental protection during OCS activities. T he SEMS program was implemented on November 15, 2011 , t o accomplish th is goal and to reduce the likelihood of another incident like the DWH explosion and oil spill. The BSEE believes this program will reduce the risk and number of accidents, injuries, and spills during OCS activities. It is difficult to quantify the benefits of lives saved and risks avoided due to this regulation

. However, implement ing these requirements will further the goal of avoiding accidents that may result in injuries, fatalities , or seri ous environmental damage. Additional discussion about the benefits of SEMS can be found in the final rule for Safety and Environmental Management Sy stems

. The Transportation Research Board of the National Academies’ study generall y concurs with our methods and conclusions for this rulemaking. **Benefits of the Regulation** A review of the most recent B SE E incident data for calendar year 2010 and 2011 in Table 4 suggests that SEMS is designed to address many of the incidents and contributing causes observed across all aspects of OCS operations

. The d ata in Table 4 are updated from the results that appeared in the preamble to the final SEMS rule (RI

N 1010

–AD15, 75 FR 63610). Two new categories , “other” and “SWA , ” were added for the updated anal ys is.

**Table 4**  **OCS Incidents and Contributing Causes SEMS**  **Element Number of** 

**Incidents*** **CY 2010**

**Incident Contributing**  **Causes CY 2011** 

**Incident Contributing**  **Causes Hazards**  **Analysis 456**  **18 26**  **Managem ent**  **of Change 217**  **4 10**  **Operating Procedures**  **631 5**  **17 Mechanical**  **Integrity 763**  **15 22**  **Other 5**  **9 SWA**  **identified 3**  **5** *I ncident totals include past BSEE completed investigations inclusive of calendar year (CY) 2010 and 2011.
The largest incident category for both 2010 and 2011 is hazard s anal ys is. This regulation address es one of the root causes of OCS incidents by enhancing JSA as part of the hazard s anal ys is requirements

. H azard s anal ys is training will periodically reinforce the value and methods for hazards anal ys is and safe operations. The B SE E has determined ,18

based on the analy sis of historical incident data , that this regulatory emphasis should substantially enhance OCS safety practices and culture. **Measuring the Future Benefits of SEMS** The BSEE will use two primary methods to assess the effectiveness of SEMS and other OCS safety

improvements. The first is through SEMS audits and reviews , and the second is through analy sis of OCS incident data. The B SE E will use a udit results to assess individual operator performance and the effectiveness of overall efforts to implement the SEMS program and culture

. At this point in time , it is premature to report back on any changes in incident trends that reflect improvements in the level of safety on the OCS a s a result of requiring SEMS. In the future, BSEE intends to post non

- proprietary audit and enforcement results associated with SEMS on our website and share the infor mation through other avenues. **Net Benefits** The SEMS program r evisions in this rulemaking address safety concerns that were not covered in the existing SEMS regulation . These revisions are intended to enhance safety for offshore workers and provide gre ater protection of the marine environment through additional employee participation in safety procedures, training programs, notification obligations , and strengthened safety and SEMS auditing procedures

. It is difficult to absolutely quantify the benefit s of the lives saved and risks avoided due to this regulation . However, BSEE believes that implementi ng a comprehensive SEMS program will reduce the risk of accidents that could result in injuries, fatalities, and serious environmental damage. In additio n, increas ing a s ys tem’s level of safety may lead to reduced material losses and enhanced productivity . Some additional benefits include:

• Reduction of the direct and indirect costs of accidents. Repair costs, damage claims, increased insurance premiums, and civil penalties are a few of the potential economic consequences of an accidental mishap.

• Establishing a marketable safety record. A record of consistently safe operations can attract new business and investment.

• Improved emplo ye e morale and productivity . Promoting communication between management and the rest of the organization prevents disenfranchisement and lifts morale. **Table 5**  **Estimated Net Benefits Item**  **Estimated Cost** The total estimated **compliance cost**  for this rule is: **$ 17**  **. 3**  **million** The total estimated benefits for this rule is: **Undetermined**

**Net Benefit: undetermined** 19

The BSEE believes that the additional safety requirements will provide net benefits through improved safety and environmental protection; however, for the reasons discussed above, we have not monetized or calculated the net benefits of this rulemaking. **An aly** **sis Specific to the Regulatory Flexibility** 

**A ct**  The BSEE is proposing this rulemaking for reasons summarized in the earlier sections , covering the need for regulatory action and how this rule will meet that need. The summary of compliance costs and benefits is provided in the E.O. 12866 analy sis. This section only

includes a summary

of the compliance costs that we estimate w ould impact small entities. All components of an Initial Regulatory Flexibility

Anal ys is (IRFA) are contained within this RIA. **Small Entities Estimated to be Impacted by this Rulemaking** The provisions in th is rul emaking will affect lessees and operators of leases and pipeline right

- of

- way holders in the OCS. This group include s about 130 active Federal oil and gas lessees. Small lessees that operate under this rule fall under the Small Business Administration's North American Industry Classification Sy stem (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, we estimate 65 percent of these companies are small entities. This final rule, therefore would affect a substantial number of small entities. This rule appl ies to all OCS operators and oil and gas operations including drilling (MODUs), production, construction, well

- workover, w ell

- completion, well

- servicing , and DOI pipeline activities. Based upon B SE E data for OCS lease operators, we estimate that approximately

105 out of 130 OCS lease operators currentl y have active OCS operations. The remaining approximately 25 operators do not have ongoing operations (i.e. they are operators o n recently

acquired leases that do not yet have operations) . These companies would be required to have a SEMS program if the company initiated OCS operations. More than 80 percent of these approximat ely 25 operators operate less than 10 leases and almost half of these inactive operators are designated operators on a single lease. We have categorized these 25 companies as “low activity” operators for this analy sis. There are man y arrangements for sharing project risks and expenses for OCS exploration and development projects. These include original and revised ownership agreements where the risk, equity , and other operating interest arrangements may be complex. When there is an assignment of lease rights among different parties, the B ureau of Ocean En er gy Management records the OCS lease assignments in a manner similar to count y court property records. However , for the small entity anal ys is for this rulemaking, we are only looking at the designated operator or operator of record since that is the entity that B SE E will hold responsible for all SEMS related compliance.20

**High A ctiv**  **ity Operators**  The BSEE considers 13 of the 105 active lease operators, high activity operators that produce more than 10 million BOE and operate more than 1,000 components. Nine of these companies are large entities and 4 are small companies. The average number of complexes managed b y a high activity operator is 118 , and high activity operators manage approximately

half of all OCS complexes . We estimate the total number of employees on complexes of high activity operators is 31,500, compared to 63,000 employees on all complexes. Theref ore, we can conclude that a majority of OCS production originates from these high activity operators. Because the drivers for SEMS compliance actions and costs are generall y the number of complexes and personnel working on these complexes, we infer that the high activity operators would bear about half of the cost of this rulemaking. **Moderate A ctivity** 

**Operators** The BSEE deems another 41 companies to be moderate activity operators that produce more than 1 million BOE and operate more than 100 components. Of these, 20 are large companies and 21 are small companies. The average number of complexes managed b y moderate activity

operators is 30. Moderate activity operators operate approximately 40 percent of OCS complexes. We estimate the total number of em ployees on complexes run by moderate activity

operators to be 25,000, compared to 63,000 employees on all complexes. Consistent with the above approach, the moderate activity operators thus would bear about 40 percent of the cost of this rulemaking. **Low Ac**  **tiv ity** **Operators** The BSEE considers the remaining 76 companies low activity operators that did not meet the activity

level thresholds for high or moderate activity operators. Of these, 18 are large companies and 58 are small entities. Only 51 of the 76 have conducted active OCS o perations within the last 3 years. The remaining 25 hold leases but have not conducted active OCS operations within the last 3 years. Consistent with OMB guidance, the PRA anal ys is applies to these 25 inactive operators. While inactive operators may inc ur an information collection burden because they are active leaseholders, they only face the full requirements of this rulemaking if they undertake OCS operations. Accordingl y, compliance costs for meeting training requirements are computed based only on the active operator emplo ye e count. Low activity

operators have an average of 6 OCS complexes. L ow activity operators represent almost half of all active operators, but they onl y operate about 10 percent of OCS complexes. We estimate that the total numbe r of emplo ye es on complexes run by low activity

operators is 6,500. Therefore, the low activity operators would bear about 10 percent of the cost of this rulemaking.21

**The Estimated Breakdown of Large and Small Company Compliance Costs** Table 6 details B SE E’s estimate of this rulemaking’s impact across operations on leases held by **high** , **moderate**

**,** and **low** activity

operators for each of the regulatory provisions. The estimated costs other than training are the PRA costs obtained from the burden summarized in Table 2 . The cost estimates are further split between **small** (less than 500 employees) and **large** operators. Factors used to allocate costs include estimated number of facilities, estimated number of emplo ye es , and number of operators in each activi ty category

. Table 6 Calculations : This section describes the cost estimation and allocation methodology

for a single cell in Table 6 . The example explained is for the low activity small company

operator for 30 CFR 250.1933 (b ) with an estimated cost of $ 5 , 0 58 (reporting unsaf

e working conditions and posting employees rights for reporting unsafe working conditions on OCS facilities). The $ 5 , 0 58 is the estimated cost allocated to low activity small companies from the total of $ 74 , 390 . The cost calculation from the burden table for 1933 (b ) in Table 2 is repeated below.

1933 (b ) Reporting unsafe

conditions; Post notice where personnel can view reporting information in § 250.193 **.** 15 mins. 3,454 facilities 86 4 hrs. $ 74, 304 = (3 , 454 facs *

0. 2 5 hr * $86/hr)

The cost for § 250. 1933 ( b ) , unsafe working condition s reporting and notice posting is determined b y using the estimated number of facilities operated b y low activity small compan y operators. The BSEE estimates that 235/3,454 complexes are operated b y companies in this category. This equates to 6.8 percent of the total OC S complexes. This yields $ 5,05 2 (0.068 * $ 74, 304 ). Each of the PRA and training costs are allocated to the six operator categories using the categories’ estimated share of employees, complexes or total active operators. **Table 6**  **Estimated Compliance Cost by Company Size and Level of Activity ($)**

**High LgCo.**  **High SmCo.**  **Mod.**

**LgCo. Mod.** 

**SmCo. High** 

**LgCo. Low** 

**SmCo. Totals** 

**1900**
**- 1933**  **High Activity Operator**  3,269,926 817,482 4,087,408

**1900**
**- 1933**  **Moderate Activity Operator**  4,118,304 4,319,414 8,437,718

**1900**
**- 1933**  **Low Activity Operator**  278,869 557,739 836,608
**1911(b) Supervisor & Em** **pl. JSA.** 163,228 40,807 79,669 83,559 13,602 27,205 408,070 **1920 Audit for High Activity Operator (ea**  **3 yrs)** 180,000 80,000 260,000

**1920 Audit for Moderate Activity**  **Operator (ea 3 yrs)** 200,000 210,000 410,00022 **1920 Audit for Low Activity Operator (ea**  **3 yrs)** 72,000 232,000 304,000

**1922 Accreditation Board Apprvl.**  304 135 675 709 607 1,957 4,386 **1925(a) Directed Audit**  19,108 8,492 42,462 44,585 38,215 123,138 276,000 **1928 Recordk**

**eeping for proposed**  **requirements (m**  **anned facilities)** 831,107 207,777 403,925 423,650 70,663 141,326 2,078,448

**1928 Recordk**

**eeping for**  **proposed requirements**  **(unmanned facilities)** 42,092 10,523 20,457 21,456 3,579 7,158 105,264

**1930(c) Document resumption of SWA**  **activities** 7,155 1,789 3,492 3,663 596 1,193 17,888
**1933 (c) Post unsafe practices contact**  **information** 29,712 7,428 14,440 15,145 2,526 5,052 74,304

**Total: 4,542,632**  **1,174,432 4,883,423**  **5,122,180 480,659**  **1,096,767 17,300,094**  Table 7 provides the estimated split between small and large entities for this rulemaking. This compliance cost summary indicates that small companies would bear approximately 4 3 percent of the cost s of this rulemaking. While this is greater than their share of OCS leases, small entities hold 45 percent of leases in the shallow water depths where most production facilities are located (98 percent of active platforms are in shallow water); see Table 8 and Table 9

.

**Table 7**  **Small Company Compliance Cost Summary ($) Estimated**  **Large Company Cost:**  9,906,714 **Estimated Small**  **Company Cost:** 7,393,380 **$Total: 17,300,094** 
**Table 8**  **Lease Ownership among Small and Large Companies (11/1/2010)** Leases 11/01/2010 (percentage) **Shallow Water**

**Leases Deepwater** 

**Leases All** 

**Leases Large Co.**  55% 92% 80% **Small Co.** 45% 8% 20%

**100% 100%**  **100% Table**  **9 Gulf of Mexico Active Platforms (02/22/2011)** 

**Water Depth in Meters**  **Active**

**Platforms 0 to 200**  3,244 **201 to 400** 20 **401 to 800** 10 **801 to 1000** 723 **1000 and Above**  26
**Identification, to the extent practicable, of all relevant F**  **ederal rules that may duplicate, overlap** **, or conflict with the rule.**  In response to comments regarding jurisdiction , BSEE ha s removed the phrase “activities that are regulated under BSEE jurisdiction” from the final rule. We have authority under the OCSLA to regulate safety and environmental matters associated with oil and gas development. This includes, but is not limited to, safety, conducting inspections, and assuring that personnel working on the OCS are adequatel y trained. Nothing in OCSLA prohibits us from regulating these areas, even if there is coinciding jurisdiction with another government entity. The BSEE has determined that this rule does not create overlap with other F ederal agenc y regulations

. We use MOUs and MOAs with other agencies to coordinate the regulatory activities for specific ty

pes of equipment and processes. These interagency agreements do not limit the scope of the SEMS program that must be maintained by the operator under these regulations. An operat or’s SEMS program should address all oil, gas , and sulphur activities arising under the lease and should not be limited to the components listed in the interagency

agreements. This rule appl ies to all OCS oil , gas , and sulphur facilities. **Small Business Alternatives**  This section describes B SE E’s evaluation of an y significant alternatives to the rule that accomplish the stated objectives of applicable statutes and that minimize any significant economic impact of the rule on small entities. This includes alternatives considered, such as: (1) esta

blishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) clarification, consolidation, or simplification of compliance and reporting requirements under the rule for su ch small entities; (3) use of performance rather than design standards; (4) an y exemption from coverage of the rule, or any part thereof, for such small entities. **Al ternative compliance or implementation timelines for small entities**  The BSEE has determined that the provisions in this rulemaking can easily be integrated into OCS operators ’ existing SEMS programs. No new capital equipment is required. Most of this rulemaking’s compliance cost is for training and to develop and implement written procedures for the revisions. For small entities with only a few facilities (low activity operators), these new provisions involve minimal cost. For small entities that are high and moderate activity operators, the cost would be correspondingl y greater. T he24

BSEE has determined that the extra training and documentation requirements are essential for a reliable safety program and delaying implementation is not a viable option. **Consolidation o f**  **reporting requirements under the rule for small entities** The SE MS records are normally kept b y the operator or their SEMS contractor and not routinely provided to B SE E unless there is a specific request. The BSEE may request records during a routine or directed audit of an operator ’ s SEMS program. Records kept by th e operator are integral to the audit trail for SEMS compliance. The SEMS recordkeeping requirements in this rulemaking clarify some of what would be necessary to ensure compliance with the underl yi ng audit requirement. The amount of reporting required fo r this rule would generall y reflect the size of the company . **Use of performance rather than design standards** The SEMS is a performance

- based approach. The overarching mechanism used by an operator to develop and implement its SEMS program provides avenues of flexibility including the following: 1. The operator may appl y the JSA to recurring events ; 2. The operator has the freedom to select the individual with UWA; and 3. The operator can determine training frequency , training methodo logy , and the training vendor, except in specific cases where certain training requirements are specified in Section 7 of APIRP 75. However, the training, notification , and documentation requirements in this rulemaking are intentionall y prescriptive. T h e main element of prescription that was added to S ubpart S was the requirement to conduct a JSA for all tasks addressed in a SEMS

. While many

operators have or would implement the safety provisions in this rulemaking or similar procedures, we cannot be ce rtain that all operators would implement appropriate measures without prescriptive regulations. This has been demonstrated over the past decade where not all OCS operating companies have voluntarily implemented a SEMS program. W e have not identified alternatives that would provide the same assurance across all operators as the requirements under this rule

. The BSEE requests yo ur comments for an y alternative safety measures or programs for OCS operations that would confirm universal achievement of the SEM S goal. **Exemption from parts the rule for such small entities** A standard alternative under the RFA is to exempt small businesses from the requirements of this rule. The “exemption” or “no action” alternative is not adopted b y B SE E for this rulemaking

. The DWH explosion and oil spill demonstrates that it is imperative for B SE E to require that all OCS operators adopt the best safety practices and requirements

. Offshore operations are highl y technical and can be hazardous

. Allowing entities to delay

or be exempt from the provisions in this rulemaking may increase the risk from OCS oil and gas operations. The risk s are not lower for small entities and25

B SE E cannot compromise the safety of offshore personnel and the environment for any entity including sma ll businesses. The BSEE may approve the use of alternative procedures to existing regulations under provisions found in 30 CFR 250.141. The operator must demonstrate to BSEE that the alternative procedure provides an equal or greater level of safety and environmental protection as required in the regulations.