[Federal Register Volume 65, Number 145 (Thursday, July 27, 2000)]
[Rules and Regulations]
[Pages 46092-46096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18802]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

RIN 1010-AC56


Producer-operated Outer Continental Shelf Pipelines That Cross 
Directly Into State Waters

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Final rule.

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SUMMARY: This final rule will clarify some unresolved regulatory issues 
involving the 1996 memorandum of understanding (MOU) on Outer 
Continental Shelf (OCS) pipelines between the Departments of the 
Interior (DOI) and Transportation (DOT). It addresses producer-operated 
pipelines that do not connect to a transporting operator's pipeline on 
the OCS before crossing into State waters. It is complementary to the 
final rule published on August 17, 1998, which addressed producer-
operated oil or gas pipelines that connect to transporting operators' 
pipelines on the OCS. The rule also establishes procedures for producer 
and transportation pipeline operators to get permission to operate 
under either MMS or DOT regulations governing pipeline design, 
construction, operation, and maintenance according to their operating 
circumstances.

EFFECTIVE DATE: August 28, 2000.

FOR FURTHER INFORMATION CONTACT: Carl W. Anderson, Operations Analysis 
Branch, at (703) 787-1608; e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Background

    MMS, through delegations from the Secretary of the Interior, has 
authority to issue and enforce rules to promote safe operations, 
environmental protection, and resource conservation on the OCS. (The 
Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) defines the 
OCS). Under this authority, MMS regulates pipeline transportation of

[[Page 46093]]

mineral production and rights-of-way for pipelines and associated 
facilities. MMS approves all OCS pipeline applications, regardless of 
whether a pipeline is built and operated under DOI or DOT regulatory 
requirements. MMS also has sole authority to grant rights-of-way for 
OCS pipelines. MMS administers the following laws as they relate to OCS 
pipelines:
    (1) The Federal Oil and Gas Royalty Management Act of 1982 
(FOGRMA), for oil and gas production measurement; and
    (2) The Federal Water Pollution Control Act, as amended by the Oil 
Pollution Act of 1990 (OPA 90), and implemented under Executive Order 
(E.O.) 12777.
    Nothing in this rule will affect MMS's authority under either 
FOGRMA or OPA 90.

The May 6, 1976, Memorandum of Understanding

    Under a May 6, 1976, MOU between DOI and DOT, MMS regulated all oil 
and gas pipelines located upstream of the ``outlet flange'' of each 
facility where produced hydrocarbons were first separated, dehydrated, 
or otherwise processed. A result of this arrangement was that 
downstream (generally shoreward) of the first production platform where 
processing takes place, DOT-regulated pipelines crossed MMS-regulated 
facilities. Because of incompatible regulatory requirements, this 
arrangement was not satisfactory for either agency.

The December 1996, Memorandum of Understanding

    In the summer of 1993, MMS and DOT's Research and Special Programs 
Administration (RSPA) began a new series of negotiations that resulted 
in the MOU of December 1996. MMS and RSPA published the 1996 MOU in a 
Federal Register notice on February 14, 1997 (62 FR 7037-7039).
    Section I, ``Purpose,'' of the December 10, 1996, MOU concludes: 
``This MOU puts, to the greatest extent practicable, OCS production 
pipelines under DOI responsibility and OCS transportation pipelines 
under DOT responsibility.'' Thus, MMS will have primary regulatory 
responsibility for producer-operated facilities and pipelines on the 
OCS, while RSPA will have primary regulatory responsibility for 
transporter-operated pipelines and associated pumping or compressor 
facilities. Producing operators are companies that extract and process 
hydrocarbons on the OCS. Transporting operators are companies that 
transport those hydrocarbons from the OCS. (There are about 130 
designated operators of producer-operated pipelines and 75 operators of 
transportation pipelines on the OCS.)
    The 1996 MOU redefines the DOI-DOT regulatory boundary from the OCS 
facility where hydrocarbons are first separated, dehydrated, or 
processed to the point at which operating responsibility for the 
pipeline transfers from a producing operator to a transporting 
operator. Although the MOU does not address the question of producer-
operated pipelines that cross the Federal/State boundary without first 
connecting to a transportation pipeline, it states that the two 
departments intend to put producer-operated pipelines under DOI 
regulation and transporter-operated lines under DOT regulation. 
Moreover, the MOU includes the flexibility to cover situations that do 
not correspond to the general definition of the regulatory boundary as 
``the point at which operating responsibility transfers from a 
producing operator to a transporting operator.'' Paragraph 7 under 
``Joint Responsibilities'' in the MOU provides: ``DOI and DOT may, 
through their enforcement agencies and in consultation with the 
affected parties, agree to exceptions to this MOU on a facility-by-
facility or area-by-area basis. Operators may also petition DOI and DOT 
for exceptions to this MOU.''

The Purpose of this Rule

    The rule would amend 30 CFR part 250, Subpart J--Pipelines and 
Pipeline Rights-of-Way, Sec. 250.1000, ``General Requirements,'' and 
Sec. 250.1001, ``Definitions.'' It has three purposes:
    1. To address questions about producer-operated pipelines that 
cross the Federal/State boundary (the ``OCS/State boundary'') without 
first connecting to a transporting operator's pipeline on the OCS;
    2. To clarify the status of producer-operated pipelines that 
connect production facilities on the OCS; and
    3. To set up a procedure that OCS operators can use to petition to 
have their pipelines regulated as either DOI or DOT facilities.
    The background and rationale for this regulation was fully provided 
in the Notice of Proposed Rulemaking (NPR) published in the Federal 
Register on Friday, October 1, 1999 (64 FR 53298-53302).

Discussion and Analysis of Comments

    MMS received three comments on the NPR. The commenters were the 
State of Florida, Chevron U.S.A. Production Company, and the Offshore 
Operator's Committee (OOC).
    The State of Florida commented that they had no objection to the 
proposed rule. Chevron U.S.A. Production Company said that they ``fully 
support the efforts of the Department of the Interior in clarifying the 
remaining issues related to the implementation of the Memorandum of 
Understanding.'' They also said that Chevron participated in the 
development of the OOC's comments and recommendations and fully 
supports those comments and recommendations. The OOC's comments and our 
responses are provided below.
    OOC recommended deletion of paragraph 250.1000(c)(9) in the 
proposed rule because, in their view, it is ``redundant to paragraph 
(c)(11).'' OOC explained:
    ``* * * The regulations clearly identify those pipelines based on 
the MOU that are subject to MMS regulations. Proposed language in 30 
CFR 250.1000(c)(11) states that all pipeline segments on the OCS not 
subject to DOT regulations are subject to MMS regulations. DOT 
regulations should more appropriately classify those pipeline segments 
subject to its regulations or as has been customarily, those pipeline 
segments exempt from 49 CFR parts 192/195.''
    Paragraph 250.1000(c)(9) is not entirely redundant to paragraph 
(c)(11); it is largely complementary to it. Paragraphs (c)(9) and 
(c)(11) are both necessary to eliminate confusion about jurisdictional 
boundaries. The purpose of paragraph (c)(9) is to recognize that there 
are certain producer-operated lines on the OCS that must be under DOT 
regulation. This is principally because of existing valve locations and 
the unfeasibility of isolating pipeline segments at the Federal/State 
boundary. Paragraph (c)(9) works in conjunction with paragraphs (c)(6) 
and (c)(11). Paragraph (c)(6) identifies the specific producer-operated 
lines covered by the new rule. Paragraph (c)(11) ensures that there are 
no pipeline operators on the OCS who escape regulation entirely. These 
three paragraphs taken together should eliminate any confusion as to 
which agency has regulatory responsibility in a given situation 
involving a producer-operated pipeline that does not connect to a 
transporter-operated pipeline on the OCS.
    OOC recommended deletion of paragraph 250.1000(c)(10), which states 
that ``DOT may inspect all upstream safety equipment * * * that serve 
to protect the integrity of DOT-regulated pipeline segments.'' OOC 
states:
    ``Although this may be desirable by DOT, DOT requirements should 
not be included in MMS regulations. Since the

[[Page 46094]]

described upstream safety equipment is on the MMS segment, inspection, 
maintenance or testing will be subject to MMS inspection requirements. 
Any inspection that DOT may require should be in accordance with MMS 
regulations and not DOT.''
    We do not agree with OOC. Paragraph 250.1000(c)(10) was, in fact, 
included in the proposed rule at DOT's request, and MMS believes that 
DOT was reasonable in making this request. Systems for cathodic 
protection, leak detection, over-pressure protection, or pigging can 
extend across jurisdictional boundaries. Any system set up to protect 
an MMS-regulated segment of a pipeline may overlap into any DOT-
regulated segment that happens to connect to that line. If either DOT 
or MMS wishes to ensure that a system protects the line segment under 
its jurisdiction, there should be no question that the agency has the 
authority to inspect such a system. This applies regardless of whether 
the system conforms to DOT or MMS standards.
    OOC recommends a change of wording to paragraph 250.1000(c)(13), 
asking that the words ``design, construction'' be deleted from the 
first sentence and a second sentence be added as follows: ``Any 
subsequent repairs or modifications will also be subject to MMS 
regulations governing design and construction.'' OOC explains:
    ``Pipelines constructed and designed in accordance with DOT 
regulations may not meet the MMS requirements due to differences in the 
regulations. Only future changes should be subject to the design and 
construction requirements of the MMS.''
    We have accepted OOC's recommendation and have changed the 
paragraph accordingly. If a pipeline originally built under DOT design 
and construction requirements were to come under MMS regulation, it 
would be our policy not to require changes in pipeline design or 
construction until there was need for a repair or modification to the 
line. We would not immediately require changes in construction of the 
pipeline, because of the expense involved in making such changes and 
the potential hazards to employees making the changes. In due time, 
however, any pipeline will require a major repair or modification and, 
at that time, different design or construction criteria may be applied.
    OOC requested that the words ``currently operated'' be inserted in 
the first paragraph defining ``DOT pipelines'' under Sec. 250.1001, so 
that it reads as follows: ``DOT pipelines include:
    ``(1) Transporter-operated pipelines currently operated under DOT 
requirements governing design, construction, maintenance, and 
operation; or'' OOC explained:
    ``Some pipelines may have been designed and constructed to other 
regulations prior to becoming a `DOT Pipeline.' This clarifies that, 
regardless of original design, a transporter-operated pipeline operated 
under DOT requirements will be called a DOT Pipeline.''
    We have accepted OOC's recommendation and have changed the 
definition accordingly. In our own review of the definition of DOT 
pipelines, we noticed that we neglected to include in the definition 
the very class of producer-operated pipelines downstream (generally 
shoreward) of the last valve on the last OCS production facility that 
the proposed rule itself identified as DOT pipelines. Therefore, we 
have included these pipelines in the definition.

Procedural Matters

Regulatory Planning and Review (E.O. 12866)

    This is not a significant rule under E.O. 12866 and does not 
require review by the Office of Management and Budget (OMB). An 
analysis of the rule indicates that the direct costs to industry for 
the entire rule total approximately $167,000 for the first year, and 
that for succeeding years, the maximum cost of the rule to industry in 
any given year would not likely exceed $53,800.
    This rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency.
    This rule does not alter the budgetary effects or entitlements, 
grants, user fees, or loan programs or the rights or obligations of 
their recipients.
    This rule does not raise novel legal or policy issues.

Regulatory Flexibility Act

    DOI has determined that this rule will not have a significant 
economic effect on a substantial number of small entities. While this 
rule will affect a substantial number of small entities, the economic 
effects of the rule will not be significant.
    The regulated community for this proposal consists of 35 producer-
pipeline operators in the Gulf of Mexico OCS and 8 producer-pipeline 
operators in the Pacific OCS. Of these operators, 15 are considered to 
be ``small.'' Of the small operators to be affected by the rule, almost 
all are represented by Standard Industrial Classification code 1311 
(crude petroleum and natural gas producers).
    DOI's analysis of the economic impacts indicates that direct costs 
to industry for the entire rule total approximately $167,000 for the 
first year, and in succeeding years, the maximum cost of the rule to 
industry in any given year would not likely exceed $53,800.
    These annual costs would not persist for long, because all 
pipelines converted to MMS regulation eventually would come into 
compliance with MMS safety valve requirements. There are up to 150 
designated operators of leases and 75 operators of transportation 
pipelines on the OCS (both large and small operators), and the economic 
impacts on the oil and gas production and transportation companies 
directly affected will be minor. Not all operators affected will be 
small businesses, but much of their modification costs may be paid to 
offshore service contractors who may be classified as small businesses. 
Perhaps two or three operators may eventually be required to install 
new automatic shutdown valves as a result of transferring under MMS 
regulations. These few operators will sustain the greatest economic 
impact from this rule.
    To the extent that this rule might eventually cause some of the 
relatively larger OCS operators to make modifications to their 
pipelines, it may have a minor beneficial effect of increasing demand 
for the services and equipment of smaller service companies and 
manufacturers. This rule will not impose any new restrictions on small 
pipeline service companies or manufacturers, nor will it cause their 
business practices to change.
    Your comments are important. The Small Business and Agriculture 
Regulatory Enforcement Ombudsman and 10 Regional Fairness boards were 
established to receive comments from small business 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 enforcement actions of MMS, 
call toll-free (888) 734-3247.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This rule is not a major rule under 5 U.S.C. 804(2), the SBREFA. 
Based on our economic analysis, this rule:
    a. This rule does not have an annual effect on the economy of $100 
million or more. As indicated in our cost analysis, direct costs to 
industry for the entire proposed rule total approximately

[[Page 46095]]

$167,000 for the first year. In succeeding years, the cost of the rule 
to industry would not likely exceed $53,800 in any given year. The 
proposed rule will have a minor economic effect on the offshore oil and 
gas and transmission pipeline industries.
    b. This rule will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    c. This rule does 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 (UMRA) of 1995

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

Takings (E.O. 12630)

    DOI certifies that this rule does not represent a governmental 
action capable of interference with constitutionally protected property 
rights.

Federalism (E.O. 13132)

    According to E.O. 13132, the rule does not have significant 
Federalism implications. The rule does not substantially and directly 
affect the relationship between the Federal and State Government. The 
rule merely establishes jurisdictional boundaries with DOT and will not 
impose costs on States or localities.

Civil Justice Reform (E.O. 12988)

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

Paperwork Reduction Act (PRA) of 1995

    As part of the NPR process, OMB approved the proposed collection of 
information under the PRA (44 U.S.C. 3501 et seq.) and assigned OMB 
control number (1010-0134). MMS did not receive any comments on the 
information collection aspects in the NPR. The final rule does not 
change any of the information collection requirements. 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 current 
valid OMB control number.
    The collection of information for this rule consists of:
    (1) In paragraph 250.1000(c)(8), operators may request that MMS 
recognize valves landward of the last production facility but still 
located on the OCS as the point where MMS regulatory authority begins. 
We estimate one or two such request(s) at most each year with an 
estimated burden of \1/2\ hour per request for a total annual burden of 
1 hour.
    (2) In paragraph 250.1000(c)(12), producing operators operating 
pipelines under DOT regulatory authority may petition MMS to continue 
to operate under DOT upstream of the last valve on the last production 
facility. In the first year, nearly all producer-pipeline operators 
would decide whether to automatically convert to DOI regulation or 
apply to remain under DOT regulation. We estimate that not more than 10 
one-time requests to remain under DOT regulation, with an estimated 
average burden of 40 hours per request. Annualized over a 3-year 
period, this would result in 135 annual burden hours. We anticipate 
that in following years, not more than two operators a year would 
petition to change their regulatory status.
    (3) In paragraph 250.1000(c)(13), transportation pipeline operators 
operating pipelines under DOT regulatory authority may also petition 
the Office of Pipeline Safety (OPS) and MMS to operate under MMS 
regulations governing pipeline design, construction, operation, and 
maintenance. Although we have allowed for this possibility in the final 
rule, we expect these would be rare. We estimate the burden would be 40 
hours per request.
    The total public reporting burden for this information collection 
requirement is estimated to be 176 annual burden hours. This includes 
the time for reviewing instructions, searching existing data sources, 
and gathering the data. The proposed rule requires no recordkeeping 
burdens. At $35 per hour, the annual paperwork ``hour'' burden would be 
$6,160.
    The requirement to respond is mandatory in some cases and required 
to obtain or retain a benefit in others. MMS uses the information to 
determine the demarcation where pipelines are subject to MMS design, 
construction, operation, and maintenance requirements, as distinguished 
from similar OPS requirements.
    Converting to DOI regulation could also result in the installation 
of as many as three automatic shutdown valves, either in the first year 
or in subsequent years. In these instances, operators would be subject 
to the regulatory and paperwork requirements in 30 CFR part 250, 
subpart J, on Pipelines and Pipeline Rights-of-Way. The information 
collection requirements in this subpart have already been approved by 
OMB under OMB control number 1010-0050.

National Environmental Policy Act

    Under 516 DM 6, Appendix 10.4, ``issuance and/or modification of 
regulations'' is considered a categorically excluded action causing no 
significant effects on the environment and, therefore, does not require 
preparation of an environmental assessment or impact statement. DOI 
completed a Categorical Exclusion Review (CER) for this action on March 
26, 1999, and concluded: ``The proposed rulemaking does not represent 
an exception to the established criteria for categorical exclusion. 
Therefore, preparation of an environmental document will not be 
required, and further documentation of this CER is not required.''

List of Subjects in 30 CFR Part 250

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

    Dated: July 14, 2000.
Sylvia V. Baca,
Assistant Secretary, Land and Minerals Management.

    For the reasons stated in the preamble, MMS amends 30 CFR part 250 
as follows:

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

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

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

    2. In Sec. 250.1000, paragraphs (c)(6) through (c)(13) are added as 
follows:


Sec. 250.1000  General requirements.

* * * * *
    (c) * * *
    (6) Any producer operating a pipeline that crosses into State 
waters without first connecting to a transporting operator's facility 
on the OCS must comply with this subpart. Compliance must extend from 
the point where

[[Page 46096]]

hydrocarbons are first produced, through and including the last valve 
and associated safety equipment (e.g., pressure safety sensors) on the 
last production facility on the OCS.
    (7) Any producer operating a pipeline that connects facilities on 
the OCS must comply with this subpart.
    (8) Any operator of a pipeline that has a valve on the OCS 
downstream (landward) of the last production facility may ask in 
writing that the MMS Regional Supervisor recognize that valve as the 
last point MMS will exercise its regulatory authority.
    (9) A pipeline segment is not subject to MMS regulations for 
design, construction, operation, and maintenance if:
    (i) It is downstream (generally shoreward) of the last valve and 
associated safety equipment on the last production facility on the OCS; 
and
    (ii) It is subject to regulation under 49 CFR parts 192 and 195.
    (10) DOT may inspect all upstream safety equipment (including 
valves, over-pressure protection devices, cathodic protection 
equipment, and pigging devices, etc.) that serve to protect the 
integrity of DOT-regulated pipeline segments.
    (11) OCS pipeline segments not subject to DOT regulation under 49 
CFR parts 192 and 195 are subject to all MMS regulations.
    (12) A producer may request that its pipeline operate under DOT 
regulations governing pipeline design, construction, operation, and 
maintenance.
    (i) The operator's request must be in the form of a written 
petition to the MMS Regional Supervisor that states the justification 
for the pipeline to operate under DOT regulation.
    (ii) The Regional Supervisor will decide, on a case-by-case basis, 
whether to grant the operator's request. In considering each petition, 
the Regional Supervisor will consult with the Office of Pipeline Safety 
(OPS) Regional Director.
    (13) A transporter who operates a pipeline regulated by DOT may 
request to operate under MMS regulations governing pipeline operation 
and maintenance. Any subsequent repairs or modifications will also be 
subject to MMS regulations governing design and construction.
    (i) The operator's request must be in the form of a written 
petition to the OPS Regional Director and the MMS Regional Supervisor.
    (ii) The MMS Regional Supervisor and the OPS Regional Director will 
decide how to act on this petition.
* * * * *

    3. In Sec. 250.1001, the definition for the term ``DOI pipelines'' 
is revised and the definitions for the terms ``DOT pipelines,'' and 
``production facility'' are added in alphabetical order as follows:


Sec. 250.1001  Definitions.

* * * * *
    DOI pipelines include:
    (1) Producer-operated pipelines extending upstream (generally 
seaward) from each point on the OCS at which operating responsibility 
transfers from a producing operator to a transporting operator;
    (2) Producer-operated pipelines extending upstream (generally 
seaward) of the last valve (including associated safety equipment) on 
the last production facility on the OCS that do not connect to a 
transporter-operated pipeline on the OCS before crossing into State 
waters;
    (3) Producer-operated pipelines connecting production facilities on 
the OCS;
    (4) Transporter-operated pipelines that DOI and DOT have agreed are 
to be regulated as DOI pipelines; and
    (5) All OCS pipelines not subject to regulation under 49 CFR parts 
192 and 195.
    DOT pipelines include:
    (1) Transporter-operated pipelines currently operated under DOT 
requirements governing design, construction, maintenance, and 
operation;
    (2) Producer-operated pipelines that DOI and DOT have agreed are to 
be regulated under DOT requirements governing design, construction, 
maintenance, and operation; and
    (3) Producer-operated pipelines downstream (generally shoreward) of 
the last valve (including associated safety equipment) on the last 
production facility on the OCS that do not connect to a transporter-
operated pipeline on the OCS before crossing into State waters and that 
are regulated under 49 CFR parts 192 and 195.
* * * * *
    Production facilities means OCS facilities that receive hydrocarbon 
production either directly from wells or from other facilities that 
produce hydrocarbons from wells. They may include processing equipment 
for treating the production or separating it into its various liquid 
and gaseous components before transporting it to shore.
* * * * *

[FR Doc. 00-18802 Filed 7-26-00; 8:45 am]
BILLING CODE 4310-MR-U