Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Proposed Rules 28639 

affiliate thereof, the Federal Home Loan 

Mortgage Corporation and any affiliate 

thereof, any Federal Home Loan Bank; 

the term ‘‘regulated entities’’ means, 

collectively, the Federal National 

Mortgage Association and any affiliate 

thereof, the Federal Home Loan 

Mortgage Corporation and any affiliate 

thereof, and the Federal Home Loan 

Banks. 

Safety and Soundness Act means the 

Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992, as 

amended by the Federal Housing 

Finance Regulatory Reform Act of 2008, 

Division A of the Housing and 

Economic Recovery Act of 2008, Public 

Law 110–289, 122 Stat. 2654 (2008). 

§ 1233.3 Reporting. 

(a) Timeframe for reporting. (1) A 

regulated entity shall submit to the 

Director a written report relating to any 

fraud or possible fraud occurring in 

connection with a loan, a series of loans 

or other financial instruments that the 

regulated entity has purchased or sold, 

and shall do so promptly after 

identifying such fraud or possible fraud 

or is notified about such fraud or 

possible fraud by law enforcement or 

other government authority. 

(2) In addition to submitting a report 

in accordance with paragraph (a)(1) of 

this section, in any situation that would 

have a significant impact on the 

regulated entity, the regulated entity 

shall immediately report any fraud or 

possible fraud to the Director by 

telephone or electronic communication. 

(b) Format for reporting. (1) The 

report shall be in such format and shall 

be filed in accordance with such 

procedures that the Director may 

prescribe. 

(2) The Director may require a 

regulated entity to provide such 

additional or continuing information 

relating to such fraud or possible fraud 

as the Director deems appropriate. 

(3) A regulated entity may satisfy the 

reporting requirements of this section by 

submitting the required information on 

a form or in another format used by any 

other regulatory agency, provided it has 

first obtained the prior written approval 

of the Director. 

(c) Retention of records. A regulated 

entity shall maintain a copy of any 

report submitted to the Director and the 

original or business record equivalent of 

any supporting documentation for a 

period of five years from the date of 

submission. 

(d) Nondisclosure. (1) A regulated 

entity may not disclose to any person 

that it has submitted a report to the 

Director pursuant to this section, unless 

it has first obtained the prior written 

approval of the Director. 

(2) The restriction in paragraph (d)(1) 

of this section does not prohibit a 

regulated entity from— 

(i) Disclosing or reporting such fraud 

or possible fraud pursuant to legal 

requirements, including reporting to 

appropriate law enforcement or other 

governmental authorities; or 

(ii) Taking any legal or business 

action it may deem appropriate, 

including any action involving the party 

or parties connected with the fraud or 

possible fraud. 

(e) No waiver of privilege. A regulated 

entity does not waive any privilege it 

may possess under any applicable law 

as a consequence of reporting fraud or 

possible fraud under this part. 

§ 1233.4 Internal controls, procedures, and 

training. 

(a) In General. Each regulated entity 

shall establish and maintain adequate 

and efficient internal controls and 

procedures and an operational training 

program to assure an effective system to 

detect and report fraud in connection 

with the purchase or sale of a loan or 

other financial instrument. 

(b) Examination. The examination by 

FHFA of fraud reporting programs of 

each regulated entity must include an 

evaluation of the extent to which 

internal policies, procedures, and 

training programs of the regulated entity 

minimize risks from fraud and to the 

extent that fraud or possible fraud is 

consistently reported to FHFA. 

§ 1233.5 Protection from liability for 

reports. 

As provided by section 1379E of the 

Safety and Soundness Act (12 U.S.C. 

4642(b)), a regulated entity that, in good 

faith, submits a report pursuant to this 

part, and any entity-affiliated party, 

that, in good faith, submits or requires 

a person to submit a report pursuant to 

this part, shall not be liable to any 

person under any provision of law or 

regulation, any constitution, law, or 

regulation of any State or political 

subdivision of any State, or under any 

contract or other legally enforceable 

agreement (including any arbitration 

agreement) for such report, or for any 

failure to provide notice of such report 

to the person who is the subject of such 

report, or any other persons identified 

in the report. 

§ 1233.6 Supervisory action. 

Failure by a regulated entity to 

comply with this part may subject the 

regulated entity or the board members, 

officers, or employees thereof to 

supervisory action by FHFA, including 

but not limited to, cease-and-desist 

proceedings and civil money penalties. 

CHAPTER XVII—OFFICE OF FEDERAL 

HOUSING ENTERPRISE OVERSIGHT, 

DEPARTMENT OF HOUSING AND URBAN 

DEVELOPMENT 

PART 1731—[REMOVED] 

2. Remove part 1731. 

Dated: June 4, 2009. 

James B. Lockhart III, 

Director, Federal Housing Finance Agency. 

[FR Doc. E9–14189 Filed 6–16–09; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF THE INTERIOR 

Minerals Management Service 

30 CFR Part 250 

RIN 1010–AD15 

[Docket ID MMS–2008–OMM–0003] 

Safety and Environmental Management 

Systems for Outer Continental Shelf 

Oil and Gas Operations 

AGENCY: Minerals Management Service 

(MMS), Interior. 

ACTION: Proposed rule. 

SUMMARY: The MMS proposes to require 

operators to develop and implement a 

Safety and Environmental Management 

System to address oil and gas operations 

in the Outer Continental Shelf. The 

Safety and Environmental Management 

System would consist of four 

elements—Hazards Analysis, 

Management of Change, Operating 

Procedures, and Mechanical Integrity— 

that, until now, have not been covered 

in our regulations. The MMS analyzed 

accident panel investigation reports, 

incident reports, and incidents of 

noncompliance and determined that the 

root cause of most safety and 

environmental accidents and incidents 

is one or more of these four elements. 

The MMS believes that requiring 

operators to implement a Safety and 

Environmental Management System 

will reduce the risk and number of 

accidents, injuries, and spills during 

Outer Continental Shelf activities. 

DATES: Submit comments by September 

15, 2009. The MMS may not fully 

consider comments received after this 

date. Submit comments to the Office of 

Management and Budget on the 

information collection burden in this 

proposed rule by July 17, 2009. This 

does not affect the deadline for the 

public to comment to MMS on the 

proposed regulations. 


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28640 Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Proposed Rules 

ADDRESSES: You may submit comments 

on the rulemaking by any of the 

following methods. Please use the 

Regulation Identifier Number (RIN) 

1010-AD15 as an identifier in your 

message. See also Public Availability of 

Comments under Procedural Matters. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Under the tab 

‘‘More Search Options,’’ click 

‘‘Advanced Docket Search,’’ then select 

‘‘Minerals Management Service’’ from 

the agency drop-down menu, then click 

the submit button. In the Docket ID 

column, select MMS–2008–OMM–0003 

to submit public comments and to view 

supporting and related materials 

available for this rulemaking. 

Information on using Regulations.gov, 

including instructions for accessing 

documents, submitting comments, and 

viewing the docket after the close of the 

comment period, is available through 

the site’s ‘‘User Tips’’ link. The MMS 

will post all comments. 

• Mail or hand-carry comments to the 

Department of the Interior; Minerals 

Management Service; Attention: 

Regulations and Standards Branch 

(RSB); 381 Elden Street, MS–4024, 

Herndon, Virginia 20170–4817. Please 

reference ‘‘Safety and Environmental 

Management Systems for Outer 

Continental Shelf Oil and Gas 

Operations, 1010–AD15’’ in your 

comments and include your name and 

return address. 

• Send comments on the information 

collection in this rule to: Interior Desk 

Officer 1010–AD15, Office of 

Management and Budget; 202–395–6566 

(fax); e-mail: oira_docket@omb.eop.gov. 

Please also send a copy to MMS. 

FOR FURTHER INFORMATION CONTACT: For 

questions on technical issues contact 

David Nedorostek, Safety and 

Enforcement Branch at 

david.nedorostek@mms.gov or (703) 

787–1029. 

SUPPLEMENTARY INFORMATION: On May 

22, 2006, MMS published an Advance 

Notice of Proposed Rulemaking (ANPR) 

in the Federal Register (71 FR 29277) to 

seek comments and information on how 

to improve our regulatory approach to 

Safety and Environmental Management 

Systems (SEMS) for operations 

conducted in the Outer Continental 

Shelf (OCS). The ANPR examined a 

variety of approaches to implementing 

SEMS from voluntary to mandatory, and 

from partial SEMS to comprehensive 

SEMS. 

During the ANPR comment period, 

eight comments were received from the 

public. One comment recommended 

keeping SEMS voluntary. Three 

comments recommended keeping SEMS 

voluntary, but if MMS decided to 

mandate a SEMS, it should be a partial 

SEMS requirement due to the number of 

accidents that are related to the four 

critical elements identified. A partial 

SEMS would consist of: Hazards 

Analysis, Management of Change, 

Operating Procedures, and Mechanical 

Integrity. The other four comments 

received recommended that MMS move 

forward with a comprehensive SEMS 

approach, i.e., the 12 elements listed in 

American Petroleum Institute’s (API) 

Recommended Practice (RP) 75, 

Development of a Safety and 

Environmental Management Program 

for Offshore Operations and Facilities, 

Third Edition, May 2004. A 

comprehensive SEMS would consist of: 

• Safety and environmental 

information; 

• Hazards analysis; 

• Management of change; 

• Operating procedures; 

• Safe work practices; 

• Training; 

• Mechanical integrity; 

• Pre-startup review; 

• Emergency response and control; 

• Investigations of incidents; 

• Auditing; and 

• Records and documentation. 

Most comments expressed that API 

RP 75 provides excellent guidance on 

developing a SEMS plan, and allows 

operators and contractors to tailor the 

program to their individual needs and 

corporate cultures. The commenters do 

not support MMS approving SEMS 

plans, rather, a third party should 

determine or certify whether a SEMS 

plan is viable, because MMS may not 

have the resources and expertise to 

approve a minimum of one plan for 

each OCS operator. 

After reviewing and discussing the 

comments, MMS proposes to require 

each offshore lessee/operator to 

develop, implement, maintain, and 

operate under a SEMS program 

composed of the four elements. This 

decision was based on incident 

investigation findings, and performance 

reviews with operators which confirmed 

that the majority of the accidents on the 

OCS are related to the four elements in 

the proposed rule (i.e., Hazards 

Analysis, Management of Change, 

Operating Procedures, and Mechanical 

Integrity). Since the existing regulations 

(30 CFR 250) do not specifically address 

these four elements, MMS finds that it 

is appropriate to cover these SEMS 

elements in its rule. Each SEMS 

program would be tailored to the scale 

and complexity of the company’s 

operation, and structured to include 

accountability for contractors and 

subcontractors. The SEMS program 

would describe management 

commitment to safety and the 

environment, as well as policies and 

procedures to assure safety and 

environmental protection while 

conducting OCS operations (including 

those operations conducted by 

contractor and subcontractor personnel). 

As company management and worker 

attitudes play a critical role in 

determining the safety of operations and 

environmental protection, a SEMS 

program would play a major role in 

focusing the attention of top 

management on safety and the marine 

and coastal environments. This will 

assure to the greatest extent possible, a 

broad organizational commitment to 

human safety and environmental 

protection. 

The MMS proposes that the SEMS 

program contain the four elements 

mentioned above which are described in 

greater detail as: 

Hazards Analyses 

This element would require that a 

hazards analysis (facility level) be 

conducted for all facilities. The purpose 

of the analysis is to identify, evaluate, 

and where unacceptable, reduce the 

likelihood and/or minimize the 

consequences of uncontrolled releases 

of oil and gas and other safety or 

environmental incidents. With respect 

to analysis methods, MMS suggests that 

operators use API RP 14 C, 

Recommended Practice for Analysis, 

Design, Installation, and Testing of 

Basic Surface Safety Systems for 

Offshore Production Platforms, Seventh 

Edition, March 2001; or API RP 14J, 

Recommended Practice for Design and 

Hazards Analysis for Offshore 

Production Facilities, Second Edition, 

May 2001, as guides, as well as other 

accepted documents and practices. In 

addition, this element would also 

require that a job hazard analysis 

(operations/task level) be performed to 

identify and evaluate hazards of a job/ 

task for the purpose of hazards control 

or elimination. 

Management of Change (MOC) 

This element would require lessees/ 

operators to document and analyze all 

proposed facility changes to determine 

possible adverse safety and 

environmental impacts, with the 

exception of replacement in kind. There 

are a number of specific topics to be 

covered in this analysis, including 

changes in: facilities and procedures, 

personnel, work practices, equipment 

(including addition of new equipment 

or modifications to existing equipment), 

and the safety and environmental 

implications of these changes. 


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Operating Procedures 

This element would require OCS oil 

and gas operators’ management officials 

to include requirements for written 

facility operating procedures designed 

to enhance efficient, safe, and 

environmentally sound operations. 

While operating procedures are 

reviewed as part of MOC procedures, 

MMS would also recommend that these 

procedures be reviewed separately to 

ensure that they reflect current 

practices. 

Mechanical Integrity 

This element would require that 

procedures are in place to ensure that 

equipment is designed, fabricated, 

installed, tested, inspected, monitored, 

and maintained in a manner consistent 

with appropriate service requirements, 

manufacturer’s recommendations, and 

industry standards to promote safe and 

environmentally sound operations in 

the OCS. 

The proposed decision to require a 

SEMS program consisting of the four 

elements is based on incident 

investigation findings, an analyses of 

Incidents of Noncompliance (INC) data, 

performance reviews with operators, 

and the fact that existing MMS 

regulations do not address these four 

elements. Requiring operators to 

implement these four elements of an 

integrated SEMS program would 

address human factor issues in safety 

and environmental protection. Most 

industrial accidents and spills result 

from human error or organizational 

errors, not device or equipment failure. 

These four elements would address 

these types of accidents by encouraging 

the use of sound management principles 

and safety procedures. 

The MMS’s evaluation of safety 

information, which led us to the 

decision to require a SEMS program, 

included the following: 

Accident Panel Investigation Reports 

Accident panel investigation reports 

are prepared by MMS for select major 

accidents. An analysis of 33 accident 

panel reports prepared by MMS from 

2000–2007 revealed that many fatalities 

and injuries occurred while performing 

routine tasks such as drilling, 

construction, coil tubing operations, and 

crane and other lifting events. 

In addition, most of these accident 

panel reports made recommendations 

that relate to one of the following four 

SEMS elements: Hazards Analysis, 

Management of Change, Operating 

Procedures, and Mechanical Integrity. 

The accident panel reports can be 

viewed at the following Web site 

address:http://www.gomr.mms.gov/ 

homepg/offshore/safety/acc_repo/ 

accindex.html 

CONTRIBUTING CAUSES

MMS report Hazards 

analysis 

Operating 

procedures 

Mechanical 

integrity 

Management 

of change 

Injury 

number 

Fatality 

number 

MMS 2007–058 ........................................ X X ........................ X ........................ 1 

MMS 2007–045 ........................................ X X ........................ X ........................ 1 

MMS 2007–037 ........................................ X X ........................ ........................ ........................ 1 

MMS 2006–070 ........................................ X X X ........................ ........................ 1 

MMS 2006–058 ........................................ X X ........................ ........................ ........................ ........................

MMS 2006–047 ........................................ X X ........................ ........................ ........................ ........................

MMS 2006–039 ........................................ ........................ X ........................ ........................ ........................ ........................

MMS 2006–021 ........................................ ........................ X ........................ ........................ ........................ ........................

MMS 2006–002 ........................................ X X ........................ ........................ ........................ 1 

MMS 2005–027 ........................................ ........................ X X X ........................ ........................

MMS 2005–007 ........................................ ........................ X X ........................ ........................ ........................

MMS 2004–078 ........................................ X X ........................ X ........................ 1 

MMS 2004–075 ........................................ X X X ........................ ........................ ........................

MMS 2004–048 ........................................ ........................ X X ........................ ........................ ........................

MMS 2004–046 ........................................ X X ........................ X 3 ........................

MMS 2004–010 ........................................ X ........................ ........................ ........................ ........................ ........................

MMS 2004–004 ........................................ X ........................ ........................ ........................ ........................ 1 

MMS 2003–068 ........................................ ........................ X ........................ ........................ ........................ ........................

MMS 2003–046 ........................................ ........................ X ........................ ........................ ........................ ........................

MMS 2003–023 ........................................ ........................ ........................ ........................ X ........................ ........................

MMS 2002–080 ........................................ ........................ ........................ ........................ X ........................ ........................

MMS 2002–076 ........................................ X ........................ X X ........................ 1 

MMS 2002–075 ........................................ X ........................ ........................ ........................ ........................ 1 

MMS 2002–062 ........................................ ........................ ........................ ........................ X 2 1 

MMS 2002–059 ........................................ X ........................ X ........................ 1 1 

MMS 2002–040 ........................................ ........................ ........................ X ........................ ........................ ........................

MMS 2001–084 ........................................ ........................ ........................ X X ........................ ........................

MMS 2001–045 ........................................ ........................ ........................ X X ........................ 1 

MMS 2001–042 ........................................ X ........................ X X ........................ 1 

MMS 2001–010 ........................................ X ........................ ........................ X 1 ........................

MMS 2001–009 ........................................ ........................ X ........................ X ........................ ........................

MMS 2001–005 ........................................ X ........................ ........................ X ........................ ........................

MMS 2000–089 ........................................ X ........................ X ........................ ........................ 1 

Total = 33 ......................................... Total = 19 Total = 18 Total = 12 Total = 15 Total = 7 Total = 14 

The table shows that the accidents 

covered by 16 of the 33 panel reports 

resulted in a combined 21 fatalities and 

injuries. The analysis done on the 

accidents identified six contributing 

causes that are related to the four 

elements: (1) A lack of communication 

between the operator and contractor(s); 

(2) no job hazard analysis was 

conducted prior to beginning work, or 

there was a lack of written procedures; 

(3) an onsite supervisor failed to enforce 

existing procedures or practices; (4) a 

lack of written safe work procedural 

guidelines; (5) integrity of the facilities 


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28642 Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Proposed Rules 

and equipment were not maintained 

according to recommended practices; 

and (6) workplace hazards were not 

identified or corrected. The MMS 

maintains that at least some of these 

accidents could have been minimized or 

even prevented if the operator had 

implemented a SEMS. 

Incident Analysis 

The MMS also conducted a study of 

1,443 incidents that occurred in OCS 

waters from 2001–2007 to determine if 

these events were associated with any of 

the 4 SEMS elements. The events 

reviewed included 41 fatalities, 302 

injuries, 10 losses of well control, 11 

collisions, 476 fires, 356 pollution 

events, and 224 crane and other lifting 

events (e.g., hoists, winches, etc.). 

The majority of incidents occurring in 

the OCS were related to operational and 

maintenance procedures or human 

error. These incidents are not addressed 

by the hardware-oriented compliance 

inspections used by MMS OCS 

inspectors. Additionally, of the 1,443 

incidents involving injuries, fires, and 

pollution on or from production 

facilities, only 25 were due to failure of 

a safety device. The majority of the 

1,443 incidents had at least 1 of the 

following 4 elements as a contributing 

cause for the event occurring: 

SEMS element Number of 

incidents 

Management of Change ........... 108 

Hazards Analysis ...................... 185 

SEMS element Number of 

incidents 

Mechanical Integrity .................. 475 

Operating Procedures .............. 481 

OCS Spill Analysis 

The MMS performed a root cause 

analysis of OCS spills over 50 barrels 

(bbls) from 2001–2007 with respect to 

the 4 elements. While root causes could 

be linked to failing to properly 

implement 1 of 4 elements, operating 

procedures and mechanical integrity 

contributed to the greatest number of 

these spills, and the 4 elements together 

could account for over 3⁄4 of the OCS 

spills. 

2001 2002 2003 2004 2005 2006 2007 Sums 

Total OCS spills >50 bbl—Multiple spills, each >50 bbl, may occur during a 

single event. Spill categories include: crude/condensate; refined petroleum (diesel, mineral oil); synthetic-based fluids; and chemical (e.g., 

ZnBr, Glycol). ............................................................................................... 8 13 11 26 42 16 5 ..........

Spills Related to Weather/Hurricanes .............................................................. .......... 4 .......... 15 35 4 1 ..........

Spill Events Unrelated to Weather .................................................................. 8 9 11 9 7 12 4 ..........

Suggested Root Cause—Related to API RP 75: 

Hazards Analysis ...................................................................................... 1 1 .......... .......... 1 1 .......... 4 

Management of Change ........................................................................... .......... 1 .......... 1 1 1 .......... 4 

Operating Procedures ............................................................................... 3 4 5 5 3 5 1 26 

Mechanical Integrity .................................................................................. 4 1 2 1 1 2 3 14 

Incidents of Noncompliance (INCs) 

The MMS inspectors issue three 

General INCs (G-INCs) that potentially 

relate to elements within a SEMS. The 

following summarizes these INCs: 

• G–110 (Operations conducted in a 

safe and workmanlike manner), 

• G–111 (Equipment maintained in a 

safe condition), and 

• G–112 (Safety of personnel and all 

necessary precautions taken to correct 

and remove any hazards). 

The MMS issued 3,132 of these types 

of G–INCs during 2003–2007 for drilling 

and production activities. Of these 3,132 

G–INCs, 2,964 (approximately 95 

percent) were directly related to one or 

more of the following four SEMS 

elements: Hazards Analysis (including 

job hazard analysis), Operating 

Procedures, Mechanical Integrity, and 

Management of Change. The following 

table depicts the G–INCs written for 

drilling and production activities: 

G–INCS ISSUED FROM 2003–2007 

SEMS elements Drilling 

percentage 

Production 

percentage 

Management of Change .............................................................................................................................................. 10 11 

Hazards Analysis ......................................................................................................................................................... 25 16 

Operating Procedures .................................................................................................................................................. 26 24 

Mechanical Integrity ..................................................................................................................................................... 39 49 

The MMS also reviewed records of 

violations of Environmental INCs (E– 

INCs). The E–INCs focus on water 

quality as it relates to mud/oil/chemical 

spills and marine debris (E–100 thru E– 

202). Over the past 7 years, MMS has 

issued about 150 E–INCs for noncompliant production and drilling 

operations during field inspections each 

year. The data indicate no discernible 

trend of improvement by industry over 

the past 7 years (see the following tables 

covering 2001–2007). 

The MMS has issued many other INCs 

that relate to environmental protection, 

including those that address flaring and 

venting violations, broad-based noncompliance with lease stipulations, 

approved plans, and permit 

applications. Similar trends to those 

previously described for the issuance of 

E–INCs are also observed in the 

issuance of other INCs that address 

environmental concerns. 


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RATIO OF TOTAL PRODUCTION OPERATION E–INCS AND NUMBER OF COMPONENTS INSPECTED PER YEAR

Year Total 

E–INCs 

Components 

inspected Ratio * 

2001 ................................................................................................................................................... 156 66,065 0.0024 

2002 ................................................................................................................................................... 173 68,355 0.0025 

2003 ................................................................................................................................................... 134 66,056 0.0020 

2004 ................................................................................................................................................... 141 67,267 0.0021 

2005 ................................................................................................................................................... 122 61,520 0.0020 

2006 ................................................................................................................................................... 133 56,930 0.0023 

2007 ................................................................................................................................................... 111 46,384 0.0024 

* Rounded. 

RATIO OF TOTAL DRILLING OPERATION E–INCS AND NUMBER OF WELLS SPUD PER YEAR

Year Total 

E–INCs Wells spud Ratio * 

2001 ................................................................................................................................................... 19 1,264 0.015 

2002 ................................................................................................................................................... 4 941 0.004 

2003 ................................................................................................................................................... 10 893 0.011 

2004 ................................................................................................................................................... 11 915 0.012 

2005 ................................................................................................................................................... 10 817 0.012 

2006 ................................................................................................................................................... 8 763 0.010 

2007 ................................................................................................................................................... 7 607 0.012 

* Rounded. 

As a result of MMS research 

conducted on accident panel 

investigations and reports, incident 

analysis, and INCs, it appears that 

equipment failure is rarely the primary 

cause of the incident or accident. This 

is due to technological advances which 

have provided industry with very 

efficient and reliable equipment for 

finding, producing, and transporting 

offshore oil and gas. However, in most 

cases, accidents and oil spills can be 

traced to human error and/or 

organizational failures. For that reason, 

operators must ensure that safe and 

environmentally sound operating 

practices are followed. The MMS finds 

it important to focus our efforts on 

ensuring that those who use the 

equipment do so safely and responsibly. 

More progress can be made toward 

achieving our goal of clean and safe 

OCS operations by concentrating on 

human behavior. The MMS regulations, 

historically, have focused on the 

installation, operation, testing, and 

inspection of safety and pollution 

prevention equipment, and risk based 

safety practices related to personnel. 

Ensuring proper equipment operation, 

however, does not necessarily ensure 

clean and safe operations. The research 

consistently points to the 

disproportionate contribution of human 

and organizational errors to accidents 

and oil spills. The MMS believes that 

operations are safer when management 

systematically encourages individuals to 

be safety conscious, provides adequate 

resources, fosters safe worksite 

practices, promotes good housekeeping 

habits, and assures that workers are 

properly trained. The MMS believes that 

if OCS oil and gas operations are better 

planned and organized, then the 

likelihood of injury to workers and the 

risk of environmental pollution will be 

further reduced. 

While this proposed rule requires 

each offshore lessee/operator to 

develop, implement, maintain, and 

operate a SEMS program consisting of 

the 4 elements identified in this 

proposed rule, nothing prohibits the 

lessee/operator from adopting a more 

comprehensive SEMS approach as set 

forth in API RP 75. The MMS 

encourages industry to incorporate the 

comprehensive elements in their SEMS 

program. 

In addition to industry complying 

with the 4 elements and electing to 

model their SEMS program after a 

comprehensive SEMS program such as 

API RP 75, lessees and operators are 

also encouraged to consider 

implementing the International 

Organization of Standardization (ISO) 

9001, Quality Management Systems— 

Requirements; and ISO 14001, 

Environmental Management Systems— 

Requirements. 

This proposed rule would require 

lessees and operators to have their 

SEMS program audited at least once 

every 3 years by either an independent 

third party or by qualified personnel 

designated within the company. A 

knowledgeable and experienced auditor 

would audit the SEMS program to 

determine if an OCS lessee and operator 

is complying with the SEMS plan. 

These audits would be conducted in an 

office environment and/or in the field, 

and cover both a broad range of 

activities or be focused on a particular 

area (e.g., records, gas compressors, 

blowout preventers, or documentation) 

as appropriate. Auditors must meet the 

qualifications as proposed in this rule. 

The MMS may, at our discretion, 

evaluate independent third parties, meet 

with lessees and operators to 

periodically review the results of SEMS 

program audits, and conduct announced 

or unannounced evaluations with MMS 

personnel and/or independent third 

parties to determine SEMS plan 

compliance and effectiveness. The MMS 

would be more inclined to conduct a 

SEMS evaluation on an operator that 

has a history of poor performance. Poor 

performance may be based on the 

number and/or type of incidents of noncompliance, civil or criminal penalties, 

injuries, fatalities, accidents, fires, 

losses of well control, explosions, 

collisions, pollution incidents, and/or 

damage to the marine environment. 

Lessees and operators would be 

responsible for all costs associated with 

any independent third party evaluation 

of their SEMS plan. 

In this proposed rule, MMS would 

require operators, on an annual basis, to 

submit the number of hours worked for 

all company and contract employees 

(people on the facility) during 

production, drilling, pipeline, and 

construction activities (which includes 

the adding or removing of equipment 

and/or facility modifications). This 

information is submitted on Form 


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MMS–131 on an annual basis. We use 

the ‘‘hours worked’’ information to 

calculate Occupational Safety and 

Health Administration-style safety and 

health indices. The MMS considers the 

information to be significant to help us 

evaluate industry’s continued 

improvement of safety and 

environmental management in the OCS. 

Information on Form MMS–131 

includes company identification, 

number of company/contractor injuries 

and/or illnesses suffered, company/ 

contractor hours worked, EPA National 

Pollutant Discharge Elimination System 

(NPDES) permit non-compliances and 

oil spill volumes for spills less than 1 

barrel. All pieces of information are 

reported as collected during one 

calendar year. We use the information 

obtained from this form to develop 

industry average incident rates that help 

to describe how well the offshore oil 

and gas industry is performing. Using 

the produced data allows MMS to better 

focus our regulatory and research 

programs on areas where the 

performance measures indicate that 

operators are having difficulty meeting 

our expectations. 

Additionally, operators can use the 

data to make individual comparisons 

and evaluate trends. Knowing how the 

offshore industry as a whole is doing, 

and where their own company ranks, 

provides company management with 

information to focus on safety and 

environmental improvement efforts. 

This information also provides offshore 

operators with a credible data source to 

demonstrate how industry and 

individual operators are performing. 

The MMS does not want the SEMS 

program to be a paperwork exercise 

conducted solely to meet regulatory 

requirements. Such an effort would 

defeat the purpose of the proposed rule, 

which is to promote an attitude, or 

performance mentality, that helps to 

achieve operational safety and 

environmental protection through 

awareness and planning. The MMS 

knows that many lessee/operators have 

already integrated similar management 

programs into their operations and 

expects that most of the remaining 

operators have some type of informal or 

undocumented management program 

that addresses safety and environmental 

policies and procedures. The MMS 

understands that the development and 

implementation of this type of program 

may place an additional burden on 

some OCS operators, in the short-term. 

However, MMS believes that a SEMS 

program would benefit all lessees/ 

operators in that it would identify and 

mitigate hazards, assure safe work 

practices, manage changes, and properly 

train offshore employees and 

contractors. 

Comments on this proposed SEMS 

rule are requested. Commenters are 

encouraged to submit detailed 

comments with justifications or 

background information supporting 

their responses. In addition, we intend 

to conduct at least one public workshop 

on this proposed SEMS rule during the 

upcoming comment period. We will 

announce the time and location in a 

separate document. 

Procedural Matters 

Regulatory Planning and Review 

(Executive Order (E.O.) 12866) 

This proposed rule is not a significant 

rule as determined by the Office of 

Management and Budget (OMB) and is 

not subject to review under E.O. 12866. 

(1) This proposed rule would not have 

an annual effect of $100 million or more 

on the economy. The MMS estimates 

that it would cost OCS oil and gas 

lessees and operators $12,673,967 to 

comply with the requirements in the 

proposed rulemaking. This estimate 

includes the initial startup and 

development costs for lessees and 

operators to develop and implement the 

proposed four elements of a SEMS. This 

is a one-time cost of approximately 

$4,590,000. The MMS estimates that 

annual recurring cost of the proposed 

rulemaking to be approximately 

$8,083,967 for maintaining SEMS after 

implementation. Details on the 

estimated costs for this rulemaking are 

further discussed in the Regulatory 

Flexibility Act section. The proposed 

rulemaking would not adversely affect 

in a material way the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local, or tribal governments or 

communities. 

(2) This proposed rule would not 

create a serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency. 

(3) This proposed rule would not alter 

the budgetary effects of entitlements, 

grants, user fees, or loan programs or the 

rights or obligations of their recipients. 

(4) This proposed rule would not raise 

novel legal or policy issues arising out 

of legal mandate, the President’s 

priorities, or the principles set forth in 

E.O. 12866. 

Regulatory Flexibility Act 

While the proposed rule would affect 

a substantial number of small entities, it 

would not have a significant economic 

effect on a substantial number of small 

entities under the Regulatory Flexibility 

Act (5 U.S.C. 601 et seq.). 

Small lessees/operators that operate 

under this rule fall under the Small 

Business Administration’s (SBA) North 

American Industry Classification 

System (NAICS) codes 211111, Crude 

Petroleum and Natural Gas Extraction, 

and 213111, Drilling Oil and Gas Wells. 

For these NAICS code classifications, a 

small company is one with fewer than 

500 employees. Based on these criteria, 

an estimated 70 percent (91 operators) 

of them are considered small. This 

proposed rule, therefore, would affect a 

substantial number of small entities. 

Assumptions 

In order to more accurately represent 

costs associated with implementing this 

rule, MMS made the following 

assumptions concerning the costs 

associated with the requirements in the 

proposed rulemaking. 

• Because of the wide variation in 

company size, we have grouped 

operators into three classes (High, 

Moderate, and Low Activity). 

• We have used the results of 10 years 

of voluntary SEMS Performance 

Measures reporting by OCS operators to 

determine that 70 of the 130 operators, 

at a minimum, are using SEMS. We 

suspect, however, that this number is 

higher based on previous Annual 

Performance Review Meetings where 

voluntary SEMS was a discussion topic. 

• We have used actual costs from 

safety management system vendors to 

derive our estimated costs for industry. 

• We assume there are no new costs 

for the estimated 70 operators who are 

currently using SEMS, as their systems 

have already been developed and they 

are expending funds to manage this 

process. However, we have calculated 

costs associated with compliance that 

require new work on their behalf and 

continued maintenance/recordkeeping 

activities. 

• The estimated cost for the 60 

remaining operators to implement, 

develop, and manage the SEMS program 

is based on the operator having an 

internet-based system, which has been 

determined to be the most common 

approach used by operators. 

• Many operators are of such a 

modest size that a purchased template 

from a safety management system 

vendor would meet their needs and 

would comply with the proposed 

regulation. They would not need to 

spend additional money to customize a 

template for their use. 

High, Moderate, and Low Activity 

Definitions 

Oil and gas operators in the OCS vary 

substantially in size and the degree in 

which they are engaged in extracting oil 


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from the OCS. Of the 130 identified 

operators, there is a range in OCS oil 

and gas activity from as little as 1 

complex to nearly 500 facilities; and 

from as low as 15,000 barrels of oil 

equivalent (BOE) annual production to 

more than 300 million BOE annual 

production. Because of this tremendous 

variation in activity, MMS divides 

operators into high, moderate, and low 

activity for the purpose of measuring 

their performance. Using these same 

criteria (following this paragraph), we 

have used these size categories to 

estimate costs associated with 

developing, managing, and fulfilling 

reporting requirements for the proposed 

SEMS rule. 

The criteria that categorizes an 

operator as a high, moderate, or low 

activity is as follows: 

• An operator that qualifies under the 

high activity category would need to 

meet the following criteria: 

• Produce at least 10 million or more 

BOE (MMBOE) per year. 

• Operate a minimum of 1,000 inservice components or more during the 

year. 

• An operator that qualifies under the 

moderate activity category would need 

to meet the following criteria: 

• Produce at least 1 MMBOE, but less 

than 10 MMBOE, per year. 

• Operate a minimum of 100 inservice components, but less than 1,000 

in-service components during the year. 

• An operator that qualifies under the 

low activity category would need to 

meet the following criteria: 

• Produce less than 1 MMBOE per 

year. 

• Operate less than 100 in-service 

components during the year. 

Development of SEMS Program 

After reviewing the voluntary SEMS 

submittals (OCS Performance Measures 

Data, Form MMS–131) received from 

1996–2006, an average of 70 operators 

(54 percent = 70/130) reported having a 

SEMS-type program in-place. The other 

60 operators (46 percent = 60/130) may 

not have a SEMS program in-place or 

may have a SEMS program but are not 

participating in the voluntary SEMS 

program. 

The following table shows a 

breakdown by operator activity category 

(high, moderate, low): 

Activity category 

Number of 

operators without 

SEMS 

Number of 

operators with 

SEMS 

Total number 

of operators 

by activity 

High .................................................................................................................................. 0 13 13 

Moderate .......................................................................................................................... 12 29 41 

Low .................................................................................................................................. 48 28 76 

Total .......................................................................................................................... 60 70 130 

As shown from the table, all high 

activity operators have a SEMS program 

in-place; the moderate activity shows 

over 70 percent are currently 

participating in a SEMS program; and 

finally, the low activity shows almost 40 

percent are using a SEMS program. 

Information received from consultants 

and vendors stated that the cost for an 

operator to buy a generic SEMS 

template is approximately $2,500. If an 

operator decided to modify the generic 

SEMS template to make it specific to 

their use, the cost would be an 

additional $10,000. As mentioned in the 

assumptions, many operators would not 

spend the additional $10,000 to 

customize a SEMS program for their use 

because it would not be necessary. 

If the 60 operators without a SEMS 

program decided to buy a SEMS 

template, the cost would be $150,000 

($2,500 × 60). If all 60 operators needed 

to modify the generic plans for their 

specific OCS operations, which would 

be unlikely, an additional cost of 

$600,000 ($10,000 × 60) would be 

incurred to perform these modifications. 

The total for all 60 operators to buy a 

template and then modify the template 

to their philosophy is estimated at 

$750,000 ($150,000 + $600,000). 

SEMS Implementation 

This section provides the estimated 

cost for industry to implement a SEMS. 

The following table shows a breakdown 

of the average number of facilities and 

components for the 3 operator activity 

levels: 

Activity category 

Average no. of 

components 

(per complex) 

Average no. of 

complexes 

High .......................................................................................................................................................................... 21 139 

Moderate .................................................................................................................................................................. 15 29 

Low .......................................................................................................................................................................... 16 6 

The total cost for implementing the 

SEMS program considers only the 60 

operators that do not have a functional 

SEMS program. The other 70 operators 

are already managing their SEMS 

program throughout the company. 

Moderate Activity Category 

A breakdown of the cost to implement 

and manage a SEMS program consisting 

of the four elements (i.e., hazards 

analysis, management of change, 

operating procedures, and mechanical 

integrity) was calculated for a moderate 

activity operator as follows: 

• A hazards analysis for a moderate 

activity operator at the complex level 

(facility risk assessment) would cost 

approximately $102,000 for 29 facilities. 

This is a one-time implementation cost. 

In following years, this cost would be 

less because the rule requires that a 

hazards analysis be performed for 

changes in the process or the equipment 

on a facility. We estimate that the 

annual cost for a moderate activity 

operator to update a hazards analysis for 

the 29 facilities would be approximately 

$10,000 for 3 facilities (10 percent of 29 

facilities). 

• The job hazard analysis at the task 

level includes data collection, analysis, 

and report development. This cost is 

included in the hazards analysis. 

• The MOC cost is based on one 

change request per month and it is 

dependent on the complexity of the 

change. The MOC cost will be 

determined by the physical state of the 


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facilities, the status of technology, and 

the turnover of personnel. The MOC 

would cost approximately $20,000 per 

year (includes the year to implement 

SEMS) which also includes MOC data 

collection, evaluation, and 

documentation update. 

• Based on information from 

consultants and vendors, a lessee/ 

operator would need to evaluate the 

operating procedures of their facility 

each year. Also, the operating procedure 

cost would be determined by the 

maintenance of such procedures. For 

most operators, no formal evaluation is 

necessary since changes will be 

identified through the job hazard 

analysis process and managed through 

the MOC process. Operating procedures 

will cost approximately $18,000 per 

year (includes the year to implement 

SEMS) which also includes data 

collection, evaluation, documentation 

update, and recordkeeping. 

• The mechanical integrity cost is 

based on the assumption that 

mechanical integrity is achieved 

through preventive maintenance. The 

preventive maintenance program is 

defined prior to the commissioning of 

the facility. The cost of maintenance is 

not included in this assessment, only 

the cost of managing the program. 

Mechanical integrity will cost 

approximately $20,000 per year 

(includes the year to implement SEMS), 

which includes the quality assurance 

inspection plan, evaluation of schedule 

appropriateness, communication of 

maintenance program, salaries, 

maintenance and inspection reports, 

and recordkeeping. 

• Auditing of the SEMS program is 

required once every 3 years and this 

cost would be approximately $15,000, 

for an average of $5,000 per year. This 

cost includes developing audit 

protocols, planning, performing audits, 

and recordkeeping. This is an annual 

cost after implementation of SEMS. 

• The cost for report development, 

meetings, data collection, 

recordkeeping, and analysis would be 

approximately $13,000 per year. This is 

an annual cost after implementation of 

SEMS. 

The estimated cost for a moderate 

activity operator to implement SEMS is 

$160,000. The estimated cost for the 12 

moderate activity operators to 

implement SEMS is $1,920,000 

($160,000 × 12 operators). The itemized 

cost is: 

• Hazards analysis ...................... $102,000 

• Management of Change ........... 20,000 

• Operating Procedures .............. 18,000 

• Mechanical Integrity ................ 20,000 

Total ...................................... $160,000 

The estimated average cost for a 

moderate activity operator to maintain 

their SEMS program is $86,000 a year. 

The estimated cost for the 12 moderate 

activity operators to initially maintain 

their SEMS program is $1,032,000. The 

itemized cost is: 

• Hazards analysis ...................... $10,000 

• Management of Change ........... 20,000 

• Operating Procedures .............. 18,000 

• Mechanical Integrity ................ 20,000 

• Audits ....................................... 5,000 

• Report development and meetings ............................................ 13,000 

Total ...................................... $ 86,000 

Once all moderate operators have a 

SEMS program implemented, the 

estimated cost to maintain their SEMS 

program will be approximately 

$3,526,000 ($86,000 per operator × 41 

moderate activity operators = 

$3,526,000). 

Low Activity Category 

A breakdown of the cost to implement 

and manage a SEMS program consisting 

of the four elements (i.e., hazards 

analysis, management of change, 

operating procedures, and mechanical 

integrity) was calculated for a low 

activity operator as follows: 

• A hazards analysis for a low activity 

operator at the complex level (facility 

risk assessment) would cost 

approximately $22,000 for 6 facilities. 

This is a one-time implementation cost. 

In following years, this cost would be 

less because the rule requires that a 

hazards analysis be performed for 

changes in a process or equipment on a 

facility. We estimate that the annual 

cost for a low activity operator to update 

a hazards analysis would be 

approximately $2,000 for 1 facility. 

• The job hazard analysis at the task 

level includes data collection, analysis, 

report development, and recordkeeping. 

This cost is already included in the 

hazards analysis. 

• The MOC cost is based on one 

change request per month and it is 

dependent on the complexity of the 

change. The MOC cost would be 

determined by the physical state of the 

facilities, the status of technology, and 

the turnover of personnel. The MOC 

would cost approximately $5,000 per 

year (includes the year to implement 

SEMS) which also includes MOC data 

collection, evaluation, documentation 

update, and recordkeeping. 

• Based on information from 

consultants and vendors, a lessee/ 

operator would need to evaluate the 

operating procedures of their facility 

each year. Also the operating procedure 

cost would be determined by the 

maintenance of such procedures. For 

most operators, no formal evaluation is 

necessary since changes will be 

identified through the job hazard 

analysis process and managed through 

the MOC process. Operating procedures 

will cost approximately $5,000 per year 

(includes the year to implement SEMS) 

which also includes data collection, 

evaluation, documentation update, and 

recordkeeping. 

• The mechanical integrity cost is 

based on the assumption that 

mechanical integrity is achieved 

through preventive maintenance. The 

preventive maintenance program is 

defined prior to the commissioning of 

the facility. The cost of maintenance is 

not included in this assessment, only 

the cost of managing the program. 

Mechanical integrity will cost 

approximately $8,000 per year (includes 

the year to implement SEMS), which 

also includes the quality assurance 

inspection plan, evaluation of schedule 

appropriateness, communication of 

maintenance program, maintenance, 

salaries, inspection reports, and 

recordkeeping. 

• Auditing of the SEMS program is 

required once every 3 years and this 

cost would be approximately $6,000, for 

an average of $2,000 per year. This cost 

includes developing audit protocols, 

planning, performing audits, and 

recordkeeping. This is an annual cost 

after implementation of SEMS. 

• The cost for report development, 

meetings, recordkeeping, and data 

collection and analysis would be 

approximately $6,000 per year. This is 

an annual cost after implementation of 

SEMS. 

The estimated cost for a low activity 

operator to implement SEMS is $40,000. 

The cost for the 48 low activity 

operators to implement SEMS is 

$1,920,000 ($40,000 × 48 operators). The 

itemized cost is: 

• Hazards analysis ...................... $ 22,000 

• Management of Change ........... 5,000 

• Operating Procedures .............. 5,000 

• Mechanical Integrity ................ 8,000 

Total ...................................... $40,000 

The estimated cost for a low activity 

operator to maintain their SEMS 

program is $28,000 a year. The cost for 

the 48 low activity operators to maintain 

SEMS is $1,344,000. The itemized cost 

is: 

• Hazards analysis ...................... $ 2,000 

• Management of Change ........... 5,000 

• Operating Procedures .............. 5,000 

• Mechanical Integrity ................ 8,000 

• Audits ....................................... 2,000 

• Report development and meetings ........................................... 6,000 

Total ...................................... $ 28,000 


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Once all low operators have a SEMS 

program implemented, the cost to 

maintain their SEMS program will be 

approximately $2,128,000 ($28,000 per 

operator × 76 low activity operators = 

$2,128,000). 

Cost to Submit to MMS 

The following are the estimated costs 

for complying with the proposed 

submittals to MMS and associated 

recordkeeping. The burden hours, that 

these costs are based on, are addressed 

in the Paperwork Reduction Act section. 

• A letter notifying the Regional 

Supervisory Field Office (RSFO) when 

an operator plans on conducting an 

audit of their SEMS program in order for 

MMS to participate as observers would 

cost approximately $3,827 each year 

(see proposed § 250.1910). This cost is 

based on one-third of all 130 operators 

sending a notification letter each year, 

with an estimated burden time of 1 

hour. 

• A report must be sent to the RSFO 

within 30 days of the audit completion 

date, once every 3 years. The report 

must outline the results of the audit 

including deficiencies identified, a 

time-table or schedule for implementing 

corrections to deficiencies, and the 

person responsible for correcting each 

identified deficiency including their job 

title (see proposed § 250.1910). The 

annual cost would be approximately 

$15,308. This cost is based on one-third 

of the all 130 operators submitting a 

report each year. 

• On an annual basis, Form MMS– 

131 (Performance Measures Data) must 

be submitted to MMS which would cost 

approximately $92,560. This cost is 

based on all 130 operators with an 

estimated time of 8 hours per response. 

• The MMS would conduct 

evaluations of SEMS programs. We 

would require you to demonstrate and 

explain the procedures and policies in 

your program and produce evidence, if 

needed, to support your explanation 

which would cost approximately $4,272 

a year (see proposed § 250.1913). This 

cost is based on conducting six 

evaluations a year. 

The total cost for required paperwork 

being submitted to MMS would be 

approximately $115,967. 

Summary of Annual Costs to Implement 

and Maintain SEMS 

The total cost to implement and 

maintain SEMS is approximately 

$12,673,967. This total includes an 

estimated $2,314,000 for high activity 

operators (13) to maintain their SEMS 

program. We estimated the cost to 

maintain SEMS for the high activity 

operator to be $178,000 per year. This 

estimated cost is greater than the low 

and moderate activity operators because 

of the increased complexity of their 

operations. We did not discuss this cost 

in detail because all the high activity 

operators already have a SEMS program 

in place. A summary of all the costs are 

shown below. 

Buy/develop and implement SEMS Plan for operators without a SEMS Implementation cost ............. $ 750,000 

• High activity operator 

cost (already implemented) ............................. $ -0- 

Moderate activity operator 

cost ($160,000 × 12) ......... 1,920,000 

• Low activity operator cost 

($40,000 × 48) ................... 1,920,000 

Total first year cost ...... $4,590,000 

Maintain SEMS (Annual 

Cost after Implementation).

• High activity operator 

cost ($178,000 × 13) ......... $2,314,000 

• Moderate activity operator cost ($86,000 × 41) ... 3,526,000 

• Low activity operator cost 

($28,000 × 76) ................... 2,128,000 

Submittals required by 

MMS (annual cost) ........... 115,967 

Total annual costs after 

implementation ......... $8,083,967 

Benefits of SEMS 

The ultimate goal of SEMS is to 

promote safety and environmental 

protection in the OCS during all 

offshore activities. Moreover, increasing 

a system’s level of safety leads to 

reduced material losses and enhanced 

productivity. This supports the concept 

that safety is good for business. 

Some further benefits include: 

• Logical prioritization of safety 

needs—SEMS emphasizes risk 

mitigation actions that provide the 

biggest impact on safety. 

• More efficient maintenance 

scheduling and resource utilization— 

Effective hazard reporting in SEMS 

allows proactive scheduling of 

maintenance tasks when resources are 

available, increasing the likelihood that 

maintenance is performed on time and 

more efficiently. 

• Compliance with legal 

responsibilities for safety—MMS 

certification requirements mandate a 

number of safety processes and 

standards that can be included in an 

organization’s SEMS. 

• Avoiding incident investigation 

costs and operational disruptions— 

Improved communication and risk 

mitigation will prevent many accidents 

from occurring. 

• Reduction of the direct and indirect 

costs of accidents—Civil penalties, 

repair costs, damage claims, and 

increased insurance premiums are a few 

of the potential economic consequences 

of an accidental mishap. 

• Establishing a marketable safety 

record—A record of consistently safe 

operations can be used to attract new 

business and investment. 

• Continuous improvement of 

operational processes—SEMS allows for 

lessons learned to be incorporated into 

the system and lead to superior 

operations. 

• Improved employee morale and 

productivity—Promoting 

communication between management 

and the rest of the organization prevents 

disenfranchisement and lifts morale. 

The financial burden estimated for 

developing and managing a SEMS 

program is minor compared to the costs 

associated with major accidents. For 

example, in 1987 prior to industry 

having developed a safety management 

template for offshore operations, the 

Mississippi Canyon 311, A (Bourbon), 

platform in the Gulf of Mexico was 

tilted to one side by an extensive 

underground blowout. The cost 

associated with this incident alone was 

$274,000,000. In 1989, a fire associated 

with a pipeline repair killed 7 people 

and destroyed a major production 

facility. A SEMS plan would have 

implemented several procedures and 

evaluations that may have prevented 

these accidents. A SEMS plan is not a 

guarantee of avoiding all accidents but 

MMS believes that a mandatory SEMS 

program (4 elements) will reduce the 

likelihood of the types of accidents and 

incidents discussed here and in the 

Preamble and will also serve to raise the 

safety awareness of all personnel in the 

office and field. 

The proposed requirement for SEMS 

would not have a significant economic 

effect on a substantial number of small 

entities. The MMS estimates that over 

40 percent of the small entities currently 

operating on the OCS have already 

implemented a SEMS program that 

meets the requirements under these 

proposed regulations. These small 

entities (28 low activity and 10 medium 

activity operators) implemented SEMS 

because it improved the efficiency and 

safety of their OCS operations. The cost 

for the remaining 60 percent of small 

entities to implement (approximately 

$52,500) and maintain (approximately 

$28,000) SEMS is very small compared 

to the average annual revenues they 

would generate ($28,000,000) from the 

production of oil and gas. The MMS 

estimated the annual revenue by 

multiplying the average production for 

a small entity (700,000 BOE) times a 

conservative price for a barrel of oil 


dwashington3 on PROD1PC60 with PROPOSALS-1
28648 Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Proposed Rules 

($40). Therefore, this proposed 

rulemaking would not have a significant 

economic effect on a substantial number 

of small entities. 

Your comments are important. The 

Small Business and Agriculture 

Regulatory Enforcement Ombudsman 

and 10 Regional Fairness Boards were 

established to receive comments from 

small businesses about Federal agency 

enforcement actions. The Ombudsman 

will annually evaluate the enforcement 

activities and rate each agency’s 

responsiveness to small business. If you 

wish to comment on the actions of 

MMS, call 1–888–734–3247. You may 

comment to the Small Business 

Administration without fear of 

retaliation. Allegations of 

discrimination/retaliation filed with the 

SBA will be investigated for appropriate 

action. 

Small Business Regulatory Enforcement 

Fairness Act 

The proposed rule is not a major rule 

under 5 U.S.C. 804(2) of the Small 

Business Regulatory Enforcement 

Fairness Act. This proposed rule: 

a. Would not have an annual effect on 

the economy of $100 million or more. 

b. Would not cause a major increase 

in costs or prices for consumers, 

individual industries, Federal, State, or 

local government agencies, or 

geographic regions. 

c. Would not have significant adverse 

effects on competition, employment, 

investment, productivity, innovation, or 

the ability of U.S.-based enterprises to 

compete with foreign-based enterprises. 

Unfunded Mandates Reform Act of 

1995 

This proposed rule would not impose 

an unfunded mandate on State, local, or 

tribal governments or the private sector 

of more than $100 million per year. The 

proposed rule would not have a 

significant or unique effect on State, 

local, or tribal governments or the 

private sector. A statement containing 

the information required by the 

Unfunded Mandates Reform Act (2 

U.S.C. 1501 et seq.) is not required. 

Takings Implication Assessment (E.O. 

12630) 

Under the criteria in E.O. 12630, this 

proposed rule does not have significant 

takings implications. The proposed rule 

is not a governmental action capable of 

interference with constitutionally 

protected property rights. A Takings 

Implication Assessment is not required. 

Federalism (E.O. 13132) 

Under the criteria in E.O. 13132, this 

proposed rule does not have federalism 

implications. This proposed rule would 

not substantially and directly affect the 

relationship between the Federal and 

State governments. To the extent that 

State and local governments have a role 

in OCS activities, this proposed rule 

would not affect that role. A Federalism 

Assessment is not required. 

Civil Justice Reform (E.O. 12988) 

This rule complies with the 

requirements of E.O. 12988. 

Specifically, this rule: 

(a) Meets the criteria of section 3(a) 

requiring that all regulations be 

reviewed to eliminate errors and 

ambiguity and be written to minimize 

litigation; and 

(b) Meets the criteria of section 3(b)(2) 

requiring that all regulations be written 

in clear language and contain clear legal 

standards. 

Consultation With Indian Tribes (E.O. 

13175) 

Under the criteria in E.O. 13175, we 

have evaluated this proposed rule and 

determined that it has no substantial 

effects on federally recognized Indian 

tribes. There are no Indian or tribal 

lands in the OCS. 

Paperwork Reduction Act (PRA) 

This proposed rule contains a 

collection of information that has been 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval under 44 U.S.C. 3507(d). 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 and 

recordkeeping burden. If you wish to 

comment on the information collection 

aspects of this proposed rule, you may 

send your comments directly to OMB 

(see the ADDRESSES section of this 

notice). Please identify your comments 

with 1010–AD15. Send a copy of your 

comments to the Regulations and 

Standards Branch (RSB), Attn: 

Comments; 381 Elden Street, MS–4024; 

Herndon, Virginia 20170–4817. Please 

reference 30 CFR Part 250, Subpart S, 

Safety and Environmental Management 

Systems for Outer Continental Shelf Oil 

and Gas Operations, 1010–AD15 in 

your comments. You may obtain a copy 

of the supporting statement for the new 

collection of information by contacting 

the Bureau’s Information Collection 

Clearance Officer at (202) 208–7744. 

The PRA 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. 

The OMB is required to make a decision 

concerning the collection of information 

contained in these proposed regulations 

between 30 to 60 days after publication 

of this document in the Federal 

Register. Therefore, a comment to OMB 

is best assured of having its full effect 

if OMB receives it by July 17, 2009. This 

does not affect the deadline for the 

public to comment to MMS on the 

proposed regulations. 

The title of the collection of 

information for the rule is 30 CFR Part 

250, Subpart S, Safety and 

Environmental Management Systems for 

Outer Continental Shelf Oil and Gas 

Operations. Respondents are 

approximately 130 Federal OCS lessees, 

operators, and/or other independent 

third-parties. The MMS will use the 

information to: Evaluate the effect of 

industry’s continued improvement of 

safety and environmental management 

of the OCS; develop an industry average 

that helps to describe how well the 

offshore oil and gas industry is 

performing; and judge the 

reasonableness of company requests for 

any specific regulatory relief. Responses 

to this collection are mandatory. The 

frequency of response varies, but is 

primarily annual. The information 

collection (IC) does not include 

questions of a sensitive nature. The 

MMS will protect proprietary 

information according to the Freedom of 

Information Act (5 U.S.C. 522) and its 

implementing regulations (43 CFR Part 

2), and 30 CFR 250.197, Data and 

information to be made available to the 

public or for limited inspection, and 30 

CFR Part 252, OCS Oil and Gas 

Information Program. 

During 1997, MMS, the U.S. Coast 

Guard, and representatives of the OCS 

oil and gas industry worked together to 

develop a suite of consensus formulas 

for gauging the industry’s safety and 

environmental performance. This 

resulted in the initiation of OMB 

approved Form MMS–131, Performance 

Measures Data. With this new subpart, 

MMS will continue to use the 

information collected on Form MMS– 

131 to calculate annually, OCS-wide, 

performance indices based on those 

consensus formulas to provide the 

public with information about 

performance trends, and allow OCS 

lease operators to compare their 

performance with industry averages. 

The results will be posted by MMS for 

use by the public. 

This rule and IC request also include 

the hours and requirements already 

approved for Form MMS–131 in OMB 

Control Number 1010–0112, (280 hours, 

expiration 3/31/11). This collection is 

voluntary, but the rulemaking will make 

this and the new requirements 


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mandatory. The current collection 

under 1010–0112 will be discontinued 

when the final regulations become 

effective. 

The following table details the IC 

burden for the proposed new 

requirements in subpart S. 

Citation 30 CFR 250 subpart S Reporting and recordkeeping requirement Hour burden Average number of 

annual responses 

Annual burden 

hours 

Non-hour cost burdens 

1900 ............................................ Develop and implement a SEMS program. 

(One time implementation cost of SEMS 

template).

$2,500 per implementation × 60 operators = $150,000. 

1900 ............................................ In-house modification (one time implementation cost) of the generic SEMS program to 

meet needs of specific company.

$10,000 per implementation × 60 operators = $600,000. 

1900–1915 .................................. High Activity Operator: Maintain all records 

pertaining to your SEMS program (e.g., operating procedures, MOC, mechanical integrity, 3rd party and qualified personnel 

info, any supporting documentation, etc.), 

and retain for 5 years; hazards analysis 

records retain for the life of the operation; 

upon request, make available to MMS.

2,000 13 ...................................... 26,000 

1900–1915 .................................. Moderate Activity Operator: Maintain all 

records pertaining to your SEMS program 

(e.g., operating procedures, MOC, mechanical integrity, 3rd party and qualified personnel info, any supporting documentation, 

etc.), and retain for 5 years; hazards analysis records retain for the life of the operation; upon request, make available to 

MMS.

966 41 ...................................... 39,606 

Moderate Activity Operator Implementation. 

(One time cost to implement SEMS).

$160,000 per moderate activity implementation × 12 

operators = $1,920,000. 

1900–1915 .................................. Low Activity Operator: Maintain all records 

pertaining to your SEMS program (e.g., operating procedures, MOC, mechanical integrity, 3rd party and qualified personnel 

info, any supporting documentation, etc), 

and retain for 5 years; hazards analysis 

records retain for the life of the operation; 

upon request, make available to MMS.

315 76 ...................................... 23,940 

Low Activity Operator Implementation. (One 

time cost to implement SEMS).

$40,000 per low activity implementation × 48 operators = 

$1,920,000. 

1910 ............................................ Notify RSFO with audit schedule in timely 

manner.

1 130 operators/once every 

3 years = 43 responses.

43 (rounded) 

1910 ............................................ Submit audit report, once in every 3 years, 

within 30 days of audit including required 

information; retain records for 5 years; 

upon request, make available to MMS.

4 130 operators/once every 

3 years = 43 responses.

172 

1913 ............................................ Demonstrate and explain, as required, the 

policies and procedures included in your 

SEMS program; produce supporting documentation if required.

8 6 ........................................ 48 

1915 ............................................ Submit Form MMS–131 .................................. 8 130 .................................... 1,040 

Total burden .................................................................................................................................. 472 Responses ................ 90,849 Hours 

$4,590,000 Non-Hour Cost Burdens 


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The MMS specifically solicits 

comments on the following questions: 

(a) Is the proposed collection of 

information necessary for MMS to 

properly perform its 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 the use 

of appropriate automated electronic, 

mechanical, or other forms of 

information technology? 

In addition, the PRA requires agencies 

to estimate the total annual reporting 

and recordkeeping non-hour cost 

burden resulting from the collection of 

information. Other than the four nonhour cost burdens for developing the 

program that are listed in the burden 

table, we have not identified any other 

costs, and we solicit your comments on 

this item. For reporting and 

recordkeeping only, your response 

should split the cost estimate into two 

components: (a) Total capital and 

startup cost component, and (b) annual 

operation, maintenance, and purchase 

of services component. 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. Generally, your estimates 

should not include equipment or 

services purchased: 

(1) Before October 1, 1995; 

(2) To comply with requirements not 

associated with the information 

collection; 

(3) For reasons other than to provide 

information or keep records for the 

Government; or 

(4) As part of customary and usual 

business or private practices. 

National Environmental Policy Act of 

1969 

This rule does not constitute a major 

Federal action significantly affecting the 

quality of the human environment. A 

detailed statement under the National 

Environmental Policy Act of 1969 is not 

required because the rule is covered by 

a categorical exclusion. This rule is 

excluded from the requirement to 

prepare a detailed statement because it 

qualifies as a regulation of an 

administrative and procedural nature, in 

that the proposed rule only requires that 

industry develop a SEMS program. (For 

further information see 43 CFR 

46.210(i)). We have also determined that 

the rule does not involve any of the 

extraordinary circumstances listed in 43 

CFR 46.215 that would require further 

analysis under the National 

Environmental Policy Act. 

Data Quality Act 

In developing this rule we did not 

conduct or use a study, experiment, or 

survey requiring peer review under the 

Data Quality Act (Pub. L. 106–554, app. 

C § 515, 114 Stat. 2763, 2763A–153– 

154). 

Effects on the Energy Supply (E.O. 

13211) 

This rule is not a significant energy 

action under the definition in E.O. 

13211. A Statement of Energy Effects is 

not required. 

Clarity of This Regulation 

We are required by E.O. 12866, E.O. 

12988, and by the Presidential 

Memorandum of June 1, 1998, to write 

all rules in plain language. This means 

that each rule we publish must: 

(a) Be logically organized; 

(b) Use the active voice to address 

readers directly; 

(c) Use clear language rather than 

jargon; 

(d) Be divided into short sections and 

sentences; and 

(e) Use lists and tables wherever 

possible. 

If you feel that we have not met these 

requirements, send us comments by one 

of the methods listed in the ADDRESSES

section. To better help us revise the 

rule, your comments should be as 

specific as possible. For example, you 

should tell us the numbers of the 

sections or paragraphs that you find 

unclear, which sections or sentences are 

too long, the sections where you feel 

lists or tables would be useful, etc. 

Public Availability of Comments 

Before including your address, phone 

number, e-mail address, or other 

personal identifying information in your 

comment, you should be aware that 

your entire comment—including your 

personal identifying information—may 

be made publicly available at any time. 

While you can ask us in your comment 

to withhold your personal identifying 

information from public review, we 

cannot guarantee that we will be able to 

do so. 

List of Subjects in 30 CFR 250 

Administrative practice and 

procedure, Continental shelf, 

Environmental protection, Incorporation 

by reference, Public Lands—mineral 

resources, Reporting and recordkeeping 

requirements. 

Dated: June 4, 2009. 

Assistant Secretary—Land and Minerals 

Management. 

For the reasons stated in the 

preamble, Minerals Management 

Service (MMS) 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 30 CFR 

part 250 continues to read as follows: 

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

2. In § 250.197, redesignate, in the 

table, paragraphs (a)(7) through (10) as 

paragraphs (a)(8) through (11), and add 

new paragraph (a)(7) to the table for 

Form MMS–131, Performance Measures 

Data, to read as follows: 

§ 250.197 Data and information to be made 

available to the public or for limited 

inspection. 

* * * * * 

(a) * * * 

On form * * * Data and information not immediately available are * * * Excepted data will be made available * * * 

* * * * * * * 

(7) MMS–131, Performance Measures Data .... Company Name(s); Operator Code(s); Contact 

Name; E-mail Address; Telephone (Number); Fax (Number).

Aggregate data collected yearly will be published one month after submission deadline; 

no individual company’s data will be made 

available to the public. 

* * * * * * * 


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* * * * * 

3. Amend § 250.198 by adding the 

following document to the table in 

paragraph (e) in alphanumerical order to 

read as follows: 

§ 250.198 Documents incorporated by 

reference. 

* * * * * 

(e) * * * 

Title of documents Incorporated by reference at 

* * * * * * * 

API RP 75 Development of a Safety and Environmental Management 

Program, for Offshore Operations and Facilities, Third Edition, May 

2004, Product No. G07503.

250.1903. 

* * * * * * * 

4. Revise § 250.199(e)(17) to read as 

follows: 

§ 250.199 Paperwork Reduction Act 

statements-information collection. 

* * * * * 

(e) * * * 

30 CFR subpart, title and/or MMS Form (OMB Control Number) Reasons for collecting information and how used 

* * * * * * * 

(17) Subpart S, Safety and Environmental Management Systems 

(1010-xxxx), including Form MMS–131, Performance Measures Data.

The information collected is to gather the raw Performance Measures 

Data relating to risk and number of accidents, injuries, and oil spills 

during OCS activities. We use the information obtained from this 

form to develop an industry average that helps to describe how well 

the offshore oil and gas industry is performing in a safe manner. 

* * * * * * * 

5. Add new subpart S to read as 

follows: 

Subpart S—Safety and Environmental 

Management Systems (SEMS) 

Sec. 

§ 250.1900 Must I have a SEMS program? 

§ 250.1901 What is the goal of my SEMS 

program? 

§ 250.1902 When must I comply with the 

regulations in this subpart? 

§ 250.1903 May I use an industry standard 

to develop my SEMS program? 

§ 250.1904 What are my general 

responsibilities for SEMS? 

§ 250.1905 What criteria for Hazards 

Analyses must my SEMS program meet? 

§ 250.1906 What criteria for Operating 

Procedures must my SEMS program 

meet? 

§ 250.1907 What criteria for Mechanical 

Integrity must my SEMS program meet? 

§ 250.1908 What criteria for Management of 

Change must my SEMS program meet? 

§ 250.1909 What criteria must be 

documented in my SEMS program for 

contractor selection? 

§ 250.1910 What are my responsibilities 

when conducting a SEMS audit? 

§ 250.1911 What are my documentation and 

recordkeeping requirements? 

§ 250.1912 What qualifications must an 

independent third party or my 

designated and qualified personnel 

meet? 

§ 250.1913 How will MMS determine if my 

SEMS program is effective? 

§ 250.1914 What happens if MMS finds 

shortcomings in my SEMS program? 

§ 250.1915 What are my responsibilities for 

submitting OCS performance measure 

data? 

§ 250.1900 Must I have a SEMS program? 

You must develop, implement, and 

maintain a SEMS program. Your SEMS 

program must address the following 

four elements: 

(a) Hazards Analysis (including job 

hazard analysis), (b) Operating 

Procedures, (c) Management of Change, 

and (d) Mechanical Integrity. 

§ 250.1901 What is the goal of my SEMS 

program? 

(a) The goal of your SEMS program 

must be to promote safety and 

environmental protection in the OCS 

during all offshore activities. 

(b) To accomplish this goal, you must 

ensure that your SEMS program 

identifies, addresses, and manages 

safety and environmental hazards and 

impacts during the design, construction, 

startup, operation, inspection, and 

maintenance of new and existing OCS 

facilities and DOI regulated pipelines. 

§ 250.1902 When must I comply with the 

regulations in this subpart? 

You must comply with the provisions 

of this subpart on or before [THE DATE 

1 YEAR AFTER THE EFFECTIVE DATE 

OF THE FINAL RULE]. 

§ 250.1903 May I use an industry standard 

to develop my SEMS program? 

Your SEMS program must meet the 

minimum criteria outlined in this 

subpart and should be modeled after the 

requirements in: 

(a) API RP 75, Development of a 

Safety and Environmental Management 

Program, for Offshore Operations and 

Facilities, Third Edition, May 2004 

(incorporated by reference as specified 

in § 250.198). 

(b) Other standards or guidelines (e.g., 

ISO 9001, 14001) that meet or exceed 

the API RP 75 standard. 

§ 250.1904 What are my general 

responsibilities for SEMS? 

(a) You are responsible for the 

development, support, and continued 

improvement of your SEMS program. 

(b) You must provide resources to 

implement and maintain your SEMS 

program. 

(c) You must appoint a management 

official to serve as the operator’s 

Management System Coordinator who 

will be responsible for the following: 

(1) Establishing, implementing, and 

maintaining SEMS program procedures, 

(2) Reporting to your management 

annually on the performance of the 

SEMS program and the need for 

improvement, and 

(3) Reinforcing awareness of safety 

and environmental protection 


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requirements throughout the 

organization. 

§ 250.1905 What criteria for Hazards 

Analyses must my SEMS program meet? 

You must develop and implement a 

hazards analysis (facility level) and a job 

hazard analysis (operations/task level) 

for all of your facilities. For this subpart, 

facilities include all types of offshore 

structures permanently or temporarily 

attached to the seabed (i.e., mobile 

offshore drilling units; floating 

production systems; floating 

production, storage and offloading 

facilities; tension-leg platforms; and 

spars) used for exploration, 

development, production, and 

transportation activities for oil, gas, or 

sulphur from areas leased in the OCS. 

Facilities also include DOI regulated 

pipelines. The purpose of both the 

facility level and operations/task level 

hazards analyses is to identify accident 

scenarios which could lead to worker 

injuries, fatalities, property damage, 

discharges and emissions, coastal and 

marine environmental impacts, or other 

adverse consequences. You must 

document and maintain current 

analyses for each operation covered by 

this section for the life of the operation 

at the facility. The analyses must be 

updated when an internal audit is 

conducted to assure that it is consistent 

with the current operations on your 

facility. 

(a) Hazards Analysis (facility level). 

For a hazards analysis (facility level), 

you must perform an initial hazards 

analysis on each facility on or before 

[THE DATE 1 YEAR AFTER THE 

EFFECTIVE DATE OF THE FINAL 

RULE]. The hazards analysis must be 

appropriate to the complexity of the 

operation and must identify, evaluate, 

and manage the hazards involved in the 

operation. 

(1) The hazards analysis must address 

the following: 

(i) Hazards of the operation; 

(ii) Previous incidents related to the 

operation you are evaluating. Special 

attention should be given in your 

hazards analysis to any incident in 

which you were issued an Incident of 

Noncompliance, civil, or criminal 

penalty; 

(iii) Control technology applicable to 

the operation your hazards analysis is 

evaluating; 

(iv) A qualitative evaluation of the 

possible safety and health effects on 

employees, and potential impacts to the 

coastal and marine environments, 

which may result if the control 

technology fails; and 

(2) The hazards analysis must be 

performed by a person(s) with 

experience in the operations being 

evaluated. These individuals also need 

to be experienced in the hazards 

analysis methodologies being employed. 

(3) You should assure that the 

recommendations in the hazards 

analysis are resolved and that the 

resolution is documented. 

(b) Job Hazard Analysis (operations/ 

task level). Job hazard analysis 

(operations/task level) must be 

conducted for each work project and 

activity. 

(1) You must keep a copy of the most 

recent job hazard analysis at the job site, 

and they must be readily accessible to 

employees. 

(2) You must complete and maintain 

an index naming the task, the date the 

job hazard analysis was completed, and 

the date the analysis was revised. 

§ 250.1906 What criteria for Operating 

Procedures must my SEMS program meet? 

(a) You must develop and implement 

written operating procedures that 

provide instructions for conducting safe 

and environmentally sound activities 

involved in each operation addressed in 

your SEMS program. These procedures 

must address the following: 

(1) Initial startup; 

(2) Normal operations; 

(3) Temporary operations; 

(4) Emergency operations; 

(5) Normal shutdown; 

(6) Startup following a turnaround, or 

after an emergency shutdown; 

(7) Bypassing and flagging; 

(8) Safety and environmental 

consequences of deviating from your 

equipment operating limits and steps 

required to correct or avoid this 

deviation; 

(9) Properties of, and hazards 

presented by, the chemicals used in the 

operations; 

(10) Precautions you will take to 

prevent the exposure of chemicals used 

in your operations to personnel and the 

environment. The precautions must 

include control technology, personal 

protective equipment, and measures to 

be taken if physical contact or airborne 

exposure occurs; 

(11) Raw materials used in your 

operations and the quality control 

procedures you used in purchasing 

these raw materials; 

(12) Control of hazardous chemical 

inventory; and 

(13) Coastal and marine 

environmental impacts identified 

through your hazards analysis. 

(b) Operating procedures must be 

accessible to all employees involved in 

the operations. 

(c) Operating procedures must be 

reviewed as often as necessary to assure 

they reflect any changes made to your 

operations. 

(d) You must develop and implement 

safe and environmentally sound work 

practices for identified hazards during 

operations. 

§ 250.1907 What criteria for Mechanical 

Integrity must my SEMS program meet? 

You must develop and implement 

written procedures that provide 

instructions to ensure the mechanical 

integrity and safe operation of 

equipment through inspection, testing, 

and quality assurance. The purpose of 

mechanical integrity is to ensure that 

equipment is fit-for-service. Your 

mechanical integrity program must 

encompass all equipment and systems 

used to prevent or mitigate uncontrolled 

releases of hydrocarbons, toxic 

substances, or other materials that may 

cause environmental or safety 

consequences. These procedures must 

address the following: 

(a) The design, procurement, 

fabrication, installation, calibration, and 

maintenance of your equipment and 

systems in accordance with the 

manufacturer’s design and material 

specifications. 

(b) The training of each employee 

involved in maintaining your 

equipment and systems so that your 

employees can implement your 

mechanical integrity program. 

(c) The frequency of inspections and 

tests of your equipment and systems 

must be in accordance with MMS 

regulations and meet the manufacturer’s 

recommendations. Inspections and tests 

can be performed more frequently if 

determined to be necessary by prior 

operating experience. 

(d) The documentation of each 

inspection and test that has been 

performed on your equipment and 

systems. This documentation must 

identify the date of the inspection or 

test, the name and position, and include 

the signature of the person who 

performed the inspection or test, the 

serial number or other identifier of the 

equipment on which the inspection or 

test was performed, a description of the 

inspection or test performed, and the 

results of the inspection test. 

(e) The correction of deficiencies 

associated with equipment and systems 

that are outside the manufacturer’s 

recommended limits before further use. 

(f) The installation of new equipment 

and constructing systems. The 

procedures must address the application 

for which they will be used. 

(g) The modification of existing 

equipment and systems. The procedures 

must assure that they are modified for 


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the application for which they will be 

used. 

(h) The verification that inspections 

and tests are being performed. The 

procedures must be appropriate to 

assure that equipment and systems are 

installed consistent with design 

specifications and the manufacturer’s 

instructions. 

(i) The assurance that maintenance 

materials, spare parts, and equipment 

are suitable for the applications for 

which they will be used. 

§ 250.1908 What criteria for Management 

of Change must my SEMS program meet? 

(a) You must develop and implement 

written management of change 

procedures for modifications associated 

with the following: 

(1) Equipment, 

(2) Operating procedures, 

(3) Personnel changes (including 

contractors), 

(4) Materials, and 

(5) Operating conditions. 

(b) Management of change procedures 

do not apply to situations involving 

replacement in kind (such as, 

replacement of one component by 

another component with the same 

performance capabilities). 

(c) You must review all changes prior 

to their implementation. 

(d) The following items must be 

included in your management of change 

procedures: 

(1) The technical basis for the change; 

(2) Impact of the change on safety, 

health, and the coastal and marine 

environments; 

(3) Necessary time period to 

implement the change; and 

(4) Management approval procedures 

for the change. 

(e) Employees, including contractors 

whose job tasks will be affected by a 

change in the operation, must be 

informed of, and trained in, the change 

prior to startup of the process or affected 

part of the operation; and 

(f) If a management of change results 

in a change in the operating procedures 

of your SEMS program, such changes 

must be documented and dated. 

§ 250.1909 What criteria must be 

documented in my SEMS program for 

contractor selection? 

Your SEMS program must document 

contractor selection criteria. When 

selecting a contractor, you must obtain 

and evaluate information regarding the 

contractor’s safety and environmental 

performance. 

(a) A contractor is anyone performing 

work for the lessee. However, these 

requirements do not apply to 

contractors providing domestic services 

to the lessee or other contractors. 

Domestic services include janitorial 

work, food and beverage service, 

laundry service, housekeeping, and 

similar activities. 

(b) You must document that your 

contracted employees are competent in 

the work practices necessary to perform 

their job in a safe and environmentally 

sound manner, and have policies and 

practices in place that are consistent 

with your SEMS program. 

Documentation of each contracted 

employee’s competency to perform his/ 

her job and a copy of the contractor’s 

SEMS program must be kept by the 

operator and the contractor at the 

facility where the contracted operations 

are being performed. 

§ 250.1910 What are my responsibilities 

when conducting a SEMS audit? 

(a) You must perform an audit of your 

entire SEMS program at least once every 

3 years to evaluate compliance with the 

requirements of this subpart, and to 

identify areas in which safety and 

environmental performance needs to be 

improved. You must have your SEMS 

program audited by either an 

independent third party or your 

designated and qualified personnel (see 

§ 250.1912). 

(b) Representatives from MMS may 

participate in your SEMS audit as 

observers. You must notify the Regional 

Supervisory Field Office (RSFO) at least 

30 days prior to conducting your audit 

so that MMS may make arrangements to 

participate in the audit. 

(c) You must submit a report to the 

RSFO within 30 days of the audit 

completion date. The report must 

outline the results of the audit including 

deficiencies identified, a timetable or 

schedule for implementing corrections 

to deficiencies, and the person 

responsible for correcting each 

identified deficiency including their job 

title. 

(d) The MMS may verify that 

corrective actions have been undertaken 

and that these actions effectively 

address the audit findings. Upon 

request, you must make available for 

MMS review: 

(1) Your SEMS program, including 

information about your contractors; 

(2) The qualifications of your 

designated and qualified personnel or 

your independent third party; 

(3) The SEMS report prepared by your 

designated and qualified personnel or 

your independent third party; 

(4) The SEMS audits conducted of 

your program; and 

(5) Other supporting documents or 

information. 

(e) You must retain copies of either 

the independent third party’s SEMS 

records or self audit for a period of 5 

years. 

§ 250.1911 What are my documentation 

and recordkeeping requirements? 

(a) Your SEMS program procedures 

must ensure that records and documents 

are maintained for a period of 5 years 

in an effective manner. Effective 

document and record control includes 

the means of identifying, collecting, 

indexing, filing, storing, maintaining, 

and retrieving the documents and 

records. 

(b) Records must be dated, signed, 

and include information on compliance 

with applicable legal requirements and 

the results of SEMS audits and reviews. 

Details of deficiencies, corrective and 

preventative actions, participation in 

training, permits, licenses, or other 

forms of legal authorization, inspection 

and calibration activity, and results of 

operational controls (maintenance, 

design, and manufacture) should also be 

included. 

§ 250.1912 What qualifications must an 

independent third party or my designated 

and qualified personnel meet? 

(a) An independent third party or 

designated and qualified personnel 

must possess the following 

qualifications: 

(1) Previous experience with SEMS, 

or similar management related 

programs; 

(2) Technical capabilities of the 

individual or organization for the 

specific project; 

(3) In-house availability of or access to 

technology, including computer 

programs or hardware to be used for this 

specific project; 

(4) Ability to perform the independent 

third party functions for the specific 

project considering current 

commitments; 

(5) Previous experience with MMS 

regulatory requirements and procedures; 

and 

(6) Procedures to avoid conflicts of 

interest with the SEMS program they are 

reviewing. 

(b) You must document the 

qualifications for the independent third 

party or your designated and qualified 

personnel. 

(c) The MMS reserves the right to 

evaluate independent third parties as 

needed. 

§ 250.1913 How will MMS determine if my 

SEMS program is effective? 

(a) The MMS or its authorized 

representative may evaluate or visit 

your facility to determine whether your 

SEMS program is in place, adequate, 


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28654 Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Proposed Rules 

and effective in protecting the safety 

and health of workers, the environment, 

and preventing incidents. These 

evaluations or visits may be random or 

based upon the OCS lease operator’s or 

contractor’s performance. 

(b) The MMS or its authorized 

representative may evaluate your SEMS 

program, including documentation of 

contractors, independent third parties, 

and designated and qualified personnel, 

and audit reports to assess your SEMS 

program. 

(1) You must be prepared to explain 

and demonstrate the procedures and 

policies included in your SEMS 

program and produce evidence to 

support your explanation. 

(2) The MMS or its authorized 

representative may conduct a site visit 

on your facility to verify that personnel 

are following your SEMS program and 

can explain and demonstrate the 

procedures and policies included in 

your SEMS program and produce 

evidence to support their explanation 

for a specific task. 

(3) If MMS directs you to do an 

evaluation, you will be responsible for 

all costs associated with the evaluation 

of your SEMS program. 

§ 250.1914 What happens if MMS finds 

shortcomings in my SEMS program? 

If MMS determines that your SEMS 

program is not in compliance with this 

subpart, we may initiate one or more of 

the following enforcement actions: 

(a) Issue an Incident(s) of 

Noncompliance; 

(b) Require you to revise and submit 

to MMS your plan to address identified 

deficiencies in your SEMS program; 

(c) Assess civil/criminal penalties; or 

(d) Initiate probationary or 

disqualification procedures from serving 

as an OCS operator. 

§ 250.1915 What are my responsibilities 

for submitting OCS performance measure 

data? 

You must submit Form MMS–131 on 

an annual basis, for the previous 

calendar year, by March 31 of each year. 

[FR Doc. E9–14211 Filed 6–16–09; 8:45 am] 

BILLING CODE 4310–MR–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 799 

[EPA–HQ–OPPT–2007–0490; FRL–8416–8] 

RIN 2070–AJ34 

Testing of Certain Nonylphenol and 

Nonylphenol Ethoxylate Substances 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Advance notice of proposed 

rulemaking. 

SUMMARY: On June 6, 2007, the 

Environmental Law and Policy Center, 

the Sierra Club, the Pacific Coast 

Federation of Fishermen’s Associations, 

the Washington Toxics Coalition, 

Physicians for Social Responsibility, 

and UNITE HERE (hereinafter 

‘‘petitioners’’), petitioned EPA under 

section 21 of the Toxic Substances 

Control Act (TSCA) to initiate 

rulemaking proceedings under section 4 

and section 6 of TSCA for the 

substances nonylphenol (NP) and 

nonylphenol ethoxylates (NPEs). EPA 

granted the petitioners’ request for 

chronic aquatic toxicity testing and a 

few other aspects of the petitioners’ 

TSCA section 4 request, but denied all 

of the petitioners’ section 6 requests. 

Subsequently, on October 24, 2007, the 

petitioners filed suit in the U.S. District 

Court for the Northern District of 

California challenging EPA’s denial of 

their TSCA section 21 petition. The 

lawsuit was mediated and, in an 

agreement signed on December 30, 

2008, the parties settled the case. EPA 

is now providing this advance notice of 

proposed rulemaking (ANPRM) for 

aquatic and sediment toxicity testing 

under TSCA section 4 for these 

substances, and is also requesting 

comment on gathering data under TSCA 

and through other means to facilitate the 

evaluation of industrial laundry worker 

exposure to NPEs. 

DATES: Comments must be received on 

or before September 15, 2009. 

ADDRESSES: Submit your comments, 

identified by docket identification (ID) 

number EPA–HQ–OPPT–2007–0490, by 

one of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the on-line 

instructions for submitting comments. 

• Mail: Document Control Office 

(7407M), Office of Pollution Prevention 

and Toxics (OPPT), Environmental 

Protection Agency, 1200 Pennsylvania 

Ave., NW., Washington, DC 20460– 

0001. 

• Hand Delivery: OPPT Document 

Control Office (DCO), EPA East Bldg., 

Rm. 6428, 1201 Constitution Ave., NW., 

Washington, DC. Attention: Docket ID 

Number EPA–HQ–OPPT–2007–0490. 

The DCO is open from 8 a.m. to 4 p.m., 

Monday through Friday, excluding legal 

holidays. The telephone number for the 

DCO is (202) 564–8930. Such deliveries 

are only accepted during the DCO’s 

normal hours of operation, and special 

arrangements should be made for 

deliveries of boxed information. 

Instructions: Direct your comments to 

docket ID number EPA–HQ–OPPT– 

2007–0490. EPA’s policy is that all 

comments received will be included in 

the docket without change and may be 

made available on-line at http:// 

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Do not submit information that you 

consider to be CBI or otherwise 

protected through regulations.gov or email. The regulations.gov website is an 

‘‘anonymous access’’ system, which 

means EPA will not know your identity 

or contact information unless you 

provide it in the body of your comment. 

If you send an e-mail comment directly 

to EPA without going through 

regulations.gov, your e-mail address 

will be automatically captured and 

included as part of the comment that is 

placed in the docket and made available 

on the Internet. If you submit an 

electronic comment, EPA recommends 

that you include your name and other 

contact information in the body of your 

comment and with any disk or CD–ROM 

you submit. If EPA cannot read your 

comment due to technical difficulties 

and cannot contact you for clarification, 

EPA may not be able to consider your 

comment. Electronic files should avoid 

the use of special characters, any form 

of encryption, and be free of any defects 

or viruses. For additional information 

about EPA’s public docket, visit the EPA 

Docket Center homepage at http:// 

www.epa.gov/epahome/dockets.htm. 

Docket: All documents in the docket 

are listed in the docket index available 

in regulations.gov. Although listed in 

the index, some information is not 

publicly available, e.g., CBI or other 

information whose disclosure is 

restricted by statute. Certain other 

material, such as copyrighted material, 

will be publicly available only in hard 

copy. Publicly available docket 

materials are available electronically at 

http://www.regulations.gov, or, if only 

available in hard copy, at the OPPT 

Docket. The OPPT Docket is located in 

the EPA Docket Center (EPA/DC) at Rm. 

3334, EPA West Bldg., 1301 


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