[Federal Register Volume 71, Number 98 (Monday, May 22, 2006)]
[Proposed Rules]
[Pages 29277-29280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-7790]



[[Page 29277]]

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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

RIN 1010-AD15


Oil and Gas and Sulphur in the Outer Continental Shelf (OCS)--
Safety and Environmental Management Systems

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Advance Notice of Proposed Rulemaking (ANPR).

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SUMMARY: MMS is seeking comments on how to improve our regulatory 
approach to safety and environmental management systems (SEMS) for 
operations conducted in the OCS. The various approaches for SEMS 
include voluntary and mandatory implementation of partial and full 
SEMS. In addition, the MMS is seeking comments on a regulatory scheme 
that would allow companies with outstanding performance records to 
operate under an alternative compliance program. MMS is investigating 
ways to develop an improved regulatory program that is more efficient 
and responsive to evolving conditions.

DATES: MMS will consider all comments received by August 21, 2006. MMS 
will begin reviewing comments then and may not fully consider comments 
received after August 21, 2006.

ADDRESSES: You may submit comments on the notice by any of the 
following methods listed below. Please use 1010-AD15 as an identifier 
in your message. See also Public Comment Policy under Supplementary 
Information.
     MMS's Public Connect on-line commenting system, https://ocsconnect.mms.gov. Follow the instructions on the Web site for 
submitting comments.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions on the Web site for submitting comments.
     E-mail MMS at [email protected]. Use the Regulatory 
Identifier Number (RIN) in the subject line.
     Fax: 703-787-1546. Identify with RIN.
     Mail or hand-carry comments to the Department of the 
Interior; Minerals Management Service; Attention: Rules Processing Team 
(RPT); 381 Elden Street, MS-4024; Herndon, Virginia 20170-4817. Please 
reference ``Oil and Gas and Sulphur Operations in the OCS--Safety and 
Environmental Management Systems--AD15'' in your comments.

FOR FURTHER INFORMATION CONTACT: David Nedorostek, Safety and 
Enforcement Branch at (703) 787-1029 or William Hauser, Chief, 
Regulations and Standards Branch at (703) 787-1613.

SUPPLEMENTARY INFORMATION: 

Public Comment Procedures

    MMS's practice is to make comments, including names and addresses 
of respondents, available for public review. Individual respondents may 
request that we withhold their address from the record, which we will 
honor to the extent allowable by law. There may be circumstances in 
which we would withhold from the rulemaking record a respondent's 
identity, as allowable by law. If you wish us to withhold your name 
and/or address, you must state this prominently at the beginning of 
your comment. However, we will not consider anonymous comments. We will 
make all submissions from organizations or businesses, and from 
individuals identifying themselves as representatives or officials of 
organizations or businesses, available for public inspection in their 
entirety.

Regulatory Background

    Under the OCS Lands Act, all activities conducted on the OCS must 
be in accordance with existing Federal statutes. MMS is responsible for 
implementing policies intended to maintain safety and environmental 
protection practiced by the industry while conducting operations in the 
OCS. The operator conducting the operation(s) is directly responsible 
for managing the performance of those operations safely and ensuring 
they prevent damage to the environment. This is the case whether the 
management of operations is through operator company personnel, 
contract personnel, or a mix of both.

MMS Goal

    The MMS goal is twofold. MMS wants to improve upon the current 
regulatory approach to safety and environmental management systems to 
further minimize injuries, fatalities, accidents, fires, explosions, 
collisions, pollution incidents, or damage to the marine environment 
with respect to all oil and gas operations on the OCS. MMS is 
considering moving away from prescriptive regulations in areas where 
industry can demonstrate that a performance-based regulatory approach 
will increase the current level of safety and environmental protection. 
MMS also wants to improve the efficiency of the current regulatory 
system by making it more responsive to innovative approaches and 
technological and environmental changes. MMS realizes the challenges in 
attaining such goals and recognizes the progress of industry as a whole 
in moving toward these goals.

The Regulatory Program

    MMS's implementing regulations have both prescriptive and 
performance elements. MMS regulations require industry to submit 
various site-specific plans and permit requests for MMS approval before 
operations can begin. There are many engineering-based requirements for 
installing, maintaining, testing, and inspecting of safety control 
devices by the operator. MMS's operating regulations incorporates 95 
referenced standards. The rate of technological change as operations 
move into increasingly challenging environments has made it difficult 
for MMS to promulgate regulations and participate in the development of 
industry standards in a timely manner. MMS's performance-based elements 
include safety, training, and broad-based environmental protections: 
Performance Standards, 30 CFR 250.106-124; Disqualification, 30 CFR 
250.135 and 136; Subpart O, Well Control and Production Safety 
Training, 30 CFR 250.1500-1510; Best Available and Safest Technology, 
30 CFR 250.105; the use of alternative technologies, 30 CFR 250.141 and 
30 CFR 250.408; Pollution Prevention Control, 30 CFR 250.300(a); 
Drilling Operations, 30 CFR 250.401(e); Well Completions, 30 CFR 
250.500; Workover Operations, 30 CFR 250.600; Production Safety 
Systems, 30 CFR 800; Sulfur Operations, 30 CFR 250.1600; and 
Decommissioning, 30 CFR 250.1703(f).

SEMP and API RP 75 History

    For the past 15 years, MMS has been engaged in an effort to extend 
the use of performance-based regulations on the OCS. In 1991, MMS 
introduced the concept of a Safety and Environmental Management Program 
(SEMP) with the goal of having operators in the offshore industry 
voluntarily adopt an active safety and environmental management 
approach in conducting operations. The American Petroleum Institute 
(API) responded by developing API RP 75, ``Recommended Practice for 
Development of a Safety and Environmental Management Program for 
Offshore Operations and Facilities'' in collaboration with industry 
organizations and MMS.
    The SEMP concept in API RP 75 includes the following 12 elements:
    1. Safety and Environmental Information,

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    2. Hazards Analysis,
    3. Management of Change,
    4. Operating Procedures,
    5. Safe Work Practices,
    6. Training,
    7. Assurance of Quality and Mechanical Integrity of Critical 
Equipment,
    8. Pre-Startup Review,
    9. Emergency Response and Control.
    10. Investigation of Incidents,
    11. Audit of Safety and Environmental Management Program Elements, 
and
    12. Documentation and Record Keeping.
    After development of API RP 75, MMS worked with the offshore 
industry to develop tools that would assist the industry in voluntarily 
moving toward use of this management-based approach, including: (1) 
Development of a prototype SEMP program through a Department of Energy 
funded contract; (2) development of SEMP Auditing Protocols through 
work with the Offshore Operators Committee (OOC) and API; and (3) 
participation in a series of six performance measures workshops (1998-
2000) focused on continual improvement of safety and environmental 
management performance.
    In 1994, MMS committed to monitor industry implementation of SEMP 
for 2 years to decide whether voluntary use of API RP 75 was adequately 
embraced by industry and to determine if SEMP would need to be formally 
incorporated into our regulations to assure industry's use of this 
program. In June 1996, MMS extended the observation period. Since that 
time MMS has continued to observe industry implementation. During 1994-
1998, the API developed and distributed surveys to assist the MMS in 
gauging the degree of industry adoption and implementation of API RP 
75.
    In 1997, MMS began conducting annual performance reviews of each 
operator. These annual reviews examine the operator's compliance 
history as it relates to the MMS Inspection Program, actions MMS has 
forwarded for civil penalty review or that have resulted in a civil 
penalty, the operator's safety record as it relates to accidents and 
incidents, and the operator's progress in implementing SEMP.
    In 2002, at the request of MMS, members of API and OOC joined with 
the agency and formed a Steering Committee to address our concern with 
enhancing the environmental component of API RP 75. In response, the 
Steering Committee rewrote API RP 75 to incorporate concepts from the 
International Organization for Standardization (ISO) 14001--
Environmental Management Systems.

Rationale for Changes in the Regulatory Program

    The overall objective is to improve our regulatory system and 
industry performance by requiring all operators to manage safety and 
environmental performance in an integrated system.
    Based on incident investigation findings and performance reviews 
with operators, MMS identified a need for performance improvement in 
the following areas at a minimum: hazards analysis, operating 
procedures, mechanical integrity, and management of change. These areas 
are part of what MMS and industry have recognized as an effective 
safety management system. Requiring operators to implement these 
critical elements of an integrated safety management system could 
address MMS's concerns with performance and ultimately improve safety 
and environmental compliance on the OCS.
    MMS believes that the effective use of SEMS would improve safety 
and environmental performance on the OCS. MMS evaluated several areas 
of statistics listed below. In summary, these areas are: panel 
investigation reports, incident analysis, and incidents of 
noncompliance (INCs).
    Accident panel investigation reports show major accidents that 
occurred from 2000 to 2005. An analysis of the panel reports reveals 
that many fatalities and injuries occurred while performing routine 
tasks. In addition, most of these panel reports made recommendations 
that relate to one of the following four SEMS elements: hazards 
analysis, management of change, mechanical integrity, and operating 
procedures. The panel reports can be viewed by typing in the following 
address: http://www.gomr.mms.gov/homepg/offshore/safety/acc_repo/accindex.html.

                                               Contributing Causes
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                                 Hazard       Operating    Mechanical    Management
         MMS report             analysis     procedures     integrity     of change    Injury No.   Fatality No.
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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................  ............  ............  ............  ............  ............  ............
MMS 2004-046................            X             X   ............            X             3   ............
MMS 2004-004................            X   ............  ............  ............  ............            1
MMS 2003-068................  ............            X   ............  ............  ............  ............
MMS 2003-046................  ............            X   ............            X   ............  ............
MMS 2003-023................  ............  ............  ............            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   ............  ............
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 = 22                 Total = 11     Total = 9     Total = 9    Total = 12     Total = 7     Total = 9
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    It is evident from the above table that the accidents covered by 11 
of the 22 panel reports resulted in a combined 16 fatalities and 
injuries. The analysis done on the accidents identified six primary 
contributing causes: (1) A lack of communication between operator and 
contractor(s), (2) lack of understanding job hazards analysis (JHA) 
prior to beginning work or lack of JHA written procedures, (3) onsite 
supervision not enforcing existing procedures or practices, (4) lack of 
written safe work procedural guidelines, (5) integrity of the 
facilities and equipment not maintained according to recommended 
practices, and (6) workplace hazards not identified and corrected. MMS 
maintains that these incidents could have been minimized or even 
prevented if the operator had implemented the four identified SEMS 
elements.
    The MMS also conducted a study of 310 incidents that occurred in 
OCS waters in 2003 and 2004, to determine if the events were associated 
with any of the four SEMS elements. The events reviewed included: 
fatalities, injuries, loss of well control, collisions, fires, 
pollution, and crane events. This study revealed that there were 13 
fatalities and 97 injuries in the 310 incidents. A majority of the 
incidents had at least one of the following four factors as a 
contributing reason for the event occurring.

------------------------------------------------------------------------
                                                            Number of
                     SEMS element                         occurrence(s)
------------------------------------------------------------------------
Hazard Analysis.......................................                20
Management of Change..................................                13
Mechanical Integrity..................................               124
Operating Procedures..................................               159
------------------------------------------------------------------------

    MMS inspectors issue three primary Incidents of Noncompliance 
(INCs) that address four key elements of a SEMS program. These INCs are 
as follows:
     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 are all necessary 
precautions taken to correct and remove any hazards).
    MMS issued 1,381 of these types of INCs during 2003-2004 for 
drilling and production activities. Of these 1,381 INCs, 1,376 or 99.6 
percent are directly related to one or more of the following four SEMS 
elements: hazard analysis, operating procedures, mechanical integrity, 
and management of change. The following table depicts these G-INCs 
written for drilling activities and production activities.

------------------------------------------------------------------------
                  Operational Incs Issued in 2003-2004
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                                                  Drilling    Production
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                 SEMS elements                   Percentage   Percentage
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Hazard Analysis...............................            6            3
Management Of Change..........................           19            5
Mechanical Integrity..........................           42           46
Operating Procedures..........................           33           46
------------------------------------------------------------------------

Environmental Compliance

    MMS also reviewed its Environmental Potential Incidents of 
Noncompliance (PINCs) and Performance Standards. The review of our 
environmental performance standards and our environmental PINCs 
indicates that the PINCs do not fully address the range of 
environmental safeguards covered under our performance standards as 
they relate to compliance with State and Federal statutes. The 
environmental PINCs issued by MMS inspectors focus on water quality as 
it relates to mud/oil spills and marine debris (E-100 thru E-202); 
flaring and venting violations (P-107 thru P-111); and broad-based 
noncompliance with lease stipulations and ``approved plans/
''applications (G-114 thru G-116). MMS has limited methods to verify 
and document industry compliance with the regulatory performance 
standards.
    MMS issues hundreds of environmental (E--INCs) every year. There is 
no discernible trend of improvement by industry over the past 5 years. 
The number of INCs issued concerning maintenance of pollution 
inspection records have continually increased from 2000-2005. MMS 
realizes that our current approach to environmental protection does not 
allow us to ascertain the level of industry compliance with all 
applicable environmental laws, regulations, and lease stipulations. We 
believe that industry's SEMS plan should contain processes and 
protocols for detailing their compliance with these requirements. MMS 
is aware that industry may be documenting compliance in ways that MMS 
does not currently verify and track, and that industry may be 
investigating ways to better demonstrate environmental compliance. MMS 
is considering a range of options for ensuring industry compliance with 
environmental regulations and is seeking comment on how industry can 
demonstrate to MMS their compliance with these requirements.

Possible Options for Implementing SEMS

    There are a number of approaches MMS could adopt in moving to a 
SEMS requirement. We request your views on the following approaches and 
any others that you would like us to consider for implementing a SEMS 
program.
    1. Keep the Current Regulatory Program--the current program is 
largely based on overarching performance-based regulations supplemented 
by specific prescriptive safety and environmental regulations and 
requirements where necessary. The use of API RP 75, while encouraged, 
is strictly voluntary.
    2. A Mandatory Limited SEMS Approach--continue the current 
regulatory regime and add the four critical SEMS elements--hazard 
analysis, management of change, operating procedures, and mechanical 
integrity.
    3. A Complete SEMS Approach--a new performance-based comprehensive 
safety and environmental management approach. The MMS would develop 
performance-based regulations that address the 12 elements from API RP 
75 and elements similar in nature to those detailed in Section 4 of ISO 
14001.

Enforcement of SEMS Requirement

    A template available to MMS for enforcing a performance-based 
regulation has been developed as part of our 30 CFR Part 250 Subpart O 
Well Control and Production Safety Training regulations. Under subpart 
O, an operator is required to develop and implement a training plan 
that complies with the provisions of our regulations. These regulations 
set out broad goals and leave the operator the flexibility to determine 
how best to comply. Under this system, MMS does not approve the plan, 
but expects the operator to show us how they have complied with the 
provisions in their plan when asked. To evaluate an operator's 
performance under the subpart O regulations, MMS has the following 
tools available:
    1. Informal employee interviews,
    2. Audits:
     Formal interviews
     Training plan reviews
     Records review
     Course content evaluations
    3. Testing:
     Written
     Verbal
     Hands-on.
    MMS views the subpart O approach as a viable option for enforcing 
additional performance-based regulations, such as SEMS, but welcomes 
any suggestions and

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information concerning other techniques.

Alternative Compliance Program

    The MMS is considering a SEMS pilot program under which a limited 
number of companies with outstanding performance records, as 
demonstrated by incident and compliance data, would manage their 
operations under a comprehensive SEMS program. For the duration of the 
pilot program, these companies would operate under a separate 
regulatory program with far fewer prescriptive requirements.
    The intention of the pilot program is threefold:
    1. Determine whether SEMS should be expanded beyond a voluntary 
regulatory program;
    2. Provide MMS with experience in auditing and using SEMS as a 
regulatory program vehicle to ensure safe and clean operations; and
    3. Determine if SEMS is practical for the oil and gas industry as a 
whole or only specific companies. MMS envisions that any company 
qualifying for the SEMS pilot program would operate according to their 
SEMS plan and would be relieved from information submissions, certain 
applications and discrete MMS approval actions except those 
specifically required by law. If a company is found to be out of 
compliance with their SEMS plan, then incidents of noncompliance and 
possibly civil penalties could result. It is projected that the pilot 
program will operate with companies needing to qualify on a periodic 
basis. Companies interested in the pilot program should have a fully 
functioning SEMS program with a verifiable history showing how their 
program has had a positive impact on the safety of their operations.

Questions

    The purpose of this ANPR is to seek input from industry and other 
interested parties on the three SEMS approaches described above. In 
addition to receiving input on the approaches identified in this ANPR, 
this process will also allow MMS to evaluate alternative ideas. MMS 
invites specific comments on the following:

SEMS Approaches

     Which of the three identified approaches do you consider 
most responsive to MMS's stated goals and why?
     Are there other safety and environmental management 
systems or programs that MMS should review? Please provide as much 
detail as possible.
     Does the subpart O model using audits, informal employee 
interviews, and testing described above, provide a suitable model for 
verifying the implementation of a performance-based safety and 
environmental management program? Are there alternative approaches to 
the subpart O model that the MMS should consider?
     Should MMS or a third party verify that a performance-
based safety and environmental management program is working? Should 
audits be periodic or should they be triggered by events or indicators?
     Should MMS review the SEMS plan, review and approve the 
SEMS plan, or have an independent third party verify, review, and 
approve the SEMS plan?
     Should SEMS plans be in addition to the current 
prescriptive regulations or should the SEMS plan be in lieu of certain 
prescriptive regulations?
     What standards should a SEMS plan include to provide 
consistent and credible approaches to offshore operational safety and 
environmental performance?

--Would these documents, standards, or guidelines be domestic or 
international?
--Would these documents, standards, or guidelines be accepted industry 
best practices or internal company policies and procedures?

     What criteria should the MMS use to determine whether an 
operator has a viable SEMS plan?
     Is API RP 75 a sufficient model for addressing all the 
factors associated with offshore industry practices? If not, please 
provide the MMS with your suggestions on an appropriate model.
     Are there existing programs or initiatives industry is 
currently using that can further our ability to verify and track 
environmental compliance, such as ISO 14001:2004, SempCheck, European 
Eco-Management and Audit Scheme, or Global Environmental Management 
Initiative.
     How can MMS improve its current regulatory model to 
incorporate environmental performance measurement systems?
     What are the most appropriate compliance measures that are 
responsive to our broad environmental performance standards referenced 
in the ``The Regulatory Program'' section above?

Alternative Compliance Program

    Should MMS consider developing a ``pilot program'' to assess an 
alternative compliance program for outstanding operators?
     What measure(s) should we use to determine who is allowed 
to participate?
     How should MMS judge prospective ``pilot program'' 
applicants? Should an applicant be required to submit a complete SEMS 
program or plan to MMS for evaluation? Should MMS approve such a 
program?
     Should a pilot program be for a fixed period of time? How 
long?
     Should performance issues trigger a premature end to an 
operator's participation in a pilot program?
     What measures should be considered?
     What type of MMS regulatory regime do you recommend for 
companies in a pilot program?
     What prescriptive regulations and permitting requirements 
should be excluded from this alternative regulatory program?
     What advantages does a SEMS regulatory approach have for 
companies compared to prescriptive approach?
     What disadvantage does a SEMS regulatory approach have for 
companies as compared to a prescriptive approach?
     Should the SEMS pilot program include only four elements 
as mentioned above or should it be for all 12 elements?
    MMS seeks responses to the above questions, an assessment of which 
option industry considers the most effective and efficient, and any 
other information deemed relevant that is not specifically asked for. 
After analyzing the comments received from this notice, MMS will 
determine the need for a public workshop to further exchange ideas. MMS 
encourages all interested parties to respond to these questions and to 
provide comments on the various options.

    Dated: May 3, 2006.
R.M. Johnnie Burton,
Director, Minerals Management Service.
 [FR Doc. E6-7790 Filed 5-19-06; 8:45 am]
BILLING CODE 4310-MR-P