Oil and Gas and Sulphur Operations on the Outer Continental Shelf-Oil and Gas Production Safety Systems

Federal RegisterSep 28, 2018

Ask Donna

What actually matters in this document.

Text

DEPARTMENT OF THE INTERIOR

Bureau of Safety and Environmental Enforcement

30 CFR Part 250

[Docket ID: BSEE-2017-0008; 189E1700D2 ET1SF0000.PSB000 EEEE500000]

RIN 1014-AA37

Oil and Gas and Sulphur Operations on the Outer Continental Shelf—Oil and Gas Production Safety Systems

AGENCY:

Bureau of Safety and Environmental Enforcement, Interior.

ACTION:

Final rule.

SUMMARY:

The Bureau of Safety and Environmental Enforcement (BSEE) is amending the regulations regarding oil and natural gas production safety systems. After a thorough reexamination of the current regulations, and consideration of recent experiences from implementation of those regulations and of public comments on the proposed rule to amend those regulations, BSEE is revising or removing certain regulatory provisions that create unnecessary burdens on stakeholders, and clarifying other provisions, while ensuring safety and environmental protection.

DATES:

This rule becomes effective on December 27, 2018.

The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of December 27, 2018.

ADDRESSES:

Rulemaking documents and public comments on the proposed rule:

You may review the rulemaking documents, including National Environmental Policy Act (NEPA) documents and public comments submitted on the proposed rule, by accessing the Federal eRulemaking Portal:

http://www.regulations.gov

. In the entry entitled, “Enter Keyword or ID,” enter “BSEE-2017-0008,” then click search. Follow the instructions to search public comments and view supporting and related materials available for this rulemaking.

Documents incorporated by reference:

BSEE provides members of the public with website addresses where they may access standards incorporated by reference in BSEE's regulations for viewing, sometimes for free and sometimes for a fee. In particular, the American Petroleum Institute (API) voluntarily makes available all API standards that are safety-related and that are incorporated into Federal regulations for free viewing by the public online in the Incorporation by Reference Reading Room on API's website at:

http://publications.api.org

In addition to the free online availability of these standards for viewing on API's website, hardcopies and printable versions are available for purchase from API. The API website address to purchase standards is:

http://www.api.org/publications-standards-and-statistics/publications/government-cited-safety-documents

To view these standards online, go to the API publications website at:

http://publications.api.org

. You must then log-in or create a new account, accept API's “Terms and Conditions,” click on the “Browse Documents” button, and then select the applicable category (

e.g.,

“Exploration and Production”) for the standard(s) you wish to review.

BSEE can make copies of incorporated standards available for review at BSEE's office(s) upon advance request. One location where incorporated standards can be available for review is BSEE's headquarters at 45600 Woodland Road, Sterling, Virginia, 20166. Please email:

regs@bsee.gov

to make arrangements to review incorporated standards, so BSEE can ensure hard copies of the requested standards are available. BSEE may also make the standards available at its other offices located in: Washington, DC; New Orleans, Louisiana; Houston, Texas; Camarillo, California; and Anchorage, Alaska.

FOR FURTHER INFORMATION CONTACT:

Amy White, Regulations and Standards Branch, 703-787-1665 or by email:

regs@bsee.gov

SUPPLEMENTARY INFORMATION:

Table of Contents

A. BSEE Statutory and Regulatory Authority and Responsibilities

B. Summary of the Rulemaking

C. Recent Executive and Secretary's Orders

D. Incorporation by Reference of Industry Standards

E. Overview of Comments on the Proposed Rule

F. Discussion of General Issues Raised by Commenters

G. Section-by-Section Summaries, Responses to Comments, and Changes From the Proposed Rule

H. Additional Comments Solicited

Procedural Matters

Regulatory Planning and Review (E.O. 12866, E.O. 13563, E.O. 13771)

Small Business Regulatory Enforcement Fairness Act and Regulatory Flexibility Act

Regulatory Flexibility Act

Unfunded Mandates Reform Act of 1995

Takings (E.O. 12630)

Federalism (E.O. 13132)

Civil Justice Reform (E.O. 12988)

Consultation with Indian Tribes (E.O. 13175)

Paperwork Reduction Act (PRA) of 1995

National Environmental Policy Act of 1969

Data Quality Act

Effects on the Nation's Energy Supply (E.O. 13211)

A. BSEE Statutory and Regulatory Authority and Responsibilities

BSEE derives its authority primarily from the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. 1331-1356a. Congress enacted OCSLA in 1953, significantly amended it in 1978, and subsequently amended specific provisions. As amended, OCSLA authorizes the Secretary of the Interior (Secretary) to lease the Outer Continental Shelf (OCS) for resource development in a way that makes it available for expeditious and orderly development, consistent with national needs and subject to environmental safeguards. Among other things, Congress established a policy to provide for orderly and expeditious development of oil and natural gas resources of the OCS to meet national economic and energy policy and which may serve to assure national security and reduce dependence on foreign sources. OCSLA also states that, among other purposes, OCS oil and gas resources should be managed in a way that balances orderly development with protection of the environment. The Secretary has delegated authority to perform certain of these functions to BSEE.

To carry out its responsibilities, BSEE regulates offshore oil and gas operations to ensure that operations are safe and environmentally responsible.

See

30 CFR 250.101(b)(2). BSEE's regulatory program covers a wide range of operations, including drilling, completion, workover, production, pipeline, and decommissioning operations; and associated facilities, such as mobile offshore drilling units (MODUs) and production platforms.

See

30 CFR part 250. BSEE also conducts onsite inspections to assure compliance with regulations, lease terms, and approved plans and permits. Detailed information concerning BSEE's regulations and guidance to the offshore oil and gas industry is on BSEE's website at:

http://www.bsee.gov/Regulations-and-Guidance/index

B. Summary of the Rulemaking

This final rule amends and updates the regulations in 30 CFR part 250, subpart H, Oil and Gas Production Safety Systems (subpart H). This rule supports the Administration's objective of facilitating energy dominance by encouraging increased domestic oil and gas production and reducing unnecessary burdens on stakeholders, while ensuring safety and environmental protection.

Since 2010, the Department of the Interior (Department) has promulgated several rulemakings (

e.g.,

Safety and Environmental Management Systems (SEMS) I and II final rules (75 FR 63610, October 15, 2010; 78 FR 20423, April 5, 2013), the final Safety Measures rule (77 FR 50856, August 22, 2012), and the Blowout Preventer Systems and Well Control final rule (the “2016 Well Control Rule” or the “2016 WCR”)

to improve worker safety and environmental protection. On September 7, 2016, the Department published a Production Safety Systems final rule substantially revising subpart H (81 FR 61834) (2016 PSSR). That final rule addressed issues such as production safety systems, subsurface safety devices, and safety device testing. These systems play a critical role in protecting workers and the environment. Most of the provisions of that rulemaking took effect on November 7, 2016. Since that time, BSEE has become aware that certain provisions in that rulemaking created potentially unduly burdensome requirements for oil and natural gas production operators on the OCS, without meaningfully increasing safety of the workers or protection of the environment. During implementation of the 2016 PSSR, BSEE reassessed a number of the provisions in subpart H and determined that it could revise some provisions to reduce or eliminate some of the concerns expressed by the operators, thereby reducing the regulatory burden, while ensuring safety and protection of the environment.

See

81 FR 25887 (April 29, 2016).

On December 29, 2017, BSEE published in the

Federal Register

a proposed rule to revise certain provisions in the subpart H regulations (82 FR 61703) (the “proposed rule”) and to solicit comments on several additional issues. After consideration of the public comments on the proposed rule, BSEE is publishing this final rule, which revises or otherwise addresses the current requirements as follows:

• Updates the incorporation of certain standards referenced in subpart H;

• Adds gas lift shut down valves (GLSDVs) to the list of safety and pollution prevention equipment (SPPE);

• Revises requirements for SPPE by replacing the requirement for independent third parties to certify that each device will function in the most extreme conditions to which it will be exposed with requirements for device design testing, documentation of the process the operator used to ensure the device is designed to function as required, and independent third party review and certification of a device if the device is moved to a different location

;

Incorporated standards address the design of SPPE, based on the specific type of device and the conditions where the device will be located.

• Clarifies equipment failure reporting requirements;

• Clarifies and revises some of the production safety system design requirements, including revising the requirements for professional engineer (PE) stamping, revising the requirements for piping schematics, simplifying the requirements for electrical system information, revising the requirement for operators to provide certain documents to BSEE, and clarifying when operators must update existing documents;

• Clarifies requirements for atmospheric vessels containing Class I liquids;

• Clarifies requirements for inspection of the fire tube for tube-type heaters;

• Clarifies the requirement for notifying the BSEE District Manager before commencing production; and

• Makes other conforming changes to ensure consistency within the regulations and makes other minor edits.

C. Recent Executive and Secretary's Orders

Since the start of 2017, the President issued several Executive Orders (E.O.) that necessitated the review of BSEE's rules. On January 30, 2017, the President issued E.O. 13771, entitled, “Reducing Regulation and Controlling Regulatory Costs” (82 FR 9339), which requires Federal agencies to take proactive measures to reduce the costs associated with complying with Federal regulations.

On March 28, 2017, the President issued E.O. 13783, entitled, “Promoting Energy Independence and Economic Growth” (82 FR 16093). This E.O. directed Federal agencies to review all existing regulations and other agency actions and, ultimately, to suspend, revise, or rescind any regulations or actions that unnecessarily burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law.

On April 28, 2017, the President issued E.O. 13795, entitled, “Implementing an America-First Offshore Energy Strategy” (82 FR 20815). This E.O. directed the Secretary of the Interior to reconsider the 2016 Well Control Rule adopted in April 2016 and to take appropriate action to “revise any related rules” for consistency with E.O. 13795's stated policy “to encourage energy exploration and production, including on the Outer Continental Shelf, in order to maintain the Nation's position as a global energy leader and foster energy security and resilience for the benefit of the American people, while ensuring that any such activity is safe and environmentally responsible.”

To further implement E.O. 13783, the Secretary issued Secretary's Order (S.O.) 3349, entitled, “American Energy Independence,” on March 29, 2017. The S.O. directed DOI to review all existing regulations “that potentially burden the development or utilization of domestically produced energy resources.” Similarly, to implement E.O. 13795, the Secretary issued S.O. 3350, entitled, “America-First Offshore Energy Strategy,” on May 1, 2017, which directed BSEE to review the 2016 Well Control Rule and related rulemakings. BSEE interpreted each of these orders to apply to the 2016 PSSR.

As part of its response to E.O.s 13783 and 13795 and to S.O.s 3349 and 3350, BSEE reviewed the regulations in subpart H, as revised by the 2016 PSSR, with a view toward the policy of encouraging energy exploration and production on the OCS, and reducing unnecessary regulatory burdens, while ensuring that any such activity is safe and environmentally responsible. Like the 2016 PSSR, BSEE also focused on offshore oil and gas production technology and operations, including subsea production systems used for production in increasingly deeper waters. This focus is unrelated to well control during well operations. Nevertheless, BSEE carefully analyzed all the provisions in the proposed rule and this final rule and compared them to the 424 recommendations arising from 26 separate reports from 14 different organizations developed in the wake of and in response to the

Deepwater Horizon (DWH)

disaster, and determined that these changes to subpart H will not contradict any of those recommendations, nor will they alter any provision of the 2016 PSSR in a way that would make the result inconsistent with those recommendations. Further, nothing in this final rule will alter any elements of other rules promulgated since

DWH,

including the Drilling Safety Rule (Oct. 2010), SEMS I (Oct. 2010), SEMS II (April 2013), and 2016 WCR (April 2016). BSEE's review has been thorough and tailored to the task of reducing unnecessary regulatory burdens while ensuring that OCS activity is safe and environmentally responsible.

D. Incorporation by Reference of Industry Standards

In accordance with the National Technology Transfer and Advancement Act, Public Law 104-113 (NTTAA), 15 U.S.C. 3701

et seq.

(Pub. L. 104-113), and with Office of Management and Budget (OMB) Circular A-119, “Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities,” (rev. Jan. 2016) implementing the NTTAA, BSEE frequently uses standards (

e.g.,

codes, specifications, and recommended practices) that standards development organizations (SDOs) have developed through a consensus process, with input from the oil and gas industry, as a means of establishing requirements for activities on the OCS. The NTTAA charged, with few exceptions, that “all Federal agencies and departments shall use technical standards that are developed or adopted by voluntary consensus standards bodies, using such technical standards as a means to carry out policy objectives or activities determined by the agencies and departments.” BSEE may incorporate these standards into its regulations by reference without republishing the standards in their entirety in regulations. The legal effect of incorporation by reference is that the incorporated standards become regulatory requirements. This incorporated material, like any other regulation, has the force and effect of law. Operators, lessees, and other regulated parties must comply with the documents incorporated by reference in the regulations. BSEE currently incorporates by reference over 100 consensus standards in its regulations. (

See

30 CFR 250.198.)

The Office of the Federal Register's (OFR) regulations, at 1 CFR part 51, govern how BSEE and other Federal agencies incorporate documents by reference. Agencies may incorporate a document by reference by publishing in the

Federal Register

the document title, edition, date, author, publisher, identification number, and other specified information. The preamble of the rule must contain a summary of each document incorporated by reference, as well as discuss the ways that the incorporated materials are reasonably available to interested parties and how interested parties can obtain those materials. The Director of the

Federal Register

will approve publication in a final rule of each incorporation by reference that meets the criteria of 1 CFR part 51. The documents are summarized in section G of this preamble.

When a copyrighted publication is incorporated by reference into BSEE regulations, BSEE is obligated to observe and protect that copyright. BSEE provides website addresses where members of the public may access these standards for viewing, sometimes for free and sometimes for a fee. SDOs decide whether to charge a fee. One such organization, API, provides free online public access to view read only copies of its key industry standards, including a broad range of technical standards. In particular, API voluntarily makes available all API standards that are safety-related and that are incorporated into Federal regulations for free viewing by the public online in the Incorporation by Reference Reading Room on API's website at:

http://publications.api.org.

http://www.api.org/publications-standards-and-statistics/publications/government-cited-safety-documents.

BSEE also makes copies of incorporated standards available for review at BSEE's office(s) upon request. Individuals wishing to view standards at a BSEE office may make arrangements by sending an email to:

regs@bsee.gov

. BSEE may make standards available at their offices in Washington, DC; Sterling, Virginia; New Orleans, Louisiana; Houston, Texas; Camarillo, California; and Anchorage, Alaska.

To view these standards online, go to the API publications website at:

http://publications.api.org

. You must then log-in or create a new account, accept API's “Terms and Conditions,” click on the “Browse Documents” button, and then select the applicable category (

e.g.,

“Exploration and Production”) for the standard(s) you wish to review.

BSEE recognizes that there may be additional opportunities to make standards more accessible and agrees to work with OMB and the OFR to explore potential approaches to improve public access to standards and to information about the standards.

In addition to the legal requirement under the NTTAA for Federal agencies to use standards, there are a number of benefits to incorporating these documents into the regulations. Standards increase consistency for employee training, equipment compatibility, processes, and testing during operations. Standards help ensure that operators and their contractors take proper precautions during operations; resulting in safety performance improvements through the reduction of lost time from injuries and incidents, work environment safety standards, proper training, product failure reporting, quality control and assurance requirements, addressing safety issues, and improved communications between user and supplier. Global adoption of standards is a compelling reason for the most updated editions to be part of regulatory frameworks since they drive consistency, promote competition, and reduce the burden of compliance.

E. Overview of Comments on the Proposed Rule

In response to the proposed rule, BSEE received 733 separate sets of comments, including some comments that had a total of over 60,000 signatures attached to the comments. BSEE received comments from a wide range of stakeholders, including industry trade groups and individual companies, State and local governments, Tribal authorities, members of the U.S. Congress, environmental groups, SDOs, and private citizens. All comments are posted at the Federal Rulemaking Portal:

http://www.regulations.gov.

To access the comments, enter “BSEE-2017-0008” in the search box. BSEE reviewed all comments submitted.

Commenters raised issues on a number of topics, including general issues, section-by- section comments, and comments on certain additional issues on which BSEE solicited comments, including:

• Potential Revisions to § 250.107(c) Best Available and Safest Technology (BAST);

• Potential Revisions to § 250.198 Documents incorporated by reference;

• Extension of Compliance Deadline for Pressure Safety Valve (PSV) Testing Under § 250.880 Production safety system testing;

• Potential Revisions Based on the Investigation of the Explosion and Fatality on West Delta Block 105 Platform E; and

• Implementation of This Rulemaking.

Some commenters opposed any changes to the existing production safety regulations, while other commenters supported most of the proposed revisions. Many commenters seemed to confuse the 2016 PSSR and BSEE's December 2017 proposed rule with the 2016 WCR. The comments indicate that those commenters apparently assumed that the proposed rule involved revisions to the 2016 WCR, which was not the case.

F. Discussion of General Issues Raised by Commenters

Requests To Extend the Comment Period

Rulemaking “Technically Complex”

Comment:

Prior to the proposed rule's public comment deadline (January 29, 2018), BSEE received several written requests to extend that comment period, most of which requested a 60-day extension. One such request provided no explanation for the requested extension, except to state that the proposed rule was “technically complex.” Similarly, another request asserted that the proposed rule was so “important in nature” that a 90-day comment period would be more reasonable.

Response:

After considering all the extension requests, BSEE determined that no extension was necessary. Although one requester stated that the proposed rule was “technically complex,” that entity provided no examples and identified no aspects of the proposed rule that it considered so complex that it could not submit meaningful comments by the close of the comment period. Similarly, the entity that suggested that a 90-day comment period would be more reasonable due to the importance of the proposed rule provided no examples of any specific proposed provisions that required more time to analyze, even though that request was submitted almost one month after publication of the proposed rule. Under the circumstances, BSEE does not believe that these entities' requests provided justification for extending the comment period.

A different entity submitted a request for an extension on January 29, 2018—the deadline set by the proposed rule for public comment—but did not suggest a specific extension period. In addition, although that request asserted that the proposed rule was “unclear, and in some places contradictory,” it provided no examples to support that assertion. For the reasons previously explained, BSEE does not believe this last-minute request provided a sufficient basis for extending the comment period.

Volume of Standards To Review

Comment:

Two entities—offshore oil and gas industry organizations—asserted that the comment period was not long enough for the commenters to analyze and prepare thorough comments on the proposed rule. In particular, those commenters asserted that the number and “volume” of the standards that BSEE proposed to update and incorporate was too large for the requesters to review and comment on in 30 days.

Response:

BSEE does not agree with the industry organizations' suggestion that the updated standards and the one new standard that BSEE proposed to incorporate were “too numerous and too voluminous” to be thoroughly analyzed and understood within the time allowed by the comment period. In fact, one of those industry organizations is the SDO that developed and published 15 out of the 19 standards that BSEE proposed to incorporate. BSEE also notes that the other industry organization is a committee of virtually all of the offshore producing companies and service providers in the Gulf of Mexico, many of whom participated, or had the opportunity to participate, in the development of the relevant standards. In addition, both industry organizations represent companies that have had the opportunity to voluntarily implement those standards, in some cases over the course of many years. Under the circumstances, BSEE does not agree that those extension requests warranted an extension.

Both of the industry organizations and one other entity also suggested that the publication of the proposed rule on December 29, 2017, during the “holiday season,” provided more justification for their requests for more time. BSEE believes that the important reductions in unnecessary burdens on energy production, and the other improvements intended by the proposed rule, warranted BSEE moving forward with the proposed and final rules as expeditiously as practicable, whether or not that entails BSEE or other entities devoting some effort during a holiday season.

Comment Period Inadequate

Comment:

One commenter submitted comments on the proposed rule, including an assertion that the comment period was inadequate (although the commenter did not request an extension).

Response:

BSEE disagrees. Although this commenter broadly asserted that the proposed rule proposed a “significant number of changes to the regulations that incorporate . . . thousands of pages of technical documents,” it failed to provide any specific examples or other support for its assertion that the comment period was inadequate. After considering this comment, as well as the prior requests for extension of the comment period, BSEE determined that the comment period set by the proposed rule was reasonably adequate for any interested party to submit meaningful comments. BSEE notes that the Administrative Procedure Act (APA), which governs the Federal rulemaking process, does not specify any minimum period for comments on proposed rules. In practice, comment periods of 30 to 60 days are commonplace and 30-day comment periods are not uncommon. Moreover, given that the number of substantive changes actually proposed was relatively small, that the provisions to be revised were previously subject to a lengthy rulemaking process that culminated in the 2016 PSSR, and that the need to remove unnecessary burdens on offshore energy production is a high-priority national goal, BSEE believes that the comment period for this proposed rule was reasonable and provided a meaningful opportunity for public participation. This determination is supported by the fact that commenters submitted well over 700 comments, raising a wide variety of issues, by the January 29, 2018, deadline.

Comments Related to

Deepwater Horizon

Recommendations

Comment:

A number of commenters asserted that the proposed rule was inconsistent with recommendations in various reports, including “The National Commission on the BP

Deepwater Horizon

Oil Spill and Offshore Drilling” (the Commission or the Commission Report), that were published in the aftermath of the

DWH

incident. Some commenters asserted that the 2016 PSSR was the agency's response to the

DWH

reports' recommendations and that any changes to this rule would reduce the protections intended by those recommendations. Several commenters also asserted that any changes to the regulations would be arbitrary and capricious.

Response:

BSEE disagrees with these comments. The recommendations that the commenters cite come from various reports concerning the

DWH

incident. Those recommendations primarily addressed problems with well operations (including drilling, completion, workover, and decommissioning operations)—some of which led up to the

DWH

incident—and suggested ways to reduce risks of other incidents related to well operations. Those commenters apparently assumed, incorrectly, that BSEE developed the 2016 PSSR as a result of the

DWH

incident and that it was largely based on the Commission's report.

These commenters evidently confused the 2016 PSSR, which updated production safety systems regulations, with the 2016 WCR, which discussed the recommendations in the

DWH

reports and implemented, or responded to, many of those recommendations in order to reduce the risk of future well operation-related incidents. The well control requirements established by the 2016 WCR are primarily in 30 CFR part

250, subparts D and G, and include requirements for well operations. By contrast, the production safety systems requirements at issue here apply to production operations and are in subpart H. Well control requirements and production safety requirements apply to different operations and types of equipment and processes. Well control equipment, such as blowout preventers, is used on multiple wells and is often moved from site to site; therefore, it must function properly in any conditions that may be encountered. By contrast, production safety equipment must function properly in the specific conditions applicable within the production system on a particular facility, as informed by data that were gathered during the drilling and completion operations.

While the 2016 WCR was responsive to the Commission's and other

DWH

reports on well operations, BSEE did not intend the 2016 final PSSR and the 2017 proposed PSSR revisions to directly respond to the Commission's report or other

DWH

reports; nor did the 2016 PSSR and 2017 proposed rule refer to the

DWH

reports. In fact, the impetus for the 2016 PSSR was unrelated to well control during well operations; rather, that rule was focused on the need to address changes in offshore oil and gas production technology and operations, including subsea production systems used for production in increasingly deeper waters. Prior production safety systems regulations did not address subsea developments in deepwater production.

See

81 FR 61834. Accordingly, the commenters' concerns that the proposed revisions to the 2016 PSSR would be inconsistent with, and significantly diminish the protections intended by, the

DWH

reports' recommendations are not justified. In any case, as previously discussed, BSEE has nevertheless carefully analyzed all the provisions in this rule, and determined that the changes made will not contradict any of the recommendations from the

DWH

reports, nor will they alter the regulations in a way that would make them inconsistent with those recommendations.

Further, the commenters' suggestions that

any

changes to the 2016 PSSR would be “arbitrary and capricious” are conclusory in nature, and the commenters have not provided support for that conclusion. The record of this rulemaking shows that the proposed and now final revisions to the PSSR are not arbitrary or capricious. First, as already explained, the commenters' underlying assumption that BSEE intended for the 2016 PSSR to implement the

DWH

recommendations is not accurate. Second, as discussed in the 2017 proposed rule, many of the proposed changes were based on experience from implementation of the 2016 PSSR.

See, e.g.,

82 FR 61704, 61709. Also, operators raised questions about the 2016 PSSR that BSEE has addressed in Regulatory Interpretations on its website, and BSEE is using this rulemaking to address issues raised in some of those questions.

In addition, for all the reasons described elsewhere in this notice, BSEE has determined that the changes to the 2016 PSSR reflected in this final rule will reduce unnecessary burdens or provide needed clarifications, while still ensuring safety and environmental protection.

See https://www.bsee.gov/guidance-and-regulations/regulations/regulatory-interpretations#ssr

. Examples of such issues include requirements in the 2016 PSSR for boarding shut-down valves (BSDVs), deferred compliance dates, production notification, effective date and annual inspection/testing requirements, and alternate compliance requests and/or departures (extensions) for PSV testing.

Similarly, BSEE disagrees with one commenter's suggestion that BSEE should not make changes to the 2016 PSSR simply because the “SUMMARY” statement in that final rule said that it was “

necessary

to improve . . . safety, environmental protection, and regulatory oversight of critical equipment involving productions safety systems” (emphasis added). While that statement was accurate as to the 2016 PSSR as a whole, it did not indicate that every specific provision in that extensive rule was essential in its existing form to ensuring safety and environmental protection, or would never be reviewed or revised in light of subsequent events or new information. Neither BSEE nor any other agency can predict, at the time it promulgates a rule, whether or not future circumstances will warrant any revisions. In fact, BSEE periodically reviews all of its regulations and makes revisions when necessary and appropriate. And, for the reasons explained elsewhere in this notice, BSEE has determined that some specific revisions to the 2016 PSSR are appropriate and that those revisions will achieve the goals of energy production and safety and environmental protection.

Timing of Revisions to Subpart H

Comment:

One commenter suggested that BSEE cannot justify making any revisions to the 2016 PSSR “barely a year” after that rule took effect.

Response:

BSEE does not agree that it is too soon to make any changes to the 2016 PSSR. The final 2016 PSSR was published in September 2016 and took effect on November 7, 2016, more than 17 months ago. As stated in the proposed rule (

see

82 FR 61704-61705) and elsewhere in this final rule, soon after the 2016 PSSR was issued, BSEE began receiving requests from the regulated industry to clarify various provisions and which raised other concerns with the rule, and several of the proposed (and now final) revisions to the 2016 PSSR are intended to clarify those provisions or address those concerns. It is common practice, especially in complex rulemakings, for an agency to become aware of unforeseen confusion or other problems with a final rule after it has been published and to revise the final rule as soon as practicable to clarify the requirements or otherwise resolve unanticipated concerns. In this case, over 17 months have passed since the 2016 PSSR was promulgated, and BSEE's experiences during that time period demonstrate that it is not too soon to make appropriate corrections to that rule.

Similarly, as explained in the proposed rule, by E.O.s 13783 and 13795, as well as S.O.s 3349 and 3350, issued in early 2017, obligated BSEE to review existing regulations (which include the 2016 PSSR) to determine whether it unnecessarily burdened exploration, development, or production of energy resources, and whether it would be appropriate to revise the rules to reduce those burdens while still ensuring that such activities are safe and environmentally responsible.

See id.

The time that has already passed since the 2016 PSSR was published and took effect is more than adequate for BSEE to have completed that review.

Review and Certification by Independent Third-Parties and Professional Engineers (PEs)

Comment:

A number of commenters expressed concern that the proposed (

i.e.,

proposed §§ 250.802 and 250.842) elimination of third-party certification of SPPE and reduction in the number of safety system design documents (

e.g.,

drawings and diagrams) required to be certified and stamped by a registered PE would significantly reduce safety and environmental protection.

Response:

BSEE disagrees. Subpart H continues to impose numerous requirements, including provisions in the standards incorporated by reference, that effectively provide multiple layers of review to ensure safety and environmental protection in the design, installation, and testing of certain

aspects of production safety systems, including the SPPE. As explained earlier in this notice, although this final rule reduces the number of provisions that require third-party or PE review and certification, BSEE expects those procedural changes will continue to ensure safety and environmental protection, especially because of the other, more substantive, regulatory requirements applicable to safety equipment design, function, maintenance, and testing that are being retained or enhanced. BSEE carefully considered which documents are most critical to these operations and which documents provide information to support those critical documents. In addition, the regulations currently contain extensive testing provisions for SPPE and other production system components (

see

§ 250.880), to ensure the devices will function when needed. These provisions clearly state actions that the operator must take if a device fails a test, including repairing or replacing devices. These requirements remain unchanged in this final rule.

Specifically, several of the standards incorporated into subpart H (

e.g.,

ANSI/API Spec. 6A and ANSI/API Spec. 14A) set design criteria for SPPE, based on the type of SPPE, and require most types of SPPE to be design-tested by an independent third-party testing facility. In addition, the following provisions of the regulations effectively provide supplemental layers of review: (1) Existing § 250.801(a) through (c) requires use of SPPE that is manufactured and marked pursuant to a quality assurance program that satisfies ANSI/API Spec. Q1 or another equivalent quality assurance program approved by BSEE; (2) existing § 250.880 sets detailed production safety system testing criteria, and mandates that SPPE failing to meet the testing criteria must be repaired or replaced; and (3) § 250.842(a), as amended, will still require PE approval of modifications to production safety systems (required by § 250.842(c)(2)), while new § 250.842(b) will require additional design documents to be developed, maintained, and provided to BSEE upon request. For all of these reasons, BSEE determined that the final revisions to §§ 250.802 and 250.842, which reduce unnecessary burdens on operators, will ensure safety and environmental protection.

Comments on Risk-Based Approaches

Comment:

Several commenters stated that BSEE should implement more “risk-based” approaches to regulation of industry.

Response:

BSEE agrees that risk-based approaches are often an appropriate way to develop effective regulatory programs. However, no changes to the existing regulations are needed for BSEE to implement certain risk-based programs. For example, BSEE is currently developing ways to deploy inspection resources to focus on operations with higher rates of safety events, equipment failure, or incidents of non-compliance (INCs).

Risk-based inspections complement BSEE's existing National Safety Inspection Program under OCSLA, which requires BSEE to conduct annual scheduled inspections and periodic unannounced inspections on all OCS oil and gas facilities. Risk-based inspection approaches evaluate operational and performance information, such as data from prior inspections and failure reporting, to identify those facilities and operations that may pose a higher likelihood of an unsafe event or of more severe consequences from such an event. BSEE uses this data to manage its inspector force and to target their work to address production facilities with higher risks of safety incidents, equipment failure, or INCs. Accordingly, BSEE implemented a formal risk-based inspection program in 2018 following pilot testing.

The program is comprised of two categories of risk-based inspections—a “facility-based” category targeting specific production facilities identified as higher-risk, and a “performance-based” category targeting specific operations or equipment across multiple facilities. Facility-based risk inspections employ a quantitative model and additional qualitative evaluation of operational and performance information to identify higher-risk facilities, and inspection protocols are tailored to facility-specific hazards, barriers, and risks. Performance-based risk inspections employ trend analysis of performance indicators, such as incident and INC data, to identify safety issues (

e.g.,

potential gas releases, lifting incidents, and compressor fires) that may pose a risk at multiple facilities; thus, those inspection protocols narrowly focus on the identified safety issue. BSEE expects to continue to develop and refine the risk-based inspection program over time.

Comments on Failure Reporting

Comment:

One commenter suggested that BSEE should modify § 250.803 to require any failed equipment to be immediately shut-in pending replacement with fully functioning, certified SPPE. Where the failed SPPE involves equipment that may be common to several production facilities, the commenter suggested that BSEE clarify its authority to order the immediate shut-down of all processes or equipment that rely on the failed SPPE until replaced by certified, functioning SPPE.

Response:

BSEE disagrees with this comment. The proposed revisions to § 250.803 were not intended to relax requirements for reporting SPPE or safety component failures or the potential for improved safety under those requirements. To the contrary, the final revisions to that section simply clarify the existing provision for reporting of failures to a BSEE designee instead of to BSEE directly. As explained in the preamble of the proposed rule (

see

82 FR 61710), on October 26, 2016, BSEE designated the Bureau of Transportation Statistics (BTS) to receive SPPE failure reports. As discussed later in this notice (

see

n.17,

infra

), the reporting of SPPE and equipment component failure information to BTS should increase the potential for improving safety by allowing BTS to examine this information in the aggregate and to prepare reports on the aggregate analysis to share with the public, including the regulated industry. In addition, the final rule retains the existing requirement that operators report equipment failures to original equipment manufacturers (OEMs), as well as to BSEE (or BSEE's designee). By requiring submissions of reports to the OEMs, § 250.803 ensures an opportunity for the industry best-suited to make changes to failed SPPE (

i.e.,

the OEM sources) to address equipment design and performance issues.

BSEE does not believe that the additional measures—for automatic shut-in of individual facilities with a failure or for wide-spread shut-in of production that uses similar SPPE—suggested by a commenter are appropriate or necessary at this time. The testing provisions in existing § 250.880 already require operators to repair and reinstall or replace many key components in production safety equipment (

e.g.,

surface safety valves) if those components fail to function as designed. The final rule retains those requirements. By the nature of the design and function of the production system and the regulatory requirements for that system, multiple barriers must be used throughout the production system. Multiple barriers are used in the production system to prevent the release of hydrocarbons; these include the SPPE that are required under § 250.801 (

e.g.,

the various valves that can be shut in, if needed, to discontinue production).

The existence of multiple barriers generally decreases the need for automatic shut-in every time a single piece of equipment fails. In addition, BSEE already requires that any non-certified valve that requires offsite repair, re-manufacturing, or any hot work (such as welding) must be replaced with a certified valve as required by § 250.801. In any event, BSEE has authority under existing § 250.107(d) to order equipment repairs or replacement in order to ensure compliance with the regulations, and to issue orders to shut-in operations of a component or facility when appropriate to prevent threats of serious or immediate harm. In light of these existing protections, BSEE does not believe that any additional requirements to automatically shut-in the failed equipment, or additional authority for BSEE to order more widespread shut-ins, are needed.

BOEM's Proposed 2019-2024 National OCS Leasing Program

Comment:

A number of comments addressed provisions of the Bureau of Ocean Energy Management (BOEM) draft proposed 2019-2024 National OCS Leasing Program (Leasing Program). Some comments stated that the proposal in the Leasing Program to expand OCS leasing into additional geographic areas would magnify any reduction in safety and environmental protection resulting from the proposed revisions to the PSSR.

Response:

The proposed Leasing Program is a separate action by BOEM, which is a separate agency from BSEE within the Department, and was not addressed in the 2017 proposed PSSR. The Leasing Program specifies the size, timing, and location of potential leasing activity that the Secretary determines will best meet national energy needs for the five-year period under consideration. The Draft Proposed Program, the first of three stages of developing the Leasing Program for 2019-2024, was released on January 4, 2018, with a 60-day comment period that ended on March 9, 2018.

See

BOEM's website,

www.boem.gov/National-Program

, for additional details. There will be additional opportunities for public review and comment on the Leasing Program at later stages of its development. Thus, any concern the commenters may have about the potential impact that an expansion of the Leasing Program might have on the level of safety and environmental protection provided by the revised PSSR is premature and speculative at this time.

Prioritizing Safety and Environmental Protection

Comments:

Several commenters stated that OCSLA requires BSEE to prioritize “environmental safeguards” among other goals identified in the statute and that section 3 of OCSLA (43 U.S.C. 1332(3)) requires BSEE to ensure that regulated activities are “safe and environmentally responsible.” Some commenters also stated that BSEE is required by 43 U.S.C 1802(2)(B) to “balance orderly energy resource development with [environmental] protection.” The commenters suggested that some or all of the proposed changes (

e.g.,

revisions to independent third-party certification of SPPE; incorporation by reference of industry standards) to the existing rule would not comply with these congressional policy declarations.

Response:

BSEE agrees that Congress intended that development and production of offshore energy resources should be carried out in a safe and environmentally protective manner. However, BSEE disagrees with the commenters' assertion that the proposed rule (or this final rule) is inconsistent with the policies embodied in OCSLA at 43 U.S.C. 1332(3) and 1802(2)(B). Although some of the commenters suggested that environmental or safety protection must be the overriding—or even the exclusive—goal of all agency actions under OCSLA, these commenters failed to acknowledge that section 1332 also states the principle that the OCS should be managed to ensure “expeditious and orderly development [of OCS resources] . . . in a manner . . . consistent with competition and other national needs” (

See

43 U.S.C. 1332(3) Similarly, the commenters failed to acknowledge that 43 U.S.C. 1802 specifically states that the Department should manage OCS oil and gas resources “expedite[] exploration and development of the . . . [OCS] in order to achieve national economic and energy policy goals, assure national security, reduce dependence on foreign sources, and maintain a favorable balance of payments.” (

See

43 U.S.C. 1802(1).)

Moreover, despite the commenter's assertions, sections 1332 and 1802(2) primarily relate to the way that the Department manages oil and gas resources at the National Program and lease sale stages of OCS development and do not expressly mandate how BSEE exercises its authority to issue safety regulations. More directly relevant to this rulemaking, however, are the specific provisions of OCLSA that authorize the Secretary to regulate activities on the OCS, which contain broad grants of discretion to issue regulations and do not contain any specific limitation that would prevent BSEE from eliminating undue burdens while still ensuring the safety of operations overall.

Likewise, 43 U.S.C. 1802(2) makes it Federal policy that to “(2) preserve, protect, and develop oil and natural gas resources in the . . . [OCS] in a manner . . . consistent with the need (A) to make such resources available to meet the Nation's energy needs as rapidly as possible, (B) to balance orderly energy resource development with protection of the human, marine, and coastal environments, (C) to insure the public a fair and equitable return on [OCS] resources . . . and (D) to preserve and maintain free enterprise competition.”

Although the commenters may disagree with how BSEE has balanced those statutory principles and goals, the difficult and complex task of balancing those policies is committed to BSEE's discretion and expert judgment. And for all the reasons discussed in the proposed rule and in this notice, BSEE has determined that the proposed revisions to subpart H (including those singled out by these commenters), as finalized in this rule, will reduce unnecessary regulatory burdens while ensuring safe and environmentally responsible operations on the OCS.

In addition, BSEE notes that subpart H, as a whole, ensures safety and environmental protection safeguards at every stage of the production process, including with regard to: Design and approval of safety equipment and safety systems; installation of such equipment and systems at production facilities; personnel safety device training; continuous maintenance, field testing, and reporting of failures and problems to BSEE and manufacturers; equipment repair/removal/replacement, when needed, to ensure ongoing functionality; and shut-in, shutdown, and emergency procedures to deal with potential and impending risks.

See, e.g.,

§§ 250.837, 250.842, 250.855, 250.880(b) and (c), 250.891.

Moreover, many of the specific requirements that apply at these stages of production, especially during production operations, are intended to prevent harm to safety or the environment. For example, if the required SPPE fails, the default setting for the valves is to fail in “safe mode”; in most cases, that is the “closed” position, thus preventing the release of hydrocarbons within the production system and limiting the impact of equipment failures. In addition, the SPPE in production safety systems are typically part of a closed system. Thus, when components fail, releasing hydrocarbons, another barrier confines the oil or gas within the system.

Accordingly, BSEE is confident that the final rule changes, which should reasonably reduce burdens (

e.g.,

by clarifying some provisions and revising or eliminating certain redundant, needlessly burdensome or marginally useful provisions), will continue to ensure safety and environmentally protective operations, especially when viewed in the context of the full suite of protective measures established by subpart H.

General Comments on Incorporation by Reference of Industry Standards

Enforcement of Compliance With Documents Incorporated by Reference

Comment:

A number of commenters asserted that, by relying on incorporation by reference of industry standards, the proposed rule would allow the oil and gas industry to regulate itself without government oversight.

Response:

BSEE disagrees. As discussed elsewhere in this final rule, BSEE incorporates industry standards by reference in accordance with the requirements of the NTTAA and implementing OMB guidance, OFR regulations (1 CFR part 51), and BSEE's own procedures for incorporation (§ 250.198). The effect of incorporation by reference of an industry standard into the regulations is that the incorporated document becomes a regulatory requirement,

see

§ 250.198(a)(3), and, thus, becomes subject to BSEE oversight and enforcement in the same manner as other regulatory requirements.

See

82 FR 61705. If an SDO later revises a standard that BSEE has previously incorporated in a final rule, the BSEE would need to evaluate the revised standard before incorporating it through rulemaking in the regulations; in other words, industry itself cannot change the regulatory requirements by revising a standard after it has been incorporated in the regulations.

Comment:

One commenter asserted that the regulations should state that, where the regulatory requirements are more specific or stringent than incorporated industry standards, the regulations should take precedence.

Response:

There is no need for further regulation in response to this comment. The 2016 PSSR already inserted a provision in subpart H—at § 250.800(d)—clarifying that if there is any conflict between the standards incorporated by reference and any other requirements in subpart H, the operator must follow the other subpart H requirements.

Comment:

Another commenter suggested that the regulations should state that compliance with incorporated industry standards is mandatory.

Response:

BSEE does not agree that such a broad statement needs to be added to the regulations. Existing § 250.198(a)(3) already provides that incorporation of an industry standard into the regulations makes that standard a regulatory requirement. BSEE has repeatedly referred to this principle in the PSSR and other rulemakings. In addition, BSEE concluded in an earlier rulemaking that a blanket statement, such as the one commenter suggested, is not needed, based on the wording of § 250.198(a)(3) and the bureau's reliance on the specific regulatory language of incorporation for each incorporated standard.

See

77 FR 50855 (August 22, 2012).

Availability of Standards for Public Review

Comment:

Some commenters expressed concern about the availability of the standards proposed to be incorporated by reference in the proposed rule. The commenters asserted that the industry standards were not easily accessible or generally available to the public as part of the rulemaking process. Several commenters advocated that BSEE make the full text of any existing or proposed technical standards that are, or will be, incorporated by reference into BSEE's regulations freely available for public download in a searchable format to facilitate public review.

Response:

The OFR requires standards incorporated by reference in its regulations to be made “reasonably available” for review by the public. Moreover, BSEE is required by law to describe how those incorporated documents are reasonably available. However, BSEE is not required, and often is not even permitted, to make industry standards downloadable and searchable for the convenience of commenters. Nor does BSEE agree with the suggestion that the standards at issue in the proposed rule were not reasonably available for public review by commenters in preparing their comments.

As discussed in the proposed rule (82 FR 61705), all standards incorporated in BSEE's regulations are available to view for free at BSEE's headquarters office in Sterling, Virginia and at BSEE's other office locations, during normal working hours, upon request. BSEE received no requests to examine the standards proposed for incorporation in the proposed rule at BSEE's office.

In addition to making standards available at BSEE for in-office examination, API voluntarily allows the public to view documents cited in government regulations free of charge on its website. (

See, e,g., http://www.api.org/publications-standards-and-statistics/publications/government-cited-safety-documents

). Documents from API and other SDOs (such as the American Society of Mechanical Engineers (ASME)) may also be purchased directly from those organizations.

In this case, the updated or reaffirmed editions of the API standards referred to in the proposed rule (as well as one new replacement standard) were made available for free viewing on API's website beginning on January 19, 2018. BSEE recognizes that those editions of the API standards were not available for viewing on API's website during the entire comment period. Nonetheless, those editions could be accessed for public viewing during a significant portion of the comment period. Moreover, at all times during the comment period, commenters could have requested to view the relevant editions of API's standards at BSEE's office or purchased copies of those editions from API for a fee.

In any event, because API based the updated or reaffirmed editions of the API standards at issue in the proposed rule on prior editions already incorporated in BSEE's existing regulations, which were previously available for free viewing on API's website, stakeholders interested in those API standards should have already been familiar with the basic subject matter of the current editions even before the new editions were made available for viewing by API.

In addition, although some commenters suggested or implied that BSEE should make incorporated industry standards freely downloadable and searchable, apparently without regard to whether the standards are protected by copyright under U.S. and international law. Federal law—including the NTTAA, which authorizes and requires BSEE to incorporate industry-developed consensus standards by reference under appropriate circumstances, and the OFR regulations (1 CFR part 51) that govern all incorporations by reference in Federal regulations—does not eliminate copyright protection for incorporated standards. In fact, OFR, which has authority to approve all incorporations by reference, has considered and expressly rejected the idea that either the NTTAA or OFR's own regulations remove copyright protections.

See

79 FR 66267, 66273 (Nov. 7, 2014).

Accordingly, as explained in the proposed rule (82 FR 61705), BSEE must respect the publisher's copyright, which means that BSEE could not make and provide copies of the copyrighted standards to other parties without the copyright-holder's consent.

One commenter stated that it emailed BSEE during the comment period to request that BSEE provide the commenter with copies of all of the API standards currently incorporated and proposed for incorporation in BSEE's regulations, which BSEE did not provide. As explained in the proposed rule and elsewhere in this notice, BSEE must respect API's and other SDO's copyright protections and cannot provide free copies of a copyrighted document without the copyright-holder's consent. That is why BSEE makes copies of all incorporated standards (proposed or final) available for viewing at BSEE's office(s) and why BSEE provides instructions for how interested parties can either view such standards on the SDO's website or purchase the standards from the SDO.

The new, updated editions of API standards that the proposed rule proposed for incorporation are API 510, API STD 2RD, API RP 2SM, ANSI/API RP 14B, API RP 14C, API RP 14FZ, API RP 14G, API RP 500, ANSI/API Spec. Q1, ANSI/API Spec. 6A, API Spec. 6AV1, ANSI/API Spec. 14A, ANSI/API Spec. 17J, and API 570. The reaffirmed standard is API RP 2SK (Third ed.). The only standard that BSEE proposed to incorporate that was not an updated edition or a reaffirmation of a currently-incorporated standard was API STD

6AV2, which API had substituted for the former API RP 14H (which was previously incorporated in § 250.198). See 82 FR 61706.

In OFR's most recent revision of its regulations governing incorporation by reference, OFR stated that “t“[he NTTAA [has] not eliminated the availability of copyright protection for privately developed codes and standards that are referenced in or incorporated into federal regulations. Therefore, we [OFR] cannot issue regulations that could be interpreted as removing copyright protection from [incorporated by reference] IBR'd standards.” 79 FR 66273.

Further, OFR's rules for incorporation by reference require only that an agency discuss in the final rule the ways that the incorporated document(s) are “reasonably available” to interested parties and how interested parties can obtain the documents.

See

1 CFR 51.5(b)(2).

Elsewhere in the final rule, as well as in the proposed rule (82 FR 61705), BSEE discusses how the editions of the standards to be incorporated here are reasonably available by free viewing at BSEE's office, or viewing on the SDO's website(s), or by purchase from the SDO.

Those procedures are consistent with BSEE's longstanding practice in many other rulemakings and OFR has reviewed and approved the incorporations by reference in this final rule in accordance with OFR's own regulations.

Similarly, OFR's regulations require that proposed rules discuss the ways that materials proposed for incorporation are “reasonably available” or how the agency worked to make those materials reasonably available.

e 1 CFR 51.5(a)(1).

1 CFR 51.7 of OFR's regulations indicates that, to be eligible for incorporation by reference, a document needs only to be reasonably available to (and usable by) “the class of persons affected.” BSEE is confident that members of the regulated industry that are affected by the incorporated standards are able to purchase copies of the standards from API or other SDOs for their use.

Other Concerns About Using Incorporation by Reference

Comment:

One commenter stated that incorporation by reference can be cumbersome and that, in many cases, it reduces clarity of the regulatory requirements. This commenter suggested that BSEE use caution in this process and recommended that BSEE develop a way to provide a short summary of the incorporated document that will aid the reviewer in determining the document's applicability and whether the reviewer needs to review that document in order to clarify the Federal regulatory requirements.

Response:

BSEE understands that the incorporation by reference of standards may sometimes appear cumbersome and may result in some questions that need further clarification. When BSEE decides to incorporate a standard by reference, it uses its best efforts to anticipate potential problems and to make the incorporation as simple, clear, and straightforward as possible. And if some confusion nonetheless arises after a standard is incorporated, BSEE can and does use several means to provide more clarity (

e.g.,

Regulatory Interpretations, guidance through Notices to Lessees and Operators (NTLs)).

BSEE disagrees, however, with the commenter's suggestion that the incorporation of documents by reference in general is overly cumbersome and often reduces clarity, and with the implication that BSEE therefore should not use incorporated standards. Standards typically address complex technical issues, often at great length and in great detail, and it would be difficult and impracticable to duplicate that effort by drafting and inserting such detailed standards in the regulations. In fact, the NTTAA requires Federal agencies to use technical standards developed by voluntary consensus organizations to carry out the agencies' objectives, when consistent with Federal law, in lieu of creating new Federal standards. And it is frequently more practical and efficient for agencies to incorporate such standards—with which the regulated industry is typically already familiar through their development by industry experts—by reference in the regulatory text rather than for the agencies to develop separate Federal standards. Moreover, OMB Circular A-119, which instructs agencies on compliance with the NTTAA, expressly recognizes incorporation by reference of such standards as an acceptable means of using such standards in regulations.

Consistent with the NTTAA, BSEE frequently participates in the standards development process by attending relevant standards development committee meetings and commenting on the documents as they are developed. Furthermore, requiring operators to follow specific standards documents that are incorporated by reference in the regulations often helps operators by providing detailed instructions for meeting the standards that would be impracticable to include in regulatory text. These instructions can help ensure consistency in operators' approaches to carrying out regulatory requirements. This consistency, in turn, helps BSEE in reviewing and approving plans, permits, and other applications and simplifies the inspection process.

With regard to the commenter's suggestion that BSEE provide summaries of the relevant standards, BSEE notes that it is already required, by OFR's regulations governing incorporations by reference, to summarize the incorporated materials in preambles to proposed and final rules (

see

1 CFR 51.5(a)(2), 51.5(b)(3)), which are provided to OFR for review before the proposed and final rules are published. In this case, BSEE provided such summaries in the proposed rule (82 FR 61706-61709) and elsewhere in this final rule that have been reviewed and approved by OFR. BSEE has also provided summaries of the standards incorporated with this final rule in a document titled, “AA37—Oil and Gas Production Safety Systems—Revisions (Subpart H), Summary of standards incorporated by reference that are being updated to newer editions in this final rule.” That document may be viewed by accessing the online docket for this rulemaking action located at the Federal eRulemaking Portal:

https://www.regulations.gov

Comment:

A commenter noted that BSEE proposed to adopt certain industry standards although it had not yet completed its own technical and regulatory evaluations (at the time of the proposal) of each standard to ensure that it provides superior safety and environmental protection. The commenter also stated that “The Report to the President by the National Commission on the BP

Deepwater Horizon

Oil Spill and Offshore Drilling . . . sounded a strong warning” about DOI relying too heavily on API standards and on incorporating those

standards into agency regulations. The commenter asserted that the Report raised concerns that API's role in developing standards could compromise BSEE's regulatory framework, since API also serves as the industry's principal lobbyist and advocate. The commenter also asserted that the report noted that API standards increasingly fail to reflect “best industry practices” and that, because the Department had relied on API in developing its own regulatory safety standards, any shortfalls in API's objectivity could also undermine the Department's regulatory system.

Response:

BSEE acknowledges some of the commenter's concerns regarding the use of industry standards in its regulations, but disagrees with much of this comment and with the commenter's conclusions. First, BSEE notes that the Report's concerns with incorporation of industry standards were based on agency practices and other circumstances pre-dating the 2010

DWH

incident. Since that event, many of those practices and circumstances have changed significantly.

With regard to the commenter's concern that BSEE had not completed its own evaluation of the new editions of certain standards that BSEE proposed to update, BSEE agrees that was the case at the time the proposed rule was published. However, BSEE did not intend to incorporate into a final rule any standards for which it had not completed its evaluation and is not doing so. Rather, BSEE sought to use the proposed rulemaking to solicit public feedback on those documents for BSEE to take into consideration while BSEE continued its internal review of these documents.

See

82 FR 61705. In fact, BSEE has benefited from consideration of the public comments on the proposed incorporations, and those comments have helped inform BSEE's determinations as to whether the new (or reaffirmed) editions proposed for incorporation are appropriate for inclusion in this final rule. In addition, soliciting comments on the proposed incorporations during BSEE's continued evaluation of those newer versions of the standards has enabled BSEE to proceed more expeditiously to the incorporation in this final rule of those standards that BSEE has now determined will provide the same or higher levels of safety and environmental protection. As discussed in part G of this notice, BSEE has completed its review of most of the updated editions or new standards proposed for incorporation in the proposed rule and has included those editions and the one new standard in this final rule. However, BSEE is still evaluating several remaining editions proposed for incorporation and is not including those remaining editions in this final rule. BSEE needs more time to complete its evaluation of those standards and will make final decisions on whether to incorporate some or all of those editions in a final rule at a later date.

Concerning the comments on BSEE's use of API standards, and the assertion that API standards increasingly do not represent best industry practices, BSEE does not agree that incorporation and use of the standards referenced in this final rule is either inappropriate or detrimental to safety and environmental protection. BSEE has evaluated the API standards incorporated in this final rule, and determined that they are at least as protective as the previously incorporated versions of those standards and serve as a valuable complement to BSEE's regulations in helping to achieve the statutory objectives. These standards provide a baseline. BSEE adds supplemental requirements where appropriate. Moreover, as previously discussed, the NTTAA mandates that Federal agencies use technical standards developed by voluntary consensus standards organizations, instead of government-developed standards, where practicable and consistent with applicable law. There are only a few SDOs, including API, that address issues related to offshore oil and gas operations. Also, API provides standards on technical topics that are not addressed by other SDOs. And, consistent with the NTTAA's preference for agency use of consensus standards (

see

15 U.S.C. 272(e)(1)(A)(v)), API develops its standards through a “general consensus” process, which provides for input from those who are potentially “materially impacted” by the standard.

In addition, based on recommendations in other post-

DWH

reports (

see, e.g.,

Final Report on the Investigation of the Macondo Well Blowout,

Deepwater Horizon

Study Group (March 1, 2011) at pp. 94-98), BSEE has expanded its standards program and increased its involvement in the standards development process, including development of many API standards, and is continuously improving and formalizing BSEE's internal process for reviewing standards relevant to the regulatory program. These developments will help BSEE to identify issues that may not be adequately addressed in incorporated standards and to supplement those standards, as necessary, in its regulations.

Comment:

A commenter asserted that BSEE should provide a technical analysis of any new or updated industry standards proposed for incorporation. The commenter suggested that this analysis should be publicly available at the same time as the proposed rule and should verify that the new standard represents BAST. This commenter noted that BSEE had not completed its own technical review before proposing these changes. The commenter requested that BSEE complete this work, and then reissue proposed regulations with an appropriate technical justification that is made available to the public before the public is asked to submit comments on the proposed changes. The commenter also suggested that the Department should establish a process with the National Academy of Engineering to assess proposed changes in standards and to determine if the new editions of incorporated standards “enhance safety and environmental protection and represent the highest level of international regulatory practice.”

Response:

BSEE does not agree with the commenters' suggestions. First, the incorporation of industry standards in BSEE's regulations does not reflect a specific BAST determination by BSEE; those actions derive from separate authorities and are governed by different criteria. Thus, there is no support for the commenter's suggestion that “technical analysis” of a standard should include verification that it represents BAST.

In addition, the issue of whether BSEE should modify its procedures for incorporating industry standards in the future is beyond the scope of this rulemaking. As previously discussed, in this rulemaking BSEE made all of the documents incorporated by reference available for public review in connection with the comment period provided for the proposed rule and continues to make publicly available at its office all of the standards incorporated by reference in the final rule.

Similarly, BSEE does not agree that a “technical analysis” of the kind suggested by the commenter prior to a proposed incorporation by reference is necessary in order for commenters to be able to comment on such a proposal. As discussed previously, BSEE complies with the NTTAA requirement that an agency use standards developed or adopted by “voluntary consensus standards bodies” rather than government-unique standards, except where inconsistent with applicable law or otherwise impractical. (

See

OMB Circular A-119). BSEE also complies

with the OFR regulations governing incorporation by reference. Those regulations (

see

§§ 51.5(a)(2) and (b)(3) and 51.11(a)) specify the process for updating an incorporated standard, including the types of descriptions required in connection with proposed and final rule documents, and a requirement that the descriptions must be provided to OFR for its review. BSEE complied with those requirements by providing for public notice and comment through the proposed rule and by seeking OFR's approval for changes to the standards incorporated by reference in the final rule.

This process does not require an agency to complete its review of a document it proposes to incorporate by reference prior to the proposed rule stage, and BSEE does not here in the final rule incorporate any standard for which it has not completed its review.

Under certain circumstances, existing § 250.198(a)(2) authorizes BSEE to incorporate a newer edition of an industry standard through a direct final rule (

i.e.,

without a prior proposal); however, that authority was not exercised in this rulemaking.

G. Section-by-Section Summaries, Responses to Comments, and Changes From the Proposed Rule

Documents Incorporated by Reference. (Section 250.198)

Section summary:

Section 250.198 of the existing regulations contains provisions regarding how BSEE incorporates documents by reference in BSEE's regulations, lists all of the documents BSEE has incorporated by reference in 30 CFR part 250, and states BSEE's general expectations for compliance with those documents. The requirements for complying with a specific incorporated document can be found where the document is referenced in the regulations, as specified in § 250.198.

BSEE proposed to revise § 250.198 by replacing older editions of certain standards incorporated in the regulations with new or recently reaffirmed editions of those standards.

In addition, BSEE proposed to replace API RP 14H (Installation, Maintenance and Repair of Surface Safety Valves and Underwater Safety Valves Offshore, Fifth Edition 2007), currently incorporated in the regulations but subsequently withdrawn by API, with a new standard, API STD 6AV2 (Installation, Maintenance and Repair of Surface Safety Valves and Underwater Safety Valves Offshore, First Edition 2014). Finally, BSEE proposed to revise § 250.198(h)(58) and (62) in order to change cross-references (from to “§ 250.842(b)” to “§ 250.842(c)”) to the regulations which mention the two standards incorporated at those locations.

As described in more detail later, the provisions proposed to be updated in this way included: ASME Boiler and Pressure Codes, Sections I, IV and VIII; API 510; API RP 2SK; ANSI/API RP 14B; API RP 14FZ; API RP 14G; API RP 500; ANSI/API Spec. Q1; ANSI/API Spec. 6A; API Spec. 6AV1; API STD 6AV2; and API 570.

The references in § 250.198 to be modified in this way are related to: API RP 14F, Design, Installation, and Maintenance of Electrical Systems for Fixed and Floating Offshore Petroleum Facilities for Unclassified and Class 1, Division 1 and Division 2 Locations, Upstream Segment, Fifth Edition (2008, reaff. 2013): and API RP 14J, Design and Hazards Analysis for Offshore Production Facilities, Second Edition (2001; reaff. 2013).

BSEE received numerous comments that raised several issues (

e.g.,

public availability of standards) related to the proposed revisions to § 250.198. BSEE responded to those general comments elsewhere in this final rule. Several commenters also stated that they either supported or did not oppose the proposed incorporations, but provided no details regarding the merits of those documents. Several commenters, however, raised significant concerns with the merits of incorporating API RP 14C (Eighth Edition 2017) and API RP 500 (Third Edition 2012) at this time. For the reasons explained earlier in this notice, this final rule updates the incorporation by reference of 12 standards (including API RP 500, Third Edition) as proposed, but does not update the remaining five standards at this time.

BSEE received no comments on the proposed revisions to the cross-references in § 250.198(h)(58) and (62) and the final rule makes those revisions.

Comment:

One industry commenter asserted that, although it did not oppose the proposed incorporation of the Third Edition of API RP 500, it needed more time to fully evaluate the impacts of the Third Edition (including the potential costs of implementation, especially for facilities that are under construction at the time the final rule takes effect) before compliance with that edition of the standard becomes mandatory. Therefore, the commenter recommended delaying the incorporation of the Third Edition of API RP 500 until a later date.

Response:

BSEE does not agree that such a delay is warranted. API RP 500 (Second Edition) was adopted in 1997 and has long been incorporated in BSEE's regulations. The regulated industry has longstanding experience with how to implement that standard. Although the Third Edition made some significant revisions to the Second Edition, the commenter did not explain or offer any examples as to why those differences would require more time to evaluate potential implementation concerns or costs. Moreover, although API was one of the joint commenters requesting a delay, API itself adopted the Third Edition (with the consensus of the industry) in 2012, and it has already had over five years to consider what the impacts of its own revised standard would be on the industry it represents. Thus, no delay in finalizing the proposed incorporation of the Third Edition of API RP 500 is necessary.

Comment:

One commenter, although not opposed to the proposed incorporation of API RP 14C (Eighth Edition), raised strong concerns about the inclusion of that edition in the final rule at this time. The commenter asserted that, in light of the many substantive changes to the Eighth Edition, which was recently adopted (February 2017), more time is needed to assess the potential impacts and costs from implementation of those changes, especially with respect to facilities still under construction. Two commenters also pointed out that there are a number of significant organizational and other clerical errors, as well as several apparent inconsistencies, in the Eighth Edition that need correction and that would cause substantial confusion and implementation problems if incorporated at this time.

Response:

The standards being incorporated into the regulations are updated editions to what is already incorporated by reference, not adoptions of novel standards. At the time BSEE or its predecessor originally incorporated the standards in the regulations, BSEE determined that they would improve safety and environmental protection for their respective applications. Subsequently, BSEE reviewed updated editions of each standard and concluded in this final rule that the new editions increase the overall safety baseline from the previously incorporated editions. Since the nature of operations evolves and equipment changes over time, standards also change to keep up-to-date. Updating the incorporation of standards to newer editions helps maintain and improve the safety and environmental integrity of operations. BSEE does not anticipate the change in burden to be significant, since updating to the new editions will not require retrofit of equipment. The revised maintenance and testing procedures contained in these standards are generally modifications of existing procedures, which are already required. BSEE is aware that there are a number of organizational problems and clerical and other non-substantive errors in the

Eighth Edition that could significantly affect other standards that refer to and rely on API RP 14C, and that could interfere with the industry's and BSEE's ability to implement the regulations. BSEE is also aware that API is currently considering how to resolve these concerns. BSEE has therefore decided not to update the reference to API RP 14C in § 250.198 in the final rule at this time.

In addition, although BSEE has completed its evaluation of most of the standards proposed for incorporation (including the Third Edition of API RP 500), BSEE needs more time to complete its evaluation of the other five standards (including the Eighth Edition of API RP 14C). Accordingly, BSEE will not finalize the proposed incorporation of the following standards at this time and will make final decisions as to whether to incorporate some or all of these standards in a final rule at a later date:

• API RP 14C, Analysis, Design, Installation, and Testing of Basic Surface Safety Systems for Offshore Production Platforms, Eighth Edition (February 2017). BSEE proposed to substitute the Eighth Edition for the currently incorporated Seventh Edition (2001, reaffirmed 2007). The Eighth Edition contains extensive substantive changes compared to the last substantive revision (the Sixth Edition) in 1998 and makes numerous organizational changes as compared to the Seventh Edition.

• API STD 2RD, Dynamic Risers for Floating Production Systems, Second Edition, September 2013. BSEE proposed to substitute this standard for the currently incorporated First Edition of API RP 2RD (1998, Errata 2009) of the same standard.

• ANSI/API Spec. 14A, Subsurface Safety Valve Equipment, Twelfth Edition (January 2015; Errata, July 2015; Addendum, June 2017). BSEE proposed to substitute the Twelfth Edition for the currently incorporated Eleventh Edition (2005) of the same standard.

• ANSI/API Spec. 17J, Unbonded Flexible Pipe, Fourth Edition May 2014; Errata 1, September 2016; Errata 2, May 2017; Addendum 1, October 2017. BSEE proposed to substitute this edition for the currently incorporated Third Edition (2008) of the same standard.

• API RP 2SM, Design, Manufacture, Installation, and Maintenance of Synthetic Fiber Ropes for Offshore Mooring, Second Edition (2014). BSEE proposed to substitute this edition for the currently incorporated First Edition (2001; 2007 Addendum) of the same standard.

BSEE is carrying forward with certain proposed revisions to § 250.198 in the final rule. First, as previously mentioned, and as proposed, the final rule revises § 250.198(h)(58) (which incorporates API RP 14F, Recommended Practice for Design, Installation, and Maintenance of Electrical Systems for Fixed and Floating Offshore Petroleum Facilities for Unclassified and Class 1, Division 1 and Division 2 Locations, Upstream Segment) and § 250.198(h)(62) (which incorporates API RP 14J, Recommended Practice for Design and Hazards Analysis for Offshore Production Facilities) to update the cross-references to § 250.842(b), which this final rule has redesignated as § 250.842(c). Second, BSEE has completed its evaluations of the following standards, as well as any comments received on their proposed incorporation, and determined that these standards are at least as protective of safety and the environment as the standards previously incorporated in the regulations. Accordingly, this final rule revises existing § 250.198 to incorporate the following updated standards:

• ASME Boiler and Pressure Vessel Code (BPVC)

○ Section I, Rules for Construction of Power Boilers including Appendices (2017 Edition). This edition replaces the previously incorporated 2004 edition of that standard, including the July 2005 Addenda and all Section I Interpretations Volume 55. ASME BPVC Section 1 provides methods and requirements for: construction of power, electric, and miniature boilers; high temperature water boilers, heat recovery steam generators, and certain fired pressure vessels to be used in stationary service; and power boilers used in locomotive, portable, and traction service. Major changes in the 2017 edition include: (a) New guidance on visual examination in the fabrication process; (b) a non-mandatory option for ultrasonic examination acceptance criteria; (c) requirements for retaining radiographs as digital images; (d) clarification of material identification requirements for a “pressure part material;” (e) updated mandatory training requirements for qualified personnel for various non-destructive examination (NDE) techniques; (f) updated provisions on the types of auxiliary lift devices that operators can use for alternative testing of valves to align with current state of the art; (g) clarification that welded pressure parts must be hydrostatic-tested with the completed boiler; and (h) references to other updated standards.

○ Section IV, Rules for Construction of Heating Boilers; including Appendices 1, 2, 3, 5, 6, and Non-mandatory Appendices B, C, D, E, F, H, I, K, L, and M, and the Guide to Manufacturers Data Report Forms (2017 Edition). This edition replaces the previously incorporated 2004 Edition and 2005 Addenda of that standard. The updated standard provides requirements for design, fabrication, installation, and inspection of steam heating, hot water heating, hot water supply boilers, and potable water heaters intended for low pressure service that are directly fired by oil, gas, electricity, coal, or other solid or liquid fuels. The new edition also (a) provides equipment scope clarifications, (b) includes a new mandatory appendix for feedwater economizers, (c) deletes conformity assessments requirements and moves them to normative reference ASME CA-1, (d) provides new corrosion resistant alloy requirements for internal tank surfaces of heat exchangers installed in storage tanks, and (e) clarifies requirements for modular boilers.

○ Section VIII, Rules for Construction of Pressure Vessels; Divisions 1, 2, and 3 (2017 Edition) and all Section VIII Interpretations Volumes 54 and 55. This edition replaces the previously incorporated 2004 Edition and 2005 Addenda, Divisions 1, 2, and 3 and all Section VIII Interpretations Volumes 54 and 55. Since the 2004 edition was issued, ASME has rewritten the BPVC code to incorporate the latest technologies and engineering knowledge. The 2017 Edition gives detailed requirements for the design, fabrication, testing, inspection, and certification of both fired and unfired pressure vessels. This updated edition specifically refers to those pressure vessels that operate at pressures, either internal or external, that exceed 15 pounds per square inch gauge (psig). Section VIII contains three divisions, each of which covers different vessel specifications.

• API 510, Pressure Vessel Inspection Code: In-Service Inspection, Rating, Repair, and Alteration, Downstream Segment, Tenth Edition (May 2014), including Addendum 1 (May 2017). This edition replaces the previously incorporated Ninth Edition of the same standard. API 510 covers the in-service inspection, repair, alteration, and re-rating activities for pressure vessels and the pressure-relieving devices protecting these vessels. API 510 is intended to specify the in-service inspection and condition-monitoring program that is needed to determine the integrity of pressure vessels and pressure-relieving devices. The Tenth Edition includes updated normative references, updated definitions, and new requirements for inspection programs, corrective actions,

management of change, integrity operating windows, pressure testing, corrosion considerations, and marking requirements.

• API RP 2SK, Design and Analysis of Stationkeeping Systems for Floating Structures, Third Edition (October 2005), Addendum (May 2008), reaffirmed edition of June 2015. The reaffirmed document makes no changes to the previously incorporated 2008 Third Edition. It provides a method for analyzing, designing, or evaluating station-keeping systems (mooring, dynamic positioning, or thruster-assisted mooring) that operators use for floating units. The reaffirmed standard also addresses some operational aspects of such systems and provides different design requirements for mobile and permanent moorings.

• ANSI/API RP 14B, Design, Installation, Operation, Test and Redress of Subsurface Safety Valve Systems, Sixth Edition (September 2015). This edition replaces the previously incorporated Fifth Edition (2005) of the same standard. This standard creates requirements and provides guidelines for subsurface safety valve (SSSV) system equipment. Manufacturers and operators design and install SSSVs to prevent an uncontrolled well flow, when actuated. The Sixth Edition addresses system design, installation, operation, testing, redress, support activities, documentation, and failure reporting. The Sixth Edition covers specific equipment including control systems, control lines, SSSVs, and secondary tools and provides criteria for proper redress for replacement or disassembly of an SSSV. In contrast to the Fifth Edition, the Sixth Edition also emphasizes supplier and manufacturer operating manuals, systems integration manuals, handling, system quality, documentation, and data control.

• API RP 14FZ, Design, Installation, and Maintenance of Electrical Systems for Fixed and Floating Offshore Petroleum Facilities for Unclassified and Class I, Zone 0, Zone 1 and Zone 2 Locations, Second Edition (May 2013). This edition replaces the previously incorporated First Edition (2001, reaffirmed 2007) of the same standard. The Second Edition contains substantial changes from the First Edition. The Second Edition establishes minimum requirements and guidelines for design and installation of electrical systems on fixed and floating petroleum facilities located offshore in hazardous locations classified as Zone 0, Zone 1, or Zone 2. As revised, the Second Edition of API RP 14FZ applies to both permanent and temporary electrical installations and describes basic desirable electrical practices for offshore electrical systems.

• API RP 14G, Fire Prevention and Control on Fixed Open-type Offshore Production Platforms, Fourth Edition (April 2007), reaffirmed January 2013. The reaffirmed document makes no changes to the previously-incorporated standard. This reaffirmed standard includes provisions for minimizing the likelihood of an accidental fire, and for designing, inspecting, and maintaining fire control systems. The reaffirmed standard emphasizes the need to train personnel in firefighting, to conduct routine drills, and to establish methods and procedures for safe evacuation. API's intent in this standard is for fire control systems to provide an early response to prevent incipient fires from spreading; however, the intent is not to preclude the application of more extensive practices to meet special situations or the substitution of other systems that will provide an equivalent or greater level of protection. This reaffirmed standard is applicable to fixed open-type offshore production platforms, which are generally installed in moderate climates and which have sufficient natural ventilation to minimize the accumulation of vapors; enclosed areas, such as quarters buildings and equipment enclosures, normally installed on this type platform are addressed. Totally enclosed platforms installed for extreme weather conditions or other reasons, however, are beyond the scope of this standard.

• API STD 6AV2, Installation, Maintenance, and Repair of Surface Safety Valves and Underwater Safety Valves Offshore (First Edition March 2014) and Errata 1, August 2014. This standard replaces the previously incorporated API RP 14H, Installation, Maintenance and Repair of Surface Safety Valves and Underwater Safety Valves Offshore (Fifth Edition 2007), which API withdrew when it adopted API STD 6AV2. The new standard provides practices for installing and maintaining Surface Safety Valves (SSVs) and Underwater Safety Valves (USVs) used or intended to be used as part of a safety system (as defined by documents such as API RP 14C) and includes provisions for conducting inspections, installations, and maintenance, field and off-site repair as well as provisions addressing testing procedures, acceptance criteria, failure reporting, and documentation. API STD 6AV2 also includes updated definitions, new provisions for qualified personnel, new documentation and test procedures, acceptance criteria for post-installation and post-field repair, and provisions for offsite repair and remanufacture alignment to ANSI/API Spec. 6A.

• API RP 500, Classification of Locations for Electrical Installations at Petroleum Facilities Classified as Class I, Division 1 and Division 2, Third Edition (December 2012; Errata January 2014). This edition replaces the previously incorporated Second Edition (1997, reaffirmed 2002) of the same standard. The purpose of this standard is to provide guidelines for classifying locations (Class I, Division 1 and Class I, Division 2) at petroleum facilities for the selection and installation of electrical equipment. This standard followed the basic definitions given in the 2011 edition of National Fire Protection Association (NFPA) 70, National Electrical Code (NEC).

• ANSI/API Spec. Q1, Specification for Quality Management System Requirements for Manufacturing Organizations for the Petroleum and Natural Gas Industry, Ninth Edition (June 2013; Errata, February 2014; Errata 2, March 2014) and Addendum 1 (June 2016). This edition replaces the previously incorporated Eighth Edition (2007) of the same standard. This updated standard features over 85 new clauses and five new sections, creating a major shift in quality management as it applies to the oil and gas industry. A thematic change is the approach to quality through risk assessment and risk management. The five new sections include risk assessment and management, contingency planning, product quality planning, preventative maintenance, and management of change. The Ninth Edition is also intended to align with API Spec. Q2, Quality Management System Requirements for Service Supply Organizations for the Petroleum and Natural Gas Industries, First Edition (2011). Overall, the goal of ANSI/API Spec. Q1 Ninth Edition is to further enhance the minimum baseline requirements of quality management systems of oil and gas equipment manufacturers.

• ANSI/API Spec. 6A, Wellhead and Christmas Tree Equipment, Twentieth Edition (October 2010; Addendum 1, November 2011; Errata 2, November 2011; Addendum 2, November 2012; Addendum 3, March 2013; Errata 3, June 2013; Errata 4, August 2013; Errata 5, November 2013; Errata 6, March 2014; Errata 7, December 2014; Errata 8, February 2016; Addendum 4, June 2016; Errata 9, June 2016; Errata 10, August 2016). This edition replaces the previously incorporated Nineteenth Edition (2004) of the same standard. The Twentieth Edition includes significant changes from the previous edition, such

as: (a) Updated definitions and terms; (b) updated normative references to other standards; (c) temperature ratings; (d) more stringent material performance requirements; (e) a revised repair and remanufacture annex; (f) updated requirements for equipment in hydrogen sulfide (H2S) service; and (g) SSV and USV performance requirements. The Twentieth Edition also aligns with other standards, such as NACE MR0175 (for use in H

S-containing environments), and contains options to use various American Society for Testing and Materials (ASTM) International documents for material testing. The authors removed references to obsolete standards and requirements for obsolete equipment from the Twentieth Edition.

• API Spec. 6AV1, Specification for Verification Test of Wellhead Surface Safety Valves and Underwater Safety Valves for Offshore Service, Second Edition (February 2013). This edition replaces the previously incorporated First Edition (1996, reaffirmed 2008) of the same standard. The Second Edition establishes design validation requirements for ANSI/API Spec. 6A, Specification for Wellhead and Christmas Tree Equipment, for SSVs and USVs as well as associated valve bore sealing mechanisms for Class II and Class III SSVs and USVs. Major changes from the First Edition include: replacing “Performance Requirement” with the term “Class;” phasing out the use of Class 1/PR1 valves; establishment of API licensing of test agencies; updated facility requirements; more specificity on the validation testing procedures of Class II valves; and new validation tests for Class III SSVs and USVs.

• API 570, Piping Inspection Code: In-service Inspection, Rating, Repair, and Alteration of Piping Systems, Fourth Edition (February 2016; Addendum 1, May 2017). This edition replaces the previously incorporated Third Edition (2009). API 570 covers inspection, rating, repair, and alteration procedures for metallic and fiberglass-reinforced plastic piping systems and their associated pressure relieving devices that have been placed in service. This inspection code applies to all hydrocarbon and chemical process piping covered in section 1.2.1 that have been placed in service (unless specifically designated as optional per section 1.2.2). This publication does not cover inspection of specialty equipment, including instrumentation, exchanger tubes and control valves. The “in service inspection” Code in this standard no longer covers process piping systems that have been retired from service and abandoned in place. However, piping that is abandoned in place may still need some amount of inspection and/or risk mitigation to ensure that it does not become a process safety hazard because of continuing deterioration. Process piping systems that are temporarily out of service, but have been preserved for potential future use, are still covered by the new edition of this Code.

Timing of Compliance With New Editions of Standards

Comment:

Several commenters suggested that, if BSEE updated certain standards in the final rule, it should clarify that some of the updated standards would apply only to new equipment or to new offshore facilities;

i.e.,

that those updated standards would not require replacement of existing facilities or equipment that do not meet the updated standards' requirements.

Response:

BSEE does not believe that it is necessary to revise the regulatory text for the updated standards that are included in this final rule to specify which standards, or which provisions in those standards, apply prospectively. BSEE does not intend to require, and the standards themselves do not envision, replacement of existing facilities or equipment (that meet the applicable requirements that were in effect when the facilities or equipment were installed) simply because updated standards have been incorporated in this final rule. The updated standards will apply to all BSEE approvals of facilities and equipment prospectively (as of the effective date of the final rule). By the nature of the standards and the way in which they are incorporated in BSEE's regulations, some of the updated standards' provisions can apply only to new facilities or equipment (

e.g.,

provisions for design, analysis, and/or installation of certain new systems or new equipment). The language of the regulations and the referenced standards will result in their application to new and existing facilities or equipment, and require certain future actions (

e.g.,

equipment inspection, testing, removal/repair/replacement). Operators must ensure that those future actions are taken and that all existing facilities/equipment comply with those applicable requirements. Although BSEE believes that the nature, purpose, and scope of the updated standards—and of the regulations which reference those standards—in this final rule are clear as to which requirements apply only to new equipment/facilities and which requirements apply to both new and existing equipment/facilities, BSEE notes that:

• API STD 6AV2 (First Edition), API 510 (Tenth Edition), and API 570 (Fourth Edition) apply to both new and existing facilities and equipment;

• API RP 2SK (Third Edition, reaffirmed 2015), API RP 14FZ (Second Edition), and API RP 500 (Third Edition) apply only to new facilities installed after the final rule effective date; and

• ANSI/API RP 14B (Sixth Edition), ANSI/API Spec. Q1 (Ninth Edition), and API Spec. 6AV1 (Second Edition) apply only to new equipment installed after the effective date.

What must the DWOP contain? (Section 250.292)

BSEE did not receive any comments on this section of the proposed rule. Since BSEE decided not to incorporate by reference the second edition of API STD 2RD, as proposed, the final rule implements no changes to this section of the regulations.

General (Section 250.800)

BSEE proposed updating API RP 2RD to API STD 2RD in this rule. BSEE did not receive any comments on this section of the proposed rule. BSEE decided not to incorporate by reference the second edition of API STD 2RD, as proposed.

However, BSEE is revising paragraph (a) of this section to clarify expectations for preproduction inspections of new facilities, adding two new subordinate paragraphs to paragraph (a). In the current regulations, paragraph (a) of this section already requires operators to receive BSEE approval of their production safety system application and request a preproduction inspection from BSEE before commencing production. BSEE added a new paragraph (a)(1) to clarify the requirement to obtain approval of the production safety system application by referencing § 250.842, which contains the requirements for that application. BSEE also added new paragraph (a)(2) to highlight and clarify the requirement to request a preproduction inspection, including language noting that the operator must notify the District Manager 72 hours before it plans to commence initial production and adding a cross reference to that existing requirement in § 250.880(a)(1). These revisions are purely organizational and clarifying and do not impose any new substantive requirements.

Safety and Pollution Prevention Equipment (SPPE) Certification (Section 250.801)

Section summary:

This section of the existing regulations contains requirements for the installation of certified SPPE on OCS wells or as part

of the system associated with the wells. It also clarified that (as of September 2017) SPPE includes SSVs and actuators, such as those installed on injection wells capable of natural flow, as well as BSDVs. This section of the existing regulations also specifies that BSEE will not allow subsurface-controlled SSSVs on subsea wells and provides that SPPE manufactured and marked pursuant to ANSI/API Spec. Q1 will be considered certified SPPE under part 250. Section 250.801(c) of the existing regulations also provides that BSEE may exercise its discretion, under certain conditions, to accept SPPE manufactured under quality assurance programs other than ANSI/API Spec. Q1.

In the proposed rule, BSEE proposed to clarify that GSLDVs are a type of SPPE, since, for reasons explained in the 2017 proposed rule (82 FR 61709), GLSDVs already must follow § 250.801. BSEE also proposed to revise the introductory sentence in paragraph (a) of this section to remove the phrase “[i]n wells located on the OCS,” since all of the equipment that is considered SPPE is either located in a well or a riser. After consideration of comments submitted on the proposed revisions to this section, as discussed below, the final rule revises § 250.801(a) to expressly include GLSDVs in the list of equipment that BSEE considers to be SPPE. In addition, as proposed, the final rule revises paragraph (a) to remove the phrase, “[i]n wells located on the OCS.”

Addition of GLSDVs to SPPE List

Comment:

Commenters generally questioned the proposed addition of GLSDVs to the list of equipment that is considered SPPE. One comment asserted that GLSDVs are installed in a departing capacity (direction of flow into the well). The commenter stated that there is a check valve to prevent backflow and that there are no testing frequency or leakage rate requirements for GLSDVs and there is no mention of GLSDVs in the Eighth Edition of API RP 14C. Comments also stated that BSEE did not provide statistics or failure data to justify the proposed addition of GLSDVs as SPPE.

Response:

BSEE does not believe that the assertions made in these comments warrant a change to the proposed revision. As explained in the proposed rule, the addition of GLSDVs to the list of SPPE is merely a clarification of what is already required by the current regulations. Section 250.835 currently requires that BSDVs meet the requirements in § 250.801, and § 250.873 states that GLSDVs must meet the requirements for BSDVs in § 250.835, so it follows that GLSDVs are already required to meet the requirements of § 250.801. The GLSDV acts as a robust, tested barrier to prevent backflow to the platform. The configuration of many subsea fields is such that it is important to prevent the continuous feeding of gas lift gas to the facility in the event of an emergency. Regarding the comment that GLSDVs are not addressed in API RP 14C, BSEE does not believe that the lack of direct mention of GLSDVs in that document is dispositive of whether the requirements for SPPE in subpart H should apply to those valves, which in fact they already did under the pre-existing regulations. BSEE notes that GLSDVs are mentioned in API RP 17V, Recommended Practice for Analysis, Design, Installation, and Testing of Safety Systems for Subsea Applications, First Edition, which was adopted by API in 2015 and includes the subsea requirements that were found in the Seventh Edition of API RP 14C. Although BSEE does not incorporate API RP 17V by reference in its regulations, that standard is considered a companion document for API RP 14C, and BSEE believes that the regulated industry is well aware of the connection between those standards. Regarding the assertion that there are no testing frequency or leakage rate requirements for GLSDVs, the current regulations include specific testing requirements for GLSDVs under § 250.873(d).

Comment:

A commenter asserted that GLSDV requirements should apply only to subsea systems.

Response:

BSEE agrees. In fact, GLSDVs are listed only under the subsea systems sections in the regulations. However, to clarify this point, BSEE added “associated with subsea systems” to § 250.801(a)(5) in the final rule.

Requirements for SPPE (Section 250.802)

Section summary:

This section provides the requirements for SPPE. SPPE are key safety barriers that prevent catastrophic events from occurring on offshore platforms. This section requires compliance with a variety of industry standards and includes repair and documentation requirements. BSEE requested comments on the proposed elimination within § 250.802(c)(1) of a requirement that an independent third party certify that each device will function under the most extreme conditions to which it may be exposed. Based on the comments received, BSEE is revising existing paragraph (c)(1) and renumbering the remaining paragraphs of this section. In paragraph (c)(1) of the final rule, BSEE is removing the requirement for an independent third party certification of the design of the SPPE. In the final rule BSEE is maintaining the requirement in the existing regulations that each device must be designed to function in the conditions to which it may be exposed, while deleting the phrase “most extreme.” BSEE is adding a provision in the final rule in paragraph (c)(1)(i) that was not in the proposed rule requiring the operator to have each device design tested by an independent test agency, according to the testing criteria in the appropriate standard as incorporated into the regulations. This change does not reflect any new substantive requirements or burdens, but rather merely reinforces existing requirements from documents that are already incorporated by reference in § 250.802. In addition, the final rule requires operators to maintain a description of the process used to ensure the device is designed to function as required in paragraph (a) and final paragraph (c)(1) of this section. The operator must provide this documentation to BSEE upon request. BSEE also included a provision in final paragraph (c)(1)(iii) that preserves the requirement for a qualified third party certification of a device, if that device is removed from service and installed at a different location. This ensures that the device will function as designed under the conditions to which it may be exposed in the new location.

Consistent with the proposed revision to § 250.801, BSEE is revising this section to include GLSDVs in the equipment addressed in paragraphs (a) and (c) of this section, as well. BSEE also is revising paragraph (d)(2) of § 250.802 to remove the phrase “on that well,” as proposed. BSEE does not need to specify the location of the SPPE since all of the equipment that is considered SPPE is either located in a well or a riser.

Third Party Certifications

Comment:

BSEE received many comments on the proposed deletion of the requirements for third party certifications. Industry groups supported elimination of this requirement and concurred with the rationale in the proposed rule that suggested that this requirement duplicated validation and functional tests required in other sections of the regulations. Other commenters highlighted the importance of this equipment in preventing major incidents, noted recommendations arising out of the

DWH

incident related to the need for the use of third party certification programs, described the

value of independent third party verification, and asserted that BSEE had not provided any evidence to support a revision of the 2016 requirement. Many commenters believe that deletion of this requirement will increase the risks arising out of offshore oil and gas development. Commenters asked how BSEE would ensure the operators followed the standards as required, and met the design requirements for the SPPE, if the independent third party certification requirement was removed.

Response:

BSEE agrees that the current industry standards and quality assurance certification programs related to SPPE have played an important role in improving the reliability of equipment that is manufactured for use on the OCS. Industry certification practices, such as the API Monogram Program, provide a level of assurance that these critical barriers are designed and manufactured according to good engineering practices. However, there are limits to the scope of these certification and verification programs. For example, these programs apply only to new equipment at the time of manufacture and the certifications are made by the OEMs rather than the operator (see industry comments: “it is the manufacturer's responsibility to meet the design requirements of API standards, not the operator” and “it is the responsibility of the manufacturer to meet certification requirement of ANSI/API Spec Q1”).

However, the responsibility for verifying that the SPPE is fit-for-service on a specific facility ultimately rests with the operator and BSEE, not the OEM. The existing requirement for independent third party certification helps to supplement BSEE's review process. Based on the public comments, BSEE reviewed this process and the existing third party certification programs and is revising the current requirements regarding the independent third party certifications as previously described.

BSEE determined that it is appropriate to retain the existing language requiring the device to be designed to function under the conditions to which it may be exposed, while deleting the phrase “most extreme.” The recommendations arising from the

DHW

incident included the use of the phrase “most extreme conditions” in the criteria for the blowout preventer (BOP), and BSEE then applied it to SPPE. However, unlike BOPs, operators do not generally move SPPE to other locations after it is installed. Manufacturers and operators design SPPE to be used in a specific well/location for the life of the equipment. The potential for unanticipated extremes during production is less than during drilling or completion operations. Manufacturers and operators know the operating environment when they design the SPPE, and the basic design criteria includes temperature, pressure and flow rate for the well where the SPPE will be installed. The valves used are normally commercial, off the shelf products that are designed to function in a range of operating conditions. The most extreme production conditions generally occur at the beginning of production operations, since operating pressures decrease over time as the reservoir is produced. In addition, BSEE is retaining long standing requirements for design testing, as provided in the incorporated standards, as well as associated requirements for documentation of the design process. The final rule still provides that any SPPE that is removed from service, then installed in another location, must have independent third party certification. To the extent the final rule will no longer require independent third party certification in other contexts, the final rule will require the operator to maintain documentation of the process used to ensure the device is designed to function in the conditions to which it may be exposed and to provide that documentation to BSEE upon request. These elements of the final rule help address concerns raised by commenters regarding BSEE's ability to verify compliance with the standards for design. As a result, we revised the language of the proposed rule in the final rule to state that the operator must have the device design tested by an independent test agency and must maintain documentation of the design process used to ensure that the device is designed to function under the conditions to which it may be exposed.

The independent third party certification required by existing regulations is a one-time certification of each device. A one-time certification will not guarantee that a device will function as designed for the life of the device. Accordingly, an independent third party's certification that the device will function is inherently of limited value. The existing regulations already include additional requirements to ensure that SPPE will function when needed. For example, § 250.880 establishes detailed testing requirements for SPPE, based on the specific type of device, ensuring that all SPPE are tested on a regular basis and repaired or replaced, as appropriate. This regular testing is designed to ensure the SPPE will function when needed, preventing failures during operations.

Existing BSDV Inventory

BSEE requested comments concerning a method of using BSDVs which were already in the operator's inventory, but had not been certified pursuant to the SPPE requirements. BSEE also requested information on the size of this non-certified BSDV inventory. The comments from industry associations included a recommendation that would allow the use of non-certified equipment if a purchase order had been signed by the effective date of the 2016 rule. BSEE notes that operators were aware of the likely SPPE requirements long before the effective date of the 2016 rule. In addition, operators have options under the existing regulations for obtaining approval to use non-certified SPPE. We believe that this case-by case approval process is a better approach than attempting to address the issue through a modification of the SPPE requirements. Consequently, BSEE made no change to the regulations regarding existing BSDV inventory.

Requirements for Non-Certified Equipment

Comment:

According to the commenter, the proposed regulations (presumably, the specific proposal to remove the phrase “on that well” from § 250.802(d)(2)) would allow pulling non-certified safety equipment from one well and moving it to another well. The commenter noted that current regulations allow non-certified equipment to remain in service on a specific well, until it is time to replace that equipment. The commenter went on to assert that the regulations allow this because there is a cost of pulling and replacing it, and BSEE provided operators the opportunity to use non-certified equipment for their useful remaining life in a specific well. The commenter noted that, therefore, the regulations would “grandfather” non-certified equipment for use in that specific well. The commenter concluded that, if the industry is allowed to pull non-certified equipment and move it to another well, new certified equipment will not be purchased and installed as planned. The commenter stated that continuing to use non-certified safety equipment is not in the public interest and could increase the risk of a spill. For those reasons, the commenter opposed this revision.

Response:

BSEE disagrees. Whenever SPPE is installed on a well, it must be certified according to §§ 250.801 and 250.802(d)(1), neither of which is being modified to allow the behavior the

commenter describes. The existing provisions that allow operators to continue to use non-certified SPPE that is currently installed on a well applies only to equipment that was installed before the certification requirement was in the regulations. Any new SPPE or SPPE that requires offsite repair, re-manufacturing, or any hot work, must be replaced with certified SPPE. Operators are not allowed to remove non-certified SPPE from one well and install it on another well. The reason that BSEE is removing the phrase “on that well” is not to allow for the conduct described by the commenter, but to recognize that SPPE may also be installed on risers or locations in production systems other than a well itself.

What SPPE failure reporting procedures must I follow? (Section 250.803)

Section summary:

Section 250.803(a) of the existing regulations: Requires operators to follow failure reporting requirements in ANSI/API Spec. 6A (Nineteenth Edition) for SSVs, BSDVs, and USVs, and to follow the requirements in ANSI/API Spec. 14A (Eleventh Edition) and Annex F of ANSI/API RP 14B (Fifth Edition) for SSSVs; defines a failure as “any condition that prevents the equipment from meeting the functional specification;” and requires operators to provide written notice of equipment failure to BSEE and the equipment manufacturer within 30 days after the discovery of the failure.

Existing § 250.803(b) requires operators to ensure that an investigation and a failure analysis to determine the cause of the failure are performed within 120 days of the failure and that the conclusions and any corrective action are documented. If an entity other than the manufacturer performs the investigation and analysis, the regulation requires operators to ensure that the manufacturer and BSEE receive copies of the analysis report. Existing § 250.803(c) specifies that if an equipment manufacturer notifies an operator that it changed the design of the equipment that failed, or if the operator changes operating or repair procedures as a result of a failure, then the operator must, within 30 days of such changes, report the design change or modified procedures in writing to the Chief of BSEE's Office of Offshore Regulatory Programs (OORP) (at the address specified in existing paragraph (d)) or to the Chief's designee.

BSEE proposed to revise § 250.803(a) to expressly include GLSDVs in the list of equipment that are subject to the failure reporting requirements and to clarify that operators must submit their SPPE failure information to BSEE through the Chief, OORP, unless BSEE has designated a third-party under proposed paragraph (d), to whom operators would then be required to submit their failure information.

Similarly, BSEE proposed to revise existing § 250.803(b) of this section to clarify that, when anyone other than the equipment manufacture performs an investigation and analysis, operators must submit the investigation and analysis results to the Chief of OORP in accordance with proposed paragraph (d). BSEE also proposed to revise existing paragraph (d) to further clarify the requirement to submit failure information to a BSEE-designated third party. The final rule implements these revisions as proposed. Finally, although BSEE proposed no changes to the existing definition of “failure” in this section, the proposed rule invited input on whether or how to revise the definition to ensure consistency. The final rule makes no change to that definition.

Currently, the designee of the Chief of OORP is the U.S. Department of Transportation's Bureau of Transportation Statistics (BTS). Operators submit this information through

www.SafeOCS.gov

, where it is received and processed by BTS. BSEE identified BTS as the designee and recommended that SPPE failure information should be sent to BTS via

www.SafeOCS.gov

through a press release issued on October 26, 2016 (

https://www.bsee.gov/newsroom/latest-news/statements-and-releases/press-releases/bsee-expands-safeocs-program

). BSEE and BTS have a Memorandum of Understanding (MOU) that provides for BTS collection of BOP and SPPE failure reports. The MOU may be viewed on BSEE's website at:

https://www.bsee.gov/sites/bsee.gov/files/bsee-bts-mou-08-18-2016_0.pdf.

Reporting instructions are on the SafeOCS website at:

https://www.SafeOCS.gov.

Reports submitted through

www.SafeOCS.gov

are collected and analyzed by BTS and protected from release under the Confidential Information Protection and Statistical Efficiency Act (CIPSEA) (44 U.S.C. 101). CIPSEA requires that BTS treat and store such reports confidentially, under strict criminal and civil penalties for noncompliance. Information submitted under CIPSEA also is protected from release to other government agencies (including BSEE), from Freedom of Information Act (FOIA) requests and subpoena. If the information were to be submitted to BSEE, BSEE could only protect its confidentiality to the extent allowed by Federal law other than CIPSEA. The SafeOCS program was designed to protect the confidentiality of information submitted and promote failure reporting without fear of reprisals. The “Oil and Gas Production Safety System Events 2017 Annual Report” is available at

https://www.safeocs.gov/sppe_home.htm.

Definition of “Failure”

Comment:

Industry commenters requested that BSEE clarify the definition of “failure” of SPPE, which was added in the 2016 PSSR, and recommended that BSEE provide a definition to align with industry standards. Commenters further recommended that, until they and BSEE could reach a “mutually agreeable” resolution, industry should document and maintain failure reports in accordance with applicable API standards, and provide failure reports to BSEE upon request. These commenters recommended that BSEE and industry hold workshops to determine the best repository or clearinghouse for collecting failure data.

Commenters asserted that the “failure” definition proposed in § 250.803(a) could be interpreted so broadly as to include maintenance issues and routine repair items that would create an administrative burden with no safety or environmental protection improvement, while noting that some operators disagree with this position. Those operators recognize that parts wear over time, and due to the wear, the SPPE device would “fail to meet the functional specification.”

Response:

BSEE disagrees. Although BSEE sought input in the proposed rule about how to revise the current language specifying how “failure” is defined in this regulation, BSEE did not receive any specific proposals for modifying the existing definition of “failure.” Currently, according to BTS, the designated third party to receive SPPE failure information, submitters for each of the specific SPPE types appear to be following the definitions within the applicable API standard for individual equipment types. BSEE finds this to be a logical and reasonable approach that is consistent with the regulatory requirement; thus, no change to the “failure” definition has been made.

With regard to the commenters' suggestion that BSEE hold workshops with industry to determine the best repository or clearinghouse for collecting failure data, BSEE does not agree that this approach is necessary, at this time. BSEE already has identified BTS as an appropriate clearinghouse for this data. The commenters did not raise specific objections or concerns related to BSEE's designation of BTS to collect the failure data. BSEE's collaboration with BTS allows the collection and analysis of failure data under strict standards of confidentiality, which supports robust reporting.

With regard to commenters' assertion that the existing definition could be interpreted so broadly as to include maintenance issues and routine repair items, BSEE observes that the types of devices included as SPPE in the final rule represent primary and secondary barriers to prevent the loss of well control and subsequent potentially catastrophic events. In a study recently completed for BSEE by ExproSoft

(

https://www.bsee.gov/sites/bsee.gov/files/tap-technical-assessment-program/765aa.pdf

), approximately 30 percent of well control events worldwide were found to be related to such barriers for production platforms, especially after large storms such as hurricanes. Thus, commenters and others should not view failure reporting as inconsequential or unimportant to concerns such as safety and environmental protection.

Reporting Requirements

Comment:

A commenter recommended that BSEE consider using the API Standard 689/ISO 14224

Collection and Exchange of Reliability and Maintenance Data for Equipment

to clarify reporting requirements and standardize data collection processes.

Response:

As the SPPE failure reporting program is relatively new, it is premature to require adherence to the referenced standard. BTS has prepared the first public report of aggregated statistics covering SPPE reports submitted by industry from the effective date of the requirement, November 7, 2016 through December 2017. BSEE still needs to assess results from the first year and identify any issues with regard to reporting or collection processes. In conducting this evaluation, BSEE plans to consider the potential usefulness of industry standards such as API Standard 689/ISO 14224 to improve the failure reporting program. At this time, however, the focus for the requested data is described within each of the cited standards and is intended to increase both the volume and quality of the aggregated equipment component failure data for SPPE shared among the regulated community and the OEMs that serve that community. BSEE is not adopting a change at this time.

Root Cause Analysis

Comment:

A commenter recommended that BSEE incorporate internationally recognized good practice standards, coupled with verification; employ incident reporting with root cause analysis (RCA); and seek prevention of major incidents through research and development on emerging threats and use of various risk tools. Regarding failure reporting, the commenter asserted that the issue of what is considered a failure is tied to its root cause, and that operators should use RCA to analyze what systemic causes allowed the failure to occur, in addition to the immediate cause.

Response:

BSEE agrees in general with the comment. In § 250.803, as revised by this final rule, BSEE establishes a system that is consistent with globally recognized good-practice standards, complemented by verification. The equipment component failure notification, analysis, and reporting process implemented through this final rule applies the identified good practices to equipment component failures, use of RCA to aid in the prevention of catastrophic events, and proper consideration of emerging threats. The final rule also applies the concept of barrier management by requiring reporting on all failures of SPPE that represent sequential barriers to catastrophic events.

BSEE agrees that a failure is ultimately a result of its root cause, and BSEE is implementing the failure reporting requirements to promote confidence that there will be no adverse impact on entities that report failures by designating BTS as the third party to receive and analyze information submitted under this section (

see

n.17). As discussed above, BTS is able to analyze and store reports confidentially. BSEE also has included consideration of root cause at two levels within the current collection methods. The fields within the form include initial root cause information. For failures that require equipment to be returned to a shore facility for repair, BSEE requires a formal RCA report. Such an analysis looks beyond the immediate cause and investigates systemic factors. The use of probabilistic risk methods for catastrophic risk assessment is outside the scope of this rule, but BSEE might consider them in the future.

Strengthen Requirements

Comment:

One commenter recommended that any revisions to § 250.803 failure reporting requirements should only strengthen them and not weaken them in any way. The commenter asserted that the current regulation does not require the processes or equipment that rely on the failed SPPE to be immediately shut-in until the equipment can be replaced with a certified, functioning SPPE and the commenter recommended that § 250.803 be revised to require immediate reporting of failed SPPE to BSEE and immediate shut-down of all processes or equipment that rely on the failed SPPE until replaced with a certified functioning SPPE. The commenter also recommended that, after investigation and collaboration with the equipment manufacturer is complete, the regulations should require the operator to notify BSEE of the long-term, permanent solution developed to either change the equipment design or modify operating, testing, maintenance, or repair procedures.

Response:

BSEE did not propose to, and does not here, relax the standards of safety in relation to equipment component safety reporting. To the contrary, the final rule continues to recognize the importance of improving safety and reducing burdens on operators while continuing to ensure safety and environmental protection. The collection of equipment component failure information promotes continuous safety improvement by enabling examination of this information in the aggregate, and by requiring submissions of reports to the OEMs where the opportunity to address design issues is greatest. Accordingly, BSEE disagrees that the additional measures suggested by the commenter are needed at this time. BSEE regulations already require multiple barriers within each well under § 250.801. Those requirements minimize the possibility that a single SPPE failure would result in the release of hydrocarbons to the environment.

Communication on Failure Reporting

Comment:

A commenter stated that since SPPE components are required to be certified in compliance with incorporated standards, all parties involved should play a significant role in failure reporting and recommended that BSEE develop a process to increase communication and information exchange among end users, manufacturers, certifying bodies, and agencies.

Response:

BSEE agrees that all parties involved in SPPE design, maintenance, and repair should be involved in collection and assessment of the data. BSEE's system for implementing the current requirement accomplishes that objective. This communication is expected to increase as the program matures.

Design, Installation, and Operation of SSSVs—Dry Trees (Section 250.814)

Section summary:

This section of the existing regulations establishes requirements for the design, installation, and operation of an SSSV in order to ensure its reliable operation. Among other things, existing § 250.814(d) requires operators to design, install, maintain, inspect, repair, and test all SSSVs in accordance with ANSI/API RP 14B (Fifth Edition 2005). BSEE proposed to revise paragraph (d) to replace the reference to ANSI/API RP 14B (Fifth Edition) with ANSI/API RP 14B (Sixth Edition 2015), which BSEE also proposed to incorporate by reference in § 250.198 in place of ANSI/API RP 14B (Fifth Edition). BSEE received no comments opposing this

specific revision and the final rule changes the reference to this standard as proposed.

Duplicative Requirements

Comment:

A group of commenters recommended deleting paragraph (b) of existing § 250.814 because it is duplicative of § 250.802(b).

Response:

BSEE disagrees. Section 250.814 is similar to, but not duplicative of, paragraph (b) of § 250.802. Section 250.802(b) requires that all SSSVs and actuators on dry and subsea trees comply with ANSI/API Spec. 14A, Subsurface Safety Valve Equipment (Eleventh Edition, 2005, reaffirmed 2012), as incorporated by reference in § 250.198(h)(73). Section 250.814, however, applies only to dry trees and specifies that operators must comply with ANSI/API RP 14B (now incorporated by reference in § 250.198(h)(55) of this final rule as the Sixth Edition, 2015) for designing, installing, maintaining, inspecting, repairing, and testing.

Third Party Testing

Comment:

A commenter stated that the proposed modification to the SSSV system equipment requirements that discontinues third party testing is without merit, as the third party testing is essential to the nuclear and fossil fuel industry. The commenter stated that the SSSV system equipment malfunctioned during the

DWH

incident.

Response:

This comment apparently concerns BOPs, since SSSVs were not involved in the

DWH

incident, but the BOP system was. BOPs are not addressed in this rulemaking, but were addressed in the 2016 WCR. In these final regulations, BSEE does not discontinue third party design testing of SSSVs. SSSVs, which are addressed in this final rule, have proven to be extremely reliable over the course of many decades. Manufacturers design SSSVs to fail in a safe mode: for example, most valves are designed so that if they fail (

i.e.,

lose pressure) they automatically close, thus preventing a release of hydrocarbons. In any event, if any leakage occurs, it does so within a closed, multiple barrier system.

Use of SSVs (Section 250.820)

Section summary:

This section of the existing regulations requires operators to comply with API RP 14H (Fifth Edition 2007) for the installation, maintenance, inspection, repair, and testing of all SSVs, including requirements applicable if the SSV does not operate properly or if any gas and/or liquid fluid flow occurs during the leakage test. BSEE proposed to revise this section to incorporate by reference API STD 6AV2 in place of API RP 14H (which was withdrawn by API). BSEE did not receive any comments on this section of the proposed rule and the final rule revises § 250.820 as proposed.

Emergency Action and Safety System Shutdown—Dry Trees (Section 250.821)

Section summary:

This section of the existing regulations specifies actions that operators must take with respect to wells in the event of an emergency (

e.g.,

an impending hurricane), including installation as soon as possible of a subsurface safety device on any well capable of natural flow that does not already have such a device. The existing regulation also requires shut-in of all oil wells and all gas wells that require compression.

BSEE proposed to revise paragraph (a) of this section to clarify that operators must shut in the production on any facility that “is impacted or that will potentially be impacted by an emergency situation.” This proposed clarification was intended to ensure that operators understand their obligation to properly secure wells before the platform is evacuated in the event of an emergency. The proposed rule also included some examples of emergencies (such as named storms, ice events, or earthquakes), but did not specify all emergency events that could trigger this provision; rather, the operator must determine when its facility is impacted or will potentially be impacted due to an emergency situation. (

See

82 FR 61710.) The final rule revises this section as proposed, except that, in response to one comment (discussed below), BSEE removed the reference to “in the Arctic” from the example of ice events as a possible emergency.

Installation of Subsurface Safety Devices

Comment:

A commenter expressed concern about installation of a subsurface safety device post-earthquake in a Planning Boundary Area that has a high potential for significant seismic activity. The commenter asked BSEE to clarify the times when installation of such a device would not be appropriate in a production well in such an area.

Response:

Subpart H establishes that production wells must have an SSSV installed. Sections 250.810 through 250.817 address circumstances when an SSSV could potentially be removed from a production well with tubing installations open to hydrocarbon-bearing zones. These circumstances generally include:

1. When approved by the BSEE District Manager (or, in Alaska, the OCS Regional Supervisor of Field Operations) for a well incapable of natural flow (§ 250.810);

2. When in the process of changing-out an SSSV or the production tubing housing an SSSV (§ 250.812);

3. When an SSSV becomes inoperable and measures are taken to address the issue (§ 250.813);

4. When an SSSV is in the process of being repaired, replaced, or installed (§ 250.814); or

5. When a wireline or pumpdown-retrievable SSSV is removed for routine operations (not exceeding 15 days and with prescribed safety mitigations in-place) (§ 250.817).

By including “post-earthquake” in this section, BSEE intends to clarify that earthquakes are among the kind of emergency situations in which an operator must follow the requirements of this section, including the requirement to install an SSSV as soon as possible, if for some reason the operator had not already installed it.

Consistency With § 250.837(a)

Comment

: One commenter proposed that BSEE adopt only the proposed language changes in § 250.837(a) and replace § 250.821(a) with § 250.837(a) language or expressly cross-reference that section.

Response:

BSEE disagrees. The language in final paragraph (a) of § 250.821 and paragraph (a) of § 250.837 is consistent and establishes the safest approach for the types of “dry” and “subsea” systems potentially impacted by those paragraphs, respectively. Section 250.821 specifically addresses Emergency Action and Safety System Shutdowns related to dry trees that do not have BSDVs, USVs, or GLSDVs and related systems found in subsea wells, whereas § 250.837 pertains to subsea trees and their associated systems.

Definition of Arctic OCS

Comment:

A commenter suggested clarification of the additions in §§ 250.821 and 250.837 relating to earthquakes and ice events. Specifically, the commenter suggested that BSEE remove the definition of Arctic OCS in § 250.105 and instead use the definition of Arctic OCS Conditions for defining the Arctic OCS without regard to Planning Boundary Area location.

Response:

BSEE disagrees with the suggested revisions to the definitions for Arctic OCS and Arctic OCS Conditions in § 250.105, which BSEE did not propose to revise and are not within the scope of this rulemaking. Those definitions were adopted as part of the Arctic Exploratory Drilling Rulemaking, 81 FR 46478 (2016) (the Arctic Rule) to

align the scope of that rule with the areas of the Arctic OCS utilized in the DOI OCS Oil and Gas Leasing Program for 2012-2017 (June 2012, available at

http://www.boem.gov/Five-Year-Program-2012-2017

). Those definitions reflect the conditions and challenges the Arctic Rule was designed to address. Altering these definitions in this rulemaking would increase confusion over the scope and applicability of the regulations specifically associated with the Arctic OCS. To address the commenter's concern, however, BSEE removed the phrase “in the Arctic” from §§ 250.821 and 250.837 in the final rule. It is not necessary to specify “ice events in the Arctic,” as “ice events” anywhere on the OCS have the potential to impact operations. Further, these provisions do not include a similar geographic specification for the other events—earthquakes or hurricanes—that it uses as examples.

Timing of Activities Associated With Emergency Events

Comment:

A commenter suggested that, if it is BSEE's intent to require operators to complete the outlined activities prior to the evacuation of the facility, then the regulation should state that specific purpose. The commenter suggested revising § 250.821 to read: “If your facility is impacted or will potentially be impacted by an emergency situation (

e.g.,

an impending National Weather Service-named tropical storm or hurricane, ice events in the Arctic, or post-earthquake), you must complete the following activities prior to evacuation of the facility:”

Response:

BSEE disagrees with the suggested change. BSEE expects that operators will complete these activities before evacuation. However, as the current regulations acknowledge, that may not always be possible due to concerns for worker safety. Accordingly, operators must complete the installation of the subsurface safety device in event of an emergency “as soon as possible, with due consideration being given to personnel safety.” BSEE does not believe that it would be prudent to replace this with an absolute requirement that does not take such considerations into account.

Design, Installation, and Operation of SSSVs—Subsea Trees (Section 250.828)

Section summary: This section addresses requirements for the design, installation, and operations of SSSVs installed on subsea trees. These provisions ensure reliable operation and establish that a well with a subsea tree must not be open to flow while an SSSV is inoperable. BSEE proposed to revise § 250.828(c) to update the title of API RP 14B with ANSI/API RP 14B. That proposal is adopted in this final rule.

Duplicative Requirements

Comment:

Although BSEE did not propose any changes to § 250.828(c), one commenter recommended deleting that provision, asserting that it duplicates the requirements of § 250.802(b).

Response:

BSEE disagrees that § 250.828(c) duplicates the requirements in § 250.802(b). This section applies only to SSSVs installed on subsea trees, while § 250.802(b) addresses general requirements for all SSSVs. Section 250.828(c) specifically addresses provisions related to SSSVs in the regulations, incorporated standards, and the approved deepwater operators plan (DWOP).

Specification for Underwater Safety Valves (USVs) (Section 250.833)

BSEE proposed revising the introductory paragraph in this section to replace API Spec. 6A with ANSI/API Spec. 6A. BSEE did not receive any comments on this section of the proposed rule. BSEE is finalizing this provision as proposed.

Use of USVs (Section 250.834)

The final rule revises this section by incorporating API STD 6AV2 in place of API RP 14H, which was withdrawn by API. BSEE did not receive any comments on this section of the proposed rule. BSEE is finalizing this provision as proposed.

Specification for All Boarding Shutdown Valves (BSDVs) Associated With Subsea Systems (Section 250.835)

Section summary:

This section's requirements in the existing regulations for use of a BSDV are intended to provide the maximum level of safety for the production facility and the people aboard the facility. The BSDV is the most critical component of the subsea system. BSEE did not propose any changes to this section and is not making any changes to the regulatory text of this section in the final rule, however there was a comment submitted on this section. We include it in the preamble only to address the comments received.

Location of BSDV

Comment:

Although BSEE did not propose any changes to this section, one commenter recommended revision of the existing requirement in paragraph (c) that the BSDV be located within 10 feet from the edge of the platform. The commenter stated that this requirement is not feasible for large diameter lines on deepwater facilities and proposed a distance greater than 10 feet or according to the distance specified in the approved DWOP.

Response:

BSEE does not agree that a change in paragraph (c) is justified. Operators may obtain approval for alternative designs under § 250.141 by demonstrating an equivalent or greater level of safety and environmental protection. This provides the operator with the flexibility to address unique situations involving deepwater facilities.

Use of BSDVs (Section 250.836)

BSEE proposed revising this section by incorporating API STD 6AV2 in place of API RP 14H, which was withdrawn by API. BSEE did not receive any comments on this section of the proposed rule. The final rule revises this section to update the new incorporation by reference, as proposed. In the final rule, BSEE is also making minor changes in the wording to emphasize that all BSDVs that are removed from service and reinstalled must meet the requirement of this section. This was the case under the existing regulation, but the revision will make the requirement more explicit.

Emergency Action and Safety System Shutdown—Subsea Trees (Section 250.837)

This section addresses actions operators must take in the event of an emergency situation. These situations include weather events, such as storms. This section includes details on valve closures related to specific conditions on the facility, such as process upsets and emergency shutdown (ESD) events, and it includes requirements pertaining to dropped objects in the vicinity of producing subsea wells.

BSEE is revising paragraph (a) of this section to clarify that operators must shut in the production on any facility that “is impacted or will potentially be impacted by an emergency situation.” This revision is consistent with the revision to § 250.821(a) for facilities with dry trees. Paragraph (a) of the final rule includes examples of emergencies, such as named storms, ice events, or earthquakes. It is not BSEE's intent to specify all emergency events that could trigger actions required by this regulation. The operator must determine when there may be impacts due to an emergency or if an emergency event impacted their facility.

BSEE also adds GLSDVs to the list of equipment that must be closed during a shut-in. This is consistent with

identifying GLSDVs as SPPE in § 250.801 and elsewhere in this subpart.

In addition, BSEE is revising paragraph (b) of this section to clarify the requirements for dropped objects in an area with subsea operations and for consistency with the provisions of the dropped objects plan required by § 250.714. Section 250.714 does not require operators to submit this plan as part of the application for permit to drill (APD) or application for permit to modify (APM); rather, the operator must make their dropped object plans available to BSEE upon request. A dropped object plan is not a static plan and § 250.714 requires operators to update their dropped objects plans as the subsea infrastructure changes.

BSEE proposed revising several paragraphs in this section that address dropped objects to use the phrase “vessel (

e.g.,

mobile offshore drilling unit (MODU) or other type of workover or intervention vessel)” in place of the current regulatory text, which uses “mobile offshore drilling unit (MODU) or other type of workover vessel.” Based on comments, BSEE revised this in the final rule to use “a mobile offshore drilling unit (MODU) or other type of workover or intervention vessel.” As proposed, BSEE is also replacing “producing subsea wells” with “subsea infrastructure” in the final paragraph (b). The current regulatory text limits these requirements to only those areas that have producing subsea wells. This change is more inclusive, requiring operators to address dropped objects in any area with infrastructure on the seafloor. Finally, as proposed, the final rule clarifies and updates the terminology in the second sentence of the existing paragraph (b)(2), while essentially preserving the requirement of the existing sentence.

Timing of Shut-Ins

Comment:

Industry commenters recommended adding a “boundary condition” in § 250.837 as found in § 250.821. A commenter suggested the following examples of “modified conditions,” such as shut-in just prior to evacuation, or if full remote real-time monitoring and control capabilities exist, shut-in prior to exceeding safe environmental operating conditions as stipulated by regulatory approvals.

Response:

BSEE disagrees with the suggested changes. Section 250.837(a) requires the operator to shut-in the facility in the event of an emergency and already provides an option for the operator to receive approval from the District Manager to address, on a case-by-case basis, situations such as the commenter described.

Use of the Word “Vessel”

Comment:

Industry commenters opposed adoption of the proposed rule language in § 250.837(b) and (c)(5), stating that adding the generic term “vessel” followed by “mobile offshore drilling unit (MODU) or other type of workover or intervention vessel” as examples would make the requirement more ambiguous. Specifically, the proposed language could be interpreted to mean that the presence of any “vessel”—such as an offshore support vessel or standby vessel—would trigger this requirement, even if the vessel is not engaged in well operations. The comments stated that it would be overly burdensome to apply these requirements to vessels that do not latch onto the well for wellbore intervention activities (

e.g.,

remotely operated vehicles (ROVs)) because intervention vessels that do not latch onto the well mitigate dropped object concerns through use of safe overboarding zones. Commenters suggested changing the wording in paragraph (b) to refer to “a mobile offshore drilling unit (MODU) or other type of workover or intervention vessel.”

Response:

BSEE agrees that using “vessel” with parenthetical examples of MODU or other type of workover vessel, in this context, is too broad. As previously discussed, BSEE revised the final rule text to use “a mobile offshore drilling unit (MODU) or other type of workover or intervention vessel” instead. This captures appropriate types of vessels that would be involved in drilling or workover operations.

Period of Lost Communications

Comment:

Industry commenters suggested revising § 250.837(b)(2) to replace “minutes or more” with “or more continuous minutes.”

Response:

BSEE disagrees with this suggested change. The suggested changes reduce clarity and do not adequately address the interpretation of “intermittent communications” and “brief losses of communication.” They would, therefore, add to the confusion regarding when the requirement to shut-in wells under this provision applies.

Pressure Safety High Low (PSHL) Sensor Activation

Comment:

Industry commenters suggest replacing the final sentence of paragraph (c)(2) with “If the PSHL sensor activation was not accompanied by an increase in pressure above the [maximum anticipated operating pressure], or the loss of integrity of the pipeline, you may return the wells to production without contacting the appropriate District Manager.”

Response:

BSEE disagrees. The language the commenter recommends is an overly prescriptive description of a false alarm, which limits the situations that could be considered false alarms. It is the operator's responsibility to identify a false alarm. If the sensor activation is identified as a false alarm, the operator may return the wells to production without notifying the District Manager. Further, the suggested text would represent a substantive change that would require a separate notice and opportunity for comment.

Platforms (Section 250.841)

Section summary:

This section addresses protecting platform production facilities by requiring basic and ancillary surface safety systems to be designed, analyzed, installed, tested, and maintained in operating condition according to the provisions of API RP 14C. In addition, this section has basic requirements for platform production process piping.

BSEE adds a new paragraph (c) to this section to address major modifications to a facility, by directing operators to follow the requirements in § 250.900(b)(2). This is not a new requirement, as operators are already required to follow the provisions of § 250.900(b)(2) for major modifications. This simply provides direction to the operator and emphasizes the need to follow § 250.900(b)(2). The final paragraph (c) is substantively the same as the proposed, but with minor clarifying changes in response to comments.

In the proposed rule, BSEE also requested comments on paragraph (b) of this section, and whether BSEE needed to make other changes to address corrosion prevented. Existing paragraph (b) of this section requires operators to maintain all piping for platform production processes as specified in API RP 14E, Recommended Practice for Design and Installation of Offshore Production Platform Piping Systems (API RP 14E). Section 6.5(a)(1) of API RP 14E addresses painting of steel piping to prevent corrosion. BSEE solicited comments on this requirement in the proposed rule's preamble. Corrosion prevention is important for safety and pollution prevention and BSEE is not removing the reference to API RP 14E from this section.

Major Modification

Comment:

A commenter stated that the proposed language in § 250.841(c) could lead an operator to think “major facility modification” is a defined term in the regulation. The term “major modification” in current BSEE

regulations only applies to a platform structure. The commenter suggested specific revisions to the regulatory text to clarify this concern.

Response:

BSEE agrees with the commenter and revises the final regulation to state that, if the operator plans to modify the production safety system in a manner that includes a major modification to the platform structure, then the operator must follow the requirements in § 250.900(b)(2). This adds clarity to the proposed text and merely cross-references existing requirements, rather than creating new ones.

Removal of § 250.841(c)

Comment:

BSEE received multiple comments urging BSEE not to remove § 250.841(c).

Response:

BSEE is not certain what provision the commenters were referring to, as there is no § 250.841(c) in the current regulations. BSEE proposed adding a new § 250.841(c) to address production safety system modifications. This provision is being retained in the final rule, with modifications to clarify intent with respect to major modifications to platform structures.

Approval of Safety Systems Design and Installation Features (Section 250.842)

Section summary:

This section establishes requirements for safety system design and installation. It describes the information that the operators must include in their production safety system application for new and modified systems. This information is needed to verify that the operator followed the prescribed standards and addressed the critical aspects of the system design. In addition, this section requires the operator to submit as-built diagrams to BSEE, so BSEE has accurate information on file for inspections. Under this section, operators must maintain these and other supporting documents and provide them to BSEE upon request.

Existing Regulations and Proposed Changes

Paragraph (a)

The existing § 250.842(a) regulations require the operator to submit a production safety system application to the District Manager before installing or modifying a production safety system. While this section requires the application to be approved, it does not specify the timing of that approval. To address this, BSEE proposed to revise the introductory provisions in paragraph (a) to state that the District Manager must approve the production safety system application before the operator may commence production through or utilize the new or modified system. BSEE is revising this provision in the final rule for clarity, to state that the District Manager must approve the production safety system application before the operator may commence production “through or otherwise use the new or modified system.”

Paragraph (a) of existing § 250.842 also includes a table that details the information that the operator needs to include in the production safety system application. Paragraph (b)(2) of the existing regulations requires the operator to certify that the “designs for the mechanical and electrical systems under paragraph (a) of this section were reviewed, approved, and stamped by an appropriate registered professional engineer(s).” This includes all of the information, diagrams, drawings, and designs that are submitted pursuant to existing paragraph (a). BSEE proposed to revise some requirements in the table in paragraph (a) related to the information, diagrams, drawings, and designs (design documents) operators must submit to BSEE for approval. BSEE proposed to revise this provision to require operators to submit the most critical documents to BSEE, and to have only those documents stamped by a PE.

In addition to requiring the operators to submit the most critica

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.